Document:

Exhibit
10.28

 

OMNICELL,
INC.

 

2004 Equity
Incentive Plan

 

Adopted by
the Board of Directors:  February 27,
2004

 

1.             Purposes.

 

(a)           General
Purpose.  The Company, by means of
the Plan, seeks to retain the services of persons not previously an employee or
director of the Company, or following a bona
fide period of non-employment, as an inducement material to the
individual’s entering into employment with the Company within the meaning of
Rule 4350(i)(1)(A)(iv) of the NASD Marketplace Rules, and to provide incentives
for such persons to exert maximum efforts for the success of the Company and
its Affiliates.

 

(b)           Eligible Stock Award Recipients.  The persons eligible to receive Stock Awards
are the Employees of the Company and its Affiliates subject to the limitations
set forth in Section 5.

 

(c)           Available Stock Awards.  The purpose of the Plan is to provide a
means by which eligible recipients of Stock Awards may be given an opportunity
to benefit from increases in value of the Common Stock through the granting of
the following Stock Awards: 
(i) Options, (ii) Stock Bonus Awards, (iii) Stock Purchase Awards,
(iv) Stock Appreciation Rights, (v) Stock Unit Awards and (vi) Other Stock
Awards.

 

2.             Definitions.

 

(a)           “Affiliate”
means any parent corporation or subsidiary corporation of the Company, whether
now or hereafter existing, as those terms are defined in Sections 424(e) and
(f), respectively, of the Code.

 

(b)           “Board”
means the Board of Directors of the Company.

 

(c)           “Capitalization Adjustment”
has the meaning ascribed to that term in Section 11(a).

 

(d)           “Change in
Control” means the occurrence, in a single transaction or in a
series of related transactions, of any one or more of the following events:

 

(i)            any
Exchange Act Person becomes the Owner, directly or indirectly, of securities of
the Company representing more than fifty
percent (50%) of the combined voting power of the Company’s then
outstanding securities other than by virtue of a merger, consolidation or
similar transaction.  Notwithstanding the foregoing, a Change in
Control shall not be deemed to occur (A) on account of the acquisition of
securities of the Company by an investor, any affiliate thereof or any other
Exchange Act Person from the Company in a transaction or series of related
transactions the primary purpose of which is to obtain financing

 

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for the Company through the
issuance of equity securities or (B)  solely
because the level of Ownership held by any Exchange Act Person (the “Subject Person”) exceeds the designated percentage threshold of the outstanding voting
securities as a result of a repurchase or other acquisition of voting
securities by the Company reducing the number of shares outstanding, provided
that if a Change in Control would occur (but for the operation of this
sentence) as a result of the acquisition of voting securities by the Company,
and after such share acquisition, the Subject Person becomes the Owner of any
additional voting securities that, assuming the repurchase or other acquisition
had not occurred, increases the percentage of the then outstanding voting
securities Owned by the Subject Person over the designated percentage
threshold, then a Change in Control shall be deemed to occur;

 

(ii)           there
is consummated a merger, consolidation or similar transaction involving
(directly or indirectly) the Company and, immediately after the consummation of
such merger, consolidation or similar transaction, the stockholders of the
Company immediately prior thereto do not Own, directly or indirectly, either
(A) outstanding voting securities representing more than fifty percent (50%) of the combined
outstanding voting power of the surviving Entity in such merger, consolidation
or similar transaction or (B) more than fifty
percent (50%) of the combined outstanding voting power of the parent of
the surviving Entity in such merger, consolidation or similar transaction, in
each case in substantially the same proportions as their Ownership of the
outstanding voting securities of the Company immediately prior to such
transaction;

 

(iii)         the
stockholders of the Company approve or the Board approves a plan of complete
dissolution or liquidation of the Company, or a complete dissolution or
liquidation of the Company shall otherwise occur;

 

(iv)          there
is consummated a sale, lease, license or other disposition of all or
substantially all of the consolidated assets of the Company and its
Subsidiaries, other than a sale, lease, license or other disposition of all or
substantially all of the consolidated assets of the Company and its
Subsidiaries to an Entity, more than fifty
percent (50%) of the combined voting power of the voting securities of
which are Owned by stockholders of the Company in substantially the same
proportions as their Ownership of the outstanding voting securities of the
Company immediately prior to such sale, lease, license or other disposition; or

 

(v)            individuals
who, on the date this Plan is adopted by the Board, are members of the Board
(the “Incumbent Board”)
cease for any reason to constitute at least a majority of the members of the
Board; provided,
however, that if the appointment or election (or nomination for
election) of any new Board member was approved or recommended by a majority
vote of the members of the Incumbent Board then still in office, such new
member shall, for purposes of this Plan, be considered as a member of the
Incumbent Board.

 

Notwithstanding the foregoing or any other provision
of this Plan, the definition of Change in Control (or any analogous term) in an
individual written agreement between the Company or any Affiliate and the
Participant shall supersede the foregoing definition with respect to Stock
Awards subject to such agreement (it being understood, however, that if no
definition of Change

 

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in Control or any analogous term is set forth in such
an individual written agreement, the foregoing definition shall apply).

 

(e)           “Code”
means the Internal Revenue Code of 1986, as amended.

 

(f)            “Committee”
means a committee of one (1) or more members of the Board appointed by the
Board in accordance with Section 3(c).

 

(g)           “Common
Stock” means the common stock of the Company.

 

(h)           “Company”
means Omnicell, Inc., a Delaware corporation.

 

(i)            “Consultant”
means any person, including an advisor, (i) engaged by the Company or an
Affiliate to render consulting or advisory services and who is compensated for
such services or (ii) serving as a member of the Board of Directors of an
Affiliate and who is compensated for such services.  However, the term “Consultant” shall not include Directors who
are not compensated by the Company for their services as Directors, and the
payment of a director’s fee by the Company solely for services as a Director
shall not cause a Director to be considered a “Consultant” for purposes of the
Plan.

 

(j)            “Continuous
Service” means that the Participant’s service with the Company
or an Affiliate, whether as an Employee, Director or Consultant, is not
interrupted or terminated.  A change in
the capacity in which the Participant renders service to the Company or an
Affiliate as an Employee, Consultant or Director or a change in the entity for
which the Participant renders such service, provided that there is no
interruption or termination of the Participant’s service with the Company or an
Affiliate, shall not terminate a Participant’s Continuous Service.  For example, a change in status from an
Employee of the Company to a Consultant of an Affiliate or a Director shall not
constitute an interruption of Continuous Service.  The Board or the chief executive officer of the Company, in that
party’s sole discretion, may determine whether Continuous Service shall be
considered interrupted in the case of any leave of absence approved by that
party, including sick leave, military leave or any other personal leave.  Notwithstanding the foregoing, an approved
leave of absence shall be treated as Continuous Service for purposes of vesting
in a Stock Award only to such extent as may be provided in the Company’s leave
of absence policy or in the written terms of the Participant’s leave of
absence.

 

(k)           “Corporate
Transaction” means the occurrence, in a single transaction or in
a series of related transactions, of any one or more of the following events:

 

(i)            a
sale  or
other disposition of all or substantially all, as determined by the Board in
its discretion, of the consolidated assets of the Company and its Subsidiaries;

 

(ii)           a
sale or other disposition of at least ninety
percent (90%) of the outstanding securities of the Company;

 

(iii)         a
merger, consolidation or similar transaction following which the Company is not
the surviving corporation; or

 

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(iv)          a
merger, consolidation or similar transaction following which the Company is the
surviving corporation but the shares of Common Stock outstanding immediately
preceding the merger, consolidation or similar transaction are converted or
exchanged by virtue of the merger, consolidation or similar transaction into
other property, whether in the form of securities, cash or otherwise.

 

(l)            “Director”
means a member of the Board.

 

(m)          “Disability”
means, with respect to a Participant, such Participant’s permanent and total
disability within the meaning of the Company’s long-term disability plan, as it
may be amended from time to time, or, if there is no such plan, as determined
by the Board.

 

(n)           “Employee”
means any person employed by the Company or an Affiliate.  Service as a Director or as a Consultant
shall not be sufficient to constitute “employment” by the Company or an
Affiliate.

 

(o)           “Entity”
means a corporation, partnership or other entity.

 

(p)           “Exchange
Act” means the Securities Exchange Act of 1934, as amended.

 

(q)           “Exchange
Act Person” means any natural person, Entity or “group” (within
the meaning of Section 13(d) or 14(d) of the Exchange Act), except that
“Exchange Act Person” shall not include (A) the Company or any Subsidiary of
the Company, (B) any employee benefit plan of the Company or any Subsidiary of
the Company or any trustee or other fiduciary holding securities under an
employee benefit plan of the Company or any Subsidiary of the Company, (C) an
underwriter temporarily holding securities pursuant to an offering of such
securities, or (D) an Entity Owned, directly or indirectly, by the stockholders
of the Company in substantially the same proportions as their Ownership of
stock of the Company.

 

(r)            Fair Market
Value” means, as of any date, the value of the Common Stock
determined as follows:

 

(i)            If
the Common Stock is listed on any established stock exchange or traded on the
Nasdaq National Market or the Nasdaq SmallCap Market, the Fair Market Value of
a share of Common Stock shall be the closing sales price for such stock (or the
closing bid, if no sales were reported) as quoted on such exchange or market
(or the exchange or market with the greatest volume of trading in the Common
Stock) on the last market trading day prior to the day of determination, as
reported in The
Wall Street Journal  or such other source as the
Board deems reliable.

 

(ii)           In
the absence of such markets for the Common Stock, the Fair Market Value shall
be determined in good faith by the Board.

 

(s)           “Non-Employee
Director”  means a Director who either (i) is not a current Employee
or Officer of the Company or an Affiliate, does not receive compensation
(directly or indirectly) from the Company or an Affiliate for services rendered
as a Consultant or in any

 

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capacity other than as a Director (except for an
amount as to which disclosure would not be required under Item 404(a) of
Regulation S-K promulgated pursuant to the Securities Act (“Regulation S-K”)),
does not possess an interest in any other transaction as to which disclosure
would be required under Item 404(a) of Regulation S-K and is not engaged in a
business relationship as to which disclosure would be required under
Item 404(b) of Regulation S-K; or (ii) is otherwise considered a
“non-employee director” for purposes of Rule 16b-3.

 

(t)            “Officer”
means a person who is an officer of the Company within the meaning of
Section 16 of the Exchange Act and the rules and regulations promulgated
thereunder.

 

(u)           “Option”
means a nonstatutory stock option granted pursuant to the Plan that is not
intended to qualify as an incentive stock option under Section 422 of the Code
and the regulations promulgated thereunder.

 

(v)            “Option
Agreement” means a written agreement between the Company and an
Optionholder evidencing the terms and conditions of an individual Option
grant.  Each Option Agreement shall be
subject to the terms and conditions of the Plan.

 

(w)           “Optionholder”
means a person to whom an Option is granted pursuant to the Plan or, if
applicable, such other person who holds an outstanding Option.

 

(x)           “Other Stock Award”
means an award based in whole or in part by reference to the Common Stock which
is granted pursuant to the terms and conditions of Section 7(e).

 

(y)           “Other Stock
Award Agreement” means a written agreement between the Company
and a holder of an Other Stock Award evidencing the terms and conditions of an
individual Other Stock Award grant. 
Each Other Stock Award Agreement shall be subject to the terms and
conditions of the Plan.

 

(z)           “Own,”
“Owned,” “Owner,” “Ownership” 
A person or Entity shall be deemed to “Own,” to have “Owned,” to be
the “Owner” of, or to have acquired “Ownership” of securities if such person or
Entity, directly or indirectly, through any contract, arrangement,
understanding, relationship or otherwise, has or shares voting power, which
includes the power to vote or to direct the voting, with respect to such
securities.

 

(aa)         “Participant”
means a person to whom a Stock Award is granted pursuant to the Plan or, if
applicable, such other person who holds an outstanding Stock Award.

 

(bb)         “Plan”
means this Omnicell, Inc. 2004 Equity Incentive Plan.

 

(cc)         “Rule 16b-3”
means Rule 16b-3 promulgated under the Exchange Act or any successor to Rule
16b-3, as in effect from time to time.

 

(dd)         “Securities
Act” means the Securities Act of 1933, as amended.

 

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(ee)         “Stock
Appreciation Right” means a right to receive the appreciation of
Common Stock which is granted pursuant to the terms and conditions of Section
7(d).

 

(ff)           “Stock
Appreciation Right Agreement” means a written agreement between
the Company and a holder of a Stock Appreciation Right evidencing the terms and
conditions of an individual Stock Appreciation Right grant.  Each Stock Appreciation Right Agreement
shall be subject to the terms and conditions of the Plan.

 

(gg)         “Stock
Award” means any right granted under the Plan, including an
Option,  Stock Purchase Award, Stock
Bonus Award, Stock Unit Award, a Stock Appreciation Right and an Other Stock
Award.

 

(hh)         “Stock Award
Agreement” means a written agreement between the Company and a
Participant evidencing the terms and conditions of an individual Stock Award
grant.  Each Stock Award Agreement shall
be subject to the terms and conditions of the Plan.

 

(ii)           “Stock Bonus Award”
means an award of shares of Common Stock which is granted pursuant to the terms
and conditions of Section 7(a).

 

(jj)           “Stock Bonus
Award Agreement” means a written agreement between the Company
and a holder of a Stock Bonus Award evidencing the terms and conditions of an
individual Stock Bonus Award grant. 
Each Stock Bonus Award Agreement shall be subject to the terms and
conditions of the Plan.

 

(kk)        “Stock
Purchase Award” means an award of shares of Common Stock which
is granted pursuant to the terms and conditions of Section 7(b).

 

(ll)           “Stock
Purchase Award Agreement” means a written agreement between the
Company and a holder of a Stock Purchase Award evidencing the terms and
conditions of an individual Stock Purchase Award grant.  Each Stock Purchase Award Agreement shall be
subject to the terms and conditions of the Plan.

 

(mm)       “Stock Unit
Award” means a right to receive shares of Common Stock which is
granted pursuant to the terms and conditions of Section 7(c).

 

(nn)         “Stock Unit
Award Agreement” means a written agreement between the Company
and a holder of a Stock Unit Award evidencing the terms and conditions of an
individual Stock Unit Award grant.  Each
Stock Unit Award Agreement shall be subject to the terms and conditions of the
Plan.

 

(oo)         “Subsidiary”
means, with respect to the Company, (i) any corporation of which more than
fifty percent (50%) of the outstanding capital stock having ordinary voting
power to elect a majority of the board of directors of such corporation
(irrespective of whether, at the time, stock of any other class or classes of
such corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time, directly or indirectly, Owned by
the Company, and (ii) any partnership in which the Company has a direct or
indirect interest

 

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(whether in the form of voting or participation in
profits or capital contribution) of more than fifty percent (50%).

 

3.             Administration.

 

(a)           Administration
by Board.  The Board shall
administer the Plan unless and until the Board delegates administration of the
Plan to a committee, as provided in Section 3(c).

 

(b)           Powers
of Board.  The Board shall have the
power, subject to, and within the limitations of, the express provisions of the
Plan:

 

(i)            Subject
to Section 5 herein, to determine from time to time which of the persons
eligible under the Plan shall be granted Stock Awards; when and how each Stock
Award shall be granted; what type or combination of types of Stock Award shall
be granted; the provisions of each Stock Award granted (which need not be
identical), including the time or times when a person shall be permitted to
receive Common Stock pursuant to a Stock Award; and the number of shares of
Common Stock with respect to which a Stock Award shall be granted to each such
person.

 

(ii)           To
construe and interpret the Plan and Stock Awards granted under it, and to
establish, amend and revoke rules and regulations for its administration.  The Board, in the exercise of this power,
may correct any defect, omission or inconsistency in the Plan or in any Stock
Award Agreement, in a manner and to the extent it shall deem necessary or
expedient to make the Plan fully effective.

 

(iii)         To
effect, at any time and from time to time, with the consent of any adversely
affected Optionholder, (1) the reduction of the exercise price of any
outstanding Option under the Plan or (2) any other action that is treated as a
repricing under generally accepted accounting principles to the extent such
action complies with Rule 4350(i)(1)(A)(iv) of the NASD Marketplace Rules.

 

(iv)          To
amend the Plan or a Stock Award as provided in Section 12.

 

(v)            To
terminate or suspend the Plan as provided in Section 13.

 

(vi)          Generally,
to exercise such powers and to perform such acts as the Board deems necessary
or expedient to promote the best interests of the Company and that are not in
conflict with the provisions of the Plan.

 

(vii)         To
adopt such procedures and sub-plans as are necessary or appropriate to permit
participation in the Plan by employees who are foreign nationals or employed
outside the United States.

 

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(c)           Delegation to
Committee.

 

(i)            General.  The Board may delegate some or all of the
administration of the Plan to a Committee or Committees of one (1) or more
members of the Board, and the term “Committee” shall apply to any person or
persons to whom such authority has been delegated.  If administration is delegated to a Committee, the Committee
shall have, in connection with the administration of the Plan, the powers
theretofore possessed by the Board that have been delegated to the Committee,
including the power to delegate to a subcommittee any of the administrative
powers the Committee is authorized to exercise (and references in this Plan to
the Board shall thereafter be to the Committee or subcommittee), subject,
however, to such resolutions, not inconsistent with the provisions of the Plan,
as may be adopted from time to time by the Board.  The Board may retain the authority to concurrently administer the
Plan with the Committee and may, at any time, revest in the Board the
administration of the Plan.

 

(ii)           Rule
16b-3 Compliance.  In the discretion
of the Board, the Committee may consist solely of two (2) or more Non-Employee
Directors, in accordance with Rule 16b-3.

 

(d)           Effect of Board’s Decision.
All determinations, interpretations and constructions made by the Board in good
faith shall not be subject to review by any person and shall be final, binding
and conclusive on all persons.

 

4.             Shares Subject to
the Plan. 

 

(a)           Share
Reserve.  Subject to the provisions
of Section 11(a) relating to Capitalization Adjustments, the shares of Common
Stock that may be issued pursuant to Stock Awards shall not exceed in the
aggregate two hundred thousand (200,000) shares of Common Stock.

 

(b)           Reversion
of Shares to the Share Reserve.  If
any Stock Award shall for any reason expire or otherwise terminate, in whole or
in part, without having been exercised in full, or if any shares of Common
Stock issued to a Participant pursuant to a Stock Award are forfeited back to
or repurchased by the Company, including, but not limited to, any repurchase or
forfeiture caused by the failure to meet a contingency or condition required
for the vesting of such shares, then the shares of Common Stock not acquired
under such Stock Award shall revert to and again become available for issuance
under the Plan.  If any shares subject to
a Stock Award are not delivered to a Participant because such shares are
withheld for taxes or the Stock Award is exercised through a reduction of
shares subject to the Stock Award (i.e., “net exercised”), then the shares that
are not delivered shall revert to and again become available for issuance under
the Plan.  If the exercise price of any
Stock Award is satisfied by tendering shares of Common Stock held by the
Participant (either by actual delivery or attestation), then the number of such
tendered shares shall revert to and again become available for issuance under
the Plan.

 

(c)           Source
of Shares.  The shares of Common
Stock subject to the Plan may be unissued shares or reacquired shares, bought
on the market or otherwise.

 

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5.             Eligibility.  Persons eligible for Stock Awards
shall consist of Employees whose potential contribution, in the judgment of the
Board, will benefit the future success of the Company and/or an Affiliate.   Stock Awards may be granted only to persons
not previously an Employee or Director of the Company, or following a bona fide period of non-employment, as an
inducement material to the individual’s entering into employment with the
Company within the meaning of Rule 4350(i)(1)(A)(iv) of the NASD Marketplace
Rules.  In addition, notwithstanding any
other provision of the Plan to the contrary, all Stock Awards must be granted
either by a majority of the Company’s independent directors or a committee
comprised of a majority of independent directors.

 

6.             Option Provisions.

 

Each Option shall be in such form and shall contain
such terms and conditions as the Board shall deem appropriate.  All Options shall be designated as
nonstatutory stock options at the time of grant.  The provisions of separate Options need not be identical, but
each Option shall include (through incorporation of provisions hereof by
reference in the Option or otherwise) the substance of each of the following
provisions:

 

(a)           Term.  The Board shall determine the term of an
Option.

 

(b)           Exercise
Price of an Option.  The Board, in
its discretion, shall determine the exercise price of each Option.

 

(c)           Consideration.  The purchase price of Common Stock acquired
pursuant to an Option shall be paid, to the extent permitted by applicable law,
either (i) in cash at the time the Option is exercised or (ii) at the
discretion of the Board (1) by delivery to the Company of other Common Stock,
(2) by a “net exercise” of the Option (as further described below), (3)
pursuant to a program developed under Regulation T as promulgated by the
Federal Reserve Board that, prior to the issuance of Common Stock, results in
either the receipt of cash (or check) by the Company or the receipt of
irrevocable instructions to pay the aggregate exercise price to the Company
from the sales proceeds, (4) according to a deferred payment or other similar
arrangement with the Optionholder or (5) in any other form of legal
consideration that may be acceptable to the Board.  Unless otherwise specifically provided in the Option, the
purchase price of Common Stock acquired pursuant to an Option that is paid by
delivery to the Company of other Common Stock acquired, directly or indirectly
from the Company, shall be paid only by shares of the Common Stock of the
Company that have been held for more than six (6) months (or such longer or
shorter period of time required to avoid a charge to earnings for financial
accounting purposes).

 

In the case of a
“net exercise” of an Option, the Company will not require a payment of the
exercise price of the Option from the Participant but will reduce the number of
shares of Common Stock issued upon the exercise by the largest number of whole
shares that has a Fair Market Value that does not exceed the aggregate exercise
price.  With respect to any remaining
balance of the aggregate exercise price, the Company shall accept a cash
payment from the Participant.  The
shares of Common Stock so used to pay the exercise price of an Option under a
“net exercise” and any shares withheld for taxes will be considered to have
been withheld from

 

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the exercise of the Option. 
Accordingly, the Option will not again be exercisable with respect to
the shares deemed withheld to satisfy the exercise price, the shares actually
delivered to the Participant or any shares withheld for purposes of tax
withholding.

 

In the case of any deferred payment arrangement,
interest shall be compounded at least annually and shall be charged at the
minimum rate of interest necessary to avoid the treatment as interest, under
any applicable provisions of the Code, of any amounts other than amounts stated
to be interest under the deferred payment arrangement.

 

(c)           Transferability
of an Option.  An Option shall be
transferable to the extent provided in the Option Agreement.  If the Option does not provide for
transferability, then the Option shall not be transferable except by (i) will,
(ii) the laws of descent and distribution, or (iii) upon dissolution of the
Optionholder’s marriage pursuant to a domestic relations order.  Also, during the Optionholder’s lifetime,
only the Optionholder is entitled to exercise his or her Option.  Notwithstanding the foregoing, by delivering
written notice to the Company, in a form satisfactory to the Company, an
Optionholder may designate a third party who, in the event of such
Optionholder’s death, shall thereafter be entitled to exercise the Option.

 

(d)           Vesting
Generally.  The total number of
shares of Common Stock subject to an Option may, but need not, vest and
therefore become exercisable in periodic installments that may, but need not,
be equal.  The Option may be subject to
such other terms and conditions on the time or times when it may be exercised
(which may be based on performance or other criteria) as the Board may deem
appropriate.  The vesting provisions of
individual Options may vary.  The
provisions of this Section 6(e) are subject to any Option provisions governing
the minimum number of shares of Common Stock as to which an Option may be
exercised.

 

(e)           Termination
of Continuous Service.  In the event
that an Optionholder’s Continuous Service terminates (other than upon the
Optionholder’s death or Disability), the Optionholder may exercise his or her
Option (to the extent that the Optionholder was entitled to exercise such
Option as of the date of termination of Continuous Service) but only within
such period of time ending on the earlier of (i) the date three (3) months
following the termination of the Optionholder’s Continuous Service (or such
longer or shorter period specified in the Option Agreement) or (ii) the
expiration of the term of the Option as set forth in the Option Agreement.  If, after termination of Continuous Service,
the Optionholder does not exercise his or her Option within the time specified
in the Option Agreement, the Option shall terminate.

 

(f)            Extension
of Termination Date.  An
Optionholder’s Option Agreement may (but need not) provide that if the exercise
of the Option following the termination of the Optionholder’s Continuous
Service (other than upon the Optionholder’s death or Disability) would be
prohibited at any time solely because the issuance of shares of Common Stock
would violate the registration requirements under the Securities Act, then the
Option shall terminate on the earlier of (i) the expiration of the term of the
Option set forth in the Option Agreement or (ii) the expiration of a period of
three (3) months after the termination of the Optionholder’s Continuous Service
during which the exercise of the Option would not be in violation of such
registration requirements.

 

10

 

(g)           Disability
of Optionholder.  In the event that
an Optionholder’s Continuous Service terminates as a result of the
Optionholder’s Disability, the Optionholder may exercise his or her Option (to
the extent that the Optionholder was entitled to exercise such Option as of the
date of termination of Continuous Service), but only within such period of time
ending on the earlier of (i) the date twelve (12) months following such
termination of Continuous Service (or such longer or shorter period specified
in the Option Agreement) or (ii) the expiration of the term of the Option as
set forth in the Option Agreement.  If,
after termination of Continuous Service, the Optionholder does not exercise his
or her Option within the time specified herein, the Option shall terminate.

 

(h)           Death
of Optionholder.  In the event that
(i) an Optionholder’s Continuous Service terminates as a result of the
Optionholder’s death or (ii) the Optionholder dies within the period (if any)
specified in the Option Agreement after the termination of the Optionholder’s
Continuous Service for a reason other than death, then the Option may be
exercised (to the extent the Optionholder was entitled to exercise such Option
as of the date of death) by the Optionholder’s estate, by a person who acquired
the right to exercise the Option by bequest or inheritance or by a person
designated to exercise the option upon the Optionholder’s death pursuant to
Section 6(d), but only within the period ending on the earlier of (1) the date
eighteen (18) months following the date of death (or such longer or shorter
period specified in the Option Agreement) or (2) the expiration of the term of
such Option as set forth in the Option Agreement.  If, after death, the Option is not exercised within the time
specified herein, the Option shall terminate.

 

(i)            Early
Exercise.  The Option may, but need
not, include a provision whereby the Optionholder may elect at any time before
the Optionholder’s Continuous Service terminates to exercise the Option as to
any part or all of the shares of Common Stock subject to the Option prior to
the full vesting of the Option.  Any
unvested shares of Common Stock so purchased may be subject to a repurchase
option in favor of the Company or to any other restriction the Board determines
to be appropriate.  The Company shall
not be required to exercise its repurchase option until at least six (6) months
(or such longer or shorter period of time required to avoid a charge to
earnings for financial accounting purposes) have elapsed following exercise of
the Option unless the Board otherwise specifically provides in the Option.

 

7.             Provisions of Stock Awards other than Options.

 

(a)           Stock
Bonus Awards.  Each Stock Bonus
Award Agreement shall be in such form and shall contain such terms and
conditions as the Board shall deem appropriate.  At the Board’s election, shares of Common Stock may be (i) held in
book entry form subject to the Company’s instructions until any restrictions
relating to the Stock Bonus Award lapse; or (ii) evidenced by a certificate,
which certificate shall be held in such form and manner as determined by the
Board.  The terms and conditions of
Stock Bonus Award Agreements may change from time to time, and the terms and
conditions of separate Stock Bonus Award Agreements need not be identical, but
each Stock Bonus Award Agreement shall include (through incorporation of
provisions hereof by reference in the agreement or otherwise) the substance of
each of the following provisions:

 

11

 

(i)            Consideration.  A Stock Bonus Award may be awarded in
consideration for past services actually rendered to the Company or an
Affiliate for its benefit or in any other form of legal consideration that may
be acceptable to the Board in its discretion.

 

(ii)           Vesting.  Shares of Common Stock awarded under the
Stock Bonus Award Agreement may, but need not, be subject to forfeiture to the
Company or a share repurchase option in favor of the Company in accordance with
a vesting schedule to be determined by the Board.

 

(iii)         Termination
of Participant’s Continuous Service. 
In the event a Participant’s Continuous Service terminates, the Company
may reacquire (or receive via  a
forfeiture condition) any or all of the shares of Common Stock held by the
Participant which have not vested as of the date of termination of Continuous
Service under the terms of the Stock Bonus Award Agreement.

 

(iv)          Transferability.  Rights to acquire shares of Common Stock
under the Stock Bonus Award Agreement shall be transferable by the Participant
only upon such terms and conditions as are set forth in the Stock Bonus Award
Agreement, as the Board shall determine in its discretion, so long as Common
Stock awarded under the Stock Bonus Award Agreement remains subject to the
terms of the Stock Bonus Award Agreement.

 

(b)           Stock
Purchase Awards.  Each Stock
Purchase Award Agreement shall be in such form and shall contain such terms and
conditions as the Board shall deem appropriate.  At the Board’s election, shares of Common Stock may be (i) held
in book entry form subject to the Company’s instructions until any restrictions
relating to the Stock Purchase Award lapse; or (ii) evidenced by a certificate,
which certificate shall be held in such form and manner as determined by the
Board.  The terms and conditions of
Stock Purchase Award Agreements may change from time to time, and the terms and
conditions of separate Stock Purchase Award Agreements need not be identical, provided, however, that each Stock
Purchase Award Agreement shall include (through incorporation of the provisions
hereof by reference in the agreement or otherwise) the substance of each of the
following provisions:

 

(i)            Purchase
Price.  At the time of the grant of
a Stock Purchase Award, the Board will determine the price to be paid by the
Participant for each share subject to the Stock Purchase Award. To the extent
required by applicable law, the price to be paid by the Participant for each
share of the Stock Purchase Award will not be less than the par value of a
share of Common Stock.

 

(ii)           Consideration.  At the time of the grant of a Stock Purchase
Award, the Board will determine the consideration permissible for the payment
of the purchase price of the Stock Purchase Award.  The purchase price of Common Stock acquired pursuant to the Stock
Purchase Award shall be paid either: (i) in cash at the time of purchase or
(ii) in any other form of legal consideration that may be acceptable to the
Board in its discretion.

 

12

 

(iii)         Vesting.
Shares of Common Stock acquired under a Stock Purchase Award may, but need not,
be subject to forfeiture to the Company or a share repurchase option in favor
of the Company in accordance with a vesting schedule to be determined by the
Board.

 

(iv)          Termination
of Participant’s Continuous Service. In the event that a Participant’s
Continuous Service terminates, the Company shall have the right, but not the
obligation, to repurchase or otherwise reacquire, any or all of the shares of
Common Stock held by the Participant that have not vested as of the date of
termination under the terms of the Stock Purchase Award Agreement.  At the Board’s election, the repurchase
price, if any, paid by the Company may be at the lower of: (i) the Fair Market
Value on the relevant date; or (ii) the Participant’s original cost.  The Company shall not be required to exercise
its repurchase option until at least six (6) months (or such longer or shorter
period of time required to avoid a charge to earnings for financial accounting
purposes) have elapsed following the purchase of the restricted stock unless
otherwise determined by the Board or provided in the Stock Purchase Award
Agreement.

 

(v)            Transferability.
Rights to purchase or receive shares of Common Stock granted under a Stock
Purchase Award shall be transferable by the Participant only upon such terms
and conditions as are set forth in the Stock Purchase Award Agreement, as the
Board shall determine in its discretion, and so long as Common Stock awarded
under the Stock Purchase Award remains subject to the terms of the Stock
Purchase Award Agreement.

 

(c)           Stock Unit Awards.  Each Stock Unit Award Agreement shall be
in such form and shall contain such terms and conditions as the Board shall
deem appropriate.  The terms and
conditions of Stock Unit Award Agreements may change from time to time, and the
terms and conditions of separate Stock Unit Award Agreements need not be
identical, provided, however, that
each Stock Unit Award Agreement shall include (through incorporation of the
provisions hereof by reference in the agreement or otherwise) the substance of
each of the following provisions:

 

(i)            Consideration.  At the time of grant of a Stock Unit Award,
the Board will determine the consideration, if any, to be paid by the
Participant upon delivery of each share of Common Stock subject to the Stock
Unit Award. To the extent required by applicable law, the consideration to be
paid by the Participant for each share of Common Stock subject to a Stock Unit
Award will not be less than the par value of a share of Common Stock.  The consideration may be paid in any form
permitted under applicable law.

 

(ii)           Vesting.  At the time of the grant of a Stock Unit
Award, the Board may impose such restrictions or conditions to the vesting of
the Stock Unit Award as it, in its absolute discretion, deems appropriate.

 

(iii)         Additional
Restrictions.  At the time of the
grant of Stock Unit, the Board may impose such restrictions or conditions that
delay the delivery of the consideration after its vesting as the Board, in its
absolute discretion, deems appropriate, with such terms to be contained in the
Stock Unit agreement.

 

13

 

(iv)          Payment.  Stock Unit Awards may be settled in Common Stock or in cash or
any combination of the two, or in any other form of consideration as determined
by the Board and contained in the Stock Unit Award Agreement.

 

(v)            Dividend
Equivalents.  Dividend equivalents
may be credited in respect of shares covered by a Stock Unit Award, as
determined by the Board and contained in the Stock Unit Award Agreement.  At the discretion of the Board, such
dividend equivalents may be converted into additional shares covered by the
Stock Unit Award in such manner as determined by the Board.  Any additional shares covered by the Stock
Unit Award credited by reason of such dividend equivalents will be subject to
all the terms and conditions of the underlying Stock Unit Award Agreement to
which they relate.

 

(vi)          Termination
of Participant’s Continuous Service.  Except
as otherwise provided in the applicable Stock Unit Award Agreement, such
portion of the Stock Unit Award that has not vested will be forfeited upon the
Participant’s termination of Continuous Service for any reason.

 

(d)           Stock Appreciation
Rights.  Each Stock Appreciation
Right Agreement shall be in such form and shall contain such terms and
conditions as the Board shall deem appropriate.  The terms and conditions of Stock Appreciation Right Agreements
may change from time to time, and the terms and conditions of separate Stock
Appreciation Right Agreements need not be identical, but each Stock
Appreciation Right Agreement shall include (through incorporation of provisions
hereof by reference in the agreement or otherwise) the substance of each of the
following provisions:

 

(i)            Strike
Price and Calculation of Appreciation. Each Stock Appreciation Right will be
denominated in share of Common Stock equivalents.  The appreciation distribution payable on the exercise of a Stock
Appreciation Right will be not greater than an amount equal to the excess of
(A) the aggregate Fair Market Value (on the date of the exercise of the Stock
Appreciation Right) of a number of shares of Common Stock equal to the number
of share of Common Stock equivalents in which the Participant is vested under
such Stock Appreciation Right and with respect to which the Participant is
exercising the Stock Appreciation Right on such date, over (B) an amount that
will be determined by the Board at the time of grant of the Stock Appreciation
Right.

 

(ii)           Vesting.  At the time of the grant of a Stock
Appreciation Right, the Board may impose such restrictions or conditions to the
vesting of such Stock Appreciate Right as it, in its absolute discretion, deems
appropriate.

 

(iii)         Exercise.  To exercise any outstanding Stock
Appreciation Right, the Participant must provide written notice of exercise to
the Company in compliance with the provisions of the Stock Appreciation Right
Agreement evidencing such Stock Appreciation Right.

 

(iv)          Payment.  The appreciation distribution in respect to a Stock Appreciation
Right may be paid in Common Stock, in cash, in any combination of the two or in
any other

 

14

 

form of consideration as determined by the Board and
contained in the Stock Appreciation Right Agreement evidencing such Stock
Appreciation Right.

 

(v)            Termination
of Continuous Service.  In the event
that a Participant’s Continuous Service terminates, the Participant may
exercise his or her Stock Appreciation Right (to the extent that the
Participant was entitled to exercise such Stock Appreciation Right as of the
date of termination) but only within such period of time ending on the earlier
of (i) the date three (3) months following the termination of the Participant’s
Continuous Service (or such longer or shorter period specified in the Stock
Appreciation Right Agreement) or (ii) the expiration of the term of the Stock
Appreciation Right as set forth in the Stock Appreciation Right Agreement.  If, after termination, the Participant does
not exercise his or her Stock Appreciation Right within the time specified in
the Stock Appreciation Right Agreement, the Stock Appreciation Right shall
terminate.

 

(e)           Other Stock Awards.  Other forms of Stock Awards valued in whole
or in part by reference to, or otherwise based on, Common Stock may be granted
either alone or in addition to Stock Awards provided for under Section 6 and
the preceding provisions of this Section 7. 
Subject to the provisions of the Plan, the Board shall have sole and complete
authority to determine the persons to whom and the time or times at which such
Other Stock Awards will be granted, the number of shares of Common Stock (or
the cash equivalent thereof) to be granted pursuant to such Awards and all
other terms and conditions of such Awards.

 

8.             Securities Law Compliance.

 

The Company shall
seek to obtain from each regulatory commission or agency having jurisdiction
over the Plan such authority as may be required to grant Stock Awards and to
issue and sell shares of Common Stock upon exercise of the Stock Awards; provided,
however, that this undertaking shall not require the Company to
register under the Securities Act the Plan, any Stock Award or any Common Stock
issued or issuable pursuant to any such Stock Award.  If, after reasonable efforts, the Company is unable to obtain
from any such regulatory commission or agency the authority which counsel for
the Company deems necessary for the lawful issuance and sale of Common Stock
under the Plan, the Company shall be relieved from any liability for failure to
issue and sell Common Stock upon exercise of such Stock Awards unless and until
such authority is obtained.

 

9.             Use of Proceeds from Stock.

 

Proceeds from the sale of Common Stock pursuant to
Stock Awards shall constitute general funds of the Company.

 

10.          Miscellaneous.

 

(a)           Acceleration
of Exercisability and Vesting.  The
Board shall have the power to accelerate the time at which a Stock Award may
first be exercised or the time during which a Stock Award or any part thereof
will vest in accordance with the Plan, notwithstanding the

 

15

 

provisions in the Stock Award stating the time at
which it may first be exercised or the time during which it will vest.

 

(b)           Shareholder
Rights.  No Participant shall be
deemed to be the holder of, or to have any of the rights of a holder with
respect to, any shares of Common Stock subject to such Stock Award unless and
until such Participant has satisfied all requirements for exercise of the Stock
Award pursuant to its terms.

 

(c)           No
Employment or other Service Rights. 
Nothing in the Plan or any instrument executed or Stock Award granted
pursuant thereto shall confer upon any Participant any right to continue to
serve the Company or an Affiliate in the capacity in effect at the time the
Stock Award was granted or shall affect the right of the Company or an
Affiliate to terminate (i) the employment of an Employee with or without notice
and with or without cause, (ii) the service of a Consultant pursuant to the
terms of such Consultant’s agreement with the Company or an Affiliate or (iii)
the service of a Director pursuant to the Bylaws of the Company or an
Affiliate, and any applicable provisions of the corporate law of the state in
which the Company or the Affiliate is incorporated, as the case may be.

 

(d)           Investment
Assurances.  The Company may require
a Participant, as a condition of exercising or acquiring Common Stock under any
Stock Award, (i) to give written assurances satisfactory to the Company as to
the Participant’s knowledge and experience in financial and business matters
and/or to employ a purchaser representative reasonably satisfactory to the
Company who is knowledgeable and experienced in financial and business matters
and that he or she is capable of evaluating, alone or together with the
purchaser representative, the merits and risks of exercising the Stock Award;
and (ii) to give written assurances satisfactory to the Company stating that
the Participant is acquiring Common Stock subject to the Stock Award for the
Participant’s own account and not with any present intention of selling or
otherwise distributing the Common Stock. 
The foregoing requirements, and any assurances given pursuant to such
requirements, shall be inoperative if (1) the issuance of the shares of Common
Stock upon the exercise or acquisition of Common Stock under the Stock Award
has been registered under a then currently effective registration statement
under the Securities Act or (2) as to any particular requirement, a
determination is made by counsel for the Company that such requirement need not
be met in the circumstances under the then applicable securities laws.  The Company may, upon advice of counsel to
the Company, place legends on stock certificates issued under the Plan as such
counsel deems necessary or appropriate in order to comply with applicable
securities laws, including, but not limited to, legends restricting the
transfer of the Common Stock.

 

(e)           Withholding
Obligations.  To the extent provided
by the terms of a Stock Award Agreement, the Participant shall, as may be
determined by the Company in its sole discretion, satisfy any federal, state or
local tax withholding obligation relating to a Stock Award by any of the
following means (in addition to the Company’s right to withhold from any
compensation paid to the Participant by the Company) or by a combination of
such means:  (i) tendering a cash
payment; (ii) authorizing the Company to withhold shares of Common Stock from
the shares of

 

16

 

Common Stock issued or otherwise issuable to the
Participant in connection with the Stock Award; or (iii) such other
consideration as may be set forth in the Stock Award Agreement.

 

11.          Adjustments upon Changes in Stock. 

 

(a)           Capitalization
Adjustments.  If any change is made
in, or other event occurs with respect to, the Common Stock subject to the Plan
or subject to any Stock Award without the receipt of consideration by the
Company (through merger, consolidation, reorganization, recapitalization,
reincorporation, stock dividend, dividend in property other than cash, stock
split, liquidating dividend, combination of shares, exchange of shares, change
in corporate structure or other transaction not involving the receipt of
consideration by the Company (each a “Capitalization Adjustment”), the Plan
will be appropriately adjusted in the class(es) and maximum number of
securities subject to the Plan pursuant to Section 4(a) and the outstanding
Stock Awards will be appropriately adjusted in the class(es) and number of
securities and price per share of Common Stock subject to such outstanding
Stock Awards.  The Board shall make such
adjustments, and its determination shall be final, binding and conclusive.  (The conversion of any convertible securities
of the Company shall not be treated as a transaction “without receipt of
consideration” by the Company.)

 

(b)           Dissolution
or Liquidation.  In the event of a
dissolution or liquidation of the Company, then all outstanding Stock Awards
shall terminate immediately prior to the completion of such dissolution or
liquidation

 

(c)           Corporate Transaction.  In the event of a Corporate Transaction, any
surviving corporation or acquiring corporation may assume or continue any or
all Stock Awards outstanding under the Plan or may substitute similar stock
awards for Stock Awards outstanding under the Plan (it being understood that
similar stock awards include, but are not limited to, awards to acquire the
same consideration paid to the stockholders or the Company, as the case may be,
pursuant to the Corporate Transaction), and any reacquisition or repurchase
rights held by the Company in respect of Common Stock issued pursuant to Stock
Awards may be assigned by the Company to the successor of the Company (or the successor’s
parent company), if any, in connection with such Corporate Transaction.  In the event that any surviving corporation
or acquiring corporation does not assume or continue all such outstanding Stock
Awards or substitute similar stock awards for all such outstanding Stock
Awards, then with respect to Stock Awards that have been not assumed, continued
or substituted and that are held by Participants whose Continuous Service has
not terminated prior to the effective time of the Corporate Transaction, the
vesting of such Stock Awards (and, if applicable, the time at which such Stock
Awards may be exercised) shall (contingent upon the effectiveness of the
Corporate Transaction) be accelerated in full to a date prior to the effective
time of such Corporate Transaction as the Board shall determine (or, if the
Board shall not determine such a date, to the date that is five (5) days prior
to the effective time of the Corporate Transaction), the Stock Awards shall
terminate if not exercised (if applicable) at or prior to such effective time,
and any reacquisition or repurchase rights held by the Company with respect to
such Stock Awards held by Participants whose Continuous Service has not
terminated shall (contingent upon the effectiveness of the Corporate Transaction)
lapse.

 

17

 

(d)           Change in
Control.  A Stock Award may
be subject to additional acceleration of vesting and exercisability upon or
after a Change in Control as may be provided in the Stock Award Agreement for
such Stock Award or as may be provided in any other written agreement between
the Company or any Affiliate and the Participant, but in the absence of such
provision, no such acceleration shall occur.

 

12.          Amendment of the Plan and Stock Awards.

 

(a)           Amendment
of Plan.  Subject to the
limitations, if any, of applicable law, the Board at any time, and from time to
time, may amend the Plan.  The Board
may, in its discretion, provide that any such amendment is effective upon
obtaining the approval of the stockholders of the Company.

 

(b)           No
Impairment of Rights.  Rights under
any Stock Award granted before amendment of the Plan shall not be impaired by
any amendment of the Plan unless (i) the Company requests the consent of the
Participant and (ii) the Participant consents in writing.

 

(c)           Amendment
of Stock Awards.  The Board at any
time, and from time to time, may amend the terms of any one or more Stock
Awards; provided,
however, that the rights under any Stock Award shall not be impaired
by any such amendment unless (i) the Company requests the consent of the
Participant and (ii) the Participant consents in writing.

 

13.          Termination or Suspension of the Plan.

 

(a)           Plan
Term.  The Board may suspend or
terminate the Plan at any time.  No
Stock Awards may be granted under the Plan while the Plan is suspended or after
it is terminated.

 

(b)           No
Impairment of Rights.  Suspension or
termination of the Plan shall not impair rights and obligations under any Stock
Award granted while the Plan is in effect except with the consent of the
Participant.

 

14.          Effective Date of Plan.

 

The Plan shall become
effective as determined by the Board.

 

15.          Choice of Law.

 

The law of the
State of California shall govern all questions concerning the construction,
validity and interpretation of this Plan, without regard to such state’s
conflict of laws rules.

 

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Exhibit 10.20  

        [EXECUTION COPY] 

 

$140,000,000 

364-DAY
REVOLVING CREDIT FACILITY 

CREDIT AGREEMENT  

Among 

ACE
GUARANTY CORP., 

ACE
GUARANTY (UK) LTD. 

and 

THE
BANKS PARTY HERETO 

and 

ABN
AMRO BANK N.V.,

As Administrative Agent 

Dated
as of May 22, 2003 

ABN
AMRO INCORPORATED

As Syndication Agent,

Lead Arranger, and Bookrunner 

 

 
 
 

TABLE OF CONTENTS    
    

	 
	 
	 	Page

	ARTICLE I	CERTAIN DEFINITIONS	 	1
	 	
 Section 1.01	

Certain Definitions	
 	

1
	 	Section 1.02	Construction	 	14
	 	(a)    Number; Inclusion	 	14
	 	(b)    Determination	 	14
	 	(c)    Agent's Discretion and Consent	 	14
	 	(d)    Documents Taken as a Whole	 	14
	 	(e)    Headings	 	14
	 	(f)    Implied References to this Agreement	 	14
	 	(g)    Persons	 	14
	 	(h)    Modifications to Documents	 	14
	 	(i)    From, To and Through	 	14
	 	(j)    Shall; Will	 	15
	 	Section 1.03	Accounting Principles; Computations	 	15
	

ARTICLE II	

REVOLVING CREDIT AND TERM LOAN FACILITY	
 	

15
	 	
 Section 2.01	

Revolving Credit Commitments; Term Loans	
 	

15
	 	Section 2.02	Nature of Banks' Obligations with Respect to Revolving Credit Loans	 	16
	 	Section 2.03	Facility Fees; Term Loan Fee	 	16
	 	Section 2.04	Utilization Fee	 	16
	 	Section 2.05	Revolving Credit Loan Requests	 	16
	 	Section 2.06	Making Revolving Credit Loans	 	17
	 	Section 2.07	Use of Proceeds	 	17
	 	Section 2.08	Bid Loan Facility	 	17
	 	(a)    Bid Loan Requests	 	17
	 	(b)    Bidding	 	18
	 	(c)    Accepting Bids	 	18
	 	(d)    Funding Bid Loans	 	19
	 	(e)    Several Obligations	 	19
	 	(f)    Bid Notes	 	19
	 	Section 2.09	Extension by Banks of the Expiration Date	 	19
	 	(a)    Requests; Approval by All Banks	 	19
	 	(b)    Approval by Required Banks	 	19
	 	Section 2.10	UK Borrower Loans	 	20
	

ARTICLE III	

INTEREST RATES	
 	

21
	 	
 Section 3.01	

Interest Rate Options	
 	

21
	 	(a)    Revolving Credit Interest Rate Options	 	21
	 	(b)    Rate Quotations	 	21
	 	(c)    Change in Fees or Interest Rates	 	21
	 	Section 3.02	Committed Loans Interest Periods	 	22
	 	(a)    Amount of Borrowing Tranche	 	22
	 	(b)    Renewals	 	22
	 	Section 3.03	Interest After Default	 	22
	 	(a)    Interest Rate	 	22
	 	(b)    Other Obligations	 	22
	 	(c)    Acknowledgment	 	22
	 	Section 3.04	LIBOR Unascertainable; Illegality; Increased Costs; Deposits Not Available	 	22
	 	 	 	 

ii

 

	 	(a)    Unascertainable	 	22
	 	(b)    Illegality; Increased Costs; Deposits Not Available	 	22
	 	(c)    Agent's and Bank's Rights	 	23
	 	Section 3.05	Selection of Interest Rate Options	 	23
	

ARTICLE IV	

PAYMENTS	
 	

23
	 	
 Section 4.01	

Payments	
 	

23
	 	Section 4.02	Pro Rata Treatment of Banks	 	24
	 	Section 4.03	Interest Payment Dates	 	24
	 	Section 4.04	Voluntary Prepayments	 	24
	 	(a)    Right to Prepay	 	24
	 	(b)    Replacement of a Bank	 	25
	 	(c)    Change of Lending Office	 	25
	 	Section 4.05	Reduction or Termination of Commitments	 	26
	 	Section 4.06	Additional Compensation in Certain Circumstances	 	26
	 	(a)    Increased Costs or Reduced Return Resulting From Taxes, Reserves, Capital Adequacy Requirements, Expenses, Etc.	 	26
	 	(b)    Indemnity	 	26
	 	Section 4.07	Taxes	 	27
	 	(a)    No Deductions	 	27
	 	(b)    Stamp Taxes	 	27
	 	(c)    Indemnification for Taxes Paid by a Bank	 	27
	 	(d)    Certificate	 	28
	 	(e)    Survival	 	28
	 	Section 4.08	Judgment Currency	 	28
	 	(a)    Currency Conversion Procedures for Judgments	 	28
	 	(b)    Indemnity in Certain Events	 	28
	 	Section 4.09	Notes, Maturity	 	28
	 	Section 4.10	Mandatory Prepayments	 	28
	

ARTICLE V	

REPRESENTATIONS AND WARRANTIES	
 	

29
	 	
 Section 5.01	

Representations and Warranties	
 	

29
	 	(a)    Organization and Qualification	 	29
	 	(b)    Capitalization and Subsidiaries	 	29
	 	(c)    Power and Authority	 	29
	 	(d)    Validity and Binding Effect	 	29
	 	(e)    No Conflict	 	29
	 	(f)    Litigation	 	30
	 	(g)    Title to Properties	 	30
	 	(h)    Financial Statements, Reinsurance Coverage	 	30
	 	(i)    Use of Proceeds; Margin Stock	 	30
	 	(j)    Full Disclosure	 	31
	 	(k)    Taxes	 	31
	 	(l)    Consents and Approvals	 	31
	 	(m)    No Event of Default; Compliance With Instruments	 	31
	 	(n)    Licenses, Etc.	 	31
	 	(o)    Insurance	 	31
	 	(p)    Compliance With Laws	 	31
	 	(q)    Material Contracts; Burdensome Restrictions	 	32
	 	(r)    Investment Companies; Regulated Entities	 	32
	 	 	 	 

iii

 

	 	(s)    Plans and Benefit Arrangements	 	32
	 	(t)    Senior Debt Status	 	33
	 	Section 5.02	Continuation of Representations	 	33
	

ARTICLE VI	

CONDITIONS OF LENDING	
 	

33
	 	
 Section 6.01	

First Loans	
 	

33
	 	(a)    Representations and Warranties True and Complete, No Defaults	 	33
	 	(b)    Secretary's Certificate	 	33
	 	(c)    Delivery of Notes, Guaranty Agreements, and Loan Request	 	34
	 	(d)    Opinion of Counsel	 	34
	 	(e)    Legal Details	 	34
	 	(f)    Payment of Fees	 	34
	 	(g)    No Material Adverse Change	 	34
	 	(h)    Existing Credit Agreement	 	34
	 	(i)    Liens	 	34
	 	Section 6.02	Each Additional Loan	 	34
	

ARTICLE VII	

COVENANTS	
 	

35
	 	
 Section 7.01	

Affirmative Covenants	
 	

35
	 	(a)    Preservation of Existence, Etc.	 	35
	 	(b)    Payment of Liabilities, Including Taxes, Etc.	 	35
	 	(c)    Maintenance of Insurance	 	35
	 	(d)    Maintenance of Properties and Leases	 	35
	 	(e)    Maintenance of Licenses, Etc.	 	36
	 	(f)    Visitation Rights	 	36
	 	(g)    Keeping of Records and Books of Account	 	36
	 	(h)    Plans and Benefit Arrangements	 	36
	 	(i)    Compliance With Laws	 	36
	 	(j)    Use of Proceeds	 	36
	 	(k)    Senior Debt Status	 	36
	 	Section 7.02	Negative Covenants	 	37
	 	(a)    Indebtedness	 	37
	 	(b)    Liens	 	37
	 	(c)    Guaranties	 	38
	 	(d)    Loans and Investments	 	38
	 	(e)    Dividends and Related Distributions	 	38
	 	(f)    Liquidations, Mergers, Consolidations, Acquisitions	 	38
	 	(g)    Dispositions of Assets or Subsidiaries	 	39
	 	(h)    Affiliate Transactions	 	39
	 	(i)    Subsidiaries, Partnerships and Joint Ventures	 	39
	 	(j)    Continuation of or Change in Business	 	40
	 	(k)    Plans and Benefit Arrangements	 	40
	 	(l)    Fiscal Year	 	40
	 	(m)    Minimum Statutory Capital	 	40
	 	(n)    Maximum Exposure Ratio	 	40
	 	(o)    Maximum Debt to Total Capitalization Ratio	 	40
	 	(p)    Maximum Collateralized Credit Derivative Guaranties	 	41
	 	Section 7.03	Reporting Requirements	 	41
	 	(a)    Quarterly Financial Statements	 	41
	 	(b)    Annual Financial Statements	 	41
	 	 	 	 

iv

 

	 	(c)    Certificate of the Company	 	41
	 	(d)    Notice of Default	 	42
	 	(e)    Off-Balance Sheet Financing	 	42
	 	(f)    Notice of Litigation	 	42
	 	(g)    Notice of Change in Insurer Financial Strength Rating	 	42
	 	(h)    Sale of Assets	 	42
	 	(i)    Budgets, Other Reports and Information	 	42
	

ARTICLE VIII	

DEFAULT	
 	

43
	 	
 Section 8.01	

Events of Default	
 	

43
	 	(a)    Payments Under Loan Documents	 	43
	 	(b)    Breach of Warranty	 	43
	 	(c)    Breach of Negative Covenants or Visitation Rights	 	43
	 	(d)    Breach of Other Covenants	 	43
	 	(e)    Defaults in Other Agreements or Indebtedness	 	43
	 	(f)    Final Judgments or Orders	 	43
	 	(g)    Loan Document Unenforceable	 	43
	 	(h)    Losses; Proceedings Against Assets	 	44
	 	(i)    Notice of Lien or Assessment	 	44
	 	(j)    Insolvency	 	44
	 	(k)    Events Relating to Plans and Benefit Arrangements	 	44
	 	(l)    Change of Control	 	44
	 	(m)    Involuntary Proceedings	 	45
	 	(n)    Voluntary Proceedings	 	45
	 	Section 8.02	Consequences of Event of Default	 	45
	 	(a)    Events of Default Other Than Bankruptcy, Insolvency or Reorganization Proceedings	 	45
	 	(b)    Bankruptcy, Insolvency or Reorganization Proceedings	 	45
	 	(c)    Set-off	 	45
	 	(d)    Suits, Actions, Proceedings	 	46
	 	(e)    Application of Proceeds	 	46
	 	(f)    Other Rights and Remedies	 	46
	 	Section 8.03	Right of Competitive Bid Loan Banks	 	46
	

ARTICLE IX	

THE AGENT	
 	

47
	 	
 Section 9.01	

Appointment	
 	

47
	 	Section 9.02	Delegation of Duties	 	47
	 	Section 9.03	Nature of Duties; Independent Credit Investigation	 	47
	 	Section 9.04	Actions in Discretion of Agent; Instructions From the Banks	 	47
	 	Section 9.05	Reimbursement and Indemnification of Agent by the Borrowers	 	48
	 	Section 9.06	Exculpatory Provisions; Limitation of Liability	 	48
	 	Section 9.07	Reimbursement and Indemnification of Agent by Banks	 	49
	 	Section 9.08	Reliance by Agent	 	49
	 	Section 9.09	Notice of Default	 	49
	 	Section 9.10	Notices	 	49
	 	Section 9.11	Banks in Their Individual Capacities; Agents in Its Individual Capacity	 	50
	 	Section 9.12	Holders of Notes	 	50
	 	Section 9.13	Equalization of Banks	 	50
	 	Section 9.14	Successor Agent	 	50
	 	Section 9.15	Agent's Fee	 	51
	 	 	 	 

v

 

	 	Section 9.16	Availability of Funds	 	51
	 	Section 9.17	Calculations	 	51
	 	Section 9.18	Beneficiaries	 	51
	

ARTICLE X	

MISCELLANEOUS	
 	

51
	 	
 Section 10.01	

Modifications, Amendments, or Waivers	
 	

51
	 	(a)    Increase of Commitment; Extension of Expiration Date	 	52
	 	(b)    Extension of Payment; Reduction of Principal Interest or Fees; Modification of Terms of Payment	 	52
	 	(c)    Release of Collateral or Guarantor	 	52
	 	(d)    Miscellaneous	 	52
	 	Section 10.02	No Implied Waivers; Cumulative Remedies; Writing Required	 	52
	 	Section 10.03	Reimbursement and Indemnification of Banks by the Borrower; Taxes	 	52
	 	Section 10.04	Holidays	 	53
	 	Section 10.05	Funding by Branch, Subsidiary, or Affiliate	 	53
	 	(a)    Notional Funding	 	53
	 	(b)    Actual Funding	 	54
	 	Section 10.06	Notices	 	54
	 	Section 10.07	Severability	 	54
	 	Section 10.08	Governing Law	 	54
	 	Section 10.09	Prior Understanding	 	55
	 	Section 10.10	Duration; Survival	 	55
	 	Section 10.11	Successors and Assigns	 	55
	 	Section 10.12	Confidentiality	 	56
	 	(a)    General	 	56
	 	(b)    Sharing Information With Affiliates of the Banks	 	56
	 	(c)    Disclosures of Tax Treatment	 	57
	 	Section 10.13	Counterparts	 	57
	 	Section 10.14	Agent's or Bank's Consent	 	57
	 	Section 10.15	Exceptions	 	57
	 	Section 10.16	CONSENT TO FORUM; WAIVER OF JURY TRIAL	 	57
	 	Section 10.17	Tax Withholding Clause	 	58
	 	Section 10.18	Joinder of Guarantors	 	58

vi

 
LIST OF SCHEDULES AND EXHIBITS  

	SCHEDULES	 	 	 	 	 	 
	

SCHEDULE 1.01(A)	
 	

—	
 	

PRICING GRID	
 	

 
	SCHEDULE 1.01(B)	 	—	 	COMMITMENTS OF BANKS AND ADDRESSES FOR NOTICES	 	 
	SCHEDULE 1.01(P)	 	—	 	EXISTING LIENS	 	 
	SCHEDULE 5.01(h)	 	—	 	REINSURANCE COVERAGE	 	 
	SCHEDULE 7.02(a)	 	—	 	EXISTING INDEBTEDNESS	 	 
	
EXHIBITS	
 	

 	
 	

 	
 	

 
	

EXHIBIT 1.01(A)	
 	

—	
 	

ASSIGNMENT AND ASSUMPTION AGREEMENT	
 	

 
	EXHIBIT 1.01(B)	 	—	 	BID NOTE	 	 
	EXHIBIT 1.01(G)(1)	 	—	 	GUARANTOR JOINDER	 	 
	EXHIBIT 1.01(G)(2)-1	 	—	 	GUARANTY AGREEMENT OF ACE LIMITED	 	 
	EXHIBIT 1.01(G)(2)-2	 	—	 	GUARANTY AGREEMENT OF MATERIAL SUBSIDIARIES	 	 
	EXHIBIT 1.01(G)(2)-3	 	—	 	GUARANTY AGREEMENT OF ACE GUARANTY CORP.	 	 
	EXHIBIT 1.01(R)	 	—	 	REVOLVING CREDIT/TERM LOAN NOTE	 	 
	EXHIBIT 2.05	 	—	 	COMMITTED LOAN REQUEST	 	 
	EXHIBIT 2.08(a)	 	—	 	BID LOAN REQUEST	 	 
	EXHIBIT 6.01(d)	 	—	 	OPINION(S) OF COUNSEL	 	 
	EXHIBIT 7.03(c)	 	—	 	QUARTERLY COMPLIANCE CERTIFICATE	 	 

vii

CREDIT AGREEMENT  

        THIS CREDIT AGREEMENT is dated as of May 22, 2003, and is made by and among ACE GUARANTY CORP., a Maryland corporation (the "Company"), ACE GUARANTY
(UK) LTD., a company organized under the laws of England and Wales (the "UK Borrower"), the BANKS (as hereinafter defined), and ABN AMRO BANK N.V., in its capacity as administrative agent for
the Banks under this Agreement (hereinafter referred to in such capacity as the "Agent") and sole bookrunner. 

W I T N E S S E T H:  

        WHEREAS, the Borrowers have requested the Banks to provide a 364-day revolving credit facility to the Borrowers in an aggregate principal amount not
to exceed the Commitments of the Banks; and 

        WHEREAS,
such revolving credit facility shall be used for the general corporate purposes of the Borrowers; and 

        WHEREAS,
the Banks are willing to provide such credit upon the terms and conditions hereinafter set forth; 

        NOW,
THEREFORE, the parties hereto, in consideration of their mutual covenants and agreements hereinafter set forth, hereby covenant and agree as follows: 

ARTICLE I  

 CERTAIN DEFINITIONS  

        Section 1.01    Certain Definitions.    In addition to words and terms defined elsewhere in this Agreement, the
following words and terms shall have the following meanings, respectively, unless the context hereof clearly requires otherwise: 

        ABN AMRO Bank or ABN AMRO shall mean ABN AMRO Bank N.V., its successors and assigns. 

        ACE shall mean ACE Limited, a Cayman Islands company. 

        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. 

        Agent shall mean ABN AMRO Bank N.V., and its successors and assigns, in its capacity as administrative agent for the Banks under this
Agreement. 

        Agent's Fee shall have the meaning assigned to that term in Section 9.15. 

        Agent's Letter shall have the meaning assigned to that term in Section 9.15. 

        Aggregate Loan Outstandings shall have the meaning assigned to that term in Section 4.10(a). 

        Agreement shall mean this Credit Agreement, as the same may be supplemented or amended from time to time, including all schedules and
exhibits. 

        Alternate Currency shall mean each of Euros and Pounds Sterling. 

        Alternate Currency Loan shall mean any Loan denominated in an Alternate Currency. 

        Approved Currency shall mean each of Dollars and each Alternate Currency. 

 

        Applicable Facility Fee Rate shall mean the percentage rate per annum corresponding to the indicated level of Insurer Financial Strength
Rating in the pricing grid on Schedule 1.01(A) below the heading "Facility Fee." The Applicable Facility Fee Rate shall be computed in accordance
with the parameters set forth on Schedule 1.01(A).

        Applicable Margin shall mean, as applicable: 

        (A)  the
percentage spread to be added to Base Rate under the Revolving Credit Base Rate Option or the Term Loan Base Rate Option corresponding to the indicated level of
Insurer Financial Strength Rating in the pricing grid on Schedule 1.01(A) below the heading "Revolving Credit Base Rate Spread," or 

        (B)  the
percentage spread to be added to LIBOR under the Revolving Credit LIBOR Option or the Term Loan LIBOR Option corresponding to the indicated level of Insurer
Financial Strength Rating in the pricing grid on Schedule 1.01(A) below the heading "Revolving Credit LIBOR Spread." 

        The
Applicable Margin shall be computed in accordance with the parameters set forth on Schedule 1.01(A).

        Applicable Usage Premium shall mean the percentage rate per annum corresponding to the indicated level of Insurer Financial Strength
Rating in the pricing grid on Schedule 1.01(A) below the heading "Usage Premium." The Applicable Usage Premium shall be computed in accordance
with the parameters set forth on Schedule 1.01(A).

        Assignee Bank shall have the meaning assigned to such term in Section 2.09(b). 

        Assignment and Assumption Agreement shall mean an Assignment and Assumption Agreement by and among a Purchasing Bank, a Transferor Bank
and the Agent, as Agent and on behalf of the remaining Banks, substantially in the form of Exhibit 1.01(A).

        Associated Cost Rate shall mean, with respect to any Interest Period for Pounds Sterling denominated Loans, the amount (expressed as a
percentage rate per annum, rounded up to the nearest four decimal places, as determined by the Agent on the first day of such Interest Period) required to compensate the Banks lending from facility
offices in the United Kingdom for the portion of the cost of each such Bank of complying with the cash ratio and special deposit requirements of the Bank of England and/or capital adequacy
requirements and banking supervision or other fees imposed by the United Kingdom Financial Services Authority, which, in the reasonable determination of such Bank, is attributable to the Loans made by
such Bank from its facility office in the United Kingdom and outstanding during such Interest Period. 

        Authorized Officer shall mean those individuals, designated by written notice to the Agent from each Borrower, authorized to execute
notices, reports and other documents on behalf of such Borrower required hereunder. Each Borrower may amend such list of individuals from time to time by giving written notice of such amendment to the
Agent. 

        Bank to be Terminated shall have the meaning assigned to such term in Section 2.09(b). 

        Banks shall mean the financial institutions named on Schedule 1.01(B) and their
respective successors and assigns as permitted hereunder, each of which is referred to herein as a Bank. 

        Base Rate shall mean the greater of (i) the interest rate per annum announced from time to time by the Agent at its Principal
Office as its then prime rate, which rate may not be the lowest rate then being charged commercial borrowers by the Agent, or (ii) the Federal Funds Effective Rate plus 0.5% per annum. 

2

 

        Base Rate Option shall mean the Revolving Credit Base Rate Option or the Term Loan Base Rate Option, as the case may be. 

        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. 

        Bid shall have the meaning assigned to such term in Section 2.08(b). 

        Bid Deadline shall have the meaning assigned to such term in Section 2.08(b). 

        Bid Loan Borrowing Date shall mean, with respect to any Bid Loan, the date for the making thereof which shall be a Business Day. 

        Bid Loan LIBOR Rate Option shall mean the option of each Borrower to request that the Banks submit Bids to make Bid Loans bearing interest
at a rate per annum quoted by such Banks at the LIBOR in effect two Business Days before the Borrowing Date of such Bid Loan plus a LIBOR Bid Loan Spread. 

        Bid Loan Fixed Rate Option shall mean the option of each Borrower to request that the Banks submit Bids to make Bid Loans bearing interest
at a fixed rate per annum quoted by such Banks as a numerical percentage (and not as a spread over another rate such as the LIBOR). 

        Bid Loan Interest Period shall have the meaning assigned to such term in Section 2.08(a). 

        Bid Loan Request shall have the meaning assigned to such term in Section 2.08(b). 

        Bid Loans shall mean collectively all of the Bid Loans and Bid Loan shall mean separately any Bid Loan, made by any of the Banks to either
Borrower pursuant to Section 2.08. 

        Bid Notes shall mean collectively all of the Bid Notes and Bid Note shall mean separately any Bid Note, of each Borrower in the form of  Exhibit 1.01(B) evidencing
the Bid Loans made to such Borrower together with all amendments, extensions, renewals, replacements, refinancings or
refunds thereof in whole or in part. 

        Borrower shall mean each of the Company and the UK Borrower. 

        Borrowing Date shall mean, with respect to any Loan, the date for the making thereof or the renewal or conversion thereof at or to the
same or a different Interest Rate Option, which shall be a Business Day. 

        Borrowing Tranche shall mean specified portions of Loans outstanding as follows: (i) any Loans to which a LIBOR Option or a Bid
Loan Fixed Rate Option applies which become subject to the same Interest Rate Option under the same Loan Request by a Borrower and which have the same Interest Period shall constitute one Borrowing
Tranche, and (ii) all Loans to which a Base Rate Option applies shall constitute one Borrowing Tranche. 

        Business Day shall mean any day other than a Saturday or Sunday or a legal holiday on which commercial banks are authorized or required to
be closed for business in New York, New York and, if the applicable Business Day relates to any Loan to which the LIBOR Option applies, such day must also be a day on which dealings are carried on in
the London interbank market and, with respect to any payments due under the Guaranty given by ACE Limited, such day must also be a day which is not a national holiday in Bermuda. 

        Closing Date shall mean May 22, 2003. 

        Commitment shall mean as to any Bank its Revolving Credit Commitment, and Commitments
shall mean the aggregate of the Revolving Credit Commitments of all of the Banks. 

3

 

        Committed Loan shall mean a Revolving Credit Loan or a Term Loan, as the case may be. 

        Committed Loan Interest Period shall mean the period of time selected by the respective Borrower in connection with (and to apply to) any
election permitted hereunder by such Borrower to have Revolving Credit Loans or Term Loans bear interest under the LIBOR Option. Subject to the last sentence of this definition, such period shall be
one, two, three or six Months. Such Interest Period shall commence on the effective date of borrowing of any Loan bearing interest at a rate determined with reference to such Interest Rate Option,
which shall be (i) the Borrowing Date if the respective Borrower is requesting new Loans, or (ii) the date of renewal of or conversion to the LIBOR Option if the Borrower is renewing or
converting to the LIBOR Option applicable to outstanding Loans. Notwithstanding the second sentence hereof: (A) any Interest Period which would otherwise end on a date which is not a Business
Day shall be extended to the next succeeding Business Day unless such Business Day falls in the next calendar month, in which case such Interest Period shall end on the
directly preceding Business Day, and (B) such Borrower shall not select, convert to or renew an Interest Period for any portion of the Loans that would end after the Term Loan Maturity Date. 

        Committed Loan LIBOR Option shall mean a Revolving Credit Loan LIBOR Option and a Term Loan LIBOR Option. 

        Committed Loan Request shall mean a request for a Revolving Credit Loan or a request to select, convert to or renew a Base Rate Option or
LIBOR Option with respect to an outstanding Revolving Credit Loan or Term Loan in accordance with Section 2.05, Section 3.01 and Section 3.02. 

        Company shall mean ACE Guaranty Corp., a Maryland corporation. 

        Compliance Certificate shall have the meaning assigned to such term in Section 7.03(c). 

        Consideration shall mean a greater than de minimis monetary return for the sale or provision of a service or product or for the
undertaking of an obligation or liability, except that with respect to a Permitted Acquisition, Consideration shall mean the aggregate of (i) the cash paid by any of the Company or any Material
Subsidiary, directly or indirectly, to the seller in connection with such Permitted Acquisition, (ii) the Indebtedness incurred or assumed by the Company or any of the Material Subsidiaries
with respect to such Permitted Acquisition, whether in favor of the seller or otherwise and whether fixed or contingent, (iii) any Guaranty given or incurred by the Company or any Material
Subsidiary in connection therewith, and (iv) any other consideration given or obligation incurred by the Company or any of the Material Subsidiaries in connection with such Permitted
Acquisition. 

        Consolidated Debt shall mean, at any time, an amount equal to the sum (without duplication) of the then outstanding Indebtedness of the
Company and of each Subsidiary of the Company (excluding, however, the amount of all Insurance-Related Guaranties and excluding all Soft Capital), determined and consolidated in accordance with GAAP. 

        Credit Derivative Guaranties shall have the meaning assigned to such term in Section 7.02(c). 

        Dollar, Dollars, U.S. Dollars and the
symbol $ shall mean lawful money of the United States of America. 

        Dollar Equivalent shall mean, at any time for the determination thereof, the amount of Dollars which could be purchased with the amount of
the relevant Alternate Currency involved in such computation at the spot exchange rate therefor as quoted by the Administrative Agent as of 11:00 A.M., London time, on the date two Business
Days prior to the date of any determination thereof for purchase on such date. 

4

 

        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, the Company 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 the Company, are treated as a single employer under Section 414 of the Internal Revenue Code. 

        Euro shall mean the single currency of participating member states of the European Union. 

        Euro-LIBOR shall mean, with respect to the Loans comprising any Borrowing Tranche denominated in Euros to which the LIBOR
Option applies for any Interest Period, an interest rate per annum determined on the basis of the rate for deposits in Euros for a period comparable to such Interest Period commencing on the first day
of such Interest Period appearing on Page 3750 of the Telerate screen as of 11:00 A.M., London time, two Business Days prior to the beginning of such Interest Period. In the event that
such rate does not appear on Page 3750 of the Telerate screen (or otherwise on such screen), Euro LIBOR shall be determined by reference to such other publicly available service for displaying
Euro-denominated rates as may be agreed upon by the Agent and the Borrowers or, in the absence of such agreement, the Euro LIBOR shall be the rate of interest per annum determined by the
Agent in accordance with its usual procedures (which determination shall be conclusive absent manifest error) equal to the rate per annum at which Euro deposits approximately equal in principal amount
to such Borrowing Tranche for a period and with a maturity comparable to such Interest Period are offered to the principal London office of Agent in immediately available funds in the London interbank
market at approximately 11:00 A.M., London time, two Business Days prior to the commencement of such Interest Period. The Agent shall give prompt notice to the Borrowers of the Euro LIBOR as
determined or adjusted in accordance herewith, which determination shall be conclusive absent manifest error. 

        Eurodollar Rate shall mean, with respect to the Loans comprising any Borrowing Tranche denominated in Dollars to which the LIBOR Option
applies for any Interest Period, an interest rate per annum determined on the basis of the rate for deposits in Dollars for a period comparable to such Interest Period commencing on the first day of
such Interest Period appearing on Page 3750 of the Telerate
screen as of 11:00 A.M., London time, two Business Days prior to the beginning of such Interest Period. In the event that such rate does not appear on Page 3750 of the Telerate screen
(or otherwise on such screen), the Eurodollar Rate shall be determined by reference to such other publicly available service for displaying eurodollar rates as may be agreed upon by the Agent and the
Borrowers or, in the absence of such agreement, the Eurodollar Rate shall be the rate of interest per annum determined by the Agent in accordance with its usual procedures (which determination shall
be conclusive absent manifest error) equal to the rate per annum at which Dollar deposits approximately equal in principal amount to such Borrowing Tranche for a period and with a maturity comparable
to such Interest Period are offered to the principal London office of Agent in immediately available funds in the London interbank market at approximately 11:00 A.M., London time, two Business
Days prior to the commencement of such Interest Period. The Agent shall give prompt notice to the Borrowers of the Eurodollar Rate as determined or adjusted in accordance herewith, which determination
shall be conclusive absent manifest error. 

        Eurodollar Reserve Percentage shall mean as of any day and with respect to any Bank or the Agent the maximum percentage in effect on such
day for such Bank or the Agent, as prescribed by the Board of Governors of the Federal Reserve System (or any successor) for determining the reserve requirements as it affects such Bank or the Agent
(including supplemental, marginal and emergency reserve requirements) with respect to eurocurrency funding (currently referred to as "Eurocurrency Liabilities"). 

5

 

        Event of Default shall mean any of the events described in Section 8.01 and referred to therein as an "Event of Default." 

        Existing Credit Agreement shall mean the Credit Agreement, dated as of May 30, 2002, among the Company (formerly known as Ace
Guaranty Re Inc.), the banks party thereto, ABN AMRO Bank N.V., as administrative agent, and ABN AMRO Incorporated, as syndication agent, lead arranger and bookrunner. 

        Existing Reinsurance Coverage shall have the meaning assigned to such term in Section 5.01(h)(C). 

        Expiration Date shall mean, with respect to the Revolving Credit Commitments, May 20, 2004, or such later date as determined
pursuant to Section 2.09. 

        Extending Bank shall have the meaning assigned to such term in Section 2.09(b). 

        Facility Fee shall have the meaning assigned to that term in Section 2.03. 

        Facility Usage shall mean at any time the sum of the principal amount of the Revolving Credit Loans or Term Loans, as the case may be,
outstanding and, solely for purposes of Section 2.04, the principal amount of the Bid Loans outstanding. 

        Federal Funds Effective Rate for any day shall mean the rate per annum (based on a year of 360 days and actual days elapsed and
rounded upward to the nearest 1/100 of 1%) announced by the Federal Reserve Bank of New York (or any successor) on such day as being the weighted average of the rates on overnight
federal funds transactions arranged by federal funds brokers on the previous trading day, as computed and announced by such Federal Reserve Bank (or any successor) in substantially the same manner as
such Federal Reserve Bank computes and announces the weighted average it refers to as the "Federal Funds Effective Rate" as of the date of this Agreement;  provided, if such Federal Reserve Bank (or its
successor) does not announce such rate on any day, the "Federal Funds Effective Rate" for such day shall
be the Federal Funds Effective Rate for the last day on which such rate was announced. 

        Fixed Rate shall mean a fixed interest rate quoted by a Bank in its Bid to apply to such Bank's Bid Loan over the term of such Bid Loan if
such Bank's Bid is accepted. 

        Fixed Rate Bid Loan shall mean a Bid Loan that bears interest under the Bid Loan Fixed Rate Option. 

        GAAP shall mean generally accepted accounting principles as in effect from time to time in the United States, subject to the provisions of
Section 1.03, applied on a consistent basis both as to classification of items and amounts. 

        Guarantor shall mean ACE, the Company and each Material Subsidiary which hereafter joins this Agreement as a Guarantor after the date
hereof pursuant to Section 10.18. 

        Guarantor Joinder shall mean a joinder by a Person as a Guarantor under this Agreement, the Guaranty Agreement and the other Loan
Documents in the form of Exhibit 1.01(G)(1).

        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. 

        Guaranty Agreement shall mean one or more Guaranty Agreements in substantially the form of  Exhibit 1.01(G)(2)-1, Exhibit 1.01(G)(2)
-2 or  Exhibit 1.01(G)(2)-3 executed and delivered by each of the Guarantors to the Agent for the benefit of the Banks. 

6

 

        Historical Statements shall have the meaning assigned to that term in Section 5.01(h)(A). 

        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 indebtedness and which are not more than ninety (90) days past due), or
(v) any Guaranty of Indebtedness. For the avoidance of doubt, Indebtedness does not include the mere commitment (whether or not set forth in a credit agreement or otherwise), in favor of a
Person, to advance funds or provide other financial accommodations to the extent that no such funds or financial accommodations are advanced or provided. 

        Insolvency Proceeding shall mean, with respect to any Person, (a) a case, action or proceeding with respect to such Person
(i) before any court or any other Official Body under any bankruptcy, insolvency, reorganization or other similar Law now or hereafter in effect, or (ii) for the appointment of a
receiver, liquidator, assignee, custodian, trustee, sequestrator, conservator (or similar official) of the Company or any Material Subsidiary or otherwise relating to the liquidation, dissolution,
winding-up or relief of such Person, or (b) any general assignment for the benefit of creditors, composition, marshaling of assets for creditors, or other similar arrangement in
respect of such Person's creditors generally or any substantial portion of its creditors, undertaken under any Law. 

        Insurance-Related Guaranties shall have the meaning assigned to that term in Section 7.02(c). 

        Insurer Financial Strength Rating shall mean the insurer financial strength rating of the Company as determined by each of
Standard & Poor's and Moody's. 

        Interest Period shall mean either a Committed Loan Interest Period or a Bid Loan Interest Period. 

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

        Interest Rate Option shall mean any Committed Loan LIBOR Option, Bid Loan LIBOR Option, Bid Loan Fixed Rate Option, or Base Rate Option. 

        Internal Revenue Code shall mean the Internal Revenue Code of 1986, 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. 

        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. 

        LIBOR shall mean, with respect to any Borrowing Tranche of Loans, the relevant interest rate,  i.e., Eurodollar Rate, Euro LIBOR or Sterling LIBOR. 

        LIBOR Bid Loan shall mean any Bid Loan that bears interest under the Bid Loan LIBOR Option. 

        LIBOR Bid Loan Spread shall mean the spread quoted by a Bank in its Bid to apply to such Bank's Bid Loan if such Bank's Bid is accepted.
The LIBOR Bid Loan Spread shall be quoted as a 

7

 

percentage
rate per annum and expressed in multiples of 1/1000th of one percentage point to be either added to (if it is positive) or subtracted from (if it is negative)
the LIBOR in effect two (2) Business Days before the Borrowing Date with respect to such Bid Loan. Interest on LIBOR Bid Loans shall be computed based on a year of 360 days for the
actual days elapsed. 

        LIBOR Interest Period shall mean the Interest Period applicable to a LIBOR Bid Loan, a Revolving Credit Loan that is subject to the
Revolving Credit LIBOR Option or a Term Loan that is subject to the Term Loan LIBOR Option. 

        LIBOR Option shall mean either the Revolving Credit LIBOR Option, the Term Loan LIBOR Option or the Bid Loan Euro-Rate Option. 

        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). 

        Loan Documents shall mean this Agreement, the Agent's Letter, the Guaranty Agreement, and any other instruments, certificates, or
documents delivered or contemplated to be delivered hereunder or thereunder or in connection herewith or therewith, as the same may be supplemented or amended from time to time in accordance herewith
or therewith, and Loan Document shall mean any of the Loan Documents. 

        Loan Request shall mean either a Bid Loan Request or a Committed Loan Request. 

        Loans shall mean collectively all Revolving Credit Loans, Term Loans and Bid Loans and Loan shall mean separately any Revolving Credit
Loan, Term Loan or Bid Loan. 

        Material Adverse Change shall mean any set of circumstances or events which (a) has or could reasonably be expected to have any
material adverse effect whatsoever upon the validity or enforceability of this Agreement or any other Loan Document, (b) is or could reasonably be expected to be material and adverse to the
business, properties, assets, financial condition, results of operations or prospects of the Company and the Material Subsidiaries taken as a whole, (c) impairs materially or could reasonably
be expected to impair materially the ability of the Company and the Material Subsidiaries taken as a whole to duly and punctually pay or perform its obligations under the Loan Documents, or
(d) impairs materially or could reasonably be expected to impair materially the ability of the Agent or any of the Banks, to the extent permitted, to enforce their legal remedies pursuant to
this Agreement or any other Loan Document. 

8

   
        Material Subsidiary shall mean (i) any Subsidiary of the Company 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 the
Company and its Subsidiaries or $25,000,000, (ii) any Subsidiary of the Company as to which the Company requests in writing that it be a Material Subsidiary, and (iii) any Subsidiary or
Subsidiaries of the Company which own(s) in the aggregate 30% or more of any Material Subsidiary; and Material Subsidiaries shall mean all such Subsidiaries. Notwithstanding the foregoing, the UK
Borrower shall be deemed to be a Material Subsidiary for all purposes in this Agreement and the other Loan Documents; provided, however that the UK
Borrower shall not be required to be a Guarantor. 

        Month, with respect to an Interest Period under the LIBOR Option, shall mean the interval between the days in consecutive calendar months
numerically corresponding to the first day of such Interest Period. If any LIBOR Interest Period begins on a day of a calendar month for which there is no numerically corresponding day in the month in
which such Interest Period is to end, the final month of such Interest Period shall be deemed to end on the last Business Day of such final month. 

        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 the Company 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 the Company 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. 

        Net Par shall mean the aggregate maximum par amount of insurance and reinsurance coverage under all obligations of insurance or
reinsurance (or similar arrangements) provided by a Person minus the aggregate maximum par amount of reinsurance (or similar arrangements including hedging arrangements) coverage in favor of such
Person with respect to its insurance or reinsurance obligations. 

        Notes shall mean the Revolving Credit/Term Loan Notes and Bid Notes. 

        Notices shall have the meaning assigned to that term in Section 10.06. 

        Obligation shall mean any obligation or liability of either Borrower, any Material Subsidiary, or ACE to the Agent or any of the Banks,
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, any Notes,
the Agent's Letter or any other Loan Document. 

        Off-Balance Sheet Transactions shall have the meaning assigned to that term in Section 7.03(e). 

        Offered Amount shall have the meaning assigned to such term in Section 2.08(b). 

        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. 

        PBGC shall mean the Pension Benefit Guaranty Corporation established pursuant to Subtitle A of Title IV of ERISA or any successor. 

        Permitted Acquisitions shall have the meaning assigned to such term in Section 7.02(f). 

9

 

        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; and 

        (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 Section 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; 

         (ii)  Pledges
or deposits made in the ordinary course of business of the Company or any Material Subsidiary 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 the Company or any Material Subsidiary to secure statutory or regulatory
obligations of the Company 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 in favor of the Agent for the benefit of the Banks securing the Obligations; 

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

      (viii)  Any
Lien existing on the date of this Agreement securing payment of non-recourse Indebtedness and described on  Schedule 1.01(P), provided that the
principal amount secured thereby is not hereafter increased; 

        (ix)  Purchase
Money Security Interests; 

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

10

 

        (xi)  Liens
securing Credit Derivative Guaranties, subject, however, to the terms of Section 7.02(p); 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 Borrower 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 Borrower 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 

        (4)   Liens
resulting from final judgments or orders described in Section 8.01(f). 

        Person shall mean any individual, 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 notice, passage of time or a determination by the Agent or the Required
Banks, or any combination of the foregoing, would constitute an Event of Default. 

        Pounds Sterling shall mean freely transferable lawful money of the United Kingdom. 

        Principal Amount shall mean (i) the stated principal amount of each Loan denominated in Dollars, and/or (ii) the Dollar
Equivalent of the stated principal amount of each Alternate Currency Loan, as the context may require. 

        Principal Office shall mean the main banking office of the Agent in New York, New York. 

        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. 

        Property shall mean all real property, both owned and leased, of the Company or any Material Subsidiary. 

11

 

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

        Purchasing Bank shall mean a Bank which becomes a party to this Agreement by executing an Assignment and Assumption Agreement. 

        Ratable Share shall mean the proportion that a Bank's Commitment bears to the Commitments. 

        Regulation U shall mean any of Regulations T, U, or X as promulgated by the Board of Governors of the Federal Reserve System, as
amended from time to time. 

        Reportable Event shall mean a reportable event described in Section 4043 of ERISA and regulations thereunder with respect to a Plan
or Multiemployer Plan. 

        Requested Amount shall have the meaning assigned to such term in Section 2.08(a). 

        Required Banks shall mean 

        (A)  if
there are no Loans, Required Banks shall mean Banks whose Commitments aggregate greater than 50% of the Commitments of all of the Banks, or 

        (B)  if
there are Loans, Required Banks shall mean: 

          (i)  prior
to a termination of the Commitments hereunder pursuant to Section 8.02(a) or Section 8.02(b), any Bank or group of Banks if the sum of the principal
amount of the Committed Loans of such Banks
then outstanding aggregates greater than 50% of the total principal amount of all of the Committed Loans then outstanding; and 

         (ii)  after
a termination of the Commitments hereunder pursuant to Section 8.02(a) or Section 8.02(b), any Bank or group of Banks if the sum of the principal
amount of the Loans of such Banks then outstanding aggregates greater than 50% of the total principal amount of all of the Loans then outstanding. 

        Revolving Credit Base Rate Option shall mean the option of the Borrowers to have Revolving Credit Loans bear interest at the rate and
under the terms and conditions set forth in Section 3.01(a)(i). 

        Revolving Credit Commitment shall mean, as to any Bank at any time, the amount initially set forth opposite its name on  Schedule 1.01(B) in the column labeled
"Amount of Commitment for Revolving Credit Loans," and thereafter on Schedule I to the most recent
Assignment and Assumption Agreement, and Revolving Credit Commitments shall mean the aggregate Revolving Credit Commitments of all of the Banks. 

        Revolving Credit LIBOR Option shall mean the option of the Borrowers to have Revolving Credit Loans bear interest at the rate and under
the terms and conditions set forth in Section 3.01(a)(ii). 

        Revolving Credit Loans shall mean collectively all Revolving Credit Loans made by the Banks to the Borrowers and Revolving Credit Loan
shall mean separately any Revolving Credit Loan, made by one of the Banks to a Borrower, pursuant to Section 2.01(a). A Bid Loan is not a Revolving Credit Loan, except that it will be treated
as a Revolving Credit Loan following a termination of the Commitments hereunder pursuant to Section 8.02(a) or Section 8.02(b) as provided in Section 8.03. 

        Revolving Credit/Term Loan Note shall mean any Revolving Credit/Term Loan Note of a Borrower in the form of  Exhibit 1.01(R) issued by such Borrower to a Bank
evidencing the Revolving Credit Loans or Term Loans, as the case may be, of such Bank to such
Borrower, together with all amendments, extensions, renewals, replacements, refinancings or refundings thereof in whole or in part. 

        SEC shall mean the Securities and Exchange Commission or any governmental agencies substituted therefor. 

12

 

        Soft Capital shall have the meaning assigned to that term in Section 7.02(a). 

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

        Statutory Capital shall mean the aggregate of policyholders' surplus of the Company and the contingency reserve of the Company, each
determined in a manner consistent with that used in preparing the Historical Statements referred to in Section 5.01(h)(A) [Historical Statements]. 

        Sterling LIBOR shall mean, with respect to the Loans comprising any Borrowing Tranche denominated in Pounds Sterling to which the LIBOR
Option applies for any Interest Period, (A) an interest rate per annum determined on the basis of the rate for deposits in Pounds Sterling for a period comparable to such Interest Period
commencing on the first day of such Interest Period appearing on Page 3750 of the Telerate screen as of 11:00 A.M., London time, two Business Days prior to the beginning of such Interest Period
plus (B) the Associated Cost Rate for such Loans for such Interest Period. In the event that such rate does not appear on Page 3750 of the Telerate screen (or otherwise on such screen),
Sterling LIBOR shall be determined by reference to such other publicly available service for displaying Pounds Sterling-denominated rates as may be agreed upon by the Agent and the Borrowers or, in
the absence of such agreement, Sterling LIBOR shall be the rate of interest per annum determined by the Agent in accordance with its usual procedures (which determination shall be conclusive absent
manifest error) equal to the rate per annum at which Pounds Sterling deposits approximately equal in principal amount to such Borrowing Tranche for a period and with a maturity comparable to such
Interest Period are offered to the principal London office of Agent in immediately available funds in the London interbank market at approximately 11:00 A.M., London time, two Business Days
prior to the commencement of such Interest Period. The Agent shall give prompt notice to the Borrowers of the Sterling LIBOR as determined or adjusted in accordance herewith, which determination shall
be conclusive absent manifest error. 

        Subsidiary of any Person at any time shall mean (i) any corporation 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. Notwithstanding the foregoing, the UK Borrower shall be deemed to be a Subsidiary for all purposes in this Agreement and the other Loan Documents;  provided, however, that the UK Borrower shall not be required to be a Guarantor. 

        Term Loan Base Rate Option shall mean the option of the Borrowers to have Term Loans bear interest at the rate and under the terms and
conditions set forth in Section 3.01(a)(i). 

        Term Loan Fee shall have the meaning assigned to that term in Section 2.03(b). 

        Term Loan LIBOR Option shall mean the option of the Borrowers to have Term Loans bear interest at the rate and under the terms and
conditions set forth in Section 3.01(a)(ii). 

        Term Loan Maturity Date shall mean the first anniversary of the Expiration Date or, if such day is not a Business Day, the next preceding
Business Day. 

13

 

        Term Loans shall mean each Revolving Credit Loan that is converted into a term loan on the Expiration Date pursuant to
Section 2.01(b). 

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

        Transferor Bank shall mean the selling Bank pursuant to an Assignment and Assumption Agreement. 

        UK Borrower shall mean ACE Guaranty (UK) Ltd., a company organized under the laws of England and Wales. 

        Section 1.02    Construction.    Unless the context of this Agreement otherwise clearly requires, the following
rules of construction shall apply to this Agreement and each of the other Loan Documents: 

        (a)    Number; Inclusion.    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"; 

        (b)    Determination.    References to "determination" of or by the Agent or the Banks shall be deemed to include
good-faith estimates by the Agent or the Banks (in the case of quantitative determinations) and good-faith beliefs by the Agent or the Banks (in the case of qualitative
determinations) and such determination shall be conclusive absent manifest error; 

        (c)    Agent's Discretion and Consent.    Whenever the Agent or the Banks are granted the right herein to act in its
or their sole discretion or to grant or withhold consent such right shall be exercised in good faith; 

        (d)    Documents Taken as a Whole.    The words "hereof," "herein," "hereunder," "hereto" and similar terms in this
Agreement or any other Loan Document refer to this Agreement or such other Loan Document as a whole and not to any particular provision of this Agreement or such other Loan Document; 

        (e)    Headings.    The section and other headings contained in this Agreement or such other Loan Document and the
Table of Contents (if any), preceding this Agreement or such other Loan Document are for reference purposes only and shall not control or affect the construction of this Agreement or such other Loan
Document or the interpretation thereof in any respect; 

        (f)    Implied References to this Agreement.    Article, section, subsection, clause, schedule and exhibit references
are to this Agreement or other Loan Document, as the case may be, unless otherwise specified; 

        (g)    Persons.    Reference to any Person includes such Person's successors and assigns but, if applicable, only if
such successors and assigns are permitted by this Agreement or such other Loan Document, as the case may be, and reference to a Person in a particular capacity excludes such Person in any other
capacity; 

        (h)    Modifications to Documents.    Reference to any agreement (including this Agreement and any other Loan Document
together with the schedules and exhibits hereto or thereto), document or instrument means such agreement, document or instrument as amended, modified, replaced, substituted for, superseded or
restated; 

        (i)    From, To and Through.    Relative to the determination of any period of time, "from" means "from and
including," "to" means "to but excluding," and "through" means "through and including"; and 

14

 

        (j)    Shall; Will.    References to "shall" and "will" are intended to have the same meaning. 

        Section 1.03    Accounting Principles; Computations.    (a) Except as otherwise provided in this
Agreement (as, for example, where reference is made to statutory or regulatory financial matters), all computations and determinations as to accounting or financial matters and all financial
statements to be delivered pursuant to this Agreement shall be made and prepared in accordance with GAAP (including principles of consolidation where appropriate), and all accounting or financial
terms shall have the meanings ascribed to such terms by GAAP as in effect on the date hereof applied on a basis consistent with that used in preparing the Historical Statements referred to in
Section 5.01(h)(A) [Historical Statements]. In the event of any change after the date hereof in GAAP, and if such change would result in the inability to determine
compliance with the financial covenants set forth in Section 7.02 based upon the Company's regularly prepared financial statements by reason of the preceding sentence, then the parties hereto
agree to endeavor, in good faith, to agree upon an amendment to this Agreement that would adjust such financial covenants in a manner that would not affect the substance thereof, but would allow
compliance therewith to be determined in accordance with the Company's financial statements at that time. 

        (b)   For
purposes of this Agreement, the Dollar Equivalent of each Loan that is an Alternate Currency Loan shall be calculated on the date when any such Loan is made, on the
second Business Day of each month, or such date as a Borrower may request and at such other times as designated by the Agent at any time when a Potential Default or an Event of Default exists. Such
Dollar Equivalent shall remain in effect until the same is recalculated by the Agent as provided above and notice of such recalculation is received by the Borrowers, it being understood that until
such notice is received, the Dollar Equivalent shall be that Dollar Equivalent as last reported to the Borrowers by the Administrative Agent. The Agent shall promptly notify the Borrowers and the
Banks of each such determination of the Dollar Equivalent. 

ARTICLE II  

 REVOLVING CREDIT AND TERM LOAN FACILITY  

        Section 2.01    Revolving Credit Commitments; Term Loans.    (a) Subject to the terms and conditions
hereof and relying upon the representations and warranties herein set forth, each Bank severally agrees to make Revolving Credit Loans to either Borrower (on a several basis) at any time or from time
to time on or after the date hereof to the Expiration Date, which Revolving Credit Loans (i) may be made and maintained in such Approved Currency as is requested by the applicable Borrower
(provided that the aggregate Principal Amount of Revolving Credit Loans denominated in Alternate Currencies shall not exceed $12,500,000 and only the UK
Borrower may incur Alternate Currency Loans) and (ii) shall not,
in the case of Revolving Credit Loans incurred by the UK Borrower, when added to the outstanding Principal Amount of all Bid Loans incurred by the UK Borrower, exceed $12,500,000 in aggregate
Principal Amount outstanding at any time for all such Revolving Credit Loans and Bid Loans; provided that, after giving effect to each such Loan, the
aggregate amount of Loans from such Bank shall not exceed such Bank's Revolving Credit Commitment. Within such limits of time and amount and subject to the other provisions of this Agreement, the
Borrowers may borrow, repay, and reborrow Revolving Credit Loans pursuant to this Section 2.01(a). 

        (b)   Subject
to and upon the terms and conditions set forth herein, each Borrower and each Bank which has Dollar-denominated Revolving Credit Loans outstanding at such time
agree that at 9:00 A.M., New York time, on the Expiration Date, the aggregate principal amount of Dollar-denominated Revolving Credit Loans owing to such Bank and outstanding at such time shall
(unless such Revolving Credit Loans have been declared (or have become) due and payable pursuant to this Agreement), upon written notice (or telephonic notice promptly confirmed in 

15

 

writing)
by the respective Borrower to the Agent requesting such conversion, automatically convert to and thereafter constitute Term Loans owing to such Bank hereunder. The Term Loans of each Bank
(i) shall be made and thereafter maintained in Dollars; (ii) shall, at the option of the applicable Borrower, be Base Rate Loans or LIBOR Loans,  provided that all Term Loans comprising the
same Borrowing Tranche shall, unless otherwise specifically provided herein, consist of Term Loans of the
same type; and (iii) shall not exceed in initial Principal Amount for such Bank an amount which equals the total principal amount of Dollar-denominated Revolving Credit Loans owed to such Bank
and outstanding at 9:00 A.M., New York time, on the Expiration Date. Once repaid, Term Loans may not be reborrowed. 

        Section 2.02    Nature of Banks' Obligations with Respect to Revolving Credit Loans.    Each Bank shall be
obligated to participate in each request for Revolving Credit Loans pursuant to Section 2.05 [Revolving Credit Loan Requests] in accordance with its Ratable Share. The
aggregate Principal Amount of each Bank's Revolving Credit Loans outstanding hereunder to the Borrowers at any time shall never exceed its Revolving Credit Commitment. The obligations of each Bank
hereunder are several and not joint. The failure of any Bank to perform its obligations hereunder shall not affect the Obligations of the Borrowers to any other party nor shall any other party be
liable for the failure of such Bank to perform its obligations hereunder. The Banks shall have no obligation to make Revolving Credit Loans hereunder on or after the Expiration Date. 

        Section 2.03    Facility Fees; Term Loan Fee.    (a) Accruing from the date hereof until but not
including the Expiration Date, the Company agrees to pay to the Agent for the account of each Bank, as consideration for such Bank's Revolving Credit Commitment hereunder, a non-refundable
facility fee (the "Facility Fee") equal to the Applicable Facility Fee Rate (computed on the basis of a year of 360 days for the actual days elapsed) on the average daily amount of such Bank's
Revolving Credit Commitment as the same may be constituted from time to time, regardless of usage. All Facility Fees shall be payable in arrears on the first Business Day of each June, September,
December, and March after the date hereof and on the Expiration Date or upon acceleration of the Loans. 

        (b)   Accruing
on the Expiration Date to but not including the Term Loan Maturity Date, the Company agrees to pay to the Agent for the pro
rata account of each Bank, a non-refundable fee (the "Term Loan Fee"), equal to 0.125% of the average daily aggregate outstanding Principal Amount of the Term
Loans. The Term Loan Fee shall be payable in arrears on the first Business Day of each March, June, September, and December after the Expiration Date and on the date the Term Loans are repaid in their
entirety. 

        Section 2.04    Utilization Fee.    On each day on which the Facility Usage exceeds 33.3% of the amount of the
Commitments (or, after the Expiration Date, the Commitments as in effect immediately prior to the Expiration Date), the Applicable Margin shall be increased for such day by the Applicable Usage
Premium. 

        Section 2.05    Revolving Credit Loan Requests.    Except as otherwise provided herein, a Borrower may from
time to time prior to the Expiration Date request the Banks to make Revolving Credit Loans in Dollars, or renew or convert the Interest Rate Option applicable to existing Revolving Credit Loans or
Term Loans pursuant to Section 3.01(c) [Interest Periods], by delivering to the Agent, not later than 10:00 a.m., New York time, (i) three
(3) Business Days prior to the proposed Borrowing Date with respect to the making of Revolving Credit Loans to which the LIBOR Option applies, or with respect to the conversion to or the
renewal of the LIBOR Option for any Loans; and (ii) one (1) Business Day prior to either the proposed Borrowing Date with respect to the making of a Revolving Credit Loan to which the
Base Rate Option applies or the last day of the preceding Committed Loan Interest Period with respect to the conversion to the Base Rate Option for any Loan, of a duly completed Committed Loan Request
therefor substantially in the form of Exhibit 2.05 or a Committed Loan Request by telephone immediately confirmed in writing by letter, facsimile, email, or telex in the form of such 

16

 

Exhibit.
In addition, the UK Borrower may from time to time prior to the Expiration Date request to make Revolving Credit Loans in Alternate Currencies by delivering to the Agent, not later than
1:00 P.M., New York time, at least four Business Days prior to the Borrowing Date a duly completed Committed Loan Request substantially in the form of Exhibit 2.05 or a Committed Loan
Request by telephone immediately confirmed in writing by letter, facsimile, email or telex in the form of such Exhibit. Each Loan Request shall be irrevocable and shall specify (i) the identity
of the applicable Borrower; (ii) the respective Approved Currency for such Loan; (iii) the proposed Borrowing Date; (iv) the aggregate amount of the proposed Loans comprising each
Borrowing Tranche (stated in the applicable Approved Currency), which shall be in integral multiples of $1,000,000 and not less than $5,000,000 for each Borrowing Tranche to which the LIBOR Option
applies and not less than the lesser of $500,000 or the maximum amount available for Borrowing Tranches to which the Base Rate Option applies; (v) whether Committed Loan LIBOR Option or Base
Rate Option shall apply to the proposed Loans comprising the applicable Borrowing Tranche; and (vi) in the case of a Borrowing Tranche to which the Committed Loan LIBOR Option applies, an
appropriate Committed Loan Interest Period for the Loans comprising such Borrowing Tranche. 

        Section 2.06    Making Revolving Credit Loans.    The Agent shall, promptly after receipt by it of a Loan
Request pursuant to Section 2.05 [Revolving Credit Loan Requests], notify the Banks of its receipt of such Loan Request specifying: (i) the applicable Borrower
making the Loan Request; (ii) the proposed Borrowing Date and the time and method of disbursement of the Revolving Credit Loans requested thereby; (iii) the amount and type of each such
Revolving Credit Loan (stated in the applicable Approved Currency) and the applicable Interest Period (if any); and (iv) the apportionment among the Banks of such Revolving Credit Loans as
determined by the Agent in accordance with Section 2.02 [Nature of Banks' Obligations]. Each Bank shall remit the principal amount of each Revolving Credit Loan to the
Agent such that the Agent is able to, and the Agent shall, to the extent the Banks have made funds available to it for such purpose and subject to Section 6.02 [Each Additional
Loan], fund such Revolving Credit Loans to the applicable Borrower in the applicable Approved Currency and immediately available funds at the Principal Office prior to 2:00 p.m.,
New York time, on the applicable Borrowing Date, provided that if any Bank fails to remit such funds to the Agent in a timely manner, the Agent may
elect in its sole discretion to fund with its own funds the Revolving Credit Loans of such Bank on such Borrowing Date, and such Bank shall be subject to the repayment obligation in
Section 9.16 [Availability of Funds]. 

        Section 2.07    Use of Proceeds.    The proceeds of the Revolving Credit Loans shall be used for the working
capital and other general corporate purposes of the Borrowers and in accordance with Section 7.01(j) [Use of Proceeds]. 

        Section 2.08    Bid Loan Facility.    (a)    Bid Loan
Requests.    Except as otherwise provided herein, any Borrower may from time to time prior to the Expiration Date request that the Banks make Bid Loans by delivery to
the Agent not later than 10:00 A.M. New York time of a duly completed request therefor substantially in the form of Exhibit 2.08(a) hereto or a request by telephone immediately confirmed
in writing by letter, facsimile, email, or telex (each, a "Bid Loan Request") at least three (3) Business Days prior to the proposed Bid Loan Borrowing Date if the applicable Borrower is
requesting Fixed Rate Bid Loans and four (4) Business Days prior to the proposed Bid Loan Borrowing Date if the applicable Borrower is requesting Euro-Rate Bid Loans of one, two,
three, or six months' duration. Each Bid Loan Request shall be irrevocable and shall specify (i) the identity of the applicable Borrower; (ii) the respective Approved Currency for such
Loan; (iii) the proposed Bid Loan Borrowing Date; (iv) whether the applicable Borrower is electing the Bid Loan Fixed Rate Option or the Bid Loan LIBOR Option; (v) the term of the
proposed Bid Loan (the "Bid Loan Interest Period"), which may be no less than seven (7) day(s) and no longer than one hundred eighty (180) days if the applicable Borrower is requesting a
Fixed Rate Bid Loan and one, two, three, or six months if the applicable Borrower is requesting a LIBOR Bid Loan; and (vi) the maximum principal amount (the 

17

 

"Requested
Amount") of such Bid Loan, which shall be not less than $10,000,000 and shall be an integral multiple of $1,000,000. After giving effect to such Bid Loan and any other Loan made on or
before the Bid Loan Borrowing Date, the aggregate Principal Amount of all Revolving Credit Loans and Bid Loans outstanding shall not exceed the aggregate amount of the Revolving Credit Commitments of
the Banks. In addition, after giving effect to any such Bid Loan incurred by the UK Borrower and any other Loan made on or before the Bid Loan Borrowing Date, the aggregate Principal Amount of all Bid
Loans and Revolving Credit Loans incurred by the UK Borrower shall not exceed $12,500,000 in Principal Amount outstanding. Notwithstanding any provision hereof to the contrary, no Bid Loan may be
requested for a period that would end beyond the Expiration Date. 

        (b)    Bidding.    The Agent shall promptly after receipt by it of a Bid Loan Request pursuant to
Section 2.08(a) notify the Banks of its receipt of such Bid Loan Request specifying (i) the identity of the applicable Borrower, (ii) the proposed Bid Loan Borrowing Date,
(iii) whether the proposed Bid Loan shall be a Fixed Rate Bid Loan or a LIBOR Bid Loan, (iv) the Bid Loan Interest Period, (v) the principal amount of the proposed Bid Loan and
(vi) in the case of an Alternate Currency Loan to be incurred by the UK Borrower, the Alternate Currency for such Bid Loan. Each Bank may submit a bid (a "Bid") to the Agent by telephone
(immediately confirmed in writing by letter, facsimile, email, or telex) not later than the following (each, as applicable, a "Bid Deadline"): 10:00 A.M. New York time two (2) Business
Day before the proposed Bid Loan Borrowing Date if the applicable Borrower is requesting a Fixed Rate Bid Loan or 10:00 A.M. New York time three (3) Business Days before the proposed Bid
Loan Borrowing Date if the applicable Borrower is requesting a LIBOR Bid Loan of one, two, three, or six months' duration. Each Bid shall specify: (A) the principal amount of proposed Bid Loans
offered by such Bank (the "Offered Amount") which (i) may be less than, but shall not exceed, the Requested Amount, (ii) shall be at least $2,000,000 and shall be an integral multiple of
$1,000,000 and (iii) may exceed such Bank's Revolving Credit Commitment; and (B) the Fixed Rate which shall apply to such proposed Bid Loan if the applicable Borrower has requested a
Fixed Rate Bid Loan or the LIBOR Bid Loan Spread which shall apply to such proposed Bid Loan if Borrower has requested a LIBOR Bid Loan and which may be a positive or negative number. If any Bid omits
information required hereunder, the Agent may in its sole discretion attempt to notify the Bank submitting such Bid. If the Agent so notifies a Bank, such Bank may resubmit its Bid  provided that it does
so prior to the applicable Bid Deadline. The Agent shall promptly notify the applicable Borrower of the Bids which it timely
received from the Banks. If the Agent in its capacity as a Bank shall, in its
sole discretion, make a Bid, it shall notify the Borrower of such Bid at least one-half hour before the applicable Bid Deadline. 

        (c)    Accepting Bids.    The applicable Borrower, at its option, shall irrevocably accept or reject Bids by notifying
the Agent of such acceptance or rejection by telephone (immediately confirmed in writing by letter, facsimile, email, or telex) not later than one hour after the applicable Bid Deadline. If the
applicable Borrower elects to accept any Bids, its acceptance must meet the following conditions: (1) the total amount which the applicable Borrower accepts from all Banks must not be less than
$10,000,000 and shall be in integral multiples of $1,000,000 and may not exceed the Requested Amount; (2) the applicable Borrower must accept Bids based solely on the amount of the Fixed Rates
or LIBOR Bid Loan Spreads, as the case may be, which each of the Banks quoted in their Bids in ascending order of the amount of Fixed Rates or LIBOR Bid Loan Spreads; (3) the applicable
Borrower may not borrow Bid Loans from any Bank on the Bid Loan Borrowing Date in an amount exceeding such Bank's Offered Amount; (4) if two or more Banks make Bids at the same Fixed Rate (if
the applicable Borrower Requested a Fixed Rate Bid Loan) or LIBOR Bid Loan Spread (if the applicable Borrower Requested a LIBOR Bid Loan) and the applicable Borrower desires to accept a portion but
not all of the Bids at such Fixed Rate or LIBOR Bid Loan Spread, as the case may be, the applicable Borrower shall accept a portion of each Bid equal to the product of the Offered Amount of such Bid
times the fraction obtained by 

18

 

dividing
the total amount of Bids which the applicable Borrower desires to accept at such Fixed Rate or LIBOR Bid Loan Spread, as the case may be, by the sum of the Offered Amounts of the Bids at such
Fixed Rate or LIBOR Bid Loan Spread, provided that the applicable Borrower shall round the Bid Loans allocated to each such Bank upward or downward as
the applicable Borrower may select to integral multiples of $1,000,000. The Agent shall (i) promptly notify a Bank that has made a Bid of the amount of its Bid that was accepted or rejected by
the applicable Borrower and (ii) as promptly as practical notify all of the Banks of all Bids submitted and those which have been accepted. 

        (d)    Funding Bid Loans.    Each Bank whose Bid or portion thereof is accepted shall remit the principal amount of
its Bid Loan to the Agent by 12:00 Noon on the Bid Loan Borrowing Date. The Agent shall make such funds available to the applicable Borrower on or before 1:00 P.M. on the Borrowing Date  provided
that the conditions precedent to the making of such Bid Loan set forth in Section 6.02 have been satisfied not later than
10:00 A.M. New York time on the proposed Bid Loan Borrowing Date. If such conditions precedent have not been satisfied prior to such time, then (i) the Agent shall not make such funds
available to the applicable Borrower, (ii) the Bid Loan Request shall be deemed to be canceled, (iii) the Agent shall return the amount previously funded to the Agent by each applicable
Bank no later than the next following Business Day, and (iv) the applicable Borrower shall be obligated to each such Bank for any loss, costs, and expenses applicable pursuant to
Section 4.06(b) [Indemnity]. The applicable Borrower shall immediately notify the Agent of any failure to satisfy the conditions precedent to the making of Bid Loans
under Section 6.02. The Agent may assume that the applicable Borrower has satisfied such conditions precedent if the applicable Borrower (i) has delivered to the Agent any documents
required to be delivered under Section 6.02, (ii) the applicable Borrower has not notified the Agent that any other conditions precedent have not been satisfied, and (iii) the
Agent has no actual notice of such a failure. 

        (e)    Several Obligations.    The obligations of the Banks to make Bid Loans after their Bids have been accepted are
several. No Bank shall be responsible for the failure of any other Bank to make any Bid Loan which another Bank has agreed to make. 

        (f)    Bid Notes.    The obligation of the applicable Borrower to repay the aggregate unpaid principal amount of the
Bid Loans made to it by each Bank, together with interest thereon, shall be evidenced by a Bid Note dated as of the Closing Date payable to the order of such Bank in a face amount equal to the
aggregate Revolving Credit Commitments of all of the Banks. 

        Section 2.09    Extension by Banks of the Expiration
Date.    (a)    Requests; Approval by All Banks.    No earlier than forty-five
(45) days prior to the Expiration Date, the Company may request an extension of the Expiration Date for another 364 days by written notice to the Banks, and the Banks agree to respond to
the Company's request for an extension no earlier than thirty (30) and no later than twenty (20) days prior to the then applicable Expiration Date;  provided, however, that the failure of any Bank to respond within such time period shall not in any
manner constitute an agreement by such Bank to extend the Expiration Date. If all Banks elect to extend, the Expiration Date shall be extended for a period of 364 days. If one or more Banks
decline to extend or do not respond to the Company's request, the provisions of Section 2.09 shall apply. 

        (b)    Approval by Required Banks.    In the event that one or more Banks do not agree to extend the Expiration Date
or do not respond to the Company's request for an extension within the time required under Section 2.09 (each a "Bank to be Terminated"), but the Required Banks agree to such extension within
such time: then, on or before the then applicable Expiration Date, the Company may, with the prior written approval of the Agent (which approval shall not be unreasonably withheld), arrange to have
one or more other banks reasonably acceptable to the Agent (each an "Assignee Bank") purchase all of the outstanding Loans, if any, of the Bank to be 

19

 

Terminated
and succeed to and assume all of the Commitments and all other rights, interests, and obligations of the Bank to be Terminated under this Agreement and the other Loan Documents. Any such
purchase and assumption shall be (1) pursuant to an Assignment and Assumption Agreement, (2) subject to and in accordance with Section 10.11 [Successors and
Assigns], and (3) if any Committed Loans are outstanding under the Committed Loan LIBOR Option or if any Bid Loans are outstanding to such Bank to be Terminated, the Borrowers shall
pay all such outstanding amounts, together with all interest, fees and all other amounts of any nature owing to the Bank to be Terminated on the effective date of such Assignment and Assumption
Agreement (including any amounts owing under Section 4.06(b) [Indemnity]. In the event that the Agent shall become a Bank to be Terminated, the provisions of this
Section 2.09 shall be subject to Section 9.14 [Successor Agent]. In the event that the Loans and Commitments of a Bank to be Terminated are not fully assigned and
assumed pursuant to this Section 2.09(b) on or before the then applicable Expiration Date, then the Expiration Date shall not be extended for any Bank. 

        Section 2.10    UK Borrower Loans.    (a) Notwithstanding anything to the contrary in this Agreement,
the UK Borrower shall not be permitted to incur any Loans hereunder unless and until the following conditions precedent have been satisfied: 

          (i)  Secretary's
Certificate. There shall be delivered to the Agent for the benefit of each Bank a certificate signed by the Secretary or an Assistant Secretary of the UK
Borrower, certifying as appropriate as to: 

        (A)  all
action taken by the UK Borrower in connection with this Agreement and the other Loan Documents; 

        (B)  the
names of the officer or officers authorized to sign this Agreement and the other Loan Documents and the true signatures of such officer or officers and specifying
the Authorized Officers permitted to act on behalf of the UK Borrower for purposes of this Agreement and the true signatures of such officers, on which the Agent and each Bank may conclusively rely;
and 

        (C)  copies
of its organizational documents, including its certificate or articles of incorporation and bylaws as in effect on the date such Secretary's Certificate is
executed and if applicable, certified by the appropriate official where such documents are filed in an office. 

         (ii)  Opinion
of Counsel. There shall be delivered to the Agent for the benefit of each Bank one or more written opinions of counsel for the UK Borrower in form and substance
satisfactory to the Agent and its counsel: 

        (A)  as
to the matters set forth in Exhibit 6.01(d); and 

        (B)  as
to such other matters incident to the transactions contemplated herein as the Agent may reasonably request. 

        (iii)  The
UK Borrower shall have received permission from the United Kingdom Financial Services Authority under Part IV of the Financial Services and Markets Act 2000
to effect and carry out contracts of insurance. 

        (b)   Notwithstanding
anything to the contrary in this Agreement, the UK Borrower will not be permitted to borrow or incur any new Loans hereunder at any time after the UK
Borrower ceases to be a wholly-owned Subsidiary of the Company. 

20

 
ARTICLE III  

 INTEREST RATES  

        Section 3.01    Interest Rate Options.    Each Borrower shall pay interest in respect of the outstanding unpaid
principal amount of the Committed Loans as selected by it from the Base Rate Option or Revolving Credit LIBOR Option set forth below applicable to the Committed Loans, it being understood that,
subject to the provisions of this Agreement, the Borrowers may select different Interest Rate Options and different Interest Periods to apply to different Borrowing Tranches of the Committed Loans and
may convert to or renew one or more Interest Rate Options with respect to all or any portion of the Committed Loans comprising any Borrowing Tranche,  provided that there shall not be at any one time
outstanding more than eight (8) Borrowing Tranches in the aggregate among all of the Committed
Loans. If at any time the designated rate applicable to any Committed Loan made by any Bank exceeds such Bank's highest lawful rate, the rate of interest on such Bank's Committed Loan shall be limited
to such Bank's highest lawful rate. 

        (a)    Revolving Credit Interest Rate Options.    Each Borrower shall have the right to select from the following
Interest Rate Options applicable to the Revolving Credit Loans and Term Loans incurred by it: 

        (i)    Revolving Credit Base Rate Option:    A fluctuating rate per annum (computed on the basis of a year of 365 or
366 days, as the case may be, for the actual days elapsed) equal to the Base Rate plus the Applicable Margin, such interest rate to change automatically from time to time effective as of the
effective date of each change in the Base Rate; or 

        (ii)    Revolving Credit LIBOR Option:    A rate per annum (computed on the basis of a year of 360 days for the
actual days elapsed) equal to the applicable LIBOR plus the Applicable Margin. 

        (b)    Rate Quotations.    The Borrowers may call the Agent on or before the date on which a Committed Loan Request is
to be delivered to receive an indication of the rates then in effect, but it is acknowledged that such projection shall not be binding on the Agent or the Banks nor affect the rate of interest which
thereafter is actually in effect when the election is otherwise made in accordance with the terms of this Agreement. 

        (c)    Change in Fees or Interest Rates.    If the Applicable Margin or Applicable Fee Amount is increased or reduced
with respect to any period for which any Borrower has already paid interest or Facility Fees, the Agent shall recalculate the additional interest or Facility Fees due from or the amount of the refund
of interest or Facility Fees due to such Borrower and shall, within fifteen (15) Business Days after the Agent received the information which gave rise to such increase or decrease, give the
applicable Borrower and the Banks notice of such recalculation. 

          (i)  Any
additional interest or Facility Fee due from any Borrower shall be paid to the Agent for the account of the Banks on the next date on which an interest or fee
payment is due; provided, however, that if there are no Loans outstanding or if the Loans are due and
payable, such additional interest or Facility Fee shall be paid promptly after receipt of written request for payment from the Agent. 

         (ii)  Any
interest or Facility Fee refund due to any Borrower shall be credited against payments otherwise due from such Borrower on the next interest or fee payment date or,
if the Loans have been repaid and the Banks are no longer committed to lend under this Agreement, the Banks shall pay the Agent for the account of such Borrower such interest or Facility Fee refund
not later than five Business Days after written notice from the Agent to the Banks. 

21

   
        Section 3.02    Committed Loans Interest Periods.    At any time when any Borrower shall select, convert to,
or
renew a Committed Loan LIBOR Option, the applicable Borrower shall notify the Agent thereof at least three (3) Business Days prior to the effective date of such LIBOR Option by delivering a
Loan Request. The notice shall specify a Committed Loan Interest Period during which such Interest Rate Option shall apply. Notwithstanding the preceding sentence, the following provisions shall apply
to any selection of, renewal of, or conversion to a Committed Loan LIBOR Option: 

        (a)    Amount of Borrowing Tranche.    Each Borrowing Tranche of Committed Loan LIBOR Loans shall be in
integral multiples of $1,000,000 and not less than $5,000,000; 

        (b)    Renewals.    In the case of the renewal of a Committed Loan LIBOR Option at the end of an Interest Period, the
first day of the new Interest Period shall be the last day of the preceding Interest Period, without duplication in payment of interest for such day. 

        Section 3.03    Interest After Default.    To the extent permitted by Law, upon the occurrence of an Event of
Default and until such time such Event of Default shall have been cured or waived: 

        (a)    Interest Rate.    The rate of interest otherwise applicable for each Loan pursuant to Section 3.01
[Interest Rate Options] shall be increased by 2.0% per annum; and 

        (b)    Other Obligations.    Each other Obligation hereunder if not paid when due shall bear interest at a rate per
annum equal to the sum of the rate of interest applicable under the Revolving Credit Base Rate Option plus an additional 2.0% per annum from the time such Obligation becomes due and payable and until
it is paid in full. 

        (c)    Acknowledgment.    The Borrowers acknowledge that the increase in rates referred to in this Section 3.03
reflects, among other things, the fact that such Loans or other amounts have become a substantially greater risk given their default status and that the Banks are entitled to additional compensation
for such risk; and all such interest referred to in this Section 3.03 shall be payable by the Borrowers upon demand by the Agent. 

        Section 3.04    LIBOR Unascertainable; Illegality; Increased Costs; Deposits Not Available.
    (a)    Unascertainable.    If on any date on which LIBOR would otherwise be determined with respect to Committed Loans
or Bid Loans, the Agent shall have determined that: 

          (i)  adequate
and fair means do not exist for ascertaining such LIBOR, or 

         (ii)  a
contingency has occurred which materially and adversely affects the respective London interbank market relating to LIBOR, the Agent shall have the rights specified in
Section 3.04. 

        (b)    Illegality; Increased Costs; Deposits Not Available.    If at any time any Bank shall have determined that: 

          (i)  the
making, maintenance or funding of any Loan to which a LIBOR Option applies has been made unlawful by compliance by such Bank in good faith with any Law or any
interpretation or application thereof by any Official Body or with any request or directive of any such Official Body (whether or not having the force of Law), or 

         (ii)  such
LIBOR Option will not adequately and fairly reflect the cost to such Bank of the establishment or maintenance of any such Loan, or 

        (iii)  after
making all reasonable efforts, deposits of the relevant amount in the relevant Approved Currency for the relevant Interest Period for a Loan to which a LIBOR
Option applies are not available to such Bank with respect to such Loan in the respective London interbank market, 

then
the Agent shall have the rights specified in Section 3.04(c). 

22

 

        (c)    Agent's and Bank's Rights.    In the case of any event specified in Section 3.04(a) above, the Agent
shall promptly so notify the Banks and the Borrowers thereof, and in the case of an event specified in Section 3.04(b) above, such Bank shall promptly so notify the Agent and endorse a
certificate to such notice as to the specific circumstances of such notice, and the Agent shall promptly send copies of such notice and certificate to the other Banks and the Borrowers. Upon such date
as shall be specified in such notice (which shall not be earlier than the date such notice is given), the obligation of (A) the Banks, in the case of such notice given by the Agent, or
(B) such Bank, in the case of such notice given by such Bank, to allow the Borrowers to select, convert to or renew a LIBOR Option shall be
suspended until the Agent shall have later notified the Borrowers, or such Bank shall have later notified the Agent, of the Agent's or such Bank's, as the case may be, determination that the
circumstances giving rise to such previous determination no longer exist. If at any time the Agent makes a determination under Section 3.04(a) and any Borrower has previously notified
the Agent of its selection of, conversion to or renewal of a LIBOR Option and such Interest Rate Option has not yet gone into effect, such notification shall be deemed to provide for the termination
of the applicable Borrower's Bid Loan request (without penalty) for such Loans if the applicable Borrower has requested Bid Loans under the Bid Loan LIBOR Option and for the selection of, conversion
to or renewal of the Base Rate Option otherwise available with respect to such Loans if the applicable Borrower has requested the Committed Loan LIBOR Option. If any Bank notifies the Agent of a
determination under Section 3.04(b), the Borrowers shall, subject to the Borrowers' indemnification Obligations under Section 4.06(b) [Indemnity], as to
any Loan of the Bank to which a LIBOR Option applies, on the date specified in such notice either convert such Loan to the Base Rate Option otherwise available with respect to such Loan (in the case
of Dollar-denominated Loans) or prepay such Loan in accordance with Section 4.04 [Voluntary Prepayments]. Absent due notice from the Borrowers of conversion or
prepayment, such Loan shall automatically be converted to the Base Rate Option otherwise available with respect to such Loan upon such specified date in the case of Dollar-denominated Loans, or
prepaid on such date in the case of all other Loans. 

        Section 3.05    Selection of Interest Rate Options.    If any Borrower fails to select a new Interest Period to
apply to any Borrowing Tranche of Committed Loans under the Committed LIBOR Option at the expiration of an existing Interest Period applicable to such Borrowing Tranche in accordance
with the provisions of Section 3.01(c) [Interest Periods], the applicable Borrower shall be deemed to have (i) in the case of Dollar-denominated Loans,
converted such Borrowing Tranche to the Revolving Credit Base Rate Option commencing upon the last day of the existing Interest Period and (ii) in the case of Alternate Currency Loans,
selected a one-month Interest Period commencing upon the last day of the existing Interest Period. 

ARTICLE IV  

 PAYMENTS  

        Section 4.01    Payments.    All payments and prepayments to be made in respect of principal, interest,
Facility Fees, Term Loan Fees, Bid Loan Processing Fees, Agent's Fee, or other fees or amounts due from the Borrowers hereunder shall be payable prior to 11:00 A.M., New York time, on the date
when due without presentment, demand, protest, or notice of any kind, all of which are hereby expressly waived by the Borrowers, and without set-off, counterclaim, or other deduction of
any nature, and an action therefor shall immediately accrue. Such payments shall be made to the Agent at the Principal Office for the ratable accounts of the Banks with respect to the Loans and for
the account of the lending Bank with respect to the Bid Loans, in the applicable Approved Currency and in immediately available funds, and the Agent shall promptly distribute such amounts to the Banks
in immediately available funds, provided that in the event payments are received by 11:00 A.M., New York time, by the Agent with respect to the
Loans and such payments are not distributed to the Banks on 

23

 

the
same day received by the Agent, the Agent shall pay the Banks the Federal Funds Effective Rate with respect to the amount of such payments for each day held by the Agent and not distributed to the
Banks. The Agent's and each Bank's statement of account, ledger, or other relevant record shall, in the absence of manifest error, be conclusive as the statement of the amount of principal of and
interest on the Loans and other amounts owing under this Agreement. 

        Section 4.02    Pro Rata Treatment of Banks.    (a) Each borrowing of Revolving Credit Loans shall be
allocated to each Bank according to its Ratable Share (irrespective of the amount of Bid Loans outstanding), and each selection of, conversion to or renewal of any Interest Rate Option applicable to
Revolving Credit Loans and each payment or prepayment by the Borrowers with respect to principal or interest on the Revolving Credit Loans, Term Loans, Facility Fees or Term Loan Fees or other fees
(except for the Agent's Fee and the Bid Loan Processing Fee) or amounts due from the Borrowers hereunder to the Banks with respect to the Revolving Credit Loans or Term Loans, shall (except as
provided in Section 3.04(c) [Agent's and Bank's Rights] in the case of an event specified in Section 3.04 [Euro-Rate
Unascertainable; Etc.], Section 4.04 [Replacement of a Bank] or Section 4.06 [Additional Compensation in Certain
Circumstances]) be made in proportion to the applicable Revolving Credit Loans or Term Loans, as the case may be, outstanding from each Bank and, if no such Loans are then outstanding, in
proportion to the Ratable Share of each Bank. Each borrowing of a Bid Loan shall be made according to the provisions in Section 2.08 hereof and each payment or prepayment by the Borrowers of
principal, interest, fees, or other amounts from the Borrowers with respect to Bid Loans shall be made to the Banks in proportion to the amounts due to such Banks with respect to Bid Loans then
outstanding. 

        (b)   All
Borrowings of Term Loans under this Agreement shall be incurred by the Borrowers from the Banks pro rata on the basis
of such Banks' Commitments as in effect immediately prior to the Expiration Date. 

        Section 4.03    Interest Payment Dates.    Interest on Committed Loans to which the Base Rate Option applies
shall be due and payable in arrears on the first Business Day of each June, September, December, and March after the date hereof and on the Expiration Date or upon acceleration of the Loan.
Interest on Committed Loans and Bid Loans to which the LIBOR Option applies and Bid Loans to which the Bid
Loan Fixed Rate Option applies shall be due and payable on the last day of each Interest Period for those Loans and, if such Interest Period is longer than three (3) Months, also at the end of
the third Month of such Interest Period. Interest on payments of principal and other monetary Obligations shall be due on the date such payment is due (whether on the stated maturity date, upon
acceleration, or otherwise) or if principal or such other Obligation is paid earlier than the date when due, then on the date when paid. 

        Section 4.04    Voluntary Prepayments.    (a)    Right to
Prepay.    Each Borrower shall have the right at its option from time to time to prepay the Committed Loans incurred by it in whole or part without premium or penalty
(except as provided in Section 4.04(b) below or in Section 4.06 [Additional Compensation in Certain Circumstances]): 

          (i)  at
any time with respect to any Committed Loan to which the Base Rate Option applies, 

         (ii)  on
the last day of the applicable Interest Period with respect to Committed Loans to which a LIBOR Option applies, 

        (iii)  on
the date specified in a notice by any Bank pursuant to Section 3.04 [LIBOR Unascertainable, Etc.] with respect to any Committed Loan
to which a LIBOR Option applies. 

        Whenever
any Borrower desires to prepay any part of the Committed Loans, it shall provide a prepayment notice to the Agent by 12:00 Noon, New York time, at least one (1) Business
Day prior to 

24

 

the
date of prepayment of Revolving Credit Loans or Term Loans to which a Base Rate Option applies and at least three (3) Business Days prior to the date of prepayment of Revolving Credit Loans
or Term Loans to which a LIBOR Option applies setting forth the following information: 

        (x)   the
date, which shall be a Business Day, on which the proposed prepayment is to be made; 

        (y)   a
statement indicating the application of the prepayment among the Borrowing Tranches of such Loans; and 

        (z)   the
total principal amount of such prepayment, which shall not be less than $1,000,000 or such lesser amount as may be outstanding under the Borrowing Tranche to
be prepaid. 

        The
principal amount of the Committed Loans for which a prepayment notice is given, together with interest and fees as have accrued on such principal amount, shall be due and payable on
the date specified in such prepayment notice as the date on which the proposed prepayment is to be made; provided,  however, that failure of any Borrower to
make payment in accordance with a prepayment notice given by it shall not be an Event of Default in and of
itself. Except as provided in Section 3.04(c) [Agent's and Bank's rights], if any Borrower prepays a Committed Loan, but fails to specify the applicable Borrowing
Tranche which the applicable Borrower is prepaying, the prepayment shall be applied first to Committed Loans to which the Base Rate Option applies, then to Loans to which the Committed Loan
LIBOR Option applies. Any prepayment hereunder and any failure of the applicable Borrower to make payment in accordance with a prepayment notice provided by it shall be subject to the applicable
Borrower's Obligation to indemnify the Banks under Section 4.06(b) [Indemnity]. 

        (b)    Replacement of a Bank.    In the event any Bank (i) gives notice under Section 3.04
[LIBOR Unascertainable, Etc.] or Section 3.04 [Increased Costs, Etc.], (ii) does not fund Revolving Credit Loans or Bid Loans because the
making of such Loans would contravene any Law applicable to such Bank, or (iii) becomes subject to the control of an Official Body (other than normal and customary supervision), then the
Company shall have the right at its option, with the consent of the Agent, which shall not be unreasonably withheld, to prepay the Loans of such Bank in whole, together with all interest accrued
thereon, and terminate such Bank's Commitment at any time after (x) receipt of such Bank's notice under Section 3.04 [LIBOR Unascertainable, Etc.] or
Section 4.06(a) [Increased Costs, Etc.], (y) the date such Bank has failed to fund Revolving Credit Loans or Bid Loans because the making of such Loans
would contravene Law applicable to such Bank, or (z) the date such Bank became subject to the control of an Official Body, as applicable; provided that the applicable Borrower shall also pay to
such Bank at the time of such prepayment any amounts required under Section 4.06 [Additional Compensation in Certain Circumstances] and any accrued interest due on such
amount and any related fees; provided, however, that the Commitment and any Bid Loan of such Bank shall
be provided by one or more of the remaining Banks or a replacement bank acceptable to the Agent; provided,  further, the remaining Banks shall have no
obligation hereunder to increase their Commitments or provide the Bid Loan of such Bank. Notwithstanding the
foregoing, the Agent may only be replaced subject to the requirements of Section 9.14 [Successor Agent]. 

        (c)    Change of Lending Office.    Each Bank agrees that, upon the occurrence of any event giving rise to increased
costs or other special payments under Section 3.04(b) [Illegality, Etc.] or Section 4.06(a) [Increased Costs, Etc.] with
respect to such Bank, it will if requested by the Company, use reasonable efforts (subject to overall policy considerations of such Bank) to designate another lending office for any Loans affected by
such event, provided that such designation is made on terms that such Bank and its lending office suffer no economic, legal or regulatory disadvantage, with the object of avoiding the consequence of
the event giving rise to the 

25

 

operation
of such Section. Nothing in this Section 4.04(c) shall affect or postpone any of the Obligations or the rights of the Agent or any Bank provided in this Agreement. 

        Section 4.05    Reduction or Termination of Commitments.    The aggregate amount of the Commitments shall be
automatically reduced to zero on the Expiration Date. In addition, the Borrower shall have the right to terminate or reduce the then unused portion of Commitments at any time or from time to time;
provided that (a) each partial reduction shall be in an aggregate amount of $10,000,000 or an integral multiple of $1,000,000 in excess thereof; (b) at no time shall the total amount of
the Commitments be less than current Loans outstanding; and (c) any Borrower shall provide at least five (5) Business Days prior written notice of each such termination or reduction to
the Agent specifying the amount of the Commitments to be reduced or terminated. Each such notice shall be irrevocable, and Commitments once terminated or reduced may not be reinstated. 

        Section 4.06    Additional Compensation in Certain
Circumstances.    (a)    Increased Costs or Reduced Return Resulting From Taxes, Reserves, Capital Adequacy Requirements, Expenses,
Etc.    If any Law, guideline or interpretation or any change in any Law, guideline or interpretation or application thereof by any Official Body charged with the
interpretation or administration thereof or compliance with any request or directive (whether or not having the force of Law) of any central bank or other Official Body: 

          (i)  subjects
any Bank to any tax or changes the basis of taxation with respect to this Agreement, the Committed Loans or the Bid Loans or payments by any Borrower of
principal, interest, Facility Fees, Term Loan Fees or other amounts due from the Borrowers hereunder (except for taxes on the overall net income of such Bank), 

         (ii)  imposes,
modifies or deems applicable any reserve (including the Eurodollar Reserve Percentage), special deposit or similar requirement against credits or commitments
to extend credit extended by, or assets (funded or contingent) of, deposits with or for the account of, or other acquisitions of funds by, any Bank, or 

        (iii)  imposes,
modifies or deems applicable any capital adequacy or similar requirement (A) against assets (funded or contingent) of, or letters of credit, other
credits or commitments to extend credit
extended by, any Bank, or (B) otherwise applicable to the obligations of any Bank under this Agreement, 

and
the result of any of the foregoing is to increase the cost to, reduce the income receivable by, or impose any expense (including loss of margin) upon any Bank with respect to this Agreement, or
the making, maintenance or funding of any part of the Committed Loans or the Bid Loans (or, in the case of any capital adequacy or similar requirement, to have the effect of reducing the rate of
return on any Bank's capital, taking into consideration such Bank's customary policies with respect to capital adequacy) by an amount which such Bank in its sole discretion deems to be material, such
Bank shall from time to time notify the Borrowers and the Agent of the amount determined in good faith (using any averaging and attribution methods employed in good faith) by such Bank to be necessary
to compensate such Bank for such increase in cost, reduction of income, additional expense or reduced rate of return. Such notice shall set forth in reasonable detail the basis for such determination.
Such amount shall be due and payable by the applicable Borrower to such Bank ten (10) Business Days after such notice is given. 

        (b)    Indemnity.    In addition to the compensation required by Section 4.06 [Increased Costs,
Etc.], the each Borrower shall indemnify each Bank against all liabilities, losses, or expenses (including loss of margin, any loss or expense incurred in liquidating or employing deposits
from third parties and any loss or expense incurred in connection with funds acquired by a Bank to fund or maintain Loans subject to a LIBOR Option or the Bid Loan Fixed Rate Option) which such Bank
sustains or incurs as a consequence of any 

26

 

          (i)  payment,
prepayment, conversion, or renewal of any Loan to which a LIBOR Option or the Bid Loan Fixed Rate Option applies on a day other than the last day of the
corresponding Interest Period (whether or not such payment or prepayment is mandatory, voluntary, or automatic and whether or not such payment or prepayment is then due), 

         (ii)  attempt
by such Borrower to revoke (expressly, by later inconsistent notices or otherwise) in whole or part any Loan Requests under Section 2.05
[Revolving Credit Loan Requests], Section 2.08 [Bid Loan Facility] or Section 3.02 [Interest Periods] or notice
relating to prepayments under Section 4.04 [Voluntary Prepayments], or 

        (iii)  default
by such Borrower in the performance or observance of any covenant or condition contained in this Agreement or any other Loan Document, including any failure of
such Borrower to pay when due (by acceleration or otherwise) any principal of or interest on the Committed Loans or the Bid Loans, Facility Fee, Term Loan Fee or any other amount due hereunder; or 

        (iv)  payment
or prepayment of any Bid Loan on a day other than the maturity date thereof (whether or not such payment or prepayment is mandatory or voluntary). 

        If
any Bank sustains or incurs any such loss or expense, it shall from time to time notify the respective Borrower of the amount determined in good faith by such Bank (which
determination may include such assumptions, allocations of costs and expenses, and averaging or attribution methods as such Bank shall deem reasonable) to be necessary to indemnify such Bank for such
loss or expense. Such notice shall set forth in reasonable detail the basis for such determination. Such amount shall be due and payable by the respective Borrower to such Bank ten
(10) Business Days after such notice is given. 

        Section 4.07    Taxes.    (a)    No
Deductions.    All payments made by each Borrower hereunder and under each Note shall be made free and clear of and without deduction for any present or future taxes,
levies, imposts, deductions, charges, or withholdings, and all liabilities with respect thereto, excluding taxes imposed on the net income of any Bank and all income and franchise taxes applicable to
any Bank of the United States (all such non-excluded taxes, levies, imposts, deductions, charges, withholdings, and liabilities being hereinafter referred to as "Taxes"). If any Borrower
shall be required by Law to deduct any Taxes from or in respect of any sum payable hereunder or under any Note, (i) the sum payable shall be increased as may be necessary so that after making
all required deductions (including deductions applicable to additional sums payable under this Section 4.07(a)) each Bank receives an amount equal to the sum it would have received had no such
deductions been made, (ii) the applicable Borrower shall make such deductions, and (iii) the applicable Borrower shall timely pay the full amount deducted to the relevant tax authority
or other authority in accordance with applicable Law. 

        (b)    Stamp Taxes.    In addition, each Borrower agrees to pay any present or future stamp or documentary taxes or
any other excise or property taxes, charges, or similar levies which arise from any payment made hereunder or from the execution, delivery, or registration of, or otherwise with respect to, this
Agreement or any Note (hereinafter referred to as "Other Taxes"). 

        (c)    Indemnification for Taxes Paid by a Bank.    Each Borrower shall indemnify each Bank for the full amount of
Taxes or Other Taxes (including, without limitation, any Taxes or Other Taxes imposed by any jurisdiction on amounts payable under this Section 4.07(c)) paid by any Bank and any liability
(including penalties, interest, and expenses) arising therefrom or with respect thereto, whether or not such Taxes or Other Taxes were correctly or legally asserted. This indemnification shall be made
within 30 days from the date a Bank makes written demand therefor. 

27

 

        (d)    Certificate.    Within 30 days after the date of any payment of any Taxes by any Borrower, the
applicable Borrower shall furnish to each Bank, at its address referred to herein, the original or a certified copy of a receipt evidencing payment thereof. 

        (e)    Survival.    Without prejudice to the survival of any other agreement of the Borrowers hereunder, the
agreements and obligations of the Borrowers contained in this Section 4.07 shall survive the payment in full of principal and interest hereunder and under any instrument delivered hereunder. 

        Section 4.08    Judgment Currency.    (a)    Currency Conversion Procedures
for Judgments.    If for the purposes of obtaining judgment in any court it is necessary to convert a sum due hereunder or under a Note in any currency (the "Original
Currency") into another currency (the "Other Currency"), the parties hereby agree, to the fullest extent permitted by Law, that the rate of exchange used shall be that at which in accordance with
normal banking procedures each Bank could purchase the Original Currency with the Other Currency after any premium and costs of exchange on the Business Day preceding that on which final judgment is
given. 

        (b)    Indemnity in Certain Events.    The obligation of each Borrower in respect of any sum due from such Borrower to
any Bank hereunder shall, notwithstanding any judgment in an Other Currency, whether pursuant to a judgment or otherwise, be discharged only to the extent that, on the Business Day following receipt
by any Bank of any sum adjudged to be so due in such Other Currency, such Bank may in accordance with normal banking procedures purchase the Original Currency with such Other Currency. If the amount
of the Original Currency so purchased is less than the sum originally due to such Bank in the Original Currency, each Borrower agrees, as a separate obligation and notwithstanding any such judgment or
payment, to indemnify such Bank against such loss. 

        Section 4.09    Notes, Maturity.    The Revolving Credit Loans and Term Loans made by each Bank shall be
evidenced by a Revolving Credit/Term Loan Note in the form of Exhibit 1.01(R). Notwithstanding anything to the contrary contained elsewhere in this Agreement, (x) all outstanding
Revolving Credit Loans not converted to Term Loans pursuant to Section 2.01(b) shall be repaid in full on the Expiration Date and (y) all outstanding Term Loans shall be repaid on
the Term Loan Maturity Date. 

        Section 4.10    Mandatory Prepayments.    (a) If on any date the sum of the aggregate outstanding
Principal Amount of Revolving Credit Loans and Bid Loans (all the foregoing, collectively, the "Aggregate Loan Outstandings") exceeds the Commitments as then in effect, the Borrowers shall repay no
later than the next following Business Day the principal amount of Revolving Credit Loans in an aggregate Principal Amount equal to such excess. If, after giving effect to the prepayment of all
outstanding Revolving Credit Loans as set forth above, the remaining Aggregate Loan Outstandings exceed the Commitments, the Borrowers shall repay on such date the principal of Bid Loans in an
aggregate amount equal to such excess. 

        (b)   If
on any date on which Dollar Equivalents are determined, pursuant to Section 1.03(b), the sum of the aggregate outstanding Principal Amount of Revolving Credit
Loans and Bid Loans constituting Alternate Currency Loans exceeds $12,500,000, the UK Borrower shall repay no later than the next following Business Day the principal amount of Revolving Credit Loans
constituting Alternate Currency Loans in an aggregate Principal Amount equal to such excess. If, after giving effect to the prepayment of all outstanding Revolving Credit Loans constituting Alternate
Currency Loans as set forth above, the aggregate outstanding Principal Amount of Bid Loans constituting Alternate Currency Loans exceeds $12,500,000, the UK Borrower shall repay on such date Bid Loans
constituting Alternate Currency Loans in an aggregate Principal Amount equal to such excess. 

28

 

        (c)   If
on any date the aggregate Principal Amount of Revolving Credit Loans and Bid Loans incurred by the UK Borrower exceeds $12,500,000, the UK Borrower shall repay no
later than the next following Business Day the principal amount of Revolving Credit loans in an aggregate Principal Amount equal to such excess. If, after giving effect to the repayment of all
outstanding Revolving Credit Loans incurred by the UK Borrower as set forth above, the outstanding Bid Loans incurred by the UK Borrower exceeds $12,500,000, the UK Borrower shall repay on such date
the principal of Bid Loans in an aggregate amount equal to such excess. 

ARTICLE V  

 REPRESENTATIONS AND WARRANTIES  

        Section 5.01    Representations and Warranties.    Each Borrower represents and warrants to the Agent and each
of the Banks as follows: 

        (a)    Organization and Qualification.    Such Borrower is a corporation duly organized, validly existing, and in good
standing under the laws of its jurisdiction of organization. Such Borrower has the lawful power to own or lease its properties and to engage in the business it presently conducts. Such Borrower is
duly licensed or qualified and in good standing in each jurisdiction where the property owned or leased by it or the nature of the business transacted by it or both makes such licensing or
qualification necessary. 

        (b)    Capitalization and Subsidiaries.    As of the Closing Date, the UK Borrower and ACE Risk Assurance Company, a
Maryland corporation, are the sole Subsidiaries of the Company. ACE Risk Assurance Company is an inactive corporation having no material liabilities or Indebtedness. The authorized
capital stock of the Company is owned by ACE Financial Services, Inc., a Delaware corporation, and all such shares of stock have been validly issued and are fully paid and nonassessable. 

        (c)    Power and Authority.    Such Borrower has full power to enter into, execute, deliver, and carry out this
Agreement and the other Loan Documents to which it is a party, to incur the Indebtedness contemplated by the Loan Documents, and to perform its Obligations under the Loan Documents to which it is a
party, and all such actions have been duly authorized by all necessary proceedings on its part. 

        (d)    Validity and Binding Effect.    This Agreement has been duly and validly executed and delivered by such
Borrower, and each other Loan Document which such Borrower is required to execute and deliver as of the date hereof has been duly executed and delivered by such Borrower. Assuming the due execution
and delivery by Agent and the Banks of those Loan Documents to which they are a party, this Agreement and each other Loan Document to which such Borrower is a party constitute the legal, valid and
binding obligations of such Borrower on and after its date of delivery thereof, enforceable against such Borrower in accordance with its terms, except to the extent that enforceability of any of such
Loan Document may be limited by bankruptcy, insolvency, reorganization, moratorium, or other similar laws affecting the enforceability of creditors' rights generally or limiting the right of specific
performance. 

        (e)    No Conflict.    Neither the execution and delivery of this Agreement or the other Loan Documents by such
Borrower nor the consummation of the transactions herein or therein contemplated or compliance with the terms and provisions hereof or thereof will conflict with, constitute a default under or result
in any breach of (i) the terms and conditions of the certificate or articles of incorporation, bylaws, or other organizational documents of such Borrower, or (ii) any Law or any material
agreement or instrument or order, writ, judgment, injunction, or decree to which such Borrower is a party or by which it is bound or to which it is subject, or result 

29

 

in
the creation or enforcement of any Lien, charge or encumbrance whatsoever upon any property (now or hereafter acquired) of such Borrower (other than Permitted Liens). 

        (f)    Litigation.    There are no actions, suits, proceedings, or investigations pending or, to the knowledge of such
Borrower, threatened against such Borrower at law or in equity before any Official Body which individually or in the aggregate may result in any Material Adverse Change. Such Borrower is not in
violation of any order, writ, injunction, or any decree of any Official Body which may result in any Material Adverse Change. 

        (g)    Title to Properties.    Such Borrower has good and marketable title to or valid leasehold interests in all
properties, assets, and other rights which it purports to own or lease or which are reflected as owned or leased on its books and records, free and clear of all Liens and encumbrances except Permitted
Liens.
All leases of property are in full force and effect and are subject only to the terms and conditions of the applicable leases. 

        (h)    Financial Statements, Reinsurance Coverage.    

        (A)    Historical Statements.    The Company has delivered to the Agent copies of its audited consolidated
year-end financial statements for and as of the end of the three (3) fiscal years ended December 31, 2000, 2001 and 2002 (the "Historical Statements"). The Historical
Statements were compiled from the books and records maintained by the Company's management, are correct and complete and fairly represent the consolidated financial condition of the Company and its
Subsidiaries as of their dates and the results of operations for the fiscal periods then ended and have been prepared in accordance with GAAP and statutory requirements consistently applied. 

        (B)    Accuracy of Financial Statements.    As of the Closing Date, neither the Company nor any Subsidiary of the
Company has any liabilities, contingent or otherwise, or forward or long-term commitments or Off-Balance Sheet Transactions that are not disclosed in the Historical Statements
or in the notes thereto, and except as disclosed therein there are no unrealized or anticipated losses from any commitments of the Company or any Subsidiary of the Company which may cause a Material
Adverse Change. Since December 31, 2002, no Material Adverse Change has occurred. 

        (C)    Reinsurance Coverage.    The Company has delivered  Schedule 5.01(h) to the Agent setting forth the amount, terms, and
provider(s) to the Company of reinsurance and the extent of the Company's
insurance or reinsurance exposure covered thereby; as of December 31, 2002, Schedule 5.01(h) is correct and complete and fairly represents the reinsurance coverage pertaining to
the business of the Company and its Subsidiaries ("Existing Reinsurance Coverage"). 

        (i)    Use of Proceeds; Margin Stock.    Such Borrower intends to use the proceeds of the Loans in accordance with
Section 2.07 and Section 7.01(j). Such Borrower does not engage or intend to engage principally, or as one of its important activities, in the business of extending credit for the
purpose, immediately, incidentally or ultimately, of purchasing or carrying margin stock (such term used herein within the meaning of Regulation U). No part of the proceeds of any Loan has been
or will be used, immediately, incidentally or ultimately, to purchase or carry any margin stock or to extend credit to others for the purpose of purchasing or carrying any margin stock or to refund
Indebtedness originally incurred for such purpose, or for any purpose which entails a violation of or which is inconsistent with the provisions of the regulations of the Board of Governors of the
Federal Reserve System. Such Borrower does not hold or intend to hold margin stock in such amounts that more than 25% of the reasonable value of its assets are or will be represented by margin stock. 

30

 

        (j)    Full Disclosure.    Neither this Agreement nor any other Loan Document, nor any certificate, statement,
agreement, or other document furnished to the Agent or any Bank by such Borrower in connection herewith or therewith, contains any untrue statement of a material fact or omits to state a material fact
necessary in order to make the statements contained herein and therein, in light of the circumstances under which they were made, not misleading. There is no fact known to such Borrower which
materially adversely affects the business, property, assets, financial condition, results of operations, or prospects of such Borrower which has not been set forth in this Agreement or in the
certificates, statements, agreements, or other documents furnished in writing to the Agent and the Banks by the Borrowers prior to or at the date hereof in connection with the transactions
contemplated hereby. 

        (k)    Taxes.    All federal, state, local, and other tax returns required to have been filed with respect to such
Borrower have been filed, and payment or adequate provision has been made for the payment of all taxes, fees, assessments, and other governmental charges which have or may become due pursuant to said
returns or to assessments received, except to the extent that such taxes, fees, assessments, and other charges are being contested in good faith by appropriate proceedings diligently conducted and for
which such reserves or other appropriate provisions, if any, as shall be required by GAAP shall have been made. There are no agreements or waivers extending the statutory period of limitations
applicable to any federal income tax return of such Borrower for any period. 

        (l)    Consents and Approvals.    No consent, approval, exemption, order, or authorization of, or a registration or
filing with, any Official Body or any other Person is required by any Law or any agreement in connection with the execution, delivery, or carrying out of this Agreement or any of the other Loan
Documents by such Borrower, except such as have been obtained or made on or prior to the Closing Date. 

        (m)    No Event of Default; Compliance With Instruments.    No event has occurred and is continuing and no condition
exists or will exist after giving effect to the borrowings or other extensions of credit to be made on the Closing Date under or pursuant to the Loan Documents which constitutes an Event of Default or
Potential Default. Such Borrower is not in violation of (i) any term of its certificate or articles of incorporation, bylaws, or other organizational documents or (ii) any material
agreement or instrument to which it is a party or by which it or any of its properties may be subject or bound where such violation would constitute a Material Adverse Change. 

        (n)    Licenses, Etc.    Such Borrower owns or possesses all the material licenses, registrations, franchises,
permits, and rights necessary to own and operate its properties and to carry on its business as presently conducted by such Borrower, without conflict with the rights of others. 

        (o)    Insurance.    No notice has been given or claim made and no grounds exist to cancel or avoid any insurance
policy or bond in favor of such Borrower or any of its property, or to reduce the coverage provided thereby. Such policies and bonds provide adequate coverage from reputable and financially sound
insurers in amounts sufficient to insure the assets and risks of such Borrower in accordance with prudent business practice in the industry of such Borrower. 

        (p)    Compliance With Laws.    Such Borrower is in compliance in all material respects with all applicable Laws in
all jurisdictions in which such Borrower is doing business, except where the failure to do so would not constitute a Material Adverse Change. 

31

  

        (q)    Material Contracts; Burdensome Restrictions.    All material contracts relating to the business operations of
such Borrower are valid, binding, and enforceable upon such Borrower and, to the knowledge of such Borrower, each of the other parties thereto in accordance with their respective terms, and there is
no default thereunder, to such Borrower's knowledge, with respect to parties other than such Borrower. Such Borrower is not bound by any contractual obligation, or subject to any restriction in any
organizational document or any requirement of Law, which in and of itself is material and adverse to such Borrower. 

        (r)    Investment Companies; Regulated Entities.    Such Borrower is not an "investment company" registered or
required to be registered under the Investment Company Act of 1940 or under the "control" of an "investment company" as such terms are defined in the Investment Company Act of 1940 and shall not
become such an "investment company" or under such "control." Such Borrower is not subject to any other Federal or state statute or regulation limiting its ability to incur Indebtedness for borrowed
money. 

        (s)    Plans and Benefit Arrangements.    The Company and each other member of the ERISA Group are in compliance in
all material respects with any applicable provisions of ERISA with respect to all Benefit Arrangements, Plans, and Multiemployer Plans. There has been no Prohibited Transaction with respect to any
Benefit Arrangement or any Plan or, to the best knowledge of the Borrowers, with respect to any Multiemployer Plan or Multiple Employer Plan, which could result in any material liability of the
Company or any other member of the ERISA Group. The Company and all other members of the ERISA Group have made when due any and all payments required to be made under any agreement relating to a
Multiemployer Plan or a Multiple Employer Plan or any Law pertaining thereto. With respect to each Plan and Multiemployer Plan, the Company and each other member of the ERISA Group (i) have
fulfilled in all material respects their obligations under the minimum funding standards of ERISA, (ii) have not incurred any liability to the PBGC other than PBGC premiums due but not
delinquent under Section 4007 of ERISA, and (iii) have not had asserted against them any penalty for failure to fulfill the minimum funding requirements of ERISA. All Plans, Benefit
Arrangements and Multiemployer Plans have been administered in accordance with their terms and applicable Law. 

        The
Company and each other member of the ERISA Group are in compliance in all material respects with any applicable provisions of ERISA with respect to all Benefit Arrangements, Plans,
and Multiemployer Plans. There has been no Prohibited Transaction with respect to any Benefit Arrangement or any Plan or, to the best knowledge of the Company, with respect to any Multiemployer Plan
or Multiple Employer Plan, which could result in any material liability of the Company or any other member of the ERISA Group. The Company and all other members of the ERISA Group have made when due
any and all payments required to be made under any agreement relating to a Multiemployer Plan or a Multiple Employer Plan or any Law pertaining thereto. With respect to each Plan and Multiemployer
Plan, the Company and each other member of the ERISA Group (i) have fulfilled in all material respects their obligations under the minimum funding standards
of ERISA, (ii) have not incurred any liability to the PBGC other than PBGC premiums due but not delinquent under Section 4007 of ERISA, and (iii) have not had asserted against
them any penalty for failure to fulfill the minimum funding requirements of ERISA. All Plans, Benefit Arrangements and Multiemployer Plans have been administered in accordance with their terms and
applicable Law. 

        (A)  No
event requiring notice to the PBGC under Section 302(f)(4)(A) of ERISA has occurred or is reasonably expected to occur with respect to any Plan, and no
amendment with respect to which security is required under Section 307 of ERISA has been made or is reasonably expected to be made to any Plan. 

32

 

        (B)  Neither
the Company, nor any other member of the ERISA Group has incurred or reasonably expects to incur any material withdrawal liability under ERISA to any
Multiemployer Plan or Multiple Employer Plan. Neither the Company, nor any other member of the ERISA Group has been notified by any Multiemployer Plan or Multiple Employer Plan that such Multiemployer
Plan or Multiple Employer Plan has been terminated within the meaning of Title IV of ERISA and, to the best knowledge of the Company, no Multiemployer Plan or Multiple Employer Plan is reasonably
expected to be reorganized or terminated, within the meaning of Title IV of ERISA. 

        (t)    Senior Debt Status.    The Obligations of such Borrower under this Agreement and each of the other Loan
Documents to which it is a party do rank and will rank at least pari passu in priority of payment with all other Indebtedness of the such Borrower
except (i) Indebtedness of such Borrower to the extent secured by Permitted Liens, and (ii) Indebtedness which constitutes a "preferred claim" under Section 9-227 of
the Maryland Insurance Law (or any analogous provision of United Kingdom law) in the event of the liquidation, rehabilitation, reorganization, or conservation of the such Borrower. The Obligations of
ACE under the Guaranty Agreement do rank and will rank at least pari passu in priority of payment with all other senior unsecured Indebtedness of ACE.
There is no Lien upon or with respect to any of the properties or income of such Borrower which secures indebtedness or other obligations of any Person except for Permitted Liens. 

        Section 5.02    Continuation of Representations.    Each Borrower makes the representations and warranties in
this ARTICLE V on the date hereof and on the Closing Date and each date thereafter on which a Loan is made as provided in and subject to Section 6.01 and Section 6.02. 

 
 

ARTICLE VI    
    
    CONDITIONS OF LENDING    
    

        The obligation of each Bank to make Loans hereunder is subject to the performance by the Borrowers of their Obligations to be performed hereunder at or prior to
the making of any such Loans and to the satisfaction of the following further conditions: 

        Section 6.01    First Loans.    On the Closing Date: 

        (a)    Representations and Warranties True and Complete, No Defaults.    The representations and warranties of the
Borrowers contained in Article V shall be true, complete, and accurate on and as of the Closing Date with the same effect as though such representations and warranties had been made on and as
of such date (except representations and warranties which relate solely to an earlier date or time, which representations and warranties shall be true and correct on and as of the specific dates or
times referred to therein), and the Borrowers shall have performed and complied with all covenants and conditions hereof and thereof, no Event of Default or Potential Default shall have occurred and
be continuing. 

        (b)    Secretary's Certificate.    There shall be delivered to the Agent for the benefit of each Bank certificates
dated the Closing Date and signed by the Secretary or an Assistant Secretary of the Company and ACE, certifying as appropriate as to: 

          (i)  all
action taken by the Company and ACE in connection with this Agreement and the other Loan Documents; 

         (ii)  the
names of the officer or officers authorized to sign this Agreement and the other Loan Documents and the true signatures of such officer or officers and specifying
the Authorized Officers permitted to act on behalf of the Company and ACE for purposes of this 

33

 

Agreement
and the true signatures of such officers, on which the Agent and each Bank may conclusively rely; and 

        (iii)  copies
of its organizational documents, including its certificate or articles of incorporation and bylaws as in effect on the Closing Date certified by the appropriate
state official where such documents are filed in a state office together with certificates from the appropriate state officials as to the continued existence and good standing of the Company and ACE
in each jurisdiction where organized. 

        (c)    Delivery of Notes, Guaranty Agreements, and Loan Request.    The Notes and Guaranty Agreement shall have been
duly executed and delivered to the Agent for the benefit of the Banks. 

        (d)    Opinion of Counsel.    There shall be delivered to the Agent for the benefit of each Bank one or more written
opinions of counsel for the Company and ACE dated the Closing Date and in form and substance satisfactory to the Agent and its counsel: 

          (i)  as
to the matters set forth in Exhibit 6.01(d); and 

         (ii)  as
to such other matters incident to the transactions contemplated herein as the Agent may reasonably request. 

        (e)    Legal Details.    All legal details and proceedings in connection with the transactions contemplated by this
Agreement and the other Loan Documents shall be in form and substance satisfactory to the Agent and counsel for the Agent, and the Agent shall have received all such other counterpart originals or
certified or other copies of such documents and proceedings in connection with such transactions, in form and substance satisfactory to the Agent and said counsel, as the Agent or said counsel may
reasonably request. 

        (f)    Payment of Fees.    The Borrowers shall have paid or caused to be paid to the Agent for itself and for the
account of the Banks to the extent not previously paid the Facility Fees, all other fees accrued through the Closing Date and the costs and expenses for which the Agent and the Banks are entitled to
be reimbursed. 

        (g)    No Material Adverse Change.    There has not occurred a Material Adverse Change since the date of the
Historical Statements. 

        (h)    Existing Credit Agreement.    The commitments under the Existing Credit Agreement shall have been terminated,
all loans thereunder shall have been repaid in full, together with all accrued and unpaid interest thereon, all accrued and unpaid fees thereon shall have been paid in full, and all other amounts then
owing pursuant to the Existing Credit Agreement shall have been repaid in full, and the
Agent shall have received evidence in form, scope and substance reasonably satisfactory to it that the matters set forth in this Section 6.01(h) have been satisfied at such time. 

        (i)    Liens.    All security interests and Liens created under the Existing Credit Agreement and the related security
documents on the capital stock of, and assets (including intercompany notes) owned by, the Company and its Subsidiaries shall have been terminated and released, and the Agent shall have received
UCC-3 termination statements, releases of mortgage (to the extent applicable), a termination agreement and all such other releases as may have been requested by the Agent, all of which
shall be in form and substance reasonably satisfactory to the Agent. 

        Section 6.02    Each Additional Loan.    At the time of making any Loans, other than Loans made on the Closing
Date, and after giving effect to the proposed extensions of credit: the representations and warranties of the applicable Borrower contained in ARTICLE V and in the other Loan Documents and the
representations and warranties of each Material Subsidiary contained or incorporated in the Guarantor Joinder given by such Material Subsidiary pursuant to Section 10.18 shall be true on and as
of the date of such additional Loan with the same effect as 

34

 

though
such representations and warranties had been made on and as of such date (except representations and warranties which expressly relate solely to an earlier date or time, which representations
and warranties shall be true and correct on and as of the specific dates or times referred to therein) and the applicable Borrower shall have performed and complied with all covenants and conditions
hereof that are required to be performed or complied with as of the date of such Loan and each Material Subsidiary shall have complied with Section 10.18 and all other covenants and conditions
that are required to be performed or complied with as of the date of such Loan and which are set forth in or incorporated into the Guarantor Joinder given by such Material Subsidiary pursuant to
Section 10.18; no Event of Default or Potential Default shall have occurred and be continuing or shall exist; and the applicable Borrower shall have delivered to the Agent a duly executed and
completed Loan Request. 

 
 

ARTICLE VII    
    
    COVENANTS    
    

        Section 7.01    Affirmative Covenants.    Each Borrower covenants and agrees that, until payment in full of the
Loans, and interest thereon, satisfaction of all of the other Obligations under the Loan Documents and
termination of the Commitments, each Borrower shall comply at all times with the following affirmative covenants: 

        (a)    Preservation of Existence, Etc.    The Company 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 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 7.02(f) [Liquidations, Mergers,
Etc.]. 

        (b)    Payment of Liabilities, Including Taxes, Etc.    The Company 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 the Company will pay, and 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.    The Company 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 the Company 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. 

        (d)    Maintenance of Properties and Leases.    The Company 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 the Company will make or cause to be made all appropriate repairs, renewals, or replacements thereof. 

35

 

        (e)    Maintenance of Licenses, Etc.    The Company 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 constitute a Material Adverse Change. 

        (f)    Visitation Rights.    The Company shall, and shall cause each of its Material Subsidiaries to, permit any of
the officers or authorized employees or representatives of the Agent 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 Agent may reasonably request and at the pro
rata expense of the Banks (if requested by the Required Banks) or the Agent (if not so requested), provided that the Agent shall provide the Company with reasonable notice
prior to any visit or inspection and provided further that during the continuation of any Event of Default, each Bank shall have the right of visitation and inspection granted above to Agent and all
such visits and inspections by Agent and any Bank during the continuation of an Event of Default shall be at the expense of the Borrowers. In the event any Bank desires to conduct a visitation or
inspection of the Company or any Subsidiary during the continuation of an Event of Default, such Bank shall make a reasonable effort to conduct such visitation and inspection contemporaneously with
any visitation or inspection to be performed by the Agent. 

        (g)    Keeping of Records and Books of Account.    The Company shall, and shall cause each Subsidiary of the Company
to, maintain and keep proper books of record and account which enable the Company and its Material Subsidiaries to issue financial statements in accordance with GAAP and as otherwise required by
applicable Laws of any Official Body having jurisdiction over the Company or any Subsidiary of the Company, 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.    The Company shall, and shall cause each other member of the ERISA Group to,
comply with ERISA, the Internal Revenue Code and other Laws applicable to Plans and Benefit Arrangements except where such failure, alone or in conjunction with any other failure, would not result in
a Material Adverse Change. Without limiting the generality of the foregoing, the Company shall cause all of its Plans and all Plans maintained by any member of the ERISA Group to be funded in
accordance with the minimum funding requirements of ERISA and 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.    The Company 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 7.01(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 constitute a Material Adverse Change. 

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

        (k)    Senior Debt Status.    The Company shall ensure that the Obligations of the Company and any Material Subsidiary
under this Agreement, a Guarantor Joinder, the Guaranty Agreement, and each of the other Loan Documents to which it is a party shall at all times rank at least pari
passu in priority of payment with all other senior unsecured Indebtedness of the Company 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 the Company or such Material Subsidiary) and
no such other 

36

 

senior
unsecured Indebtedness of the Company or any Material Subsidiary shall at any time be governed by or subject to covenants, defaults, or other provisions that are more restrictive on the Company
or any Material Subsidiary than those set forth herein; and provided that if payment of any present or future Indebtedness of the Company or any Material Subsidiary, except Indebtedness of the Company
or any Material Subsidiary to the extent secured by Permitted Liens, shall at any time hereafter become secured by any Lien on any property, the Company 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). 

        Section 7.02    Negative Covenants.    Each Borrower covenants and agrees that until payment in full of the
Loans and interest thereon, satisfaction of all of the other Obligations hereunder and termination of the Commitments, such Borrower shall comply with the following negative covenants: 

        (a)    Indebtedness.    The Company 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
under the Loan Documents; 

         (ii)  Existing
Indebtedness as set forth on Schedule 7.02(a) (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  Schedule 7.02(a);
 

        (iii)  Capitalized
and operating leases; 

        (iv)  Indebtedness
secured by Purchase Money Security Interests; 

         (v)  Indebtedness
of the Company or any Material Subsidiary to the Company or any other Material Subsidiary or any of their respective Affiliates; 

        (vi)  Any
Interest Rate Hedge; 

       (vii)  Any
Guaranties permitted pursuant to Section 7.02(c); 

      (viii)  Other
Indebtedness of the Company which is non-recourse to the Company and in the nature (as to its purpose and non-recourse structure) of
that existing Indebtedness in favor of Deutsche Bank shown on Exhibit 7.02(a) ("Soft Capital"); and 

        (ix)  Other
Indebtedness in an amount outstanding at any time not to exceed five percent (5%) of the consolidated tangible net worth of the Company and its Subsidiaries. 

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

        (c)    Guaranties.    The Company 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, except for Guaranties of that Indebtedness of the Company and the Material Subsidiaries permitted hereunder and (the following,
collectively, "Insurance-Related Guaranties"): (i) reinsurance and insurance policies and Guaranties which the Company or any Material Subsidiary is licensed to provide in the ordinary course
of its reinsurance or insurance business, and (ii) Guaranties given by the Company to support credit derivative transactions entered into by AGR Financial 

37

 

Products Inc.,
a Delaware corporation and Affiliate of the Company ("Credit Derivative Guaranties"), subject, however, to the terms of Section 7.02(p). 

        (d)    Loans and Investments.    The Company 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 the Company and any Material Subsidiary. 

        (e)    Dividends and Related Distributions.    The Company 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 payable to the Company or any Material Subsidiary
and except for dividends payable by the Company not in excess of $15,000,000 in any fiscal year of the Company. 

        (f)    Liquidations, Mergers, Consolidations, Acquisitions.    The Company 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 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 or merge into the Company or any other Material Subsidiary or any of their respective Affiliates, and 

        (2)   the
Company or any Material Subsidiary may acquire, whether by purchase 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)  if
the Company or any Material Subsidiary is acquiring the ownership interests in such Person and such Person meets the criteria for a Material Subsidiary set forth in
the definition of such term at
Section 1.01, such Person shall execute a Guarantor Joinder and join this Agreement as a Guarantor pursuant to Section 10.18 [Joinder of Guarantors] on or before
the date of such Permitted Acquisition; 

         (ii)  the
board of directors or other equivalent governing body of such Person shall have approved such Permitted Acquisition (if such approval has been given or if such
approval would be required by Law) and the Company or the relevant Material Subsidiary shall have delivered to the Banks written evidence of such approval of the board of directors (or equivalent
body) of such Person for such Permitted Acquisition or, if such approval is not given and not required by Law and any proceeds of the Loans are 

38

 

utilized
for such Permitted Acquisition, the Company or the relevant Material Subsidiary shall deliver to the Banks evidence satisfactory to Agent that the Permitted Acquisition is not hostile to, or
otherwise opposed by the board of directors of, such Person; 

        (iii)  the
business acquired, or the business conducted by the Person whose ownership interests are being acquired, as applicable, shall be substantially the same as one or
more lines of business conducted by the Company or any Material Subsidiary or otherwise incidental to the business of a financial services company and shall comply with Section 7.02(j)
[Continuation of or Change in Business]; 

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

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

        (g)    Dispositions of Assets or Subsidiaries.    The Company 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 the Company), except: 

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

         (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 the Company's or such Subsidiary's business or which are incidental to the management of the Company'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 the Company to the Company or any Material Subsidiary; 

        (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
shall exist or shall result from such disposition, and (B) the
aggregate value of all assets so sold by (x) the Company shall not exceed in any fiscal year ten percent (10%) of the consolidated tangible net worth of the Company and its Subsidiaries or
(y) any Material Subsidiary in any fiscal year shall not exceed a material portion of such Material Subsidiary's tangible net worth. 

        (h)    Affiliate Transactions.    The Company 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 the Company 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 fully disclosed to the Agent, and is in
accordance with all applicable Law and accounting standards. 

        (i)    Subsidiaries, Partnerships and Joint Ventures.    The Company shall not, and shall not permit any of its
Material Subsidiaries to, own, acquire, or create directly or indirectly any 

39

 

Material
Subsidiary other than Material Subsidiaries each of which has joined this Agreement as a Guarantor at any time after the Closing Date in accordance with Section 10.18
[Joinder of Guarantors]; provided that the UK Borrower shall not be required to become a Guarantor. Each of the Company and its Material Subsidiaries shall not become or agree
to become (1) a general or limited partner in any general or limited partnership, except that the Company or any of its Material Subsidiaries may be general or limited partners in any other
Material Subsidiary, (2) a member or manager of, or hold a limited liability company interest in, a limited liability company, except that the Company or any of its Material Subsidiaries may be
members or managers of, or hold limited liability company interests in, other Material Subsidiaries, or (3) a joint venturer or hold a joint venture interest in any joint venture except that
the Company 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 Company, and (B) as to
which neither the Company 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.    The Company 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 the Company or such Subsidiary as of the Closing Date;  provided, however, that it shall not be a material change hereunder for the Company to alter the
concentration percentages of products offered or business conducted as of the Closing Date, 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 material change hereunder for a Material Subsidiary to engage in any business incidental to the conduct of a financial services company. 

        (k)    Plans and Benefit Arrangements.    The Company 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.    The Company shall not, and shall not permit any Subsidiary of the Company to, change its fiscal
year from the twelve-month period beginning January 1 and ending December 31 unless the Company has (i) provided thirty (30) days prior written notice to the Agent and the
Banks of the proposed change accompanied by an explanation in reasonable detail of the effect thereof on the Company and its Subsidiaries in general and on the Company'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
Agent and the Required Banks to maintain the continuity of the such covenants. 

        (m)    Minimum Statutory Capital.    The Company shall not at any time permit the Statutory Capital of the Company to
be less than eighty percent (80%) of the Statutory Capital the Company as of the most recent fiscal quarter of the Company prior to the Closing Date. 

        (n)    Maximum Exposure Ratio.    The Company shall not at any time permit the ratio of the Net Par of the Company to
the Statutory Capital the Company to exceed 150 to 1.0. 

        (o)    Maximum Debt to Total Capitalization Ratio.    The Company shall maintain at all times a ratio of Consolidated
Debt to Total Capitalization of not more than 0.35 to 1.0. 

40

  

        (p)    Maximum Collateralized Credit Derivative Guaranties.    The Company shall not at any time permit the aggregate
value of all property of the Company or any of the Material Subsidiaries subject to a Lien given to secure payment of Credit Derivative Guaranties to exceed eleven percent (11%) of the sum of Total
Capitalization plus the aggregate value of all collateral provided in accordance herewith to the Agent for the benefit of the Banks, except to the extent that the Agent for the benefit of the Banks is
provided with a Lien of equal priority on substantially similar property of the Company having a value equal to the amount by which such percentage is exceeded (the amount by which such percentage is
exceeded, for the purposes of this Section 7.02(p), being referred to herein as the "Excess Lien Amount"). Property subject to such Lien shall be reduced or released, as the case may be, at any
time by the Agent upon the request of the Company and without further action or consent of any of the Banks whenever the value of the property subject to that Lien in favor of the Agent for the
benefit of the Banks established pursuant to this Section 7.02(p) at such time exceeds the Excess Lien Amount. 

        Section 7.03    Reporting Requirements.    Each Borrower covenants and agrees that until payment in full of the
Loans and interest thereon, satisfaction of all other Obligations hereunder and under the other Loan Documents and termination of the Commitments, the Company will furnish or cause to be furnished to
the Agent and each of the Banks: 

        (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 ACE as filed with the SEC and two sets of financial
statements of the Company, 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 the Company as having been prepared as to one set of financial statements in accordance with GAAP, consistently applied, and as
to the other set of financial statements as having been prepared in accordance with statutory accounting principles required by the State of Maryland. 

        (b)    Annual Financial Statements.    As soon as available and in any event within ninety (90) days after the
end of each fiscal year of the Company, the Form 10-K of ACE as filed with the SEC and two sets of financial statements of the Company each consisting of a consolidated balance
sheet as of the end of such fiscal year, and related consolidated statements of income, stockholders' equity, and cash flows for the fiscal year then ended, all in reasonable detail with one such set
being prepared in accordance with GAAP, consistently applied, and the other set being prepared in accordance with statutory accounting principles required by the State of Maryland, and, in each case,
certified by independent certified public accountants of nationally recognized standing satisfactory to the Agent. The certificate or report of accountants 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 the Company or any Material Subsidiary under any of the Loan Documents. 

        (c)    Certificate of the Company.    Concurrently with the financial statements of the Company furnished to the Agent
and to the Banks pursuant to Section 7.03(a) [Quarterly Financial Statements] and Section 7.03(b) [Annual Financial Statements], a
certificate (each a "Compliance Certificate") of the Company signed by the Chief Executive Officer, President, Chief Financial Officer, Treasurer, or Assistant Treasurer of the Company, in the form of
Exhibit 7.03, to the effect that, except as described pursuant to Section 7.03(d) [Notice of Default], (i) the representations and warranties of the
Borrowers contained in ARTICLE V and in the other Loan 

41

 

Documents
and the representations and warranties of each Material Subsidiary, if any, contained or incorporated in the Guarantor Joinder given by such Material Subsidiary pursuant to
Section 10.18 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 which expressly relate solely to an earlier date or time) and each Borrower has performed and complied with all covenants and conditions hereof and each Material Subsidiary, if any,
shall have complied with all covenants and conditions of or incorporated into the Guarantor Joinder given by such Material Subsidiary pursuant to Section 10.18, (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 (A) demonstrate compliance as of the date of such
financial statements with all financial covenants contained in Section 7.02 [Negative Covenants] and (B) determine the Net Par of the Company and any material
changes or loss experience in connection with Existing Reinsurance Coverage from the components thereof set forth on Schedule 5.01(h). 

        (d)    Notice of Default.    Promptly after any officer of a Borrower 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 Borrower setting forth the
details of such Event of Default or Potential Default and the action which such Borrower proposes to take with respect thereto, or (ii) the creation or acquisition of a Material Subsidiary (or
the existence of a Material Subsidiary other than the UK Borrower which has not executed and delivered a Guaranty Agreement to Agent for the benefit of the Banks), a certificate signed by the Chief
Executive Officer, President, Chief Financial Officer, Treasurer, or Assistant Treasurer of the Company setting forth the legal name, jurisdiction of organization, and such other relevant information
reasonably requested by Agent. 

        (e)    Off-Balance Sheet Financing.    None of the Company or any of its 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 the Company or any of its Material Subsidiaries (collectively,
"Off-Balance Sheet Transactions"), except such
Off-Balance Sheet Transactions as are fully disclosed to the Banks and Agent 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 the Company or any Material Subsidiary of the Company, which involve a claim or series of claims in excess of $20,000,000 or
which if adversely determined would constitute a Material Adverse Change. 

        (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 Company's Insurer Financial Strength Rating, notice of such change. The Company will deliver together with such notice a copy of any
written notification which the Company 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 Section 7.02(g)(v). 

        (i)    Budgets, Other Reports and Information.    Promptly upon their becoming available to the Company, such reports
and information as any of the Banks may from time to time reasonably request. Each Borrower shall also notify the Banks and Agent promptly of the enactment, enforcement, or adoption of any Law which
may result in a Material Adverse Change with respect to such Borrower. 

42

 

ARTICLE VIII  

 DEFAULT  

        Section 8.01    Events of Default.    An Event of Default shall mean the occurrence or existence of any one or
more of the following events or conditions (whatever the reason therefor and whether voluntary, involuntary, or effected by operation of Law): 

        (a)    Payments Under Loan Documents.    Either Borrower shall fail to pay (i) any principal of any Loan
(including scheduled installments or mandatory prepayments, if any, or the payment due at maturity) when such principal is due hereunder or (ii) any interest on any Loan or any other amount
owing hereunder or under the other Loan Documents within five (5) Business Days after such interest or other amount becomes due in accordance with the terms hereof or thereof; 

        (b)    Breach of Warranty.    Any representation or warranty made at any time by any of the Company and the Material
Subsidiaries herein or by any of the Company and the Material Subsidiaries in any other Loan Document, or in any certificate, other instrument, or statement furnished by the Company or a Material
Subsidiary pursuant to the provisions hereof or thereof, shall prove to have been false or misleading in any material respect as of the time it was made or furnished; 

        (c)    Breach of Negative Covenants or Visitation Rights.    The Company or any Material Subsidiary shall default in
the observance or performance of any covenant contained in Section 7.02 [Negative Covenants] or shall default for a period of ten (10) days or more in the
observance or performance of any covenant contained in Section 7.01(f); 

        (d)    Breach of Other Covenants.    There shall be a default in the observance or performance of any other covenant,
condition, or provision hereof or of any other Loan Document 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)    Defaults in Other Agreements or Indebtedness.    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 the Company or any Material Subsidiary of the Company may be obligated as a
borrower or guarantor in excess of $20,000,000 in the aggregate, and such breach, default or event of default consists of the failure to pay (beyond any period of grace permitted with respect thereto,
whether waived or not) any Indebtedness when due (whether at stated maturity, by acceleration or otherwise) or 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; 

        (f)    Final Judgments or Orders.    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 the Company or any Material 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; 

        (g)    Loan Document Unenforceable.    Any of the Loan Documents shall cease to be legal, valid, and binding
agreements enforceable against the party executing the same or such party's successors and assigns (as permitted under the Loan Documents) in accordance with the respective terms thereof or shall in
any way be terminated (except in accordance with its terms) or become or be declared stayed, ineffective, or inoperative or shall cease to give or provide the respective Liens or security interests
intended to be created thereby; provided, however, if any of the foregoing is a result of an involuntary
proceeding of the type described in Section 8.01(m), such proceeding has 

43

 

not
been contested by the affected party or has not been dismissed after the passage of more than sixty (60) days; 

        (h)    Losses; Proceedings Against Assets.    Any of the Company's assets having an aggregate value (reasonably
determined) in excess of five (5%) of the tangible net worth of Company and its Subsidiaries, or any of its Material Subsidiaries' assets having an aggregate value (reasonably determined) in excess of
a material amount of such Material Subsidiary's tangible net worth, are attached, seized, levied upon or subjected to a writ or distress warrant; or such come within the possession of any receiver,
trustee, custodian or assignee for the benefit of creditors and the same is not cured within sixty (60) days thereafter; 

        (i)    Notice of Lien or Assessment.    A notice of Lien or assessment in excess of $20,000,000 which is not a
Permitted Lien is filed of record with respect to all or any part of the Borrower's or any of its Material Subsidiaries' assets by the United States, or any department, agency, or instrumentality
thereof, or by any state, county, municipal, or other governmental agency, including the PBGC, or any taxes or debts owing at any time or times hereafter to any one of these becomes payable and the
same is not paid within thirty (30) days after the same becomes payable; 

        (j)    Insolvency.    The Company or any Material Subsidiary of the Company ceases to be solvent or admits in writing
its inability to pay its debts as they mature; 

        (k)    Events Relating to Plans and Benefit Arrangements.    Any of the following occurs: (i) any Reportable
Event, which the Agent determines in good faith constitutes grounds for the termination of any Plan by the PBGC or the appointment of a trustee to administer or liquidate any Plan, shall have occurred
and be continuing; (ii) proceedings shall have been instituted or other action taken to terminate any Plan, or a termination notice shall have been filed with respect to any Plan;
(iii) a trustee shall be appointed to administer or liquidate any Plan; (iv) the PBGC shall give notice of its intent to institute proceedings to terminate any Plan or Plans or to
appoint a trustee to administer or liquidate any Plan; and, in the case of the occurrence of (i), (ii), (iii) or (iv) above, the Agent determines in good faith that the amount of the
Company's liability is likely to exceed 10% of its Consolidated Tangible Net Worth; (v) the Company or any member of the ERISA Group shall fail to make any contributions when due to a Plan or a
Multiemployer Plan; (vi) the Company or any other member of the ERISA Group shall make any amendment to a Plan with respect to which security is required under Section 307 of ERISA;
(vii) the Company or any other member of the ERISA Group shall withdraw completely or partially from a
Multiemployer Plan; (viii) the Company or any other member of the ERISA Group shall withdraw (or shall be deemed under Section 4062(e) of ERISA to withdraw) from a Multiple Employer
Plan; or (ix) any applicable Law is adopted, changed or interpreted by any Official Body with respect to or otherwise affecting one or more Plans, Multiemployer Plans or Benefit Arrangements
and, with respect to any of the events specified in (v), (vi), (vii), (viii) or (ix), the Agent determines in good faith that any such occurrence would be reasonably likely to materially and
adversely affect the total enterprise represented by the Company and the other members of the ERISA Group; 

        (l)    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 Limited or an Affiliate of ACE Limited, 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 the Company; or (ii) within a period of twelve (12) consecutive calendar
months, individuals who were directors of the Company on the first day of such period and individuals approved by ACE Limited or an Affiliate of ACE Limited shall cease to constitute a majority of the
board of directors of the Company; or (iii) the UK Borrower shall cease to be a subsidiary of the Company at any time when any Loans are outstanding to the UK Borrower; 

44

 

        (m)    Involuntary Proceedings.    A proceeding shall have been instituted in a court having jurisdiction in the
premises seeking a decree or order for relief in respect of the Company or any Material Subsidiary of the Company 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 the Company or any
Material Subsidiary of the Company 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; or 

        (n)    Voluntary Proceedings.    The Company or any Material Subsidiary of the Company 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. 

        Section 8.02    Consequences of Event of Default.    (a)    Events of Default
Other Than Bankruptcy, Insolvency or Reorganization Proceedings.    If an Event of Default or Potential Default specified under Section 8.01(a) through
Section 8.01(l) shall occur and be continuing, the Banks and the Agent shall be under no further obligation to make Revolving Credit Loans, Term Loans or Bid Loans, as the case may be, and
if any such Event of Default shall occur and be continuing, the Agent may, and upon the request of the Required Banks, shall by written notice to the Borrowers, take any of the following actions:
(i) terminate the Commitments and thereupon the Commitments shall be terminated and of no further force or effect, or (ii) declare the unpaid principal amount of the Revolving Credit
Notes, Term Loans and Bid Notes then outstanding and all interest accrued thereon, any unpaid fees, and all other Indebtedness of the Borrowers to the Banks hereunder and thereunder to be forthwith
due and payable, and the same shall thereupon become and be immediately due and payable to the Agent for the benefit of each Bank without presentment, demand, protest or any other notice of any kind,
all of which are hereby expressly waived; and 

        (b)    Bankruptcy, Insolvency or Reorganization Proceedings.    If an Event of Default specified under
Section 8.01(m) [Involuntary Proceedings] or Section 8.01(n) [Voluntary Proceedings] shall occur, the Commitments shall automatically
terminate and be of no further force and effect, the Banks shall be under no further obligations to make Revolving Credit Loans, Term Loans or Bid Loans hereunder and the unpaid principal amount of
the Loans then outstanding and all interest accrued thereon, any unpaid fees and all other Indebtedness of the Borrowers to the Banks hereunder and thereunder shall be immediately due and payable,
without presentment, demand, protest or notice of any kind, all of which are hereby expressly waived; and 

        (c)    Set-off.    If an Event of Default shall occur and be continuing, any Bank to whom any Obligation
is owed by any Borrower or any Material Subsidiary hereunder or under any other Loan Document or any participant of such Bank which has agreed in writing to be bound by the provisions of
Section 9.13 [Equalization of Banks] and any branch, Subsidiary, or Affiliate of such Bank or participant anywhere shall have the right, in addition to all other rights
and remedies available to it, without notice to any Borrower or any Material Subsidiary, to set-off against and apply to the then unpaid balance of all the Loans and all other Obligations
hereunder or under any other Loan Document any debt owing to, and any other funds held in any manner for the account of, any Borrower or any Material Subsidiary by such Bank or participant or by such
branch, Subsidiary or Affiliate, including all funds in all deposit accounts (whether time or demand, general or special, provisionally credited or finally credited, or otherwise) now or 

45

 

hereafter
maintained by any Borrower or any Material Subsidiary for its own account (but not including funds held in custodian or trust accounts) with such Bank or participant or such branch,
Subsidiary, or Affiliate. Such right shall exist whether or not any Bank or the Agent shall have made any demand under this Agreement or any other Loan Document, whether or not such debt owing to or
funds held for the account of any Borrower or any Material Subsidiary is or are matured or unmatured and regardless of the existence or adequacy of any Guaranty or any other security, right, or remedy
available to any Bank or the Agent; and 

        (d)    Suits, Actions, Proceedings.    If an Event of Default shall occur and be continuing, and whether or not the
Agent shall have accelerated the maturity of Committed Loans pursuant to any of the foregoing provisions of this Section 8.02, the Agent or any Bank, upon the request or consent of the Required
Banks, may proceed to protect and enforce the Agent's or any one or more Banks' rights by suit in equity, action at law and/or other appropriate proceeding, whether for the specific performance of any
covenant or agreement contained in this Agreement or the other Loan Documents, including as permitted by applicable Law the obtaining of the ex parte appointment of a receiver, and, if such amount
shall have become due, by declaration or otherwise, proceed to enforce the payment thereof or any other legal or equitable right of the Agent or such Bank; and 

        (e)    Application of Proceeds.    From and after the date on which the Agent has taken any action pursuant to this
Section 8.02 and until all Obligations have been paid in full, any and all proceeds received by the Agent from the exercise of any remedy by the Agent, shall be applied as follows: 

        (A)  first,
to reimburse the Agent and the Banks for out-of-pocket costs, expenses and disbursements, including reasonable attorneys' fees and legal
expenses, incurred by the Agent or the Banks in connection with collection of any Obligations under any of the Loan Documents; 

        (B)  second,
to the repayment of all Indebtedness then due and unpaid of any Borrower or any Material Subsidiary to the Banks incurred under this Agreement or any of the
other Loan Documents, whether of principal, interest, fees, expenses or otherwise, in such manner as the Agent may determine in its discretion; and 

        (C)  the
balance, if any, as required by Law. 

        (f)    Other Rights and Remedies.    In addition to all of the rights and remedies contained in this Agreement or in
any of the other Loan Documents, the Agent shall have all of the rights and remedies under applicable Law, all of which rights and remedies shall be cumulative and non-exclusive, to the
extent permitted by Law. The Agent may, and upon the request of the Required Banks shall, exercise all post-default rights granted to the Agent and the Banks under the Loan Documents or
applicable Law. 

        Section 8.03    Right of Competitive Bid Loan Banks.    If any Event of Default shall occur and be continuing,
the Banks which have any Bid Loans then outstanding to the Borrowers (the "Bid Loan Banks") shall not be entitled to accelerate payment of the Bid Loans or to exercise any right or remedy related to
the collection of the Bid Loans until the Commitments shall be terminated hereunder pursuant to Section 8.02. Upon such a termination of the Commitments: (i) references to Revolving
Credit Loans in Section 8.02 shall be deemed to apply also to the Bid Loans and the Bid Loan Banks shall be entitled to all enforcement rights given to a holder of a Revolving Credit Loan in
Section 8.02, and (ii) the definition of Required Banks shall be changed as provided in Section 1.01 so that each Bank shall have voting rights hereunder in proportion to its
share of the total Loans outstanding. 

46

 
ARTICLE IX  

 THE AGENT  

        Section 9.01    Appointment.    Each Bank hereby irrevocably designates, appoints and authorizes ABN AMRO Bank
N.V. to act as Agent for such Bank under this Agreement and to execute and deliver or accept on behalf of each of the Banks the other Loan Documents. Each Bank hereby irrevocably authorizes the Agent
to take such action on its behalf under the provisions of this Agreement and the other Loan Documents and any other instruments and agreements referred to herein, and to exercise such powers and to
perform such duties hereunder as are specifically delegated to or required of the Agent by the terms hereof, together with such powers as are reasonably incidental thereto. ABN AMRO Bank N.V. agrees
to act as the Agent on behalf of the Banks to the extent provided in this Agreement. 

        Section 9.02    Delegation of Duties.    The Agent may perform any of its duties hereunder by or through agents
or employees (provided such delegation does not constitute a relinquishment of its duties as Agent) and, subject to Section 9.05 [Reimbursement of Agent by Borrower,
Etc.] and Section 9.06, shall be entitled to engage and pay for the advice or services of any attorneys, accountants or other experts concerning all matters pertaining to its duties
hereunder and to rely upon any advice so obtained. 

        Section 9.03    Nature of Duties; Independent Credit Investigation.    The Agent shall have no duties or
responsibilities except those expressly set forth in this Agreement and no implied covenants, functions, responsibilities, duties, obligations, or liabilities shall be read into this Agreement or
otherwise exist. The duties of the Agent shall be mechanical and administrative in nature; the Agent shall not have by reason of this Agreement a fiduciary or trust relationship in respect of any
Bank; and nothing in this
Agreement, expressed or implied, is intended to or shall be construed as to impose upon the Agent any obligations in respect of this Agreement except as expressly set forth herein. Without limiting
the generality of the foregoing, the use of the term "agent" in this Agreement with reference to the Agent is not intended to connote any fiduciary or other implied (or express) obligations arising
under agency doctrine of any applicable Law. Instead, such term is used merely as a matter of market custom, and is intended to create or reflect only an administrative relationship between
independent contracting parties. Each Bank expressly acknowledges (i) that the Agent has not made any representations or warranties to it and that no act by the Agent hereafter taken, including
any review of the affairs of any of the Company or any of its Subsidiaries, shall be deemed to constitute any representation or warranty by the Agent to any Bank; (ii) that it has made and will
continue to make, without reliance upon the Agent, its own independent investigation of the financial condition and affairs and its own appraisal of the creditworthiness of each of the Company and its
Subsidiaries in connection with this Agreement and the making and continuance of the Loans hereunder; and (iii) except as expressly provided herein, that the Agent shall have no duty or
responsibility, either initially or on a continuing basis, to provide any Bank with any credit or other information with respect thereto, whether coming into its possession before the making of any
Loan or at any time or times thereafter. 

        Section 9.04    Actions in Discretion of Agent; Instructions From the Banks.    The Agent agrees, upon the
written request of the Required Banks, to take or refrain from taking any action of the type specified as being within the Agent's rights, powers or discretion herein, provided that the Agent shall
not be required to take any action which exposes the Agent to personal liability or which is contrary to this Agreement or any other Loan Document or applicable Law. In the absence of a request by the
Required Banks, the Agent shall have authority, in its sole discretion, to take or not to take any such action, unless this Agreement specifically requires the consent of the Required Banks or all of
the Banks. Any action taken or failure to act pursuant to such instructions or discretion shall be binding on the Banks, subject to Section 9.06 [Exculpatory Provisions,
Etc.]. Subject to the provisions of 

47

 

Section 9.06,
no Bank shall have any right of action whatsoever against the Agent as a result of the Agent acting or refraining from acting hereunder in accordance with the instructions of the
Required Banks, or in the absence of such instructions, in the absolute discretion of the Agent. 

        Section 9.05    Reimbursement and Indemnification of Agent by the Borrowers.    Each Borrower unconditionally,
jointly and severally, agrees to pay or reimburse the Agent and hold the Agent harmless against (a) liability for the payment of all reasonable out-of-pocket costs,
expenses, and disbursements (including fees and expenses of counsel) incurred by the Agent (i) in connection with the development, negotiation, preparation, printing, execution, administration,
syndication, interpretation and performance of this Agreement and the other Loan Documents, (ii) relating to any requested amendments, waivers or consents pursuant to the provisions hereof,
(iii) in connection with the enforcement of this Agreement or any other Loan Document or collection of amounts due hereunder or thereunder or the proof and allowability of any claim arising
under this Agreement or any other Loan Document, whether in bankruptcy or receivership proceedings or otherwise, and (iv) in any workout or restructuring or in connection with the protection,
preservation, exercise or enforcement of any of the terms hereof or of any rights hereunder or under any other Loan Document or in connection with any foreclosure, collection or bankruptcy
proceedings, and (b) all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever which may be imposed on, incurred by or asserted against the Agent, in its capacity as such, in any way relating to or arising out of this Agreement or
any other Loan Documents or any action taken or omitted by the Agent hereunder or thereunder, provided that the Borrowers shall not be liable for any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements if the same results from the Agent's gross negligence or willful misconduct, or if the Borrowers were not given notice
of the subject claim and the opportunity to participate in the defense thereof, at their expense (except that the Borrowers shall remain liable to the extent such failure to give notice does not
result in a loss to the Borrowers), or if the same results from a compromise or settlement agreement entered into without the consent of the Borrowers, which shall not be unreasonably withheld. 

        Section 9.06    Exculpatory Provisions; Limitation of Liability.    Neither the Agent nor any of its directors,
officers, employees, agents, attorneys or Affiliates shall (a) be liable to any Bank for any action taken or omitted to be taken by it or them hereunder, or in connection herewith including
pursuant to any Loan Document, unless caused by its or their own gross negligence or willful misconduct, (b) be responsible in any manner to any of the Banks for the effectiveness,
enforceability, genuineness, validity or the due execution of this Agreement or any other Loan Documents or for any recital, representation, warranty, document, certificate, report or statement herein
or made or furnished under or in connection with this Agreement or any other Loan Documents, or (c) be under any obligation to any of the Banks to ascertain or to inquire as to the performance
or observance of any of the terms, covenants or conditions hereof or thereof on the part of the Borrowers or any of their Subsidiaries, or the financial condition of the Borrowers or any of their
Subsidiaries, or the existence or possible existence of any Event of Default or Potential Default. No claim may be made by the Borrowers or any of their Subsidiaries, any Bank, the Agent or any of
their respective Subsidiaries against the Agent, any Bank or any of their respective directors, officers, employees, agents, attorneys or Affiliates, or any of them, for any special, indirect or
consequential damages or, to the fullest extent permitted by Law, for any punitive damages in respect of any claim or cause of action (whether based on contract, tort, statutory liability, or any
other ground) based on, arising out of or related to any Loan Document or the transactions contemplated hereby or any act, omission or event occurring in connection therewith, including the
negotiation, documentation, administration or collection of the Loans, and the Borrowers (for themselves and on behalf of each of their Subsidiaries), the Agent and each Bank hereby waive, release and
agree never to sue upon any claim for any such damages, whether such claim now exists or hereafter arises and whether or not it is now known or suspected to exist in their favor. Each Bank agrees
that, except for notices, reports and other documents expressly required 

48

 

to
be furnished to the Banks by the Agent hereunder or given to the Agent for the account of or with copies for the Banks, the Agent and each of its directors, officers, employees, agents, attorneys
or Affiliates shall not have any duty or responsibility to provide any Bank with an credit or other information concerning the business, operations, property, condition (financial or otherwise),
prospects or creditworthiness of the Borrowers or any of their Subsidiaries which may come into the possession of the Agent or any of its directors, officers, employees, agents, attorneys or
Affiliates. 

        Section 9.07    Reimbursement and Indemnification of Agent by Banks.    Each Bank agrees to reimburse and
indemnify the Agent (to the extent not reimbursed by the Borrowers and without limiting the Obligation of the Borrowers to do so) in proportion to its Ratable Share from and against all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements,
including attorneys' fees and disbursements (including the allocated costs of staff counsel), and costs of appraisers and environmental consultants, of any kind or nature whatsoever which may be
imposed on, incurred by or asserted against the Agent, in its capacity as such, in any way relating to or arising out of this Agreement or any other Loan Documents or any action taken or omitted by
the Agent hereunder or thereunder, provided that no Bank shall be liable for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements (a) if the same results from the Agent's gross negligence or willful misconduct, or (b) if such Bank was not given notice of the subject claim and the opportunity to
participate in the defense thereof, at its expense (except that such Bank shall remain liable to the extent such failure to give notice does not result in a loss to the Bank), or (c) if the
same results from a compromise and settlement agreement entered into without the consent of such Bank, which shall not be unreasonably withheld. In addition, each Bank agrees promptly upon demand to
reimburse the Agent (to the extent not reimbursed by the Borrowers and without limiting the Obligation of the Borrowers to do so) in proportion to its Ratable Share for all amounts due and payable by
the Borrowers to the Agent in connection with the Agent's periodic audit of the Company's or any of its respective Material Subsidiaries' books, records and business properties. 

        Section 9.08    Reliance by Agent.    The Agent shall be entitled to rely upon any writing, telegram, telex or
teletype message, resolution, notice, consent, certificate, letter, cablegram, statement, order or other document or conversation by telephone or otherwise believed by it to be genuine and correct and
to have been signed, sent or made by the proper Person or Persons, and upon the advice and opinions of counsel and other professional advisers selected by the Agent. The Agent shall be fully justified
in failing or refusing to take any action hereunder unless it shall first be indemnified to its satisfaction by the Banks against any and all liability and expense which may be incurred by it by
reason of taking or continuing to take any such action. 

        Section 9.09    Notice of Default.    The Agent shall not be deemed to have knowledge or notice of the
occurrence of any Potential Default or Event of Default unless the Agent has received written notice from a Bank or a Borrower referring to this Agreement, describing such Potential Default or Event
of Default and stating that such notice is a "notice of default." 

        Section 9.10    Notices.    The Agent shall promptly send to each Bank a copy of all notices received from any
Borrower pursuant to the provisions of this Agreement or the other Loan Documents promptly upon receipt thereof. The Agent shall promptly notify the Borrowers and the other Banks of each change in the
Base Rate and the effective date thereof. 

49

   
        Section 9.11    Banks in Their Individual Capacities; Agents in Its Individual Capacity.    With respect to
its
Revolving Credit Commitment, the Revolving Credit Loans and any Bid Loans made by it and any other rights and powers given to it as a Bank hereunder or under any of the other Loan Documents, the Agent
shall have the same rights and powers hereunder as any other Bank and may exercise the same as though it were not the Agent, and the term "Bank" and "Banks" shall, unless the context otherwise
indicates, include the Agent in its individual capacity. ABN AMRO Bank and its Affiliates and each of the Banks and their respective Affiliates may, without liability to account, except as prohibited
herein, make loans to, issue letters of credit for the account of, acquire equity interests in, accept deposits from, discount drafts for, act as trustee under indentures of, and generally engage in
any kind of banking, trust, financial advisory, underwriting or other business with, the Company and its Subsidiaries and their Affiliates, in the case of the Agent, as though it were not acting as
Agent hereunder and in the case of each Bank, as though such Bank were not a Bank hereunder, in each case without notice to or consent of the other Banks. The Banks acknowledge that, pursuant to such
activities, the Agent or its Affiliates may (i) receive information regarding the Company and any of its Subsidiaries or Affiliates (including information that may be subject to confidentiality
obligations in favor of the Company or any of its Subsidiaries or Affiliates) and acknowledge that the Agent shall be under no obligation to provide such information to them, and (ii) accept
fees and other consideration from the Company and any of its Subsidiaries for services in connection with this Agreement and otherwise without having to account for the same to the Banks. 

        Section 9.12    Holders of Notes.    The Agent may deem and treat any payee of any Note as the owner thereof
for all purposes hereof unless and until written notice of the assignment or transfer thereof shall have been filed with the Agent. Any request, authority or consent of any Person who at the time of
making such request or giving such authority or consent is the holder of any Note shall be conclusive and binding on any subsequent holder, transferee or assignee of such Note or of any Note or Notes
issued in exchange therefor. 

        Section 9.13    Equalization of Banks.    The Banks and the holders of any participations in any Commitments or
Loans or other rights or obligations of a Bank hereunder agree among themselves that, with respect to all amounts received by any Bank or any such holder for application on any Obligation hereunder or
under any such participation, whether received by voluntary payment, by realization upon security, by the exercise of the right of set-off or banker's lien, by counterclaim, or by any
other non-pro rata source, equitable adjustment will be made in the manner stated in the following sentence so that, in effect, all such
excess amounts will be shared ratably among the Banks and such holders in proportion to their interests in payments on the Loans, except as otherwise provided in Section 3.04(c)
[Agent's and Bank's Rights], Section 4.04(b) [Replacement of a Bank] or Section 4.06 [Additional Compensation in Certain
Circumstances]. The Banks or any such holder receiving any such amount shall purchase for cash from each of the other Banks an interest in such Bank's Loans in such amount as shall result
in a ratable participation by the Banks and each such holder in the aggregate unpaid amount of the Loans, provided that if all or any portion of such excess amount is thereafter recovered from the
Bank or the holder making such purchase, such purchase shall be
rescinded and the purchase price restored to the extent of such recovery, together with interest or other amounts, if any, required by law (including court order) to be paid by the Bank or the holder
making such purchase. 

        Section 9.14    Successor Agent.    The Agent (i) may resign as Agent or (ii) shall resign if
such resignation is required by Section 4.04(b) [Replacement of a Bank], in either case of (i) or (ii) by giving not less than thirty (30) days'
prior written notice to the Borrowers. If the Agent shall resign under this Agreement, then either (a) the Required Banks shall appoint from among the Banks a successor agent for the Banks,
subject to the consent of the Borrowers, such consent not to be unreasonably withheld, or (b) if a successor agent shall not be so appointed and approved within the thirty (30) day
period following the Agent's notice to the Banks of its resignation, then the Agent shall appoint, with the consent of the Borrowers, such consent not to be unreasonably withheld, a successor agent
who shall 

50

 

serve
as Agent until such time as the Required Banks appoint and the Borrowers consent to the appointment of a successor agent. Upon its appointment pursuant to either clause (a) or
(b) above, such successor agent shall succeed to the rights, powers and duties of the Agent, and the term "Agent" shall mean such successor agent, effective upon its appointment, and the former
Agent's rights, powers and duties as Agent shall be terminated without any other or further act or deed on the part of such former Agent or any of the parties to this Agreement. After the resignation
of any Agent hereunder, the provisions of this ARTICLE IX shall inure to the benefit of such former Agent and such former Agent shall not by reason of such resignation be deemed to be released from
liability for any actions taken or not taken by it while it was an Agent under this Agreement. 

        Section 9.15    Agent's Fee.    The Borrowers shall pay to the Agent a nonrefundable fee (the "Bid Loan
Processing Fee") in connection with processing Bid Loans and a nonrefundable fee (the "Agent's Fee") for Agent's services hereunder under the terms of a letter (the "Agent's Letter") between the
Borrowers and Agent, as amended from time to time. 

        Section 9.16    Availability of Funds.    The Agent may assume that each Bank has made or will make the
proceeds of a Loan available to the Agent unless the Agent shall have been notified by such Bank on or before the later of (1) the close of Business on the Business Day preceding the Borrowing
Date with respect to such Loan or (2) two hours before the time on which the Agent actually funds the proceeds of such Loan to the respective Borrower (whether using its own funds pursuant to
this Section 9.16 or using proceeds deposited with the Agent by the Banks and whether such funding occurs before or after the time on which Banks are required to deposit the proceeds of such
Loan with the Agent). The Agent may, in reliance upon such assumption (but shall not be required to), make available to the respective Borrower a corresponding amount. If such corresponding amount is
not in fact made available to the Agent by such Bank, the Agent shall be entitled to recover such amount on demand from such Bank (or, if such Bank fails to pay such amount forthwith upon such demand
from the Borrowers) together with interest thereon, in respect of each day during the period commencing on the date such amount was made available to the Borrowers and ending on the date the Agent
recovers such amount, at a rate per annum equal to (i) the Federal Funds Effective Rate during the first three
(3) days after such interest shall begin to accrue and (ii) the applicable interest rate in respect of such Loan after the end of such three-day period. 

        Section 9.17    Calculations.    In the absence of gross negligence or willful misconduct, the Agent shall not
be liable for any error in computing the amount payable to any Bank whether in respect of the Loans, fees or any other amounts due to the Banks under this Agreement. In the event an error in computing
any amount payable to any Bank is made, the Agent, the Borrowers and each affected Bank shall, forthwith upon discovery of such error, make such adjustments as shall be required to correct such error,
and any compensation therefor will be calculated at the Federal Funds Effective Rate. 

        Section 9.18    Beneficiaries.    Except as expressly provided herein, the provisions of this ARTICLE IX are
solely for the benefit of the Agent and the Banks, and the Company and its Subsidiaries shall not have any rights to rely on or enforce any of the provisions hereof. In performing its functions and
duties under this Agreement, the Agent shall act solely as agent of the Banks and does not assume and shall not be deemed to have assumed any obligation toward or relationship of agency or trust with
or for the Company or any of its Subsidiaries. 

ARTICLE X  

 MISCELLANEOUS  

        Section 10.01    Modifications, Amendments, or Waivers.    With the written consent of the Required Banks, the
Agent, acting on behalf of all the Banks, and the Borrowers may from time to time enter into written agreements amending or changing any provision of this Agreement or any other Loan Document or the
rights of the Banks or the Borrowers hereunder or thereunder, or may grant written 

51

 

waivers
or consents to a departure from the due performance of the Obligations hereunder or thereunder. Any such agreement, waiver or consent made with such written consent shall be effective to bind
all the Banks and the Borrowers; provided that, without the written consent of all the Banks, no such agreement, waiver, or consent may be made which will: 

        (a)    Increase of Commitment; Extension of Expiration Date.    Increase the amount of the Revolving Credit Commitment
of any Bank hereunder or extend the Expiration Date or the Term Loan Maturity Date; 

        (b)    Extension of Payment; Reduction of Principal Interest or Fees; Modification of Terms of Payment.    Whether or
not any Loans are outstanding, extend the time for payment of principal or interest of any Loan (excluding the due date of any mandatory prepayment of a Loan or any mandatory Commitment reduction in
connection with such a mandatory prepayment hereunder except for mandatory reductions of the Commitments on the Expiration Date), the Facility Fee, the Term Loan Fee or any other fee payable to any
Bank, or reduce the principal amount of or the rate of interest borne by any Loan or reduce the Facility Fee or any other fee payable to any Bank, or otherwise affect the terms of payment of the
principal of or interest of any Loan, the Facility Fee or any other fee payable to any Bank; 

        (c)    Release of Collateral or Guarantor.    Release any Guarantor from its Obligations under the Guaranty Agreement
or any other security for any of the Obligations except as otherwise may be permitted by the terms hereof or of the instrument establishing the Lien; or 

        (d)    Miscellaneous.    Amend Section 4.02 [Pro Rata Treatment of Banks],
Section 9.06 [Exculpatory Provisions, Etc.] or Section 9.13 [Equalization of Banks] or this Section 10.01, alter any provision
regarding the pro rata treatment of the Banks, change the definition of Required Banks, or change any requirement providing for the Banks or the
Required Banks to authorize the taking of any action hereunder; 

provided, further, that no agreement, waiver or consent which would modify the interests, rights or
obligations of the Agent in its capacity as Agent or as an issuer of letters of credit shall be effective without the written consent of the Agent. 

        Section 10.02    No Implied Waivers; Cumulative Remedies; Writing Required.    No course of dealing and no
delay or failure of the Agent or any Bank in exercising any right, power, remedy or privilege under this Agreement or any other Loan Document shall affect any other or future exercise thereof or
operate as a waiver thereof, nor shall any single or partial exercise thereof or any abandonment or discontinuance of steps to enforce such a right, power, remedy or privilege preclude any further
exercise thereof or of any other right, power, remedy or privilege. The rights and remedies of the Agent and the Banks under this Agreement and any other Loan Documents are cumulative and not
exclusive of any rights or remedies which they would otherwise have. Any waiver, permit, consent or approval of any kind or character on the part of any Bank of any breach or default under this
Agreement or any such waiver of any provision or condition of this Agreement must be in writing and shall be effective only to the extent specifically set forth in such writing. 

        Section 10.03    Reimbursement and Indemnification of Banks by the Borrower; Taxes.    The Borrower agrees
unconditionally upon demand to pay or reimburse to each Bank (other than the Agent, as to which the Borrowers' Obligations are set forth in Section 9.05 [Reimbursement of Agent By
Borrower, Etc.]) and to save such Bank harmless against (i) liability for the payment of all reasonable out-of-pocket costs, expenses and disbursements
(including fees and expenses of counsel for each Bank except with respect to (a) and (b) below), incurred by such Bank (a) in connection with the review, execution, delivery,
administration, or interpretation of this Agreement, and other instruments and documents to be delivered hereunder, (b) relating to any amendments, waivers, or consents pursuant to the
provisions hereof, (c) in connection with the enforcement of this Agreement or any other Loan 

52

 

Document,
or collection of amounts due hereunder or thereunder or the proof and allowability of any claim arising under this Agreement or any other Loan Document, whether in bankruptcy or receivership
proceedings or otherwise, and (d) in any workout or restructuring or in connection with the protection, preservation, exercise, or enforcement of any of the terms hereof or of any rights
hereunder or under any other Loan Document or in connection with any foreclosure, collection, or bankruptcy proceedings, or (ii) all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses, or disbursements of any kind or nature whatsoever which may be imposed on, incurred by or asserted against such Bank (including such Bank's officers,
directors and employees), in its capacity as such, in any way relating to or arising out of this Agreement or any other Loan Documents, use of proceeds of the Loans or the transactions contemplated by
the Loan Documents or any action taken or omitted by such Bank (including such Bank's officers, directors and employees) hereunder or thereunder, provided that the Borrowers shall not be liable to a
Bank (including such Bank's officers, directors and employees) for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses, or
disbursements (A) if the same results from such Bank's or its officer's, director's or employee's gross negligence or willful misconduct, or (B) if the Borrowers were not given notice of
the subject claim and the opportunity to participate in the defense thereof, at their expense (except that the Borrowers shall remain liable to the extent such failure to give notice does not result
in a loss to the Borrowers), or (C) if the same results from a compromise or settlement agreement entered into without the consent of the Borrowers, which shall not be unreasonably withheld.
The Banks will attempt to minimize the fees and expenses of legal counsel for the Banks which are subject to reimbursement by the Borrowers hereunder by considering the usage of one law firm to
represent the Banks and the Agent if appropriate under the circumstances. The Borrowers, jointly and severally, agree unconditionally to pay all stamp, document, transfer, recording or filing taxes or
fees and similar impositions now or hereafter determined by the Agent or any Bank to be payable in connection with this Agreement or any other Loan Document, and the Borrowers, jointly and severally,
agree unconditionally to save the Agent and the Banks harmless from and against any and all present or future claims, liabilities or losses with respect to or resulting from any omission to pay or
delay in paying any such taxes, fees or impositions. 

        Section 10.04    Holidays.    Whenever payment of a Loan to be made or taken hereunder shall be due on a day
which is not a Business Day such payment shall be due on the next Business Day (except as provided in the definition of Committed Loan Interest Period with respect to Interest Periods under the LIBOR
Option) and such extension of time shall be included in computing interest and fees, except that the Loans shall be due on the Business Day preceding the Expiration Date or the Term Loan Maturity Date
if the Expiration Date or the Term Loan Maturity Date is not a Business Day. Whenever any payment or action to be made or taken hereunder (other than payment of the Loans) shall be stated to be due on
a day which is not a Business Day, such payment or action shall be made
or taken on the next following Business Day, and such extension of time shall not be included in computing interest or fees, if any, in connection with such payment or action. 

        Section 10.05    Funding by Branch, Subsidiary, or
Affiliate.    (a)    Notional Funding.    Each Bank shall have the right from time to time,
without notice to the Borrowers, to deem any branch, Subsidiary, or Affiliate (which for the purposes of this Section 10.05 shall mean any corporation or association which is directly or
indirectly controlled by or is under direct or indirect common control with any corporation or association which directly or indirectly controls such Bank) of such Bank to have made, maintained, or
funded any Loan to which the LIBOR Option applies at any time, provided that immediately following (on the assumption that a payment was then due from the Borrowers to such other office), and as a
result of such change, the Borrowers will not be under any greater financial obligation pursuant to Section 4.06 [Additional Compensation in Certain Circumstances] than
they would have been in the absence of such change. Notional funding offices may be selected by each Bank without regard to such Bank's actual methods of making, maintaining or funding the Loans or
any sources of funding actually used by or available to such Bank. 

53

 

        (b)    Actual Funding.    Each Bank shall have the right from time to time to make or maintain any Loan by arranging
for a branch, Subsidiary or Affiliate of such Bank to make or maintain such Loan subject to the last sentence of this Section 10.05(b). If any Bank causes a branch, Subsidiary or Affiliate to
make or maintain any part of the Loans hereunder, all terms and conditions of this Agreement shall, except where the context clearly requires otherwise, be applicable to such part of the Loans to the
same extent as if such Loans were made or maintained by such Bank, but in no event shall any Bank's use of such a branch, Subsidiary or Affiliate to make or maintain any part of the Loans hereunder
cause such Bank or such branch, Subsidiary or Affiliate to incur any cost or expenses payable by any Borrower hereunder or require any Borrower to pay any other compensation to any Bank (including any
expenses incurred or payable pursuant to Section 4.06 [Additional Compensation in Certain Circumstances]) which would otherwise not be incurred. 

        Section 10.06    Notices.    Any notice, request, demand, direction, or other communication (for purposes of
this Section 10.06 only, a "Notice") to be given to or made upon any party hereto under any provision of this Agreement shall be given or made by telephone or in writing (which includes means
of electronic transmission (i.e., "e-mail") or facsimile transmission in accordance with this Section 10.06. Any such Notice must be
delivered to the applicable parties hereto at the addresses and numbers set forth under their respective names on Schedule 1.01(B) hereof or in accordance with any subsequent unrevoked Notice
from any such party that is given in accordance with this Section 10.06. Any 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 United States Postal Service, with first-class postage prepaid, return receipt requested; 

        (C)  In
the case of a telephonic Notice, when a party is contacted by telephone, if delivery of such telephonic Notice is confirmed no later than the next Business Day by
hand delivery, a facsimile or electronic transmission, a Website Posting or overnight courier delivery of a confirmatory notice (received at or before noon on such next Business Day); 

        (D)  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; 

        (E)  In
the case of electronic transmission, when actually received; 

        (F)  In
the case of a Website Posting, upon delivery of a Notice of such posting (including the information necessary to access such web site) by another means set forth in
this Section 10.06; and 

        (G)  If
given by any other means (including by overnight courier), when actually received. 

Any
Bank giving a Notice to any Borrower or any Material Subsidiary shall concurrently send a copy thereof to the Agent, and the Agent shall promptly notify the other Banks of its receipt of such
Notice. 

        Section 10.07    Severability.    The provisions of this Agreement are intended to be severable. If any
provision of this Agreement shall be held invalid or unenforceable in whole or in part in any jurisdiction, such provision shall, as to such jurisdiction, be ineffective to the extent of such
invalidity or unenforceability without in any manner affecting the validity or enforceability thereof in any other jurisdiction or the remaining provisions hereof in any jurisdiction. 

        Section 10.08    Governing Law.    This Agreement and any other documents delivered herewith and the rights and
obligations of the parties hereto and thereto shall be for all purposes governed by, and construed and enforced in accordance with the internal Laws of the State of New York, without giving effect to
its conflicts of law principles. 

54

 

        Section 10.09    Prior Understanding.    This Agreement and the other Loan Documents supersede all prior
understandings and agreements, whether written or oral, between the parties hereto and thereto relating to the transactions provided for herein and therein, including any prior confidentiality
agreements and commitments. 

        Section 10.10    Duration; Survival.    All representations and warranties of the Borrowers and the Material
Subsidiaries contained herein or made in connection herewith shall survive the making of Loans and shall not be waived by the execution and delivery of this Agreement, any investigation by the Agent
or the Banks, the making of Loans, or payment in full of the Loans. All covenants and agreements of the Borrowers contained in Section 7.01 [Affirmative Covenants],
Section 7.02 [Negative Covenants] and Section 7.03 [Reporting Requirements], and all comparable covenants and agreements contained in or
incorporated into the Guarantor Joinder given by each Material Subsidiary pursuant to Section 10.18, shall continue in full force and effect from and after the date hereof so long as the
Borrowers may borrow hereunder and until termination of the Commitments and payment in full of the Loans. All covenants and agreements of the Borrowers contained herein relating to the payment of
principal, interest, premiums, additional compensation or expenses and indemnification, including those set forth in ARTICLE IV [Payments] and Section 9.05
[Reimbursement of Agent by Borrowers, Etc.], Section 9.07 [Reimbursement of Agent by Banks, Etc.] and Section 10.03
[Reimbursement of Banks by Borrowers; Etc.], and all comparable covenants and agreements contained in or incorporated into the Guarantor Joinder given by each Material
Subsidiary pursuant to Section 10.18, shall survive payment in full of the Loans and termination of the Commitments. 

        Section 10.11    Successors and Assigns.    (a) This Agreement shall be binding upon and shall inure to the
benefit of the Banks, the Agent, the Borrowers and the Material Subsidiaries, and their respective successors and assigns, except that no Borrowers or any Material Subsidiary may assign or transfer
any of its rights or Obligations or any interest herein or in any other Loan Document, except as may be permitted by the terms hereof. Each Bank may, at its own cost, make assignments of or sell
participations in all or any part of its Revolving Credit Commitments and the Loans made by it to one or more banks or other entities, subject to the consent of the Borrowers and the Agent with
respect to any assignee, such consent not to be unreasonably withheld, provided that (1) no consent of the Borrowers shall be required
(A) if an Event of Default exists and is continuing, or (B) in the case of an assignment by a Bank to an Affiliate of such Bank, (2) any assignment by a Bank to a Person other
than an Affiliate of such Bank may not be made in amounts less than the lesser of $5,000,000 or the amount of the assigning Bank's Commitment, (3) a Bank may assign an interest or sell a
participation in less than 100% of its Commitments, Committed Loans, or Bid Loans, provided that such Bank sells an equal percentage interest or
participation in each of its Revolving Credit Commitment and Revolving Credit Loans and Term Loans, and (4) a Bank may assign a Bid Loan to another Person without assigning any portion of its
Commitment to such Person. In the case of an assignment, upon receipt by the Agent of the Assignment and Assumption Agreement, the assignee shall have, to the extent of such assignment (unless
otherwise provided therein), the same rights, benefits and obligations as it would have if it had been a signatory Bank hereunder, the Commitments shall be adjusted accordingly, and upon surrender of
any Revolving Credit/Term Loan Note subject to such assignment, the applicable Borrower shall execute and deliver a new Revolving Credit/Term Loan Note to the assignee, if such assignee requests such
a Note in an amount equal to the amount of the Revolving Credit Commitment assumed by it and a new Revolving Credit/Term Loan Note to the assigning Bank, if the assigning Bank requests such a Note
with respect to the Commitment it has retained. The assigning Bank shall surrender its Bid Note and the respective Borrower shall execute and deliver to the assignee (and to the assignor if the
assignor is assigning less than all of its Revolving Credit Commitments and Bid Loans) a new Bid Note in the form of Exhibit 1.01(B) as
appropriate. Any Bank which assigns any or all of its Commitment or Loans to a Person other than an Affiliate of such Bank shall pay to the Agent a service fee in the amount of $3,500 for each
assignment. In the case of a participation, the participant shall only have the rights specified in Section 8.02 [Set-off] (the 

55

 

participant's
rights against such Bank in respect of such participation to be those set forth in the agreement executed by such Bank in favor of the participant relating thereto and not to include any
voting rights except with respect to changes of the type referenced in Section 10.01(a) [Increase of Commitment, Etc.], Section 10.01(b) [Extension of
Payment, Etc.], or Section 10.01(c) [Release of Collateral or Guarantor]), all of such Bank's obligations under this Agreement or any other Loan Document
shall remain unchanged, and all amounts payable by any Borrower or any Material Subsidiary hereunder or thereunder shall be determined as if such Bank had not sold such participation. 

        (b)   Any
assignee or participant which is not incorporated under the Laws of the United States of America or a state thereof shall deliver to the Borrowers and the Agent the
form of certificate described in Section 10.17 [Tax Withholding Clause] relating to federal income tax withholding. Each Bank may furnish any publicly available
information concerning the Borrowers or its Subsidiaries and any other information concerning the Borrowers or its Subsidiaries in the possession of such Bank from time to time to assignees and
participants (including prospective
assignees or participants), provided that such assignees and participants agree to be bound by the provisions of Section 10.12
[Confidentiality]. 

        (c)   Notwithstanding
any other provision in this Agreement, any Bank may at any time pledge or grant a security interest in all or any portion of its rights under this
Agreement, its Note (if any) and the other Loan Documents to any Federal Reserve Bank without notice to or consent of the Borrowers or the Agent. No such pledge or grant of a security interest shall
release the transferor Bank of its obligations hereunder or under any other Loan Document. 

        Section 10.12    Confidentiality.    (a)    General.    The
Agent and the Banks each agree to keep confidential all information obtained from the Borrowers or their Subsidiaries which is nonpublic and confidential or proprietary in nature (including any
information the Borrowers specifically designate as confidential), except as provided below, and to use such information only in connection with their respective capacities under this Agreement and
for the purposes contemplated hereby. The Agent and the Banks shall be permitted to disclose such information (i) to outside legal counsel, accountants and other professional advisors who need
to know such information in connection with the administration and enforcement of this Agreement, subject to agreement of such Persons to maintain the confidentiality of such information as provided
herein, (ii) to assignees and participants as contemplated by Section 10.11, and prospective assignees and participants, provided that Agent exercises its best efforts to obtain the
agreement of such prospective assignees and participants to be bound by the confidentiality provisions hereof, (iii) to the extent requested by any bank regulatory authority or, with notice to
the Borrowers, as otherwise required by applicable Law or by any subpoena or similar legal process, or in connection with any investigation or proceeding arising out of the transactions contemplated
by this Agreement, (iv) if it becomes publicly available other than as a result of a breach of this Agreement or becomes available from a source not known to be subject to confidentiality
restrictions, or (v) if the Borrowers shall have consented to such disclosure. 

        (b)    Sharing Information With Affiliates of the Banks.    The Borrowers acknowledge that from time to time financial
advisory, investment banking, and other services may be offered or provided to the Borrowers or one or more of their Affiliates (in connection with this Agreement or otherwise) by any Bank or by one
or more Subsidiaries or Affiliates of such Bank and the Borrowers hereby authorize each Bank to share any information delivered to such Bank by the Borrowers or any of their Subsidiaries pursuant to
this Agreement, or in connection with the decision of such Bank to enter into this Agreement, to any such Subsidiary or Affiliate of such Bank, it being understood that any such Subsidiary or
Affiliate of any Bank receiving such information shall be bound by the provisions of Section 10.12 as if it were a Bank hereunder. Such authorization shall survive the repayment of the Loans
and other Obligations and the termination of the Commitments. 

56

 

        (c)    Disclosures of Tax Treatment.    Notwithstanding anything herein or in any of the other Loan Documents to the
contrary, the Company, the UK Borrower, the Agent and each Bank (and each employee, representative or other agent of any such Person) may disclose to any and all Persons, without
limitation of any kind, the tax treatment and tax structure of the transactions contemplated hereby and all materials of any kind (including opinions or other tax analyses) that are provided to such
Person relating to such tax treatment and tax structure. For purposes of this authorization, "tax treatment" means the purported or claimed U.S. federal income tax treatment of the transaction, and
"tax structure" means any fact that may be relevant to understanding the purported or claimed U.S. federal income tax treatment of the transaction. The authorization to disclose the tax treatment and
tax structure of the transactions contemplated hereby contained in the preceding sentence was applicable immediately upon commencement of discussions between the Company, the UK Borrower and the Agent
with respect to the transactions contemplated hereby. Notwithstanding the foregoing, however, the Company, the UK Borrower, the Agent and each Bank each hereby acknowledges that, to the best of its
knowledge, no other party to this Agreement has made or provided a "tax statement" (as such term is defined in Treasury Regulation section 301.6112-1(c)(2)(iii)) regarding this
Agreement or the transactions contemplated hereby to, or for the benefit of, the Company, the UK Borrower, the Agent or such Bank, as the case may be, or any Person affiliated with the Company, the UK
Borrower, the Agent or such Bank, as the case may be. 

        Section 10.13    Counterparts.    This Agreement may be executed by different parties hereto on any number of
separate counterparts, each of which, when so executed and delivered, shall be an original, and all such counterparts shall together constitute one and the same instrument. 

        Section 10.14    Agent's or Bank's Consent.    Whenever the Agent's or any Bank's consent is required to be
obtained under this Agreement or any of the other Loan Documents as a condition to any action, inaction, condition or event, the Agent and each Bank shall be authorized to give or withhold such
consent in its sole and absolute discretion and to condition its consent upon the giving of additional collateral, the payment of money or any other matter. 

        Section 10.15    Exceptions.    The representations, warranties and covenants contained herein shall be
independent of each other, and no exception to any representation, warranty or covenant shall be deemed to be an exception to any other representation, warranty or covenant contained herein unless
expressly provided, nor shall any such exceptions be deemed to permit any action or omission that would be in contravention of applicable Law. 

        Section 10.16    CONSENT TO FORUM; WAIVER OF JURY TRIAL.    EACH OF THE BORROWERS
HEREBY IRREVOCABLY CONSENTS TO THE NONEXCLUSIVE JURISDICTION OF ANY NEW YORK STATE COURT OR FEDERAL COURT OF THE UNITED STATES OF AMERICA SITTING IN NEW YORK CITY, AND WAIVES PERSONAL SERVICE OF ANY
AND ALL PROCESS UPON IT. THE COMPANY CONSENTS THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE BY CERTIFIED OR REGISTERED MAIL DIRECTED TO THE COMPANY AT THE ADDRESS PROVIDED FOR IN SECTION 10.06 AND
SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED UPON ACTUAL RECEIPT THEREOF. THE UK BORROWER CONSENTS THAT ALL SERVICE OF PROCESS MAY BE MADE BY CERTIFIED OR REGISTERED MAIL DIRECTED TO THE COMPANY AT
THE ADDRESS PROVIDED IN SECTION 10.06 (AND THE UK BORROWER HEREBY IRREVOCABLY APPOINTS THE COMPANY AS ITS AGENT TO RECEIVE SUCH SERVICE OF PROCESS), AND SERVICE SO MADE SHALL BE COMPLETED UPON ACTUAL
RECEIPT THEREOF. EACH OF THE BORROWERS WAIVES ANY OBJECTION TO JURISDICTION AND VENUE OF ANY ACTION INSTITUTED AGAINST IT AS PROVIDED HEREIN AND AGREES NOT TO ASSERT ANY DEFENSE BASED ON LACK OF
JURISDICTION OR VENUE. 

57

 

        EACH BORROWER, THE AGENT, AND EACH OF THE BANKS HEREBY WAIVES TRIAL BY JURY IN ANY ACTION, SUIT, PROCEEDING, OR COUNTERCLAIM OF ANY KIND ARISING OUT OF OR RELATED
TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT, OR ANY COLLATERAL TO THE FULL EXTENT PERMITTED BY LAW.

        Section 10.17    Tax Withholding Clause.    Each Bank or assignee or participant of a Bank that is not
incorporated under the Laws of the United States of America or a state thereof (and, upon the written request of the Agent, each other Bank or assignee or participant of a Bank) agrees that it will
deliver to each of the Borrowers and the Agent two (2) duly completed appropriate valid Withholding Certificates (as defined under § 1.1441-1(c)(16) of the Income Tax
Regulations (the "Regulations")) certifying its status (i.e., U.S. or foreign person) and, if appropriate, making a claim of reduced, or exemption from,
U.S. withholding tax on the basis of an income tax treaty or an exemption provided by the Internal Revenue Code. The term "Withholding Certificate" means a Form W-9; a
Form W-8BEN; a Form W-8ECI; a Form W-8IMY and the related statements and certifications as required under §
1.1441-1(e)(2) and/or (3) of the Regulations; a statement described in § 1.871-14(c)(2)(v) of the Regulations; or any other certificates under the
Internal Revenue Code or Regulations that certify or establish the status of a payee or beneficial owner as a U.S. or foreign person. Each Bank, assignee or participant required to deliver to the
Borrowers and the Agent a Withholding Certificate pursuant to the preceding sentence shall deliver such valid Withholding Certificate as follows: (A) each Bank which is a party hereto on the
Closing Date shall deliver such valid Withholding Certificate at least five (5) Business Days prior to the first date on which any interest or fees are payable by the Borrowers hereunder for
the account of such Bank; (B) each assignee or participant shall deliver such valid Withholding Certificate at least five (5) Business Days before the effective date of such assignment
or participation (unless the Agent in its sole discretion shall permit such assignee or participant to deliver such valid Withholding Certificate less than five (5) Business Days before such
date in which case it shall be due on the date specified by the Agent). Each Bank, assignee or participant which so delivers a valid Withholding Certificate further undertakes
to deliver to each of the Borrowers and the Agent two (2) additional copies of such Withholding Certificate (or a successor form) on or before the date that such Withholding Certificate expires
or becomes obsolete or after the occurrence of any event requiring a change in the most recent Withholding Certificate so delivered by it, and such amendments thereto or extensions or renewals thereof
as may be reasonably requested by the Borrowers or the Agent. Notwithstanding the submission of a Withholding Certificate claiming a reduced rate of or exemption from U.S. withholding tax, the Agent
shall be entitled to withhold United States federal income taxes at the full 30% withholding rate if in its reasonable judgment it is required to do so under the due diligence requirements imposed
upon a withholding agent under § 1.1441-7(b) of the Regulations. Further, the Agent is indemnified under § 1.1461-1(e) of the Regulations against any
claims and demands of any Bank or assignee or participant of a Bank for the amount of any tax it deducts and withholds in accordance with regulations under § 1441 of the Internal Revenue
Code. 

        Section 10.18    Joinder of Guarantors.    Any Material Subsidiary of the Company which is required to be a
Guarantor pursuant to Section 7.02(i) [Subsidiaries, Partnerships and Joint Ventures] shall execute and deliver to the Agent (i) a Guarantor Joinder in
substantially the form attached hereto as Exhibit 1.01(G)(1) pursuant to which it shall join as a Guarantor each of the documents to which the Guarantors are parties; and (ii) documents
in the forms described in Section 6.01 [First Loans] modified as appropriate to relate to such Subsidiary. The Company shall deliver such Guarantor Joinder and related
documents to the Agent within five (5) Business Days after, as the case may be, the date of the acquisition of such Subsidiary, the date upon which a Subsidiary meets the criteria for a
Material Subsidiary as set forth in the definition thereof in Section 1.01, or the date the filing of such Subsidiary's certificate or articles of incorporation if the Subsidiary is a
corporation, the date of the filing of its certificate of limited partnership if it is a limited partnership or the date of its organization if it is an entity other than a limited partnership or
corporation. 

[SIGNATURE
PAGES FOLLOW] 

58

        IN WITNESS WHEREOF, the parties hereto, by their officers thereunto duly authorized, have executed this Agreement as of the day and year first above written. 

	 	 	ACE GUARANTY CORP.
	

 	
 	
By:	

 Name:

Title:
	

 	
 	
ACE GUARANTY (UK) LTD.
	

 	
 	
By:	

 Name:

Title:

	 	 	ABN AMRO BANK N.V.
	

 	
 	
By:	

 Name:

Title:
	

 	
 	

By:	

 Name:

Title:

	 	 	FLEET NATIONAL BANK
	

 	
 	
By:	

 Name:

Title:
	

 	
 	

By:	

 Name:

Title:

	 	 	CITIBANK, N.A.
	

 	
 	
By:	

 Name:

Title:

	 	 	NORDDEUTSCHE LANDESBANK GIROZENTRALE NEW YORK BRANCH AND/OR CAYMAN ISLANDS BRANCH
	

 	
 	
By:	

 Name:

Title:

	 	 	WESTLB AG (f/k/a WESTDEUTSCHE LANDESBANK GIROZENTRALE), NEW YORK BRANCH
	

 	
 	
By:	

 Name:

Title:
	

 	
 	

By:	

 Name:

Title:

	 	 	BANK OF AMERICA N.A.
	

 	
 	
By:	

 Name:

Title:

	 	 	THE BANK OF NEW YORK
	

 	
 	
By:	

 Name:

Title:
	 	 	 	 

SCHEDULE 1.01(A)  

PRICING GRID  

	Pricing

Level
 
	 	Facility Fee

(Basis Points

per Annum)
	 	Revolving Credit

Base Rate Spread—

Applicable Margin

(Basis Points

per Annum)
	 	Revolving Credit

LIBOR Spread—

Applicable Margin

(Basis Points

per Annum)
	 	All-in Drawn

(@LIBOR)

when usage is

£ 33%

(Basis Points

per Annum)
	 	Usage

Premium

(Basis Points

per Annum)
	 	All-in Drawn

(@LIBOR)

when usage is

> 33%

(Basis Points

per Annum)

	Level I	 	9.0	 	0.00	 	21.0	 	30.0	 	5.0	 	35.0
	Level II	 	12.5	 	0.00	 	32.5	 	45.0	 	10.0	 	55.0
	Level III	 	16.5	 	0.00	 	48.5	 	65.0	 	15.0	 	80.0
	Level IV	 	21.5	 	0.00	 	73.5	 	95.0	 	15.0	 	110.0
	Level V	 	26.5	 	0.00	 	93.5	 	120.0	 	25.0	 	145.0

        For
purposes of this Pricing Grid, capitalized terms not otherwise defined in this Pricing Grid shall have the respective meanings ascribed to them in the Credit Agreement and the
following terms have the meanings set forth below, subject to the concluding paragraph of this Pricing Grid: 

        "Level I Pricing" applies on any day on which the Company's Insurer Financial Strength Rating is rated AAA by S&P or the Company's Insurer
Financial Strength Rating is rated Aaa by Moody's. 

        "Level II Pricing" applies on any day on which (i) the Company's Insurer Financial Strength Rating is rated AA+ or higher by S&P or
the Company's Insurer Financial Strength Rating is rated Aa1 or higher by Moody's and (ii) Level I Pricing does not apply. 

        "Level III Pricing" applies on any day on which (i) the Company's Insurer Financial Strength Rating is rated AA or higher by S&P or
the Company's Insurer Financial Strength Rating is rated Aa2 or higher by Moody's and (ii) neither Level I Pricing nor Level II Pricing applies. 

        "Level IV Pricing" applies on any day on which (i) the Company's Insurer Financial Strength Rating is rated AA- or
higher by S&P or the Company's Insurer Financial Strength Rating is rated Aa3 or higher by Moody's and (ii) none of Level I Pricing, Level II Pricing and Level III Pricing applies. 

        "Level V Pricing" applies on any day if no other Pricing Level applies on such day. 

        "Moody's" means Moody's Investors Service, Inc. 

        "Pricing Level" refers to the determination of which of Level I, Level II, Level III, Level IV, or Level V Pricing applies on any day. 

        "S&P" means Standard & Poor's Ratings Services, a division of The McGraw-Hill Companies, Inc. 

        The
"Usage" applicable to any date is the percentage equivalent of a fraction the numerator of which is the sum of the aggregate
outstanding principal amount of all Loans outstanding under the Facility at such date and the denominator of which is the total amount of the Facility at such date. 

        The
ratings in effect for any day are those in effect at the close of business on such day. 

        In
the case of split ratings from S&P and Moody's, the rating to be used to determine the applicable Pricing Level is the higher of the two (e.g., AAA/Aa1 results in Level I Pricing);  provided that if
the split is more than one full rating, the intermediate (or higher of the two intermediate ratings) will be used
(e.g., AAA/Aa2 results in Level II Pricing; or AAA/Aa3 results in Level II). 

SCHEDULE 1.01(B)  

COMMITMENTS OF BANKS AND ADDRESSES FOR NOTICES  

Part 1—Commitments of Banks and Addresses for Notices to Banks  

	Bank
 
	 	Amount of

Commitment

for Revolving

Credit Loans
	 	Commitment
	 	Ratable Share
	 
	Name: ABN AMRO Bank N.V.
 Address: Park Avenue Plaza

55 East 52nd Street

New York, NY 10055

Attention: Neil Stein

Telephone: 212-409-1489

Telecopy: 212-409-1718	 	$	25,000,000	 	$	25,000,000	 	17.86	%
	
Name: Fleet National Bank
 Address: Mail Stop: CTEH 40225C

777 Main Street

Hartford, CT 06115

Attention: George Urban

Telephone: 860-952-7562

Telecopy: 860-952-7604	
 	
$	

24,000,000	
 	
$	

24,000,000	
 	

17.14	
%
	
Name: Citibank, N.A.
 Address: 388 Greenwich St., Floor 23

New York, NY 10013

Attention: Michael Taylor

Telephone: 212-816-4033

Telecopy: 212-816-4190	
 	
$	

20,000,000	
 	
$	

20,000,000	
 	

14.29	
%
	
Name: Norddeutsche Landesbank

Girozentrale New York Branch and/or

Cayman Islands Branch
 Address: 1114 Avenue of the Americas, 37 Floor

New York, NY 10036

Attention: George Peters

Telephone: 212-812-6993

Telecopy: 212-812-6860	
 	
$	

20,000,000	
 	
$	

20,000,000	
 	

14.29	
%
	
Name: WestLB AG (f/k/a Westdeutsche

Landesbank Girozentrale), New York Branch
 Address: 1211 Avenue of the Americas

New York, NY 10036

Attention: Cheryl Wilson

Telephone: 212-852-6152

Telecopy: 212-597-5424	
 	
$	

20,000,000	
 	
$	

20,000,000	
 	

14.29	
%
	
Name: Bank of America N.A.
 Address: 231 S. LaSalle Street

Chicago, IL 60697

Attention: Debra Basler

Telephone: 312-828-3734

Telecopy: 312-987-0889	
 	
$	

16,000,000	
 	
$	

16,000,000	
 	

11.43	
%
	
Name: The Bank of New York
 Address: One Wall Street

New York, NY 10286

Attention: Evan Glass

Telephone: 212-635-6466

Telecopy: 212-809-9520	
 	
$	

15,000,000	
 	
$	

15,000,000	
 	

10.71	
%
	

Total	
 	
$	

140,000,000	
 	
$	

140,000,000	
 	

100.0	
%
	 	 	
	 	
	 	
	 

 

Part 2—Addresses for Notices to Borrower and Guarantors:  

AGENT  

        Notices related to commitments, covenants or extensions of expiry/termination dates: 

ABN
AMRO Bank N.V.

208 South LaSalle Street, Suite 1500

Chicago, IL 60604-1003

Attn: Agency Services

E-Mail: josephine.o'brien@abnamro.com

FAX: 312-601-3610 

ABN
AMRO Bank N.V.

208 South LaSalle Street, Suite 1500

Chicago, IL 60604-1003

Attn: Credit Administration

E-Mail: teresa.weirath@abnamro.com

FAX: 312-992-5111 

ABN
AMRO Bank N.V.

55 East 52 Street

New York, NY 10055

Attn: Neil Stein

E-Mail: neil.stein@abnamro.com

FAX: (212) 409-1718 

        Notices
related to Loans, Interest and Fees and all required Financial Information: 

ABN
AMRO Bank N.V.

208 South LaSalle Street, Suite 1500

Chicago, IL 60604-1003

Attn: Agency Services

E-Mail: josephine.o'brien@abnamro.com

FAX: 312-601-3610 

BORROWERS  

Name:
ACE Guaranty Corp.

Address: 1325 Avenue of the Americas

New York, NY 10019

Attention: Donald H. Paston

Telephone: 212-974-0100

Telecopy: 212-581-3268 

Name:
ACE Guaranty (UK) Ltd.

Address: 1325 Avenue of the Americas

New York, NY 10019

Attention: Geraldine Alfino Egler, Esq.

Telephone: 212-261-5597

Telecopy: 212-581-3268 

2

 

        With
a mandatory copy to: 

Name:
ACE Guaranty Corp.

Address: 1325 Avenue of the Americas

New York, NY 10019

Attention: Geraldine Alfino Egler, Esq.

Telephone: 212-261-5597

Telecopy: 212-581-3268 

3

SCHEDULE 1.01(P)  

ACE Guaranty Corp.

Existing Liens  

        Amended and Restated Pledge and Security Agreement, dated as of November 15, 2001, between ACE Guaranty Re Inc. and Deutsche Bank AG, New York
Branch, as Collateral Agent. 

SCHEDULE 5.01(h)  

ACE Guaranty Corp.

Reinsurance Ceded

As of December 31, 2002  

	Description
 
	 	Reinsurer
	 	Limit
	 	Attachment

Point (losses)
	 	Term

	(a) Ten Year Aggregate Whole Account Cover

1. Layer A(1)

2. Layer B	 	ACE Bermuda	 	$50 million

$100 million	 	$50 million

$200 million	 	1/1/2001-

12/31/2010
	(b) CDO Excess of Loss

Covers senior tranches of 23CDOs in AGR's swap book of business	 	Bridge Resecurity from Dresdner Bank by way of assignment	 	$1.97 billion	 	$1.97 billion	 	12/31/2001-

Term of Risk
	(c) CDO Excess of Loss

(d) Covers senior tranches of a group of CDOs CDOs in AGR's swap book of business	 	ACRI	 	$1.0 billion	 	$1.0 billion	 	12/31/2002-

Term of Risk
	ADS Reinsurance Treaty(2)

Covers 50% of ACE Guaranty Re's net liability in respect of 28 investment grade Municipal Credits listed; Max. Cession of $35,000,000 of ceded Debt Service per Municipal Credit per year; Aggregate limit of $175,000,000 all Municipal Credits for 7
consecutive year period; Special Acceptance Clause for 5 further Municipal Credits. The treaty is 50% placed.	 	Toa Reinsurance Company (20%)

Hannover Reinsurance Company (10%)

ACE Capital Reinsurance Overseas (10%)

Chubb Reinsurance (10%)	 	50% of net liability in respect of specified municipal credits;

Maximum cession of $35,000,000 of ceded debt service per municipal credit per year;

Aggregate limit of $175,000,000	 	First dollar of loss on specified credits	 	4/1/2002-

3/31/2002
	(e) Banco de Brasil Single Risk Reinsurance

Covers assumed exposure related to credit card receivables of Banco de Brasil:

Quota Share Reinsurance

Excess of Loss Reinsurance	 	Radian Reinsurance Co

RAM Reinsurance Co Ltd	 	$40 million

$20 million	 	$0.0 million

$57.5 million	 	Life of Transaction
	(f) Regulatory Covers

From time to time ACE Guaranty cedes business on a credit by credit basis to comply with statutory or rating agency requirements. These cessions are made on an excess of loss basis and do not provide significant risk transfer.	 	ACE Capital Reinsurance Overseas	 	Varies by credit	 	Varies by credit	 	12/31/2002-

12/31/2003

	(1)
	As
of March 31, 2003, $10 million of the limit has been utilized.

	(2)
	Cancelled
as of April 1, 2003 

SCHEDULE 7.02(a)  

ACE Guaranty Corp.

Existing Indebtedness  

        1.     Amended
and Restated Credit Agreement, dated as of November 15, 2001, as amended by the December 2002 Amendment to Credit Agreement, dated as of
December 18, 2002, among ACE Guaranty Corp., the Banks party thereto from time to time, and Deutsche Bank AG, New York Branch, as Agent 

        a.     Amended
and Restated Pledge and Security Agreement, dated as of November 15, 2001, between ACE Guaranty Re Inc. and Deutsche Bank AG, New York Branch, as
Collateral Agent. 

Available
to ACE Guaranty Corp.: $175 million; presently undrawn 

        2.     Amended
and Restated 364-day Credit Agreement, dated as of May 8, 2000 and as thereafter amended, among ACE Limited, a Cayman Islands company, ACE
Guaranty Corp., and the other Borrowers thereunder, the Initial Lenders thereunder, the Co-Syndication Agents thereunder and Morgan Guaranty Trust Company of New York as Administrative
Agent thereunder. 

Available
to ACE Guaranty Corp.: $50 million; presently undrawn 

        3.     Line
of Credit Agreement, effective as of October 22, 2001, between ACE Guaranty Corp. and ACE INA Holdings Inc. 

Available
to ACE Guaranty Corp.: $75 million; presently undrawn 

QuickLinks

TABLE OF CONTENTS

ARTICLE VI CONDITIONS OF LENDING

ARTICLE VII COVENANTS

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