Document:

Exhibit 10.6

 

To Be Used With Employment Agreement

 

Restricted Stock Agreement under

Assured Guaranty Ltd. 2004 Long-Term Incentive Plan

 

THIS
AGREEMENT, entered into as of the Grant Date (as defined in paragraph 1), by
and between the Participant and Assured Guaranty Ltd. (the “Company”):

 

WITNESSETH THAT:

 

WHEREAS,
the Company maintains the Assured Guaranty Ltd. 2004 Long-Term Incentive Plan
(the “Plan”), and the Participant has been selected by the committee
administering the Plan (the “Committee”) to receive a Restricted Stock Award
under the Plan; and

 

WHEREAS,
the Participant and the Company agree that this Award is in full satisfaction
of the restricted stock awards to be granted to the Participant pursuant to
paragraph 7(a) of the employment agreement between the Company and the
Participant dated February 11, 2004;

 

NOW,
THEREFORE, IT IS AGREED, by and between the Company and the Participant, as
follows:

 

1.  Terms of Award.  The following words and phrases used in this
Agreement shall have the meanings set forth in this paragraph 1:

 

(a)                                  The
“Participant” is                                .

 

(b)                                 The
“Grant Date” is                                                                                  .

 

(c)                                  The
number of “Covered Shares” shall be                       shares
of Stock.

 

Other words and phrases
used in this Agreement are defined pursuant to paragraph 18 or elsewhere in
this Agreement.

 

2.  Restricted Stock Award.  This Agreement specifies the terms of the “Restricted
Stock Award” granted to the Participant.

 

3.  Restricted Period.  Subject to the limitations of this Agreement,
the “Restricted Period” for each Installment of Covered Shares of the
Restricted Stock Award shall begin on the Grant Date and end as described in
the following schedule (but only if the Date of Termination has not
occurred before the end of the Restricted Period):

 

 

	
  INSTALLMENT

  	
   

  	
  RESTRICTED PERIOD WILL END ON:

  
	
  1⁄4 of Covered Shares

  	
   

  	
  One year anniversary of the Grant Date

  
	
  1⁄4 of Covered Shares

  	
   

  	
  Two year anniversary of the Grant Date

  
	
  1⁄4 of Covered Shares

  	
   

  	
  Three year anniversary of the Grant Date

  
	
  1⁄4 of Covered Shares

  	
   

  	
  Four year anniversary of the Grant Date

  

 

The Restricted Period
shall end prior to the date specified in the foregoing schedule to the
extent set forth below:

 

(a)                                  For
Installments as to which the Restricted Period has not ended prior to the Date
of Termination, the Restricted Period for such Installments shall end upon the
Participant’s Date of Termination, if the Date of Termination occurs by reason
of the Participant’s Disability or death.

 

(b)                                 For
Installments as to which the Restricted Period has not ended prior to the date
of a Change in Control, the Restricted Period for such Installments shall end
upon a Change in Control, provided that such Change in Control occurs on or
before the Date of Termination.

 

(c)                                  For
Installments as to which the Restricted Period has not ended prior to the Date
of Termination, if the Participant’s employment is Terminated Without Cause,
the Participant shall be treated as though employed by the Company and
Subsidiaries after the Participant’s actual Date of Termination until the later
of (i) the date on which the Participant ceases receiving severance payments
under the Employment Agreement or (ii) the date on which the term of the
Employment Agreement expires.  Under
clause (ii), a notice of termination shall be deemed to constitute a notice of
non-renewal of the Employment Agreement term under the provisions of the
Employment Agreement to be effective as of the earliest date permitted under
the Employment Agreement.  The terms “Cause”
and “Terminated Without Cause” shall be defined as set forth in the Employment
Agreement.  Notwithstanding the
foregoing, if the Executive’s employment is Terminated without Cause, the
provisions of this paragraph (c) shall apply only if the Executive executes and
returns to the Company a general release and waiver of all claims against the
Company as required under the Employment Agreement.

 

(d)                                 For
Installments as to which the Restricted Period has not ended prior to the Date
of Termination, if the Participant’s Date of Termination occurs because of
Retirement, the Participant shall be treated as though employed by the Company
and Subsidiaries after the Participant’s actual Date of Termination until the
Restricted Period has ended with respect to all Installments.

 

4.  Transfer and Forfeiture of Shares.  If the Restricted Period with respect to any
Installment of the Covered Shares ends on or before the Participant’s Date of
Termination, then

 

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at the end of such
Restricted Period, that Installment of Covered Shares shall be transferred to
the Participant free of all restrictions (except for restrictions described in
paragraph 10).  If the Restricted Period
with respect to any Installments does not end on or before the Participant’s
Date of Termination, then as of the Participant’s Date of Termination, the
Participant shall forfeit such Installments. 
However, the Committee, in its sole discretion, may accelerate the end
of the Restricted Period or provide for the vesting of the Covered Shares under
circumstances that such vesting would not otherwise occur in its sole
discretion, based on such factors as the Committee deems appropriate.

 

5.  Withholding.  All deliveries and distributions under this
Agreement are subject to withholding of all applicable taxes.  At the election of the Participant, and
subject to such rules and limitations as may be established by the Committee
from time to time, such withholding obligations may be satisfied through the
surrender of shares of Stock which the Participant already owns, or to which
the Participant is otherwise entitled under the Plan; provided, however, that
such shares may be used to satisfy not more than the Company’s minimum
statutory withholding obligation (based on minimum statutory withholding rates
for Federal and state tax purposes, including payroll taxes, that are
applicable to such supplemental taxable income).

 

6.  Transferability.  Except as otherwise provided by the
Committee, the Restricted Stock Award may not be sold, assigned, transferred,
pledged or otherwise encumbered during the Restricted Period.

 

7.  Dividends.  The Participant shall not be prevented from
receiving dividends and distributions paid on the Covered Shares of Restricted
Stock merely because those shares are subject to the restrictions imposed by
this Agreement and the Plan; provided, however that no dividends or
distributions shall be payable to or for the benefit of the Participant with
respect to record dates for such dividends or distributions for any Covered
Shares occurring on or after the date, if any, on which the Participant has
forfeited those shares.

 

8.  Voting.  The Participant shall not be prevented from
voting the Restricted Stock Award merely because those shares are subject to
the restrictions imposed by this Agreement and the Plan; provided, however,
that the Participant shall not be entitled to vote Covered Shares with respect
to record dates for any Covered Shares occurring on or after the date, if any,
on which the Participant has forfeited those shares.

 

9.  Registration of Restricted Stock Award.  Each certificate issued in respect of the
Covered Shares awarded under this Agreement shall be registered in the name of
the Participant.

 

10.  Cancellation and Rescission of Restricted
Stock Award.

 

(a)                                  The
Committee may cancel, rescind, suspend, withhold or otherwise limit or restrict
the Restricted Stock Award at any time if the Participant engages in any “Detrimental
Activity.”

 

(b)                                 At
the end of the Restricted Period with respect to an Installment and prior to
the transfer of the Covered Shares to the Participant, the Participant shall
certify, to the extent required by the Committee, in a manner acceptable to the
Committee, that the Participant

 

3

 

is not
engaging and has not engaged in any Detrimental Activity.  In the event a Participant has engaged in any
Detrimental Activity prior to, or during the six months after, the vesting of
any Installment of Covered Shares, such vesting may be rescinded by the
Committee within two years thereafter. 
In the event of any such rescission, the Participant shall pay to the
Company the amount of any gain realized as a result of the rescinded vesting,
in such manner and on such terms and conditions as may be required by the
Company, and the Company shall be entitled to set-off against the amount of any
such gain any amount owed to the Participant by the Company and/or Subsidiary.

 

11.  Heirs and Successors.  This Agreement shall be binding upon, and
inure to the benefit of, the Company and its successors and assigns, and upon
any person acquiring, whether by merger, consolidation, purchase of assets or
otherwise, all or substantially all of the Company’s assets and business.  If any benefits deliverable to the
Participant under this Agreement have not been delivered at the time of the
Participant’s death, such benefits shall be delivered to the Designated
Beneficiary, in accordance with the provisions of this Agreement and the
Plan.  The “Designated Beneficiary” shall
be the beneficiary or beneficiaries designated by the Participant in a writing
filed with the Committee in such form and at such time as the Committee shall
require.  If a deceased Participant fails
to designate a beneficiary, or if the Designated Beneficiary does not survive
the Participant, any rights that would have been exercisable by the Participant
and any benefits distributable to the Participant shall be distributed to the
legal representative of the estate of the Participant.  If a deceased Participant designates a
beneficiary and the Designated Beneficiary survives the Participant but dies
before the complete distribution of benefits to the Designated Beneficiary
under this Agreement, then any benefits distributable to the Designated
Beneficiary shall be distributed to the legal representative of the estate of
the Designated Beneficiary.

 

12.  Administration.  The authority to manage and control the
operation and administration of this Agreement shall be vested in the
Committee, and the Committee shall have all powers with respect to this
Agreement as it has with respect to the Plan. 
Any interpretation of this Agreement by the Committee and any decision
made by it with respect to this Agreement is final and binding on all
persons.  The Committee shall have the
authority to obtain such information from the Participant (including tax return
information) as it determines may be necessary to confirm that the Participant
is in compliance with the requirements applicable to Detrimental Activity, and
if the Participant fails to provide such information, the Committee may
conclude that the Participant is not in compliance with such requirements.

 

13.  Plan Governs.  Notwithstanding anything in this Agreement to
the contrary, this Agreement shall be subject to the terms of the Plan, a copy
of which may be obtained by the Participant from the office of the Secretary of
the Company; and this Agreement is subject to all interpretations, amendments,
rules and regulations promulgated by the Committee from time to time pursuant
to the Plan.

 

14.  Not An Employment Contract.  The Restricted Stock Award will not confer on
the Participant any right with respect to continuance of employment or other
service with the Company or any Related Company, nor will it interfere in any
way with any right the Company or any Related Company would otherwise have to
terminate or modify the terms of such Participant’s employment or other service
at any time.

 

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15.  Notices.  Any written notices provided for in this
Agreement or the Plan shall be in writing and shall be deemed sufficiently
given if either hand delivered or if sent by fax or overnight courier, or by
postage paid first class mail.  Notices
sent by mail shall be deemed received three business days after mailing but in
no event later than the date of actual receipt. 
Notices shall be directed, if to the Participant, at the Participant’s
address indicated by the Company’s records, or if to the Company, at the
Company’s principal executive office.

 

16.  Fractional Shares.  In lieu of issuing a fraction of a share,
resulting from an adjustment of the Restricted Stock Award pursuant to the Plan
or otherwise, the Company will be entitled to pay to the Participant an amount
equal to the fair market value of such fractional share.

 

17.  Amendment.  This Agreement may be amended in accordance
with the provisions of the Plan, and may otherwise be amended by written
agreement of the Participant and the Company without the consent of any other
person.

 

18.  Definitions.  For purposes of this Agreement, words and
phrases shall be defined as follows:

 

(a)                                  Change
in Control.  The term “Change in
Control” shall be defined as set forth in the Plan.

 

(b)                                 Date
of Termination.  A Participant’s “Date
of Termination” means, with respect to an employee, the date on which the
Participant’s employment with the Company and Subsidiaries terminates for any
reason, and with respect to a Director, the date immediately following the last
day on which the Participant serves as a Director; provided that a Date of
Termination shall not be deemed to occur by reason of a Participant’s transfer
of employment between the Company and a Subsidiary or between two Subsidiaries;
further provided that a Date of Termination shall not be deemed to occur by
reason of a Participant’s cessation of service as a Director if immediately
following such cessation of service the Participant becomes or continues to be
employed by the Company or a Subsidiary, nor by reason of a Participant’s
termination of employment with the Company or a Subsidiary if immediately
following such termination of employment the Participant becomes or continues
to be a Director; and further provided that a Participant’s employment shall
not be considered terminated while the Participant is on a leave of absence
from the Company or a Subsidiary approved by the Participant’s employer.

 

(c)                                  Detrimental
Activity.  The term “Detrimental
Activity” shall mean (i) a violation of paragraph 11 of the Employment
Agreement (relating to competition) during the period in which such activity is
prohibited under the Employment Agreement; or (ii) a violation of paragraph 12
of the Employment Agreement (relating to confidentiality).

 

(d)                                 Director.  The term “Director” means a member of the
Board, who may or may not be an employee of the Company or a Subsidiary.

 

(e)                                  Disability.  The Participant shall be considered to have a
“Disability” during the period in which the Participant is unable, by reason of
a medically determinable physical or mental

 

5

 

impairment,
to engage in any substantial gainful activity, which condition, in the opinion
of a physician selected by the Committee, is expected to have a duration of not
less than 120 days.

 

(f)                                    Employment
Agreement.  “Employment Agreement”
shall mean the agreement between the Participant and the Company dated February 11,
2004 or any successor agreement thereto.

 

(g)                                 Retirement.  “Retirement” of a Participant shall mean with
respect to an employee of the Company or a Subsidiary, the occurrence of a
Participant’s Date of Termination after the Participant has completed three
years of service and attained age 55. 
For purposes of this definition, years of service shall be determined in
accordance with rules established by the Committee, and shall take into account
service with the Company and its Subsidiaries, as well as service with ACE
Limited and its subsidiaries occurring prior to the initial public offering of
stock of the Company.

 

(h)                                 Plan
Definitions.  Except where the
context clearly implies or indicates the contrary, a word, term, or phrase used
in the Plan is similarly used in this Agreement.

 

IN WITNESS
WHEREOF, the Participant has executed the Agreement, and the Company has caused
these presents to be executed in its name and on its behalf, all as of the
Grant Date.

 

	
  Assured Guaranty
  Ltd.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
  Its:

  	
   

  	
   

  
	
   

  	
   

  
	
  Participant

  	
   

  
	
   

  	
   

  
	
   

  	
   

  

 

6Exhibit 10.7

 

STANDBY LETTER OF CREDIT AGREEMENT

 

THIS STANDBY LETTER OF CREDIT AGREEMENT is made and entered into as of
November 8, 2004 by and among:

 

ASSURED GUARANTY LTD., a company organized under the laws of Bermuda
(with its successors and assigns, “Holdings”),

 

ASSURED GUARANTY RE OVERSEAS LTD., a company organized under the laws
of Bermuda (with its successors and assigns, “AGRO”), and

 

ASSURED GUARANTY RE INTERNATIONAL LTD., a company organized under the
laws of Bermuda (with its successors and assigns, “AGRI” and, with Holdings and
AGRO, each an “Applicant” and, collectively, the “Applicants”), 

 

and

 

KEYBANK NATIONAL ASSOCIATION, a national banking association (the
“Bank”).

 

Recitals:

 

A.            The Applicants have
requested that the Bank to establish a credit facility (the “Facility”), under
which the Bank would issue its irrevocable standby letters of credit (each a
“Credit” and, collectively, the “Credits”) substantially in the form of Exhibit
A hereto, each in favor of a beneficiary identified by an Applicant in writing
to the Bank (each a “Beneficiary” and, collectively, the “Beneficiaries”).

 

B.            Subject to the terms
and conditions of this Agreement, the Bank has agreed to issue the Credits to
the Beneficiaries.

 

 

Agreements:

 

NOW, THEREORE, in consideration of the foregoing Recitals and of other
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Applicants and the Bank hereby agree as follows:

 

1.             Definitions and
Construction.

 

(a)           Certain
Definitions.  As used herein, the
following terms shall have the meanings herein specified unless the context
otherwise requires:

 

“Affiliate” as to any Person shall mean any other Person (i) which
directly or indirectly controls, is controlled by, or is under common control with,
such Person, (ii) which beneficially owns or holds 5% or more of any class of
the voting or other equity interests of such Person, or (iii) 5% or more of any
class of voting interests or other equity interests of which is beneficially
owned or held, directly or indirectly, by such Person.  Control, as used in this definition, shall
mean the possession, directly or indirectly, of the power to direct or cause
the direction of the management or policies of a Person, whether through the
ownership of voting securities, by contract or otherwise, including the power
to elect a majority of the directors or trustees of a corporation or trust, as
the case may be.

 

“ACE” shall mean ACE Limited, a Cayman Islands company.

 

“AGRI” shall have the meaning set forth in the first paragraph of this
Agreement.

 

“AGRO” shall have the meaning set forth in the first paragraph of this
Agreement.

 

“Applicant” shall have the meaning set forth in the first paragraph of
this Agreement.

 

“Applicant Jurisdiction” shall have the meaning set forth in Section
12(g) of this Agreement.

 

2

 

“Average Facility Maximum” shall mean for any period, an amount equal
to the sum of the Facility Maximum as of the close of business of each business
day in such period, divided by the number of business days in such period.

 

“Bank” shall have the meaning set forth in the first paragraph of this
Agreement.

 

“Base Rate” shall mean, for any day, a rate per annum equal to the greater of (i) the Prime
Rate in effect on such day and (ii) the Federal Funds Effective Rate in effect
on such day plus one-half percent (0.50%).

 

“Beneficiary” shall have the meaning set forth in Recital A of this
Agreement.

 

“Benefit Arrangement” shall mean at any time an “employee benefit
plan,” within the meaning of Section 3(3) of ERISA, which is neither a Plan nor
a Multiemployer Plan and which is maintained, sponsored or otherwise
contributed to by any member of the ERISA Group.

 

“Bermuda Law Event” shall have the meaning set forth in Section 11 of
this Agreement.

 

“Change in
Law” means (a) the adoption of any law, rule or regulation, (b) any change in
any law, rule or regulation or in the interpretation or application thereof by
any Official Body or (c) any request, guideline or directive (whether or not
having the force of law) of any Official Body made or issued.

 

“Consolidated
Debt” shall mean, at any time, an amount equal to the sum (without duplication)
of the then outstanding Indebtedness of Holdings and of each Subsidiary of
Holdings (excluding, however, (i) the amount of all Insurance-Related
Guaranties, (ii) the amount of any Soft Capital (as defined in the Credit
Agreement), (iii) the obligations of Holdings with respect to any preferred
stock of Holdings, and (iv) the obligations of any of Holdings or its
Subsidiaries under Guaranteed Investment Contracts), determined and
consolidated in accordance with GAAP.

 

3

 

“Consolidated Interest
Coverage Ratio” shall mean, for any period, the ratio of Consolidated Net
Income to Consolidated Interest Expense for such period.

 

“Consolidated Interest
Expense” shall mean, for any period, the total consolidated interest expense of
Holdings and its Subsidiaries for such period.

 

“Consolidated Net Income”
shall mean, for any period, the net income for such period for Holdings and its
Subsidiaries, determined on a consolidated basis in accordance with GAAP.

 

“Consolidated Net Worth”
shall mean, at any time, the net worth of Holdings and its Subsidiaries at such
time, determined on a consolidated basis in accordance with GAAP.

 

“Covered Taxes” means all Taxes, other than Excluded Taxes.

 

“Credit” shall have the meaning set forth in Recital A of this
Agreement.

 

“Credit
Agreement” shall mean the $250,000,000 - 364-Day Revolving Credit Facility -
Credit Agreement dated as of April 29, 2004 among Holdings and others, as
“Borrowers” thereunder, the “Banks” party thereto and ABN Amro Bank N.V., as
administrative agent, as such Credit Agreement is from time to time amended,
restated or otherwise modified.

 

“ERISA” shall mean the
Employee Retirement Income Security Act of 1974, as the same may be amended or
supplemented from time to time, and any successor statute of similar import,
and the rules and regulations thereunder, as from time to time in effect.

 

“ERISA Group” shall mean,
at any time, Holdings and all members of a controlled group of corporations and
all trades or businesses (whether or not incorporated) under common control and
all other entities which, together with Holdings, are treated as a single
employer under Section 414 of the Internal Revenue Code.

 

“Event of
Default” shall have the meaning set forth in Section 14 of this Agreement.

 

4

 

“Excluded
Taxes” shall mean, with respect to the Bank or any other recipient of a payment
from any Applicant hereunder, (i) Taxes imposed on (or measured by) net income,
net profits or overall gross receipts (including, without limitation, branch
profits taxes) by any jurisdiction under the laws of which such recipient is
organized, in which such recipient has an office or with respect to which such
recipient has any other connection (other than a connection deemed to arise
solely by reason of the recipient’s being a party to this Agreement or
receiving a payment under this Agreement, or the recipient’s enforcement of its
rights or exercise of its remedies under this Agreement), (ii) any Tax that is
not imposed solely as a result of a Change in Law formally announced after the
date hereof and (iii) any Tax that is attributable to the recipient’s failure
to comply with Section 6(b) of this Agreement.

 

“Facility”
shall have the meaning set forth in Recital A of this Agreement.

 

“Facility Maximum” shall mean Fifty Million Dollars ($50,000,000), as
such amount may from time to time be reduced pursuant to the provisions of
Section 2(b) of this Agreement.

 

“Facility Term” shall have the meaning set forth in Section 2(a) of
this Agreement.

 

“Federal Funds Effective Rate” shall mean,
for any day, the weighted average (rounded upwards, if necessary, to the next
1/100 of 1%) of the rates on overnight Federal funds transactions with members
of the Federal Reserve System arranged by Federal funds brokers, as published
on the next succeeding business day by the Federal Reserve Bank of Cleveland,
or, if such rate is not so published on such business day, the average (rounded
upwards, if necessary, to the next 1/100 of 1%) of the quotations for such day
for such transactions received by the Bank from three Federal funds brokers of
recognized standing selected by it.

 

“GAAP” shall mean accounting principles
generally accepted in the United States of America, consistently applied.

 

5

 

“Guaranteed Investment
Contract” shall mean, with respect to any Person, a guaranteed investment
contract, funding agreement or similar agreement issued or entered into by such
Person wherein such Person guarantees a rate of return on invested capital over
the term of such contract or agreement.

 

“Guaranty” of any Person
shall mean any obligation of such Person guarantying or in effect guarantying
any liability or obligation of any other Person in any manner, whether directly
or indirectly, including any agreement to indemnify or hold harmless any other
Person (other than as an incidental part of another transaction), any
performance bond or other suretyship arrangement and any other form of
assurance against loss, except endorsement of negotiable or other instruments
for deposit or collection in the ordinary course of business.

 

“Holdings” shall have the meaning set forth in the first paragraph of
this Agreement.

 

“Indebtedness” shall mean, as to any Person at any time, any and all
indebtedness, obligations or liabilities (whether matured or unmatured,
liquidated or unliquidated, direct or indirect, absolute or contingent, or
joint or several) of such Person for or in respect of:  (i) borrowed money, (ii) amounts raised under
or liabilities in respect of any note purchase or acceptance credit facility,
(iii) payment obligations (contingent or otherwise) under any letter of credit,
currency swap agreement, interest rate swap, cap, collar or floor agreement or
other interest rate management device, (iv) any other transaction (including
forward sale or purchase agreements, capitalized leases and conditional sales
agreements) having the commercial effect of a borrowing of money entered into
by such Person to finance its operations or capital requirements (but not including
trade payables and accrued expenses incurred in the ordinary course of business
which are not represented by a promissory note or other evidence of

 

6

 

indebtedness and which are not
more than ninety (90) days past due), (v) any Guaranteed Investment Contract,
or (vi) any Guaranty of Indebtedness.

 

“Insurance-Related Guaranties” shall have the meaning set forth in
Section 9(c) of this Agreement.

 

“Insurer Financial Strength Rating” shall mean the insurer financial strength rating of AGRI
or AGRO, as determined by either of Standard & Poor’s and Moody’s.

 

“Interest Rate Hedge” shall mean an interest rate exchange, collar,
cap, swap, adjustable strike cap, adjustable strike corridor, or similar
agreement entered into by Holdings or any Material Subsidiary in order to
provide protection to, or minimize the impact upon, Holdings or any Material
Subsidiary of increasing floating rates of interest applicable to Indebtedness.

 

“Law” shall mean any law (including common law), constitution, statute,
treaty, regulation, rule, ordinance, opinion, release, ruling, order,
injunction, writ, decree, bond, judgment, authorization, or approval, lien or
award of or settlement agreement with any Official Body.

 

“Lien” shall mean any mortgage, deed of trust, pledge, lien, security
interest, charge, or other encumbrance or security arrangement of any nature
whatsoever, whether voluntarily or involuntarily given, including any
conditional sale or title retention arrangement, and any assignment, deposit
arrangement, or lease intended as, or having the effect of, security and any
filed financing statement or other notice of any of the foregoing (whether or
not a lien or other encumbrance is created or exists at the time of the filing).

 

“Material Adverse Effect” shall mean any
event or condition, or series of related events or conditions that,
individually or in the aggregate, could reasonably be expected to result in a
material adverse effect on (i) the assets, business, financial condition or
operations of an

 

7

 

Applicant
or (ii) the ability of an Applicant to perform any of its Obligations under
this Agreement.

 

“Material Subsidiary” shall mean (i) any Subsidiary of Holdings that is
AGRI or a Subsidiary of AGRI and which has at any time, or which will have
after giving effect to any contemplated transaction, acquisition, loan or
investment, a net worth equal to or greater than an amount which is the greater
of five percent (5%) of the consolidated tangible net worth of Holdings and its
Subsidiaries or $25,000,000, (ii) any Subsidiary of Holdings as to which
Holdings requests in writing to be a Material Subsidiary, and (iii) any
Subsidiary or Subsidiaries of Holdings which own(s) in the aggregate 30% or
more of any Material Subsidiary. 
Notwithstanding the foregoing, each of AGRI and AGRO shall be deemed to
be a Material Subsidiary for all purposes of this Agreement.

 

“Moody’s” shall mean Moody’s Investors Service, Inc. and its successors.

 

“Multiemployer Plan”
shall mean any employee benefit plan which is a “multiemployer plan” within the
meaning of Section 4001(a)(3) of ERISA and to which Holdings or any member of
the ERISA Group is then making or accruing an obligation to make contributions
or, within the preceding five Plan years, has made or had an obligation to make
such contributions.

 

“Multiple Employer Plan” shall mean a Plan which has two or more
contributing sponsors (including Holdings or any member of the ERISA Group) at
least two of whom are not under common control, as such a plan is described in
Sections 4063 and 4064 of ERISA.

 

“Obligations” shall mean any
reimbursement obligation, interest, fee, or other indebtedness, obligation or
liability of any Applicant or Material Subsidiary to the Bank, howsoever
created, arising or evidenced, whether direct or indirect, absolute or
contingent, now or hereafter existing, or due or to become due, under or in
connection with this Agreement.

 

8

 

“Official Body” shall mean any national, federal, state, local, or
other government or political subdivision or any agency, authority, board,
bureau, central bank, commission, department, or instrumentality of either, or
any court, tribunal, grand jury, or arbitrator, in each case whether foreign or
domestic.

 

“Permitted Acquisition” shall have the meaning set forth in Section
9(f) of this Agreement.

 

“Permitted Investments”
shall mean:

 

(i)            direct
obligations of the United States of America or the United Kingdom or any agency
or instrumentality thereof or obligations backed by the full faith and credit
of the United States of America or the United Kingdom maturing in twelve (12)
months or less from the date of acquisition;

 

(ii)           commercial
paper maturing in 180 days or less rated not lower than A-1, by Standard &
Poor’s or P-1 by Moody’s on the date of acquisition;

 

(iii)          demand
deposits, time deposits or certificates of deposit maturing within one year in
commercial banks whose obligations are rated A-1, A or the equivalent or better
by Standard & Poor’s on the date of acquisition;

 

(iv)          fixed
income securities with a weighted average credit quality of A by Standard &
Poor’s or A2 by Moody’s on the date of acquisition; and

 

(v)           investments
of the types specified in Sections 1402(b) and 1404(a)(1), (2), (3), (8), and
(10) of the New York Insurance Law.

 

“Permitted Liens” shall
mean:

 

(i)            Liens
for taxes, assessments, or similar charges, incurred in the ordinary course of
business and which are not yet due and payable;

 

9

 

(ii)           Liens
and pledges or deposits made in the ordinary course of business of Holdings or
any Material Subsidiary with respect to employee’s salaries and benefits, to
secure payment of workmen’s compensation, or to participate in any fund in
connection with workmen’s compensation, unemployment insurance, old-age
pensions or other social security programs with respect to such Person’s
officers or employees;

 

(iii)          Liens
of mechanics, materialmen, warehousemen, carriers, or other like Liens,
securing obligations incurred in the ordinary course of business that are not
yet due and payable and Liens of landlords securing obligations to pay lease
payments that are not yet due and payable or in default;

 

(iv)          Good-faith
pledges or deposits made in the ordinary course of business of Holdings or any
Material Subsidiary to secure statutory or regulatory obligations of Holdings
or any Material Subsidiary;

 

(v)           Encumbrances
consisting of zoning restrictions, easements or other restrictions on the use
of real property, none of which materially impairs the use of such property or
the value thereof, and none of which is violated in any material respect by
existing or proposed structures or land use;

 

(vi)          Liens,
security interests and mortgages, if any, in favor of the Bank securing the
Obligations;

 

(vii)         Liens
on property leased by Holdings or any Material Subsidiary under capital and
operating leases;

 

(viii)        Any
Lien existing on the date of this Agreement described on Schedule 1,
provided that the principal amount secured thereby is not hereafter increased;

 

(ix)           Purchase
Money Security Interests;

 

10

 

(x)            Liens
on assets received by any Applicant from a third Person and held in trust by
any Applicant in respect of liabilities assumed by any Applicant in the course
of the reinsurance business of such Applicant;

 

(xi)           To
the extent that they would constitute “Liens”, Insurance-Related Guaranties;
and

 

(xii)          The following, (A) if the validity or
amount thereof is being contested in good faith by appropriate and lawful
proceedings diligently conducted so long as levy and execution thereon have
been stayed and continue to be stayed or (B) if a final judgment is entered and
such judgment is discharged within thirty (30) days of entry, and they do not
in the aggregate materially impair the ability of any Applicant or any Material
Subsidiary to perform its Obligations hereunder or under the other Loan
Documents:

 

(1)          Claims or Liens for taxes, assessments
or charges due and payable and subject to interest or penalty, provided
that the applicable Applicant or applicable Material Subsidiary maintains such
reserves or other appropriate provisions as shall be required by GAAP and pays
all such taxes, assessments or charges forthwith upon the commencement of
proceedings to foreclose any such Lien;

 

(2)          Claims, Liens, or encumbrances upon,
and defects of title to, real or personal property, including any attachment of
personal or real property or other legal process prior to adjudication of a
dispute on the merits;

 

(3)          Claims or Liens of mechanics,
materialmen, warehousemen, carriers, or other statutory nonconsensual Liens; or

 

11

 

(4)          Liens resulting from final judgments
or orders described in Section 14(m) of this Agreement.

 

“Person” shall mean any individual, company, corporation, partnership,
limited liability company, association, joint-stock company, trust,
unincorporated organization, joint venture, government or political subdivision
or agency thereof, or any other entity.

 

“Plan” shall mean at any time an employee pension benefit plan
(including a Multiple Employer Plan, but not a Multiemployer Plan) which is
covered by Title IV of ERISA or is subject to the minimum funding standards
under Section 412 of the Internal Revenue Code and either (i) is maintained by
any member of the ERISA Group for employees of any member of the ERISA Group or
(ii) has at any time within the preceding five years been maintained by any
entity which was at such time a member of the ERISA Group for employees of any
entity which was at such time a member of the ERISA Group.

 

“Potential Default” shall mean any event or condition, which, with the giving
of notice, the passage of time or both, would constitute an Event of Default.

 

“Prime Rate” shall mean, for any day, the rate of interest per annum then most
recently publicly announced by the Bank as its “prime” rate (or equivalent rate
otherwise named) in effect at its principal office in Cleveland, Ohio, which
prime rate is not necessarily the lowest rate of interest charged by the Bank
to commercial borrowers.

 

“Prohibited Transaction” shall mean any “prohibited transaction” as
defined in Section 4975 of the Internal Revenue Code or Section 406 of ERISA
for which neither an individual nor a class exemption has been issued by the
United States Department of Labor.

 

12

 

“Purchase Money Security Interest” shall mean Liens upon tangible
personal property securing loans to AGRO, AGRI or any Material Subsidiary, or
deferred payments by such Person, in either case for the purchase of such
tangible personal property.

 

“SEC” shall have the meaning set forth in
Section 12(d) of this Agreement.

 

“Standard & Poor’s” shall mean Standard & Poor’s Ratings
Services, a division of The McGraw-Hill Companies, Inc., and its successors.

 

“Subsidiary” of any Person at any time shall mean (i) any corporation,
company or trust of which 50% or more (by number of shares or number of votes)
of the outstanding capital stock or shares of beneficial interest normally
entitled to vote for the election of one or more directors or trustees
(regardless of any contingency which does or may suspend or dilute the voting
rights) is at such time owned directly or indirectly by such Person or one or
more of such Person’s Subsidiaries, (ii) any partnership of which such Person
is a general partner or of which 50% or more of the partnership interests is at
the time directly or indirectly owned by such Person or one or more of such
Person’s Subsidiaries, (iii) any limited liability company of which such Person
is a member or of which 50% or more of the limited liability company interests
is at the time directly or indirectly owned by such Person or one or more of
such Person’s Subsidiaries or (iv) any corporation, trust, partnership, limited
liability company or other entity which is controlled or capable of being
controlled by such Person or one or more of such Person’s Subsidiaries.

 

“Tax” (or, as appropriate, “Taxes”) shall mean any present or future
income, stamp or other tax, levy, impost, duty, charge or withholding imposed,
levied, collected, withheld or assessed by any taxing authority (including any
interest or penalties attributable thereto).

 

“Test Period” shall mean each period of four consecutive fiscal
quarters of Holdings (taken as one accounting period) ending after the date
hereof.

 

13

 

“Total Capitalization” shall mean, at any time, an amount (without
duplication) equal to (i) the then outstanding Consolidated Debt of Holdings
and its Subsidiaries, plus (ii) consolidated stockholders equity of Holdings
and its Subsidiaries.

 

(b)           Construction.  Unless the context of this Agreement
otherwise clearly requires, the following rules of construction shall apply to
this Agreement.  References to the plural
include the singular, the plural, the part and the whole; “or” has the
inclusive meaning represented by the phrase “and/or,” and “including” is not a
term of limitation and has the meaning represented by the phrase “including
without limitation”.  The words “hereof,”
“herein,” “hereunder,” “hereto” and similar terms in this Agreement refer to this
Agreement as a whole and not to any particular provision of this
Agreement.  Article, section, subsection,
clause, schedule and exhibit references are to this Agreement, unless otherwise
specified.

 

2.             Agreement of the
Bank to Issue the Credits.

 

(a)           Issuance of
Credits.  Subject to the terms and
conditions of this Agreement, the Bank agrees to issue Credits to Beneficiaries
at any time and from time to time prior to April 28, 2005 (such period, as it
may be earlier terminated pursuant to Section 2(b) or Section 14 of this
Agreement being the “Facility Term”) upon the written request of an Applicant
(in the form of Exhibit B hereto, as the same may be modified from time to time
to reflect changes in the form of the Bank’s customary letter of credit application),
but only so long as, on the date of issuance, and after giving effect to such
issuance, (i) no Event of Default or Potential Default then exists or would
then exist, (ii) the Applicants’ representations in Section 12 of this
Agreement are and would be true and correct in all material respects, and (iii)
the sum of (A) the aggregate undrawn face amount of all then outstanding
Credits (including the Credit then proposed to be issued) and (B) the aggregate
amount of all sums then owing to the Bank pursuant to Section 3 of this

 

14

 

Agreement shall not be greater
than the Facility Maximum. 
Notwithstanding the provisions of the immediately preceding sentence, if
the “Expiration Date” of the Credit Agreement is extended pursuant to an
amendment or other writing to which the Bank is a party, the Facility Term
shall automatically and without further action by the Bank or the Applicants be
extended to end on the date that is the earlier of (A) November 7, 2005 and (B)
the “Expiration Date” of the Credit Agreement, as so extended by such amendment
or other writing.

 

(b)           Voluntary
Reduction of Facility.  The
Applicants may, at any time and without payment of premium or penalty,
terminate in whole or from time to time in part reduce the Facility Maximum by
delivering to the Bank, not later than 12:00 noon (Cleveland, Ohio time) three
(3) business days immediately preceding the effective date of the reduction, a
notice of such reduction (a “Reduction Notice”), in form reasonably specified
by the Bank, stating the amount by which the Facility Maximum is to be reduced
and the effective date of such reduction. 
Each reduction shall be subject to the following: (i) each such reduction
shall be in an aggregate principal amount of not less than Five Million Dollars
($5,000,000) or any integral multiple of $1,000,000 in excess thereof and (ii)
each such reduction shall be in an amount such that the Facility Maximum, as so
reduced, is not less than an amount equal to the sum of (A) the aggregate
undrawn face amount of all then outstanding Credits and (B) the aggregate
amount of all sums then owing to the Bank pursuant to Section 3 of this
Agreement.  From and after each such
reduction, the unused facility fee payable under Section 4 of this Agreement
shall be calculated upon the Facility Maximum as so reduced.  Any partial reduction in the Facility Maximum
shall be irrevocable and effective during the remainder of the Facility Term.  If the Applicants terminate in whole the Facility
Maximum, on the effective date of such termination there shall be no Credits
then outstanding, and the Applicants shall have paid to the Bank in full

 

15

 

all sums owing to the Bank
pursuant to Section 3 of this Agreement together with all accrued and unpaid
interest (if any) and fees and all other amounts due to the Bank hereunder.

 

3.             Agreement to
Pay; Interest.  The Applicants
unconditionally, and jointly and severally, agree to pay to the Bank at its office
specified in Section 22 hereof (or such other location as the Bank may from
time to time specify to the Applicants in writing), on written demand in
immediately available funds, on each date on which a disbursement is made by
the Bank pursuant to a Credit, an amount equal to such disbursement.  If payment is not made on the date of
disbursement, the Applicants shall pay to the Bank interest on such amount,
also payable on demand, at a per annum rate equal to the Base Rate, plus two
percent (2%) from the date of disbursement until paid in full, but excluding
the date on which payment is made.  Such
interest shall be computed by obtaining a daily interest factor based upon a
360-day year and multiplying such factor by the actual number of days elapsed in
any interest computation period.  Any change in the Base Rate due
to a change in the Prime Rate or the Federal Funds Effective Rate will be
effective from and including the effective date of such change in the Prime
Rate or the Federal Funds Effective Rate, respectively.

 

4.             Fees.  The Applicants agree to pay to the Bank,

 

(a)           on the date hereof,
an upfront fee in the amount of fifteen thousand dollars (US$15,000),

 

(b)           quarterly in arrears
on the last business day of each calendar quarter and on the date on which each
Credit expires, letter of credit fees (based on a 360-day year and actual days
elapsed) in an amount equal to thirty-five basis points (0.35%) per annum of
the amount available to be drawn from time to time during such calendar quarter
or shorter computation

 

16

 

period under each Credit
outstanding during such calendar quarter or shorter computation period, and

 

(c)           quarterly in arrears
on the last business day of each calendar quarter and on the date on which the
Facility expires or is terminated a facility fee (based on a 360-day year and
actual days elapsed) in an amount equal to eight basis points (0.08%) per annum
of the Average Facility Maximum during such quarter or lesser period.

 

5.             Joint and
Several Obligations; Limitations; Waivers.

 

(a)           Joint and Several
Obligations.  The Applicants agree
that the Obligations of the Applicants under this Agreement are joint and
several, shall be absolute, unconditional and irrevocable, and shall be performed
strictly in accordance with terms of this Agreement, irrespective of any of the
following circumstances:  (i) any lack of
validity or enforceability of any one or more of the Credits or any document or
instrument relating thereto; (ii) the existence of any claim, setoff, defense
or other rights which any of the Applicants may have at any time against the
Bank, the Beneficiary or any other person or entity, whether in connection with
any one or more of the Credits, this Agreement or any unrelated transaction;
(iii) any document presented under any one or more of the Credits proving to be
forged, fraudulent, or invalid or any statement therein being untrue or
inaccurate in any respect whatsoever; (iv) payment by the Bank under any one or
more of the Credits against presentation of a draft or certificate which does
not strictly comply with the terms thereof or is insufficient in any respect,
provided such payment shall have been made by the Bank in good faith and
without gross negligence and payment is made against presentation of a draft or
other document that at least substantially complies with the terms of the
Credit applicable thereto; (v) any agreement by the Bank and the Beneficiary
extending or shortening the Bank’s time after presentation to examine documents
or

 

17

 

to honor or give notice of
discrepancies; or (vi) any other circumstance or happening whatsoever, whether
or not similar to any of the foregoing, provided that the same shall not
constitute gross negligence or bad faith on the part of the Bank.

 

(b)           Bank Actions.  Without limiting any other provision of this
Agreement, the Bank:  (i) may rely upon
any oral, telephonic, facsimile, electronic written or other communication
believed by it in good faith to have been authorized by any Applicant, the
Beneficiary or anyone acting for any of them; (ii) shall not be responsible for
errors, omissions, interruptions or delays in transmission or delivery of any
message, advice or document in connection with any Credit, whether transmitted
by courier, mail, telecommunication or otherwise, or for errors in
interpretation of technical terms or in translation; (iii) shall not be
responsible for the identity or authority of any signer or the form, accuracy,
genuineness or legal effect of any draft, certificate or other document
presented under any Credit; and (iv) may accept as a draft any written or
electronic demand or other request for payment under any Credit, even if such
demand or other request is not in the form of a negotiable draft; provided
that none of the foregoing shall be construed to excuse the gross negligence or
willful misconduct of the Bank.

 

(c)           No Subrogation.  No Applicant shall have any right of
subrogation, reimbursement or similar right in respect of its payment of any
sum or its performance of any other obligation hereunder unless and until all
Obligations have been paid in full and the Bank has no further obligation
hereunder or under the Credits.  In
addition, each Applicant confirms that upon the Bank’s issuance of each Credit,
it will have received adequate consideration and reasonably equivalent value
for the Indebtedness and other Obligations incurred hereunder.

 

(d)           Limitation of Obligations.  If the Obligations of an Applicant would be
held or determined by a court or tribunal having competent jurisdiction to be
void, invalid or

 

18

 

unenforceable on account of the amount of its
aggregate liability under this Agreement, then, notwithstanding any other
provision of this Agreement to the contrary, the aggregate amount of the
liability of such Applicant under this Agreement shall, without any further
action by such Applicant, the Bank or any other person, be automatically
limited and reduced to an amount which is valid and enforceable.

 

(e)           No Fraudulent Transfer.  Without limiting the generality of the
foregoing, each Applicant and the Bank hereby confirms that it is the intention
of all such parties that neither this Agreement nor the issuance of any Credit
constitute a fraudulent transfer or conveyance under the federal Bankruptcy
Code, the Uniform Fraudulent Conveyances Act, the Uniform Fraudulent Transfer
Act or similar state statute applicable to this Agreement.  Therefore, such parties agree that the
Obligations of an Applicant shall be limited to such maximum amount as will,
after giving effect to such maximum amount and other contingent and fixed
liabilities of such Applicant that are relevant under such laws, and after
giving effect to any collections from, rights to receive contribution from or
payments made by or on behalf of the other Applicants and any other obligor,
result in the Obligations not constituting a fraudulent transfer or conveyance.

 

(f)            Waivers.  Each Applicant hereby waives (i) notice of
acceptance of this Agreement, notice of the creation, renewal or accrual of any
of the Obligations and notice of any other liability to which it may apply, and
notice of or proof of reliance by the Bank upon this Agreement, (ii) diligence,
protest, notice of protest, presentment, demand of payment, notice of dishonor
or nonpayment of any of the Obligations, suit or taking other action or making
any demand against, and any other notice to the other Applicant or any obligor,
(iii) any defense based upon any statute or rule of law to the effect that the
obligation of a surety must be neither larger in amount nor in other respects
more burdensome than that of the principal, (iv) any

 

19

 

defense based upon the Bank’s
administration or handling of the Obligations, and (v) to the fullest extent
permitted by law, any defenses or benefits which may be derived from or
afforded by law which limit the liability of or exonerate accommodation co-makers,
guarantors or sureties, or which may conflict with terms of this Agreement.

 

6.             Change in Law;
Capital Adequacy.  If after the date
hereof, the adoption of or any change in any law or regulation or in the
interpretation thereof by, or compliance by the Bank with any guideline or
request from, any central bank or other authority charged with the
administration thereof (whether or not having the force of law) shall impose,
modify or deem applicable any (a) reserve, special deposit or similar requirement
against letters of credit issued by the Bank or (b) any capital adequacy or
similar requirement (including without limitation a requirement which affects
the manner in which the Bank allocates capital to letters of credit), and the
result thereof shall be to increase the cost to the Bank of issuing or
maintaining any one or more of the Credits (which increase in cost shall be
calculated in good faith in accordance with the Bank’s customary and reasonable
averaging and attribution methods) or to reduce the rate of return on the
Bank’s capital as a consequence of its obligations under any one or more of the
Credits to a level below that which the Bank could have achieved but for such
circumstances, then the Applicants shall pay to the Bank within ten (10) days
of demand such additional amount or amounts as shall compensate the Bank for
such increase in cost or reduction in rate of return; provided that this
Section 6 shall not apply to Taxes, which shall be governed exclusively by
Section 7 of this Agreement.  A
certificate of the Bank showing in reasonable detail the calculation of any
such additional amount or amounts shall be provided in connection with such
written demand for payment and shall be conclusive, absent manifest error.  The Bank agrees that, upon the occurrence of
any event giving rise to any increased cost or special payment under

 

20

 

this Section 6, it will use
reasonable efforts (subject to overall policy considerations of the Bank) to
designate another lending office for any Credits affected by such event,
provided that such designation is made on terms that the Bank suffer no
economic, legal or regulatory disadvantage, with the object of avoiding the
consequence of the event giving rise to the operation this Section 6.

 

7.             Taxes.

 

(a)           Net Payments.  Any and all payments made to the Bank by any
Applicant hereunder shall be made free and clear of and without deduction or
withholding for any Covered Taxes, unless an Applicant is required to deduct or
withhold Covered Taxes.  If an Applicant
shall be required by law to deduct or withhold any Covered Taxes from or in
respect of any sum payable hereunder to the Bank, (i) the sum payable shall be
increased as may be necessary so that after making all required deductions or
withholdings of Covered Taxes (including deductions or withholdings applicable
to additional sums payable under this Section 7) the Bank receives an amount
equal to the sum it would have received had no such deductions or withholdings
been required and (ii) such Applicant shall pay the full amount deducted or
withheld to the relevant taxing authority in accordance with applicable law and
shall provide the Bank with the original or a certified copy of the receipt
evidencing such payment.  If the Bank
determines in good faith that it has received a refund in respect of any
Covered Taxes with respect to which any Applicant has paid additional amounts
pursuant to this Section 7, the Bank shall promptly after the date of such
receipt pay over the amount of such refund to such Applicant (but only to the
extent of additional amounts paid by the Applicant under this Section 7 with
respect to the Covered Taxes giving rise to such refund), net of all reasonable
expenses of the Bank (including additional Taxes attributable to such refund,
as determined in good faith by

 

21

 

the Bank) and without interest (other than
interest, if any, paid by the relevant taxing authority with respect to such
refund).  Any Applicant shall, upon
demand, repay to the Bank any amount paid over to such Applicant by the Bank in
the event the Bank is required to repay any portion of such refund to such
taxing authority.  Nothing in this Section
7 shall entitle any Applicant to have access to the records of the Bank,
including, without limitation, tax returns.

 

(b)           Exemptions.  To the extent it is legally entitled to do
so, the Bank shall from time to time, at the written request of any Applicant,
provide to such Applicant such form, certification or similar documentation, if
any (each duly completed, accurate and signed) as is required by any
jurisdiction, in order to obtain an exemption from, or reduced rate of,
deduction or withholding of Covered Taxes to which the Bank is entitled
pursuant to an applicable tax treaty or other applicable law.

 

(c)           Assignees.  An assignee of the Bank or subsequent
assignee shall not be entitled to any greater additional amounts under this
Section 7 than the Bank would have been entitled to absent such assignment
(determined taking into account the provisions of this Section 7) except to the
extent that the entitlement to greater additional amounts resulted solely from
a Change in Law formally announced after the date on which such assignee became
an assignee hereunder.

 

8.             Affirmative
Covenants.  Subject to the provisions
of Section 11 of this Agreement each Applicant covenants and agrees that, until
the Bank has no obligation to issue Credits, no Credit is outstanding, and all
of the Obligations have been satisfied in full, such Applicant shall comply
with the following affirmative covenants:

 

(a)           Preservation of Existence, Etc.  Such Applicant shall, and shall cause each of
its Material Subsidiaries to, maintain its legal existence as a corporation,
limited partnership, or limited liability company and its license or
qualification and good standing in each jurisdiction in

 

22

 

which its ownership or lease of property or the
nature of its business makes such license or qualification necessary, except as
otherwise expressly permitted in Section 9(f) of this Agreement and except
further where such failure would not have a Material Adverse Effect.

 

(b)           Payment of Liabilities, Including Taxes, Etc.  Such Applicant shall, and shall cause each of
its Material Subsidiaries to, duly pay and discharge all liabilities to which
it is subject or which are asserted against it, promptly as and when the same
shall become due and payable, including all taxes, assessments, and
governmental charges upon it or any of its properties, assets, income or
profits, prior to the date on which penalties attach thereto, except to the
extent that such liabilities, including taxes, assessments or charges, are
being contested in good faith and by appropriate and lawful proceedings
diligently conducted and for which such reserve or other appropriate
provisions, if any, as shall be required by GAAP shall have been made, provided
that such Applicant will pay, and shall cause its Material Subsidiaries to pay,
all such liabilities forthwith upon the commencement of proceedings to
foreclose any Lien which may have attached as security therefor.

 

(c)           Maintenance of Insurance.  Such Applicant shall, and shall cause each of
its Material Subsidiaries to, insure its properties and assets against loss or
damage by insurable hazards as such assets are commonly insured (including, to
the extent applicable to the respective industry of such or any Subsidiary
thereof, fire, extended coverage, property damage, workers’ compensation,
public liability, and business interruption insurance) and against other risks
(including errors and omissions) in such amounts as similar properties and
assets are insured by prudent companies in similar circumstances carrying on
similar businesses, and with reputable and financially sound insurers,
including self-insurance to the extent customary.

 

23

 

(d)           Maintenance of Properties and Leases.  Such Applicant shall, and shall cause each of
its Material Subsidiaries to, maintain in good repair, working order, and
condition (ordinary wear and tear excepted) in accordance with the general
practice of other businesses of similar character and size, all of those
properties useful or necessary to its business, and from time to time such
Applicant will make or cause to be made all appropriate repairs, renewals, or
replacements thereof.

 

(e)           Maintenance of Licenses, Etc.  Such Applicant shall, and shall cause each of
its Material Subsidiaries to, maintain in full force and effect all licenses,
franchises, permits, rights, and other authorizations necessary for the
ownership and operation of its properties and business if the failure so to
maintain the same would cause, or could reasonably be expected to cause, a
Material Adverse Effect.

 

(f)            Visitation Rights. 
Such Applicant shall, and shall cause each of its Material Subsidiaries
to, permit any of the officers or authorized employees or representatives of
the Bank to visit and inspect any of its properties and to examine and make
excerpts from its books and records and discuss its business affairs, finances
and accounts with its officers, all in such detail and at such times and as
often as the Bank may reasonably request and at the expense of the Bank, provided
that the Bank shall provide such Applicant with reasonable notice prior to any
visit or inspection, and provided  further that during the
continuation of any Event of Default, all such visits and inspections by the
Bank shall be at the expense of the Applicants.

 

(g)           Keeping of Records and Books of Account.  Such Applicant shall, and shall cause each of
its other Subsidiaries to, maintain and keep proper books of record and account
which enable each Applicant and Material Subsidiaries to issue financial
statements in accordance with GAAP and as otherwise required by applicable Laws
of any Official Body having jurisdiction

 

24

 

over such Applicant or any such Subsidiary, and in
which full, true and correct entries shall be made in all material respects of
all its dealings and business and financial affairs.

 

(h)           Plans and Benefit Arrangements.  Such Applicant shall, and Holdings shall
cause each other member of the ERISA Group to, comply with ERISA, the Internal
Revenue Code and other Laws applicable to any Plans and Benefit Arrangements
except where such failure, alone or in conjunction with any other failure,
would not cause, or would not reasonably be expected to cause, a Material Adverse
Effect.  Without limiting the generality
of the foregoing, Holdings shall cause all of its Plans and all Plans
maintained by any member of the ERISA Group, if any, to be funded in accordance
with the minimum funding requirements of ERISA and, to the extent applicable
shall make, and cause each member of the ERISA Group to make, in a timely
manner, all contributions due to Plans, Benefit Arrangements and Multiemployer
Plans.

 

(i)            Compliance With Laws.  Such Applicant shall, and shall cause each of
its Material Subsidiaries to, comply with all applicable Laws in all respects, provided
that it shall not be deemed to be a violation of this Section 8(i) if any
failure to comply with any Law would not result in fines, penalties,
remediation costs, other similar liabilities or injunctive relief which in the
aggregate would cause, or could reasonably be expected to cause, a Material
Adverse Effect.

 

(j)            Use of Proceeds. 
Such Applicant will use the Credits only for the general corporate
purposes and working capital needs of such Applicant.  No Applicant shall use the Credits for any
purposes which contravenes any applicable Law or any provision hereof.

 

(k)           Senior Debt Status. 
Such Applicant shall ensure that the Obligations of such Applicant under
this Agreement, and shall cause any Material Subsidiary that is party to a
Guaranty to ensure that its obligations thereunder, shall at all times rank at
least pari passu in

 

25

 

priority of payment with all other senior unsecured
Indebtedness of such Applicant or such Material Subsidiary (except to the
extent of any Indebtedness which has a “preferred” status under any Law
governing the bankruptcy, liquidation, insolvency, rehabilitation,
reorganization, conservation, or like circumstance of such Applicant or such
Material Subsidiary) and no such other senior unsecured Indebtedness of such
Applicant or such Material Subsidiary shall at any time be governed by or
subject to covenants, defaults, or other provisions that are more restrictive
on such Applicant or such Material Subsidiary than those set forth herein; and
provided that if payment of any present or future Indebtedness of such
Applicant or any Material Subsidiary, except Indebtedness of such Applicant or
any Material Subsidiary to the extent secured by Permitted Liens, shall at any
time hereafter become secured by any Lien on any property, such Applicant or
such Material Subsidiary shall secure payment of the Obligations with a Lien of
like priority on the same or substantially similar property of the same or
greater value (but, in any event, such Lien shall secure an amount of
Obligations not to exceed the amount secured by the Lien given to secure
payment of such other Indebtedness).

 

9.                                       Negative
Covenants.  Subject to the provisions
of Section 11 of this Agreement each Applicant covenants and agrees that until
the Bank has no obligation to issue Credits, no Credit is outstanding and all
of the Obligations have been satisfied in full, such Applicant shall comply
with the following negative covenants:

 

(a)                                  Indebtedness.  Such
Applicant shall not, and shall not permit any of its Material Subsidiaries to,
at any time create, incur, assume, or suffer to exist any Indebtedness, except:

 

(i)                                     Indebtedness (A) under this Agreement and (B)
of Holdings and AGRI under the Credit Agreement not exceeding, in the
aggregate, $100,000,000 at any time;

 

26

 

(ii)                                  Existing Indebtedness as set forth on the Indebtedness
Schedule (including any extensions or renewals thereof, provided
there is no increase in the amount thereof or other significant change in the
terms thereof unless otherwise specified on the Indebtedness Schedule;

 

(iii)                               Capitalized and operating leases;

 

(iv)                              Indebtedness secured by Purchase Money
Security Interests;

 

(v)                                 Indebtedness of Holdings or any Material
Subsidiary to another Applicant or any other Material Subsidiary, or any of
their respective Affiliates;

 

(vi)                              Any Interest Rate Hedge;

 

(vii)                           Any Guaranties permitted pursuant to Section
9(c) of this Agreement;

 

(viii)                        Other Indebtedness of Material Subsidiaries
which are regulated insurance companies consisting of letters of credit, trust
accounts and similar collateral support required in the ordinary course of
business either by statute or by rating agencies to support the insurance
and/or reinsurance businesses of such Material Subsidiaries;

 

(ix)                                All obligations of any Affiliate of Holdings
under Guaranteed Investment Contracts issued by such Person in an aggregate amount
of up to $1,000,000,000; and

 

(xi)                                Other Indebtedness of Holdings from time to
time so long as such Indebtedness is permitted at such time by the other
provisions of this Agreement.

 

(b)                                 Liens.  Such
Applicant shall not, and shall not permit any of its Material Subsidiaries to,
at any time create, incur, assume, or suffer to exist any Lien on any of its

 

27

 

property or assets, tangible or intangible, now
owned or hereafter acquired, or agree or become liable to do so, except
Permitted Liens.

 

(c)                                  Guaranties.  Such
Applicant shall not, and shall not permit any of its Material Subsidiaries to,
at any time, directly or indirectly, become or be liable in respect of any
Guaranty, or assume, guaranty, become surety for, endorse or otherwise agree,
become or remain directly or contingently liable upon or with respect to any
obligation or liability of any other Person (it being understood that, in the
case of AGRO and AGRI, the restrictions of this Section 9(c) shall not be
deemed to apply to liabilities arising from credit default swap transactions
entered into by either such Applicant in the ordinary course of its business in
respect of the reference obligations and reference entities that are the
subject of such credit default swap transactions), except for Guaranties of
that Indebtedness of such Applicant and the Material Subsidiaries permitted
hereunder, Guaranties in favor of the Bank pursuant to this Agreement, and the
following (collectively, “Insurance-Related Guaranties”):

 

(i)                                     reinsurance and insurance agreements and
policies and Guaranties which such Applicant or any Material Subsidiary is
authorized or licensed to provide in the ordinary course of its reinsurance or
insurance business,

 

(ii)                                  keepwell and similar agreements between and
among various Subsidiaries of Holdings, the purpose and effect of which is to
transfer the financial strength ratings of either of Assured Guaranty Corp. or
AGRI to its Subsidiaries, and

 

(iii)                               letters of credit, trust accounts or similar
collateral support procured by Subsidiaries of Holdings which are required in
the ordinary course of business either by statute or by rating agencies in
order to support the respective reinsurance or insurance business of such
Subsidiaries.

 

28

 

(d)                                 Loans
and Investments.  Such Applicant
shall not, and shall not permit any of its Material Subsidiaries to, at any
time make or suffer to remain outstanding any loan or advance to, or purchase,
acquire or own any stock, bonds, notes or securities of, or any partnership
interest (whether general or limited) or limited liability company interest in,
or any other investment or interest in, or make any capital contribution to,
any other Person, or agree, become, or remain liable to do any of the foregoing,
except:

 

(i)                                     trade credit extended on usual and customary
terms in the ordinary course of business;

 

(ii)                                  advances to employees to meet expenses
incurred by such employees in the ordinary course of business;

 

(iii)                               Permitted Investments and Permitted Acquisitions;
and

 

(iv)                              loans, advances and investments in Holdings
and any Subsidiary of Holdings; provided that
AGRI may not make any loans, advances and investments in Holdings or any
Subsidiary of Holdings which is not a Subsidiary of AGRI (other than any such
Subsidiary of Holdings which issues or proposes to issue Guaranteed Investment
Contracts).

 

(e)           Dividends and Related Distributions.  Such Applicant shall not, and shall not
permit any of its Material Subsidiaries to, make or pay, or agree to become or
remain liable to make or pay, any dividend or other distribution of any nature
(whether in cash, property, securities or otherwise) on account of or in
respect of its shares of capital stock, partnership interests, or limited
liability company interests or on account of the purchase, redemption,
retirement, or acquisition of its shares of capital stock (or warrants, options
or rights therefor), partnership interests or limited liability company
interests, except dividends or other distributions

 

29

 

payable to Holdings or any Material Subsidiary and
except for (i) dividends payable by Holdings not in excess of $15,000,000 in
any fiscal year of Holdings and (ii) purchases, redemptions, retirements, or
acquisitions by Holdings of its shares of capital stock (or warrants, options
or rights therefor) not in excess of $25,000,000 in the aggregate in any twelve
(12) month period, so long as no Event of Default or Potential Default shall
exist immediately prior to and after giving effect to each such purchase,
redemption, retirement, or acquisition.

 

(f)            Liquidations, Mergers, Consolidations, Acquisitions.  Such Applicant shall not, and shall not
permit any of its Material Subsidiaries to, dissolve, liquidate, or wind-up its
affairs, or become a party to any amalgamation, merger or consolidation, or
acquire by purchase, lease, or otherwise all or substantially all of the assets
or capital stock of or other ownership interest in any other Person, provided
that

 

(1)           any Material Subsidiary may consolidate, amalgamate or
merge into Holdings or any Material Subsidiary, provided that no
Applicant may merge, amalgamate or consolidate with another Applicant, and an
Applicant may only merge, amalgamate or consolidate with another Material
Subsidiary if such Applicant is the surviving entity of such merger,
amalgamation or consolidation; and

 

(2)           Such Applicant or any Material Subsidiary may acquire,
whether by purchase, by amalgamation or by merger, (A) all of the ownership
interests of another Person or (B) substantially all of the assets of another
Person or of a business or division of another Person (each a “Permitted
Acquisition”), provided that each of the following requirements is met:

 

(i)                                     the board of directors or other equivalent
governing body of such Person shall have approved such Permitted Acquisition,
and such Applicant or the relevant Material Subsidiary shall have delivered to
the Bank written evidence of such

 

30

 

approval of the board of
directors (or equivalent body) of such Person for such Permitted Acquisition;

 

(ii)                                  the business acquired, or the business
conducted by the Person whose ownership interests are being acquired, as
applicable, shall be substantially the same as, or otherwise complementary or
related to, one or more lines of business conducted by such Applicant or any
Material Subsidiary, or otherwise incidental to the business of a financial
services company, and shall comply with Section 9(j) of this Agreement;

 

(iii)                               no Event of Default or Potential Default
shall exist immediately prior to and after giving effect to such Permitted
Acquisition; and

 

(iv)                              upon the reasonable request of the Bank,
Holdings or the relevant Material Subsidiary shall deliver to the Bank at least
five (5) Business Days before such Permitted Acquisition such information about
such Person or its assets as the Bank may reasonably require.

 

(g)                                 Dispositions of Assets or Subsidiaries.  Such
Applicant shall not, and shall not permit any of its Material Subsidiaries to,
sell, convey, assign, lease, abandon, or otherwise transfer or dispose of,
voluntarily or involuntarily, any of its properties or assets, tangible or
intangible (including by sale, assignment, discount, or other disposition of
accounts, contract rights, chattel paper, equipment, or general intangibles
with or without recourse or of capital stock, shares of beneficial interest,
partnership interests or limited liability company interests of a Subsidiary of
an Applicant), except:

 

(i)                                     transactions involving the sale of inventory,
if any, in the ordinary course of business;

 

31

 

(ii)                                  any sale, transfer, or lease of assets,
including any sale of investment assets, in the ordinary course of business
which are no longer necessary or required in the conduct of such Applicant’s or
such Subsidiary’s business or which are incidental to the management of such
Applicant’s or its Subsidiary’s investment portfolio in a manner consistent
with past practices;

 

(iii)                               any sale, transfer or lease of assets by any
wholly owned Subsidiary of such Applicant to such Applicant or any Material
Subsidiary thereof;

 

(iv)                              any sale, transfer or lease of assets in the
ordinary course of business which are replaced by reasonably equivalent
substitute assets; or

 

(v)                                 any sale, transfer or lease of assets, other
than those specifically excepted pursuant to clauses (i) through (iv) above, provided
that (A) at the time of any disposition, no Event of Default or Potential
Default, shall exist or shall result from such disposition, and (B) the
aggregate value of all assets so sold by (1) Holdings shall not exceed in any
fiscal year fifteen percent (15%) of the consolidated tangible net worth of
Holdings and its Subsidiaries or (2) any Material Subsidiary in any fiscal year
shall not exceed a material portion of such Material Subsidiary’s tangible net
worth.

 

(h)                                 Affiliate Transactions.  Such
Applicant shall not, and shall not permit any of its Material Subsidiaries to,
enter into or carry out any transaction (including purchasing property or
services from or selling property or services to any Affiliate of Holdings or
any Material Subsidiary or other Person) unless such transaction is not
otherwise prohibited by this Agreement, is entered into upon fair and
reasonable arm’s-length terms and conditions which are

 

32

 

fully disclosed to the Bank, and is in accordance
with all applicable Law and accounting standards.

 

(i)            Subsidiaries, Partnerships and Joint Ventures.  Such Applicant shall not, and shall not
permit any of its Material Subsidiaries to, own, acquire, or create directly or
indirectly any Material Subsidiary that is not a Guarantor of the Obligations.  No Applicant shall, or permit any of its
Material Subsidiaries to, become or agree to become (1) a general or limited
partner in any general or limited partnership, except that Holdings or any of
its Material Subsidiaries may be general or limited partners in any Material
Subsidiary, (2) a member or manager of, or hold a limited liability company
interest in, a limited liability company, except that Holdings or any of its
Material Subsidiaries may be members or managers of, or hold limited liability
company interests in, Material Subsidiaries, or (3) a joint venturer or hold a
joint venture interest in any joint venture except that Holdings or any of its
Material Subsidiaries may be a party to a joint venture (A) that would not
otherwise be a Material Subsidiary were it a Subsidiary of Holdings, and (B) as
to which neither Holdings nor any Material Subsidiary is directly or indirectly
jointly or severally liable for any act or omission of the joint venture beyond
the amount of its investment therein.

 

(j)            Continuation of or Change in Business.  Such Applicant shall not, and shall not
permit any of its Material Subsidiaries to, make a material change in the
nature of its business as substantially conducted and operated by such
Applicant or such Subsidiary as of the date of this Agreement; provided,
however, that (A) it shall not be a material change hereunder for such
Applicant or any such Material Subsidiary to alter the concentration
percentages of products offered or business conducted as of the date of this Agreement,
nor to enter into any business incidental to the offering of such products or
the conduct of such business and it shall not be a

 

33

 

material change hereunder for a Material Subsidiary
to engage in any business incidental to the conduct of a financial services
company and (B) the parties hereto hereby acknowledge and agree that the
issuance of Guaranteed Investment Contracts is a business incidental to the
conduct of a financial services company.

 

(k)           Plans and Benefit Arrangements.  Such Applicant shall not, and shall not
permit any of its Material Subsidiaries to, engage in a Prohibited Transaction
with any Plan, Benefit Arrangement, or Multiemployer Plan which, alone or in
conjunction with any other circumstance or set of circumstances, would result
in a material liability under ERISA or otherwise violate ERISA in a material
respect.

 

(l)            Fiscal Year. 
Such Applicant shall not, and shall not permit any Subsidiary of such
Applicant to, change its fiscal year from the twelve-month period beginning
January 1 and ending December 31 unless such Applicant has (i) provided thirty
(30) days’ prior written notice to the Bank of the proposed change accompanied
by an explanation in reasonable detail of the effect thereof on such Applicant
and its Subsidiaries in general and on such Applicant’s or its Material
Subsidiary’s financial reporting and covenant compliance hereunder, and (ii)
agreed to amend the covenants contained herein (including the financial covenants
set forth below) if reasonably requested by the Bank to maintain the continuity
of the such covenants.

 

(m)          Maximum Debt to Total Capitalization Ratio.  Holdings shall not permit at any time the
ratio of Consolidated Debt to Total Capitalization of to be greater than 0.30
to 1.0.

 

(n)           Minimum Net Worth. 
Holdings shall not permit at any time its Consolidated Net Worth to be
less than seventy-five percent (75%) of the Consolidated Net Worth of Holdings
as of June 30, 2004.

 

34

 

(o)           Interest Coverage Ratio.  Holdings will not permit the Consolidated
Interest Coverage Ratio for any Test Period ending on the last day of a fiscal
quarter of Holdings to be less than 2.50 to 1.0.

 

10.           Reporting Requirements.  Subject to the provisions of Section 11 of
this Agreement each Applicant covenants and agrees that until the Bank has no
obligation to issue Credits, no Credit is outstanding and all of the
Obligations have been satisfied, such Applicant shall furnish or cause to be
furnished to the Bank:

 

(a)           Quarterly Financial Statements.  As soon as available and in any event within
forty-five (45) calendar days after the end of each of the first three fiscal
quarters in each fiscal year, the Form 10-Q of Holdings as filed with the SEC
and separate financial statements of each of Holdings, AGRI and AGRO, each
consisting of a consolidated balance sheet as of the end of such fiscal quarter
and related consolidated statements of income, stockholders’ equity, and cash
flows for the fiscal quarter then ended and the fiscal year through that date,
all in reasonable detail and certified (subject to normal year-end audit
adjustments) by the Chief Executive Officer, President, Chief Financial
Officer, Treasurer, or Assistant Treasurer of Holdings, AGRI or AGRO, as the
case may be, as having been prepared (i) as to the financial statements of
Holdings, in accordance with GAAP, consistently applied, and (ii) as to the
financial statements of AGRI and AGRO, as having been prepared in accordance
with statutory accounting principles required by the Applicant Jurisdictions
thereof.

 

(b)           Annual Financial Statements.  As soon as available and in any event within
ninety (90) days after the end of each fiscal year of Holdings, the Form 10-K
of Holdings as filed with the SEC and separate financial statements of each of
Holdings, AGRI and AGRO, each consisting of a consolidated balance sheet as of
the end of such fiscal year, and related

 

35

 

consolidated statements of income, stockholders’
equity, and cash flows for the fiscal year then ended, all in reasonable
detail, with the financial statements of Holdings being prepared in accordance
with GAAP, consistently applied, and the financial statements of AGRI and AGRO
being prepared in accordance with statutory accounting principles required by
the Applicant Jurisdictions thereof, and (i) in the case of Holdings’ financial
statements, certified by independent certified public accountants of recognized
standing satisfactory to the Bank and (ii) in the case of AGRI’s and AGRO’s
financial statements, certified by the Chief Executive Officer, President,
Chief Financial Officer, Treasurer, or Assistant Treasurer of AGRI or AGRO, as
the case may be.  The certificate or
report of accountants in respect of Holdings shall be free of qualifications
(other than any consistency qualification that may result from a change in the
method used to prepare the financial statements as to which such accountants
concur) and shall not indicate the occurrence or existence of any event,
condition, or contingency which would materially impair the prospect of payment
or performance of any covenant, agreement, or duty of any Applicant under this
Agreement.

 

(c)           Certificate of the Applicants.  Concurrently with the financial statements of
Holdings, AGRI and AGRO furnished to the Bank pursuant to Section 10(a) and
Section 10(b) of this Agreement, a certificate of each of Holdings, AGRI and
AGRO signed by the Chief Executive Officer, President, Chief Financial Officer,
Treasurer, or Assistant Treasurer of Holdings, AGRI or AGRO, as the case may
be, in form and content satisfactory to the Bank, to the effect that, except as
described pursuant to Section 10(d) of this Agreement, (i) the representations
and warranties of the Applicants contained in Section 12 of this Agreement are
true on and as of the date of such certificate with the same effect as though
such representations and warranties had been made on and as of such date
(except representations and warranties

 

36

 

which expressly relate solely to an earlier date or
time) and each Applicant has performed and complied with all covenants and
conditions hereof, (ii) no Event of Default or Potential Default exists and is
continuing on the date of such certificate, and (iii) containing calculations
in sufficient detail to demonstrate compliance as of the date of such financial
statements with all applicable financial covenants contained in Sections 10(m),
10(n) and 10(o) of this Agreement.

 

(d)           Notice of Default. 
Promptly after any officer of an Applicant has learned of: (i) the
occurrence of an Event of Default or Potential Default, a certificate signed by
the Chief Executive Officer, President, Chief Financial Officer, Treasurer, or
Assistant Treasurer of such Applicant setting forth the details of such Event
of Default or Potential Default, and the action which such Applicant proposes
to take with respect thereto, or (ii) the creation or acquisition of a Material
Subsidiary, a certificate signed by the Chief Executive Officer, President,
Chief Financial Officer, Treasurer, or Assistant Treasurer of such Applicant
setting forth the legal name, jurisdiction of organization, and such other
relevant information reasonably requested by the Bank.

 

(e)           Off-Balance Sheet Financing.  Neither any Applicant nor any of
their Material Subsidiaries shall engage
in any off-balance sheet transaction (i.e., the liabilities in respect of which
do not appear on the liability side of the balance sheet) providing the
functional equivalent of material Indebtedness or otherwise providing for a
material liability of such Applicant or
any of Holdings’ Material Subsidiaries
(collectively, “Off-Balance Sheet Transactions”), except such Off-Balance Sheet
Transactions as are fully disclosed to the Bank prior to their creation.

 

(f)            Notice of Litigation.  Promptly after the commencement thereof,
notice of all actions, suits, proceedings or investigations before or by any
Official Body or any other Person against such Applicant or any Material
Subsidiary of Holdings, which involve a claim or series

 

37

 

of claims in excess of $20,000,000 or which, if
adversely determined, would cause, or could reasonably be expected to cause, a
Material Adverse Effect.

 

(g)           Notice of Change in Insurer Financial Strength Rating.  Within two (2) business days after Standard
& Poor’s or Moody’s announces a change in the Insurer Financial Strength
Rating of AGRI or AGRO, notice of such change. 
Holdings will deliver together with such notice a copy of any written
notification which AGRI or AGRO received from the applicable rating agency
regarding such change of its Insurer Financial Strength Rating.

 

(h)           Sale of Assets. 
At least fifteen (15) calendar days prior thereto, notice with respect
to any proposed sale or transfer of material assets pursuant to clause (v) of
Section 9(g) of this Agreement.

 

(i)            Budgets, Other Reports and Information.  Promptly upon their becoming available to
such Applicant, such reports and information as any of the Bank may from time
to time reasonably request.  Each
Applicant shall also notify the Bank promptly of the enactment, enforcement, or
adoption of any Law which causes, or could reasonably be expected to cause, a
Material Adverse Effect with respect to such Applicant.

 

11.           Bermuda
Law Event.  To the extent that the
making by any Applicant of any covenant set forth in any of Sections 8, 9 and
10 of this Agreement is for such Applicant not permitted by, or is unlawful
under or is in violation of, any Bermuda Law pertaining to fetters on statutory
powers, then such covenant shall be deemed not made by nor applicable to such
Applicant, but if such Applicant shall take or fail to take any action which
would have breached such covenant had the same been applicable to such
Applicant, the action or failure to take action shall constitute a “Bermuda Law
Event”.

 

38

 

12.           Representations
and Warranties.  The Applicants represent and warrant to the
Bank, and shall be deemed to represent and warrant to the Bank upon the request
for and issuance of each Credit, that:

 

(a)           Organization and Qualification.  Each Applicant and each of its Subsidiaries
is duly organized, validly existing and in good standing under the laws of the
jurisdiction of its organization, has all requisite power and authority to
carry on its business as now conducted and is qualified to do business in, and
is in good standing in, every jurisdiction where such qualification is
required, except where failures to do so, individually or in the aggregate,
could not reasonably be expected to result in a Material Adverse Effect.

 

(b)           Power and Authority; Validity and Binding
Effect.  The transactions contemplated by
this Agreement are within the corporate or limited liability company powers of
each Applicant and have been duly authorized by all necessary corporate or
limited liability company action and, if required, stockholder or member
action.  There is no document affecting the authority of
the board of directors of such Applicant to authorize such Applicant’s entry
into this Agreement that is not disclosed by such Applicant’s memorandum of
association or bye-laws or by the minutes of the proceedings of the directors
of each Applicant relating to the authorization of this Agreement, which
proceedings, as to AGRO, consist of the written consent of its directors dated
October 28, 2004, and which proceedings, as to Holdings and AGRI, consist of
meetings of their respective directors held on November 4, 2004.  This Agreement has been duly executed and delivered by each Applicant
and constitutes a legal, valid and binding obligation of each Applicant in each
case enforceable in accordance with its terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium and other laws affecting

 

39

 

creditors’ rights generally and subject to
general principles of equity, regardless of whether considered in a proceeding
in equity or at law.

 

(c)           No
Conflict.  The transactions contemplated by this
Agreement (i) do not require any consent or approval of, registration or filing
with, or other action by, any Official Body, except such as have been obtained
or made and are in full force and effect, (ii) will not violate any applicable
law or regulation or the charter, by-laws, or other organizational documents of
any Applicant or any order of any Official Body, (iii) will not violate or result
in a default under any indenture, agreement or other instrument binding upon
any Applicant or any of its properties, or give rise to a right thereunder to
require such Applicant to make any payment, where such default or payment
reasonably can be expected to have a Material Adverse Effect and (iv) will not
result in the creation or imposition of any Lien on any property of any
Applicant, except to the extent, if any, provided under the terms of this
Agreement.

 

(d)           Financial
Information.  Holdings has heretofore
furnished to the Bank (i) its audited consolidated balance sheet for it and its
consolidated Subsidiaries and the related statements of income, stockholders’
equity and cash flows for the fiscal year ended December 31, 2003, reported on
by PricewaterhouseCoopers LLP, independent public accountants (as provided in
the registration statement of Holdings on Form S-1 filed with the Securities
and Exchange Commission (the “SEC”) on May 5, 2004), and (ii) the unaudited
consolidated balance sheet of Holdings and its consolidated Subsidiaries as of
June 30, 2004 and the related consolidated statements of income, stockholders’
equity and cash flows for the fiscal quarter then ended and for the portion of
the fiscal year then ended, as provided in the report of Holdings on Form 10Q
filed with the SEC for the fiscal quarter ended June 30, 2004.  Such financial statements present fairly, in
all material respects, the consolidated financial position of Holdings

 

40

 

and
its Subsidiaries as of such dates and its consolidated results of operations
and cash flows for such periods in accordance with GAAP, subject to normal
year-end adjustments and the absence of footnotes in the case of the statements
referred to in clause (ii) above.

 

(e)           No
Material Adverse Change.  Since June
30, 2004 there has been no material adverse change in the assets, business,
financial condition or operations of any Applicant and its Subsidiaries, taken
as a whole.

 

(f)            No
Margin Stock.  None of the
Applicants, nor any of their Subsidiaries, is engaged principally, or as one of
its important activities, in the business of extending credit for the purpose
of purchasing or carrying margin stock (within the meaning of Regulation U),
and the Credit will not be used in connection with buying or carrying any such
margin stock.

 

(g)           No
Action Required.  To ensure the
legality, validity, enforceability, or admissibility in evidence of this
Agreement, it is not necessary, as of the date hereof, that this Agreement or
any other document be filed or recorded with any Official Body in any of (a)
Bermuda, and (b) any other country or jurisdiction (i) where any Applicant is
licensed or qualified to do business (each an “Applicant Jurisdiction”) or (ii)
from or through which payments hereunder are made by any Applicant, or that any stamp or similar tax be paid
on or in respect of this Agreement in any Applicant Jurisdiction, other than
such filings and recordations as have already been made and such stamp or similar
taxes as have already been paid.

 

(h)           Proper Form.  This Agreement is in proper form under the
laws of any Applicant Jurisdiction for the admissibility thereof in the courts
of such Applicant Jurisdiction; and it is not necessary or desirable to ensure the
enforceability of this Agreement that it or any other instrument relating
hereto be filed or registered in any court, public office or register of any
Applicant Jurisdiction.

 

41

 

(i)            No Taxes or Charges.  There are no taxes or other governmental
charges payable under the laws of any Applicant Jurisdiction or to any
governmental authority of any Applicant Jurisdiction in respect of any amount
payable under this Agreement.

 

(j)            No Withholding.  Under the law of any Applicant Jurisdiction
there is no requirement for any of the parties to this Agreement to make any
deduction from or any withholding of any part of any payment under this
Agreement; and there are no stamp or registration or similar taxes or charges
payable in any Applicant Jurisdiction in respect of this Agreement or the
enforcement thereof in the courts of any Applicant Jurisdiction.

 

(k)           Foreign Courts.  The courts of each Applicant Jurisdiction
will observe and give effect to the choice of the laws of the State of New York
as the governing law of this Agreement.

 

(l)            No Applicant Immunity.  Under the law of each Applicant Jurisdiction,
neither an Applicant nor any of its properties or assets is immune from
institution of legal proceedings or the obtaining or execution of a judgment in
such Applicant Jurisdiction.

 

(m)          No Bank Qualification.  It is not necessary under the laws of any
Applicant Jurisdiction that the Bank be authorized or qualified to carry on
business in such Applicant Jurisdiction for its entry into, execution,
delivery, performance or enforcement of this Agreement.

 

(n)           Bank Not Resident.  The Bank will not be deemed to be resident,
domiciled, carrying on business or subject to taxation in any Applicant
Jurisdiction by reason only of its entry into, execution, delivery, performance
or enforcement of this Agreement.

 

(o)           Corporate Structure.  (i) Holdings owns 100% of the issued and
outstanding capital stock of AGRI; and (ii) AGRI owns, directly or indirectly,
100% of the issued and outstanding capital stock of each of Assured Guaranty
Barbados Holdings, Ltd., a company

 

42

 

organized
under the laws of Barbados; Assured Guaranty Overseas US Holdings Inc., a
Delaware corporation; AGRO; and Assured Guaranty Mortgage Insurance Company, a
New York corporation.

 

(p)           Regulatory Compliance.  Each Applicant is in compliance in all
material respects with the conditions attached to its registration as an
insurer under the Insurance Act 1978 of Bermuda (the “Insurance Act”); and no
Applicant has received any direction of the Bermuda Monetary Authority issued
in respect of such Applicant under section 32 of the Insurance Act.

 

13.           Conditions to
Effectiveness.  The effectiveness of
this Agreement and the Bank’s agreements hereunder are subject to the
Applicants’ delivery to the Bank of each of the following conditions:

 

(a)           Certified
Resolutions.  A certificate executed
by an authorized officer of each Applicant and a secretary or assistant
secretary of such Applicant certifying (i) the resolutions of the board of
directors of such Applicant authorizing the execution, performance and delivery
of this Agreement and each other document executed in connection herewith or in
connection with any of the transactions contemplated hereby, (ii) the names and
signatures of the officers of such Applicant executing or attesting to such
documents, and (iii) (A) compliance by the Applicants with all representations,
warranties, covenants and conditions under this Agreement and each of the
documents executed in connection herewith, (B) the absence of any Event of
Default, and (C) the absence of any material adverse change since June 30, 2004
in the business, properties, operations or condition (financial or otherwise) of
such Applicant or its ability to perform its Obligations hereunder;

 

(b)           Formation
Documents.  True and complete copies
of the certificate or articles of formation of each Applicant, including any
amendments or restatements thereof, and of the by-laws

 

43

 

or equivalent governing
documents, certified as true, correct and in full force and effect by the
Secretary or an Assistant Secretary of such Applicant;

 

(c)           Legal Opinions.  A favorable opinion of counsel for each
Applicant, all in form and substance reasonably acceptable to the Bank;

 

(d)           Closing Fee.  In immediately available funds, the closing
fee required by Section 4(a) of this Agreement;

 

(e)           Debt Rating.  Evidence satisfactory to the Bank that the senior
unsecured debt rating of Holdings as of August 31, 2004 (i) as determined by
Moody’s, is not less than “A2” and (ii) as determined by Standard & Poor’s,
is not less than “A”.

 

14.           Events of Default.  Should any of the following events (each an
“Event of Default”) occur, the Applicants shall pay to the Bank, on demand, to
serve as cash collateral for the Obligations, an amount equal to all of the
Obligations then outstanding, including, without limitation, an amount equal to
the aggregate undrawn face amount of any and all Credits then outstanding and
the aggregate amount payable pursuant to drafts that have been presented under
Credits and not reimbursed to the Bank:

 

(a)           Failure to Pay.  Any Applicant fails to make payment when due
of any amount payable under this Agreement and such failure continues
unremedied for at least five (5) days;

 

(b)           Negative
Covenants.  Any Applicant fails to
perform any of the covenants contained in Section 9 of this Agreement to be
performed by such Applicant;

 

(c)           Affirmative and
Reporting Covenants.  Any Applicant
fails to perform for a period of ten (10) days or more any of the covenants
contained in Section 8(f) of this Agreement to be performed by such Applicant;

 

44

 

(d)           Other Covenants.  Any Applicant fails to perform any other
covenant or other agreement to be performed by such Applicant under this
Agreement (other than those described in clauses (a), (b) and (c), above) and
such default shall continue unremedied for a period of thirty (30) days (such
grace period to be applicable only in the event such default can be remedied by
corrective action);

 

(e)           Representations.  Any representation made in any financial
statement or in any certificate or other writing delivered to the Bank by or on
behalf of any Applicant in connection with this Agreement (including, without
limitation, any representation made in Section 12 of this Agreement) or any
Credit is in any material respect false or misleading when made;

 

(f)            Credit Agreement
Default.  The occurrence of an “Event
of Default” under, and as defined in, the Credit Agreement;

 

(g)           Involuntary
Proceeding.  A proceeding shall have
been instituted in a court having jurisdiction in the premises seeking a decree
or order for relief in respect of any Applicant or any Applicant’s Subsidiary
in an involuntary case under any applicable bankruptcy, insolvency,
reorganization, or other similar law now or hereafter in effect, or for the
appointment of a receiver, liquidator, assignee, custodian, trustee,
sequestrator, or conservator (or similar official) of any Applicant or any
Applicant’s Subsidiary or for any substantial part of its property, or for the
winding-up or liquidation of its affairs, and such proceeding shall remain
undismissed or unstayed and in effect for a period of sixty (60) consecutive
days or such court shall enter a decree or order granting any of the relief
sought in such proceeding;

 

45

 

(h)           Voluntary
Proceeding.  Any Applicant or any
Applicant’s Subsidiary shall commence a voluntary case under any applicable
bankruptcy, insolvency, reorganization, or other similar law now or hereafter
in effect, shall consent to the entry of an order for relief in an involuntary
case under any such law, or shall consent to the appointment or taking
possession by a receiver, liquidator, assignee, custodian, trustee,
sequestrator, or conservator (or other similar official) of itself or for any
substantial part of its property or shall make a general assignment for the
benefit of creditors, or shall fail generally to pay its debts as they become
due, or shall take any action in furtherance of any of the foregoing;

 

(i)            Bermuda Law
Event.  A Bermuda Law Event shall
occur and be continuing, provided that any grace period provided under the
provisions of this Section 10 or otherwise under this Agreement applicable to
an equivalent breach of covenant under this Agreement shall apply to this
clause (i);

 

(j)            Change of
Control.  (i) Any person or group of
persons (within the meaning of Sections 13(d) or 14(a) of the Securities
Exchange Act of 1934, as amended), other than ACE or an Affiliate of ACE, shall
have acquired beneficial ownership of (within the meaning of Rule 13d-3
promulgated by the SEC under said Act) 30% or more of the voting capital stock
of Holdings; or (ii) within a period of twelve (12) consecutive calendar
months, individuals who were directors of Holdings on the first day of such
period and individuals approved by the existing board of directors of Holdings
shall cease to constitute a majority of the board of directors of Holdings; or
(iii) AGRI shall cease to be a wholly-owned Subsidiary of Holdings; or (iv)
Assured Guaranty Barbados Holdings, Ltd. shall cease to be a wholly-owned Subsidiary
of AGRI; or (v) Assured Guaranty

 

46

 

Overseas US Holdings Inc. shall cease to be a wholly-owned Subsidiary
of Assured Guaranty Barbados Holdings, Ltd.; or (vi) AGRO shall cease to be a
wholly-owned subsidiary of Assured Guaranty Overseas US Holdings Inc.; provided
that the occurrence of any event described in any of clauses (iii), (iv), (v)
and (vi) shall not be deemed to be an Event of Default if (A) after giving
effect to such occurrence, each of AGRI, AGRO, Assured Guaranty Barbados
Holdings, Ltd., and Assured Guaranty Overseas US Holdings Inc. shall, directly
or indirectly, remain a wholly-owned Subsidiary of Holdings and (B) if
requested by the Bank, the Subsidiary of Holdings that caused such event to
occur joins in this Agreement as an Applicant or other form of obligor
satisfactory to the Bank;

 

(k)           Cessation of
Enforceability.  This Agreement shall
cease to be a legal, valid, and binding agreement enforceable against each
Applicant or its successors and assigns (as permitted under this Agreement) in
accordance with the respective terms hereof or shall in any way be terminated
(except in accordance with its terms) or become or be declared stayed,
ineffective, or inoperative; provided, however, if any of the
foregoing is a result of an involuntary proceeding of the type described in
clause (i), above, such proceeding has not been contested by the affected party
or has not been dismissed after the passage of more than sixty (60) days,

 

(l)            Cross Default.  A default or event of default shall occur at
any time under the terms of any other agreement involving borrowed money or the
extension of credit or any other Indebtedness under which any Applicant or any
Material Subsidiary may be obligated as a borrower or guarantor in excess of
$20,000,000 in the aggregate, and (i) such breach, default or event of default
consists of the failure to pay (beyond any period

 

47

 

of grace permitted with respect thereto, whether waived or not) any
Indebtedness when due (whether at stated maturity, by acceleration or
otherwise) or (ii) if such breach or default causes the acceleration of any
Indebtedness (whether or not such right shall have been waived) or the termination
of any commitment to lend; or

 

(m)          Judgments.  Any final judgments or orders for the payment
of money which results in an uninsured liability to pay in excess of
$20,000,000 in the aggregate shall be entered against any Applicant or any
Applicant’s Subsidiary by a court having jurisdiction in the premises, which
judgment is not discharged, vacated, bonded, or stayed pending appeal within a
period of forty-five (45) days from the date of entry.

 

Any cash collateral amount so paid and the corresponding amount of
which has not been drawn at the expiration of the Credit shall be repaid to the
Applicants, without interest, upon the payment in full of all other amounts and
other Obligations owing hereunder.  In
addition to the foregoing, upon the occurrence and during the continuance of
any Event of Default (i) the Bank may, by notice to the Applicants, terminate
the Facility and the Facility Term (provided that if the Event of Default
arises under either of clause (g) or clause (h) of this Section 14 with respect
to any one or more of the Applicants, such termination shall be automatic and
without any notice or other action by the Bank), and (ii) the Bank may exercise
any and all such rights and remedies as are available to it at law or in
equity.

 

15.           Dollars.  The amounts of all Credits will be
denominated in United States dollars; and all payments owing hereunder, whether
in respect of reimbursement, interest, fees or otherwise, shall be made in
United States dollars.

 

16.           Bank’s Expenses.  The Applicants agree to reimburse to the Bank
promptly upon request all reasonable out-of-pocket expenses paid or incurred by the Bank,
including reasonable

 

48

 

attorneys’ fees and expenses,
in connection with (i) the preparation of this Agreement, the Credits and
related documentation and the closing of the effectiveness of this Agreement
and the issuance of the Credits, (ii) any amendments, modifications or waivers of
the provisions hereof or thereof, and (iii) the enforcement of its
rights and remedies hereunder, at law and in equity.

 

17.           Indemnity.  The Applicants agree at all times to protect
indemnify and save harmless the Bank from and against any and all losses,
claims, demands, liabilities, damages, costs, charges, counsel fees and other
expenses which the Bank may at any time incur by reason of this Agreement or
the issuance and performance of the Credits except to the extent resulting from
the Bank’s gross negligence or willful misconduct.

 

18.           Consent to
Jurisdiction.  EACH APPLICANT HEREBY
CONSENTS TO THE NON-EXCLUSIVE JURISDICTION OF ANY COUNT OF RECORD IN THE COUNTY
OF CUYAHOGA, OHIO OR OF THE UNITED STATES DISTRICT COURT FOR THE NORTHERN
DISTRICT OF OHIO for the purpose of any suit, action, proceeding or judgment relating
to or arising out of this Agreement or any one or more of the Credits, and
service of process by the Bank in any such suit, action, proceeding or judgment
may be made by mailing a copy thereof to such Applicant at its address set
forth in Section 22, below.  EACH
APPLICANT ALSO WAIVES ANY CLAIM THAT CUYAHOGA COUNTY OR THE NORTHERN DISTRICT
OF OHIO IS AN INCONVENIENT FORUM.

 

19.           Governing Law.  THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK.

 

20.          No Waiver.  No failure on the part of the Bank to
exercise, and no delay in exercising any right, remedy or power hereunder,
shall operate as a waiver thereof, nor shall any single or partial exercise by
the Bank of any right, remedy or power hereunder preclude any

 

49

 

other or future exercise of any
other right, remedy or power.  Each and
every right, remedy and power hereby granted to the Bank or allowed it by law
or other agreement shall be cumulative and not exclusive the one of any other
and may be exercised by the Bank from time to time.

 

21.           Renewal; Copy of
Notice of Non-Renewal.  Each Credit
will be deemed to be automatically extended without amendment for a period of
one year from the expiration date or any further expiration date thereof,
unless at least forty-five (45) days prior to such expiration date, the Bank
shall notify the Beneficiary thereof by registered or certified mail or by
overnight courier (who obtains written confirmation of receipt) that such
Credit will not be renewed for any such additional period, which the Bank
reserves the right to do in its sole discretion.  Contemporaneously with the issuance to such
Beneficiary of such notice that the Bank will not renew the term of such Credit,
which the Bank reserves the right to do in its sole discretion, the Bank shall
provide the Applicants with a copy of such notice.

 

22.           Notices.  All demands for payment, notices or other
communications hereunder shall be given in writing (including communications by
facsimile transmission) and shall be addressed:

 

50

 

	
  If to the Bank:

  	
  127 Public Square

  
	
   

  	
  Cleveland, Ohio  44114

  
	
   

  	
  Attention:  Ms. Mary K. Young

  
	
   

  	
  Fax No. (216) 689-4981;

  
	
   

  	
   

  
	
  If to Holdings:

  	
  30 Woodbourne Avenue

  
	
   

  	
  Hamilton HM 08, Bermuda

  
	
   

  	
  Attention:  General Counsel and
  Secretary

  
	
   

  	
  Fax No. (441) 296-3379;

  
	
   

  	
   

  
	
  If to AGRI:

  	
  30 Woodbourne Avenue

  
	
   

  	
  Hamilton HM 08, Bermuda

  
	
   

  	
  Attention:  Chief Underwriting
  Officer

  
	
   

  	
  Fax No. (441) 296-3379;

  
	
   

  	
   

  
	
  If to AGRO:

  	
  11 Victoria Street

  
	
   

  	
  Hamilton HM 11, Bermuda

  
	
   

  	
  Attention:  Assistant Secretary

  
	
   

  	
  Fax No. (441) 292-3793

  
	
   

  	
   

  
	
  With, as to AGRO only, a copy to:

  
	
   

  	
   

  
	
   

  	
  AG Intermediary Inc.

  
	
   

  	
  1325 Avenue of the Americas

  
	
   

  	
  New York, NY 10019

  
	
   

  	
  Attention:  General Counsel

  
	
   

  	
  Fax No. (212) 581-3268

  

 

or to such other address as such party may designate by notice to the
other parties.  Any such notice shall be
effective (a) in the case of hand-delivery, when delivered; (b) if given by
mail, four days after such notice is deposited with the US Postal Service, with
first-class postage prepaid, return receipt requested; (c) in the case of a
facsimile transmission, when sent to the applicable party’s facsimile machine’s
telephone number if the party sending such notice receives confirmation of the
delivery thereof from its own facsimile machine; and (d) if given by any other
means (including by overnight courier), when actually received.

 

23.           Successors and
Assigns.  No Applicant may assign or
otherwise transfer any of its rights or obligations hereunder without the prior
written consent of the Bank (and any attempted assignment or transfer by an
Applicant without such consent shall be null and void).  The Bank

 

51

 

may, with the prior written
consent of the Applicants (which consent shall not to be unreasonably withheld
or delayed), assign all or a portion of its rights and obligations with respect
to this Agreement to one or more financial institutions that are banks listed
on the most current Bank List of banks approved by the National Association of
Insurance Commissioners, provided that no consent of any Applicant shall be
required for such an assignment if an Event of Default has occurred and is
continuing, and provided further that the Bank may assign its rights and
remedies (as distinct from its obligations in respect of the Credits) to any
assignee (whether or not a bank so listed), without the consent of the
Applicants, if an Event of Default has occurred and is continuing.  Subject to the foregoing, this Agreement is
binding upon and inures to the benefit of the parties hereto and their
respective successors and assigns.

 

24.           Waiver of Jury
Trial.  EACH APPLICANT AND THE BANK
IRREVOCABLY WAIVES ITS RIGHT TO A JURY TRIAL IN ANY ACTION OR PROCEEDING BASED
UPON OR ARISING OUT OF THIS AGREEMENT, ANY ONE OR MORE OF THE CREDITS OR ANY
DEALINGS WITH ONE ANOTHER RELATING TO THE SUBJECT MATTER OF THIS AGREEMENT,
WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE.

 

[No additional provisions are on this page;
the page next following is the signature page.]

 

52

 

IN WITNESS
WHEREOF, the Bank and the Applicants have entered into this Agreement as of the
date first above written.

 

	
  APPLICANTS:

  	
  BANK:

  
	
   

  	
   

  
	
  ASSURED GUARANTY LTD.

  	
  KEYBANK NATIONAL ASSOCIATION

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  	
   

  	
  Mary K. Young, Vice President

  
	
  Title:

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  ASSURED GUARANTY RE OVERSEAS LTD.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  ASSURED GUARANTY RE INTERNATIONAL LTD.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
   

  
									

 

53

 

EXHIBIT A

 

IRREVOCABLE LETTER OF CREDIT NO.
                     

 

To:                                                                       

                                                             

                        ,
                     
                    

Attn: 
                         

(           )
           -         

 

At the request
and for the account of
                                 
on behalf of                                  ,
we hereby establish this clean, irrevocable and, subject to the provisions
hereof, unconditional Letter of Credit in your favor as Beneficiary for drawing
up to U.S.
$                                 
effective                                  ,
200  .  This Letter of Credit
is issued, presentable and payable at our office at 4910 Tiedeman Road, 4th
Floor, MC: OH-01-51-0435, Cleveland, Ohio 44144-2338, Attention: Standby Letter
of Credit Processing and Service Center, and expires with our close of business
on [a date specified by the Applicant that is not later than 365 days after the
date of issuance].  Except if and when
the amount of this Letter of Credit is increased, this Letter of Credit cannot
be modified or revoked without your consent.

 

The term “Beneficiary” includes any successor by operation of law of
the named Beneficiary, including without limitation any liquidator,
rehabilitator, receiver or conservator, provided that any drawing by such
successor must be accompanied by a copy of satisfactory legal documentation
evidencing the appointment of such successor of the Beneficiary.

 

We hereby undertake promptly to honor your sight draft(s) in the form
attached as Exhibit 1 hereto drawn on us indicating our Letter of Credit No.
                         ,
for all or any part of this Letter of Credit upon presentation of your draft
drawn on us at our office specified above on or before the expiration date
hereof or any automatically extended expiration date as provided herein.

 

Except as expressly stated herein, our undertaking is not subject to
any agreement, requirement or qualification. 
The obligation of KeyBank National Association (the “Bank”) under this
Letter of Credit is the individual obligation of the Bank and is in no way contingent
upon reimbursement with respect thereto, or upon our ability to perfect any
lien, security interest or any other reimbursement.

 

This Letter of Credit will be deemed to be automatically extended
without amendment for one year from the expiration date or any further
expiration date, unless at least forty-five (45) days prior to such expiration
date, we notify you at the above address by registered or certified mail or by
overnight courier that this Letter of Credit will not be renewed for any such additional
period.

 

 

Except as expressly provided herein, this Letter of Credit is subject
to and governed by the laws of the State of Ohio and the International Standby
Practices 1998 (the “ISP”), and in the event of conflict, the laws of the State
of Ohio will control.

 

 

	
   

  	
  Very truly yours,

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  KEYBANK NATIONAL ASSOCIATION

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  	
  And:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Date:
                          ,
  200

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