Document:

Exhibit 10.1

Exhibit 10.1

SECURITIES PURCHASE AGREEMENT

by and among

THE PNC FINANCIAL SERVICES GROUP, INC.,

NATIONAL CITY BANK

and

FIRST NIAGARA FINANCIAL GROUP, INC.

Dated
as of April 6, 2009

 

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	 	 	Page	 
	 
	ARTICLE I
	 	 	 	 
	DEFINITIONS
	 	 	 	 
	 
	 	 	 	 
	Section 1.01. Definitions
	 	 	1	 
	Section 1.02. General Interpretive Principles
	 	 	7	 
	 
	 	 	 	 
	ARTICLE II
	 	 	 	 
	SALE AND PURCHASE OF THE SECURITIES
	 	 	 	 
	 
	 	 	 	 
	Section 2.01. Sale and Purchase of the Securities
	 	 	7	 
	Section 2.02. Closing
	 	 	7	 
	 
	 	 	 	 
	ARTICLE III
	 	 	 	 
	REPRESENTATIONS AND WARRANTIES
	 	 	 	 
	 
	 	 	 	 
	Section 3.01. Representations and Warranties of the Company
	 	 	8	 
	Section 3.02. Representations and Warranties of PNC
	 	 	17	 
	Section 3.03. Representations and Warranties of NCB
	 	 	18	 
	 
	 	 	 	 
	ARTICLE IV
	 	 	 	 
	ADDITIONAL AGREEMENTS OF THE PARTIES
	 	 	 	 
	 
	 	 	 	 
	Section 4.01. Taking of Necessary Action
	 	 	19	 
	Section 4.02. Financial Statements and Other Reports
	 	 	19	 
	Section 4.03. Common Stock Lockup
	 	 	20	 
	Section 4.04. Standstill
	 	 	20	 
	Section 4.05. Securities Laws; Legends
	 	 	21	 
	Section 4.06. Lost, Stolen, Destroyed or Mutilated Securities
	 	 	22	 
	Section 4.07. Regulatory Matters
	 	 	22	 
	Section 4.08. Company Lockup
	 	 	23	 
	Section 4.09. Public Disclosure
	 	 	23	 
	 
	 	 	 	 
	ARTICLE V
	 	 	 	 
	CONDITIONS; TERMINATION
	 	 	 	 
	 
	 	 	 	 
	Section 5.01. Conditions of Purchasers
	 	 	24	 
	Section 5.02. Conditions of the Company
	 	 	25	 
	Section 5.03. Termination
	 	 	25	 
	Section 5.04. Effect of Termination
	 	 	26	 

 

-i-

 

	 	 	 	 	 
	 	 	Page	 
	 
	 	 	 	 
	ARTICLE VI
	 	 	 	 
	MISCELLANEOUS
	 	 	 	 
	 
	 	 	 	 
	Section 6.01. Survival of Representations and Warranties
	 	 	26	 
	Section 6.02. Notices
	 	 	27	 
	Section 6.03. Entire Agreement; Third Party Beneficiaries; Amendment
	 	 	28	 
	Section 6.04. Third Party Beneficiaries
	 	 	28	 
	Section 6.05. Counterparts
	 	 	28	 
	Section 6.06. Governing Law
	 	 	28	 
	Section 6.07. Confidentiality
	 	 	28	 
	Section 6.08. Expenses
	 	 	29	 
	Section 6.09. Indemnification
	 	 	29	 
	Section 6.10. Successors and Assigns
	 	 	30	 
	Section 6.11. Remedies; Waiver
	 	 	30	 
	Section 6.12. Waiver of Jury Trial
	 	 	31	 
	Section 6.13. Severability
	 	 	31	 
	 
	 	 	 	 
	EXHIBITS
	 	 	 	 
	 
	 	 	 	 
	A  —  Terms of Registration and Exchange Rights Agreement
	 	 	 	 
	 
	 	 	 	 
	B  —  Terms of the Senior Notes
	 	 	 	 
	 
	 	 	 	 
	C  —  Form of Opinion of Counsel to the Company
	 	 	 	 

 

-ii-

 

SECURITIES PURCHASE AGREEMENT

SECURITIES
PURCHASE AGREEMENT (the “Agreement”), dated as of April 6, 2009, by and
among The PNC Financial Services Group, Inc., a corporation organized under the laws of the
Commonwealth of Pennsylvania (“PNC”), National City Bank, a national banking association
organized under the laws of the United States (“NCB,” and together with PNC,
“Purchasers”), and First Niagara Financial Group, Inc., a Delaware corporation (the
“Company”). Capitalized terms not otherwise defined where used shall have the meanings
ascribed thereto in Article I.

WHEREAS, simultaneous with the entry into this Agreement, Purchasers and the Company are
entering into that certain Purchase and Assumption Agreement (the “P&A Agreement”) with
respect to the sale by NCB and assumption by the Company of certain banking operations of NCB in
the Commonwealth of Pennsylvania;

WHEREAS, subject to the terms and conditions of this Agreement, PNC has agreed to purchase
from the Company, and, if it so elects, the Company will sell to PNC, shares of Common Stock (as
defined below);

WHEREAS, subject to the terms and conditions of this Agreement, NCB has agreed to purchase
from the Company, and, if it so elects, the Company will issue to NCB, Senior Notes (as defined
below);

WHEREAS, the Company and Purchasers desire to set forth certain agreements herein.

NOW THEREFORE, in consideration of the premises and the representations, warranties and
agreements herein contained and intending to be legally bound hereby, the parties hereby agree as
follows:

ARTICLE I

Definitions

Section 1.01. Definitions. As used in this Agreement, the following terms shall have
the meanings set forth below:

“Affiliate” means, with respect to any person, any other person directly or indirectly
controlling, controlled by or under common control with such person; provided that for purposes of
this Agreement, BlackRock, Inc. and its subsidiaries shall not be deemed to be Affiliates of
Purchasers. As used in this definition, the term “person” shall be broadly interpreted to include,
without limitation, any corporation, company, partnership and individual or group.

“Aggregate Notes Principal Amount” shall have the meaning set forth in Section 2.01.

“Agreement” shall have the meaning set forth in the preamble hereto.

 

 

 

“Ancillary Documents” means the Registration and Exchange Rights Agreement, the
Indenture and the Senior Notes.

“Beneficially Own” and “Beneficial Owner” shall have the meaning set forth in
Section 4.04(b).

“Blackout Release Date” means the earlier of (i) the date that PNC shall have ceased
to have Beneficial Ownership of Common Stock and (ii) the date that the Company shall have filed
with the SEC its form 10-Q with respect to the quarterly period ended September 30, 2009.

“Business Day” means any day, other than a Saturday, Sunday or a day on which banking
institutions in the City of New York, New York are authorized or obligated by law or executive
order to close.

“Change of Control” means: (i) Any Person becomes the Beneficial Owner (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of either (A) the
then-outstanding shares of Common Stock or (B) the combined voting power of the then-outstanding
Voting Securities; provided, however, that, for purposes of this Section 1(d), the following
acquisitions shall not constitute a Change of Control: (1) any acquisition directly from the
Company, (2) any acquisition by the Company, (3) any acquisition by any employee benefit plan (or
related trust) sponsored or maintained by the Company or any Affiliate;

(ii) Consummation of a reorganization, merger, statutory share exchange or consolidation or
similar transaction involving the Company or any of its subsidiaries, a sale or other disposition
of all or substantially all of the assets of the Company, or the acquisition of assets or stock of
another entity by the Company or any of its subsidiaries (each, a “Business Combination”),
in each case unless, following such Business Combination, (A) all or substantially all of the
individuals and entities that were the beneficial owners of the Common Stock and the Voting
Securities outstanding immediately prior to such Business Combination Beneficially Own, directly or
indirectly, more than 50% of the then-outstanding shares of common stock (or, for a non-corporate
entity, equivalent securities) and the combined voting power of the then-outstanding voting
securities entitled to vote generally in the election of directors (or, for a non-corporate entity,
equivalent governing body), as the case may be, of the entity resulting from such Business
Combination (including, without limitation, an entity that, as a result of such transaction, owns
the Company or all or substantially all of the Company’s assets either directly or through one or
more subsidiaries) in substantially the same proportions as their ownership immediately prior to
such Business Combination of the then-outstanding Common Stock and Voting Securities, as the case
may be, (B) no Person (excluding any corporation resulting from such Business Combination or any
employee benefit plan (or related trust) of the Company or such corporation resulting from such
Business Combination) beneficially owns, directly or indirectly, 20% or more of, respectively, the
then-outstanding shares of common stock of the corporation resulting from such Business Combination
or the combined voting power of the then-outstanding voting securities of such corporation, except
to the extent that such ownership existed prior to the Business Combination, and (C) at least a
majority of the members of the board of directors (or, for a non-corporate entity, equivalent
governing body) of the entity
resulting from such Business Combination were members of the Incumbent Board at the time of
the execution of the initial agreement or of the action of the Board providing for such Business
Combination; or

 

2

 

(iii) Approval by the stockholders of the Company of a complete liquidation or dissolution of
the Company.

“Closing” and “Closing Date” shall have the meanings set forth in Section
2.02(a).

“Code” means the United States Internal Revenue Code of 1986, as amended.

“Common Share Number” means 6,818,182 or such lesser number (which may be zero) as the
Company may elect by written notice to PNC not later than five (5) calendar days prior to the
Closing Date; provided that, except as PNC may otherwise agree by written notice to the Company,
the Common Share Number shall not exceed the Maximum Common Share Number.

“Common Share Reference Price” means the volume-weighted average of the trading sale
prices per share of Common Stock as reported on the NASDAQ during the Reference Period.

“Common Stock Purchase Price” shall have the meaning set forth in Section 2.01.

“Common Stock” shall have the meaning set forth in Section 3.01(e).

“Company” shall have the meaning set forth in the preamble hereto.

“Company Bylaws” means the amended and restated bylaws of the Company.

“Company Certificate” means the certificate of incorporation of the Company.

“Company Cumulative Preferred Stock” shall have the meaning set forth in Section
3.01(e).

“Company Disclosure Schedule” shall have the meaning set forth in Section 3.01.

“Company Indemnitees” shall have the meaning set forth in Section 6.09(b).

“Company Plans” means all material compensation or employee benefit plans, programs,
policies, agreements or other arrangements, whether or not “employee benefit plans” (within the
meaning of Section 3(3) of ERISA), providing cash or equity-based incentives, health, medical,
dental, disability, accident or life insurance benefits or vacation, severance, retirement,
pension, savings, or other employee benefits, that are sponsored, maintained or contributed to by
the Company or any of its Affiliates for the benefit of current or former employees or directors of
the Company or any of its Affiliates and all employee agreements providing compensation, vacation,
severance or other benefits to any current or former officer or employee of the Company or any of
its Affiliates.

 

3

 

“DGCL” means the Delaware General Corporation Law.

“Environmental Law” means any federal, state, or local law, statute, rule, regulation,
code, rule of common law, order, judgment, decree, injunction or agreement with any federal, state,
or local governmental authority, (a) relating to the protection, preservation or restoration of the
environment (including, without limitation, air, water vapor, surface water, groundwater, drinking
water supply, surface land, subsurface land, plant and animal life or any other natural resource)
or to human health or safety or (b) the exposure to, or the use, storage, recycling, treatment,
generation, transportation, processing, handling, labeling, production, release or disposal of
hazardous substances, in each case as amended and now in effect. Environmental Laws include,
without limitation, the Clean Air Act (42 USC §7401 et seq.); the Comprehensive Environmental
Response Compensation and Liability Act (42 USC §9601 et seq.); the Resource Conservation and
Recovery Act (42 USC §6901 et seq.); the Federal Water Pollution Control Act (33 USC §1251 et
seq.); and the Occupational Safety and Health Act (29 USC §651 et seq.).

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and the
regulations promulgated thereunder.

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules
and regulations promulgated thereunder.

“FDIC” means the Federal Deposit Insurance Corporation.

“Federal Reserve Board” means the Board of Governors of the Federal Reserve System.

“FNB” means First Niagara Bank, a federally chartered stock savings association,
organized under federal law.

“GAAP” means generally accepted accounting principles in the United States of America
as of the date hereof.

“Indemnified Party” shall have the meaning set forth in Section 6.09(c).

“Indemnifying Party” shall have the meaning set forth in Section 6.09(c).

“Indenture” shall have the meaning set forth in Exhibit B.

“Information” shall have the meaning set forth in Section 6.07.

“Intellectual Property” means trademarks, service marks, brand names, certification
marks, trade dress and other indications of origin, the goodwill associated with the foregoing and
registrations in any jurisdiction of, and applications in any jurisdiction to register, the
foregoing, including any extension, modification or renewal of any such registration or
application; inventions, discoveries and ideas, whether patentable or not, in any jurisdiction;
patents, applications for patents (including divisions, continuations, continuations in part and
renewal applications) and any renewals, extensions or reissues thereof, in any

 

4

 

jurisdiction;
nonpublic information, trade secrets and confidential information and rights in any
jurisdiction to limit the use or disclosure thereof by any person; writings and other works,
whether copyrightable or not, in any jurisdiction; and registrations or applications for
registration of copyrights in any jurisdiction and any renewals or extensions thereof; and any
similar intellectual property or proprietary rights.

“IRS” shall have the meaning set forth in Section 3.01(l).

“Loss” shall have the meaning set forth in Section 6.09(a).

“Material Adverse Effect” means any material adverse effect on (a) the financial
condition, results of operations, assets, liabilities or business of the Company and its
Subsidiaries taken as a whole (provided, however, that, with respect to this clause (a), a
“Material Adverse Effect” shall not be deemed to include any effects to the extent arising out of
or resulting from (i) changes, after the date hereof, in GAAP or regulatory accounting requirements
applicable to banks or savings associations and their holding companies generally, (ii) changes,
after the date hereof, in laws, rules or regulations of general applicability or interpretations
thereof by Governmental Entities, (iii) actions or omissions of the Company taken with the prior
written consent of Purchasers, (iv) changes, after the date hereof, in general economic or market
conditions generally affecting the other companies in the industries in which the Company and its
Subsidiaries operate or (v) the consummation of the transactions contemplated by the P&A Agreement,
except, with respect to clauses (i), (ii) and (iv), to the extent that the effects of such changes
are disproportionately adverse to the financial condition, results of operations, assets,
liabilities or business of the Company and its Subsidiaries, taken as a whole), (b) the ability of
the Company to perform its obligations under this Agreement or the Ancillary Documents or (c) the
validity or enforceability of this Agreement or any of the Ancillary Documents or the rights or
remedies of Purchasers hereunder and thereunder.

“Maximum Common Share Number” means the lesser of (A) 6,818,182 and (B) the quotient,
rounded up to the nearest whole number, of (x) $75 million divided by (y) the Common Share
Reference Price.

“NASDAQ” means the NASDAQ Stock Market LLC.

“OTS” means the Office of Thrift Supervision.

“P&A Agreement” shall have the meaning set forth in the recitals hereto.

“PBGC” shall have the meaning set forth in Section 3.01(k)(i).

“Person” or “person” means an individual, corporation, limited liability
company, association, partnership, group (as such term is used in Section 13(d)(3) of the Exchange
Act), trust, joint venture, business trust or unincorporated organization, or a government or any
agency or political subdivision thereof.

“PNC” shall have the meaning set forth in the preamble hereto.

“Purchaser Indemnitee” shall have the meaning set forth in Section 6.09(a).

 

5

 

“Purchaser Information” means information with respect to a Purchaser and its
Affiliates or any of their respective officers and directors that is provided to the Company by a
Purchaser or any of its representatives specifically for inclusion in any of the Regulatory
Filings.

“Purchasers” shall have the meaning set forth in the preamble hereto.

“Reference Period” means the five consecutive trading days during which the shares of
Common Stock are traded on the NASDAQ ending on the calendar day immediately prior to the Closing
Date, or if such calendar day is not a trading day, then ending on the trading day immediately
preceding such calendar day

“Registration and Exchange Rights Agreement” means a registration and exchange rights
agreement with respect to the Senior Notes executed by the Company and NCB and containing the terms
set forth hereto in Exhibit A.

“Regulatory Authority” means any federal or state banking, other regulatory,
self-regulatory or enforcement authority or any court, administrative agency or commission or other
governmental authority or instrumentality.

“Regulatory Filings” shall have the meaning set forth in Section 3.01(o).

“Reports” shall have the meaning set forth in Section 3.01(f).

“SEC” means the United States Securities and Exchange Commission.

“Securities” means the Common Stock and the Senior Notes.

“Securities Act” means the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder.

“Senior Notes” means 12% Senior Notes due 2014 of the Company having such terms as are
set forth on Exhibit B hereto.

“Subsidiary” means, with respect to any Person, any other Person of which 50% or more
of the shares of the voting securities or other voting interests are owned or controlled, or the
ability to select or elect 50% or more of the directors or similar managers is held, directly or
indirectly, by such first Person or one or more of its Subsidiaries, or by such first Person, or by
such first Person and one or more of its Subsidiaries.

“Tax” or “Taxes” means all federal, state, local, and foreign income, excise,
gross receipts, gross income, ad valorem, profits, gains, property, capital, sales, transfer, use,
payroll, employment, severance, withholding, duties, intangibles, franchise, backup withholding,
and other taxes, charges, levies or like assessments, whether computed on a separate or
consolidated, unitary or combined basis or in any other manner, whether disputed or not and
including any obligation to indemnify or otherwise assume or succeed to the tax liability of
another person, together with all penalties and additions to tax and interest thereon.

 

6

 

“Tax Return” means a report, return or other information (including any amendments)
required to be supplied to a Regulatory Authority with respect to Taxes including, where permitted
or required, combined or consolidated returns for any group of entities that includes the Company
or any of its Subsidiaries.

“Transactions” shall have the meaning set forth in Section 3.01(c).

“Voting Debt” shall have the meaning set forth in Section 3.01(e).

“Voting Securities” shall have the meaning set forth in Section 4.04(b).

Section 1.02. General Interpretive Principles. Whenever used in this Agreement,
except as otherwise expressly provided or unless the context otherwise requires, any noun or
pronoun shall be deemed to include the plural as well as the singular and to cover all genders.
The name assigned this Agreement and the section captions used herein are for convenience of
reference only and shall not be construed to affect the meaning, construction or effect hereof.
Whenever the words “include,” “includes,” or “including” are used in this Agreement, they shall be
deemed to be followed by the words “without limitation.” Unless otherwise specified, the terms
“hereto,” “hereof,” “herein” and similar terms refer to this Agreement as a whole (including the
exhibits, schedules and disclosure statements hereto), and references herein to Articles or
Sections refer to Articles or Sections of this Agreement.

ARTICLE II

Sale and Purchase of the Securities

Section 2.01. Sale and Purchase of the Securities. Subject to all of the terms and
conditions of this Agreement, and in reliance upon the representations and warranties hereinafter
set forth, at the Closing (as defined below), (a) the Company may elect to sell to PNC, and, upon
such election, PNC will purchase from the Company, a number of shares of Common Stock equal to the
Common Share Number, for an aggregate purchase price equal to the product of (x) the Common Share
Number and (y) the Common Share Reference Price (the “Common Stock Purchase Price”) and (b)
NCB will purchase from the Company at par Senior Notes in an aggregate principal amount (rounded up
to the nearest whole $1,000) (the “Aggregate Notes Principal Amount”) equal to (A) (x)
$150,000,000 minus (y) the Common Stock Purchase Price or (B) such lesser aggregate
principal amount (which may be zero) as the Company may elect by written notice to PNC not later
than five (5) calendar days prior to the Closing Date.

Section 2.02. Closing. (a) Subject to the satisfaction or waiver of the conditions
set forth in this Agreement, the purchase and sale of the Common Stock hereunder and the issuance
of the Senior Notes hereunder (the “Closing”) shall take place at the offices of PNC at One
PNC Plaza, 249 Fifth Avenue, Pittsburgh, Pennsylvania. The Closing shall take place concurrently
with the closing of the transactions contemplated by the P&A Agreement (the date that the Closing
occurs, the “Closing Date”).

 

7

 

(b) At the Closing: (i) the Company will deliver to PNC a number of shares of Common Stock
equal to the Common Share Number, in certificated or book entry form as the parties shall agree;
(ii) the Company will issue to NCB the Senior Notes in certificated or book
entry form as the parties shall agree, having an aggregate principal amount equal to the
Aggregate Notes Principal Amount; (iii) PNC, in full payment for the Common Stock, will deliver or
cause to be delivered to the Company immediately available funds, by wire transfer to such account
as the Company shall specify, in the amount of the Common Stock Purchase Price; (iv) NCB, in full
payment for the Senior Notes, will deliver or cause to be delivered to the Company immediately
available funds, by wire transfer to such account as the Company shall specify, in an amount equal
to the Aggregate Notes Principal Amount; and (v) each party shall take or cause to happen such
other actions, and shall execute and deliver such other instruments or documents, as shall be
required under Article V.

ARTICLE III

Representations and Warranties

Section 3.01. Representations and Warranties of the Company. Except as disclosed in
the Reports filed with or furnished to the SEC by the Company prior to the date hereof (excluding
any risk factor disclosures contained in such documents under the heading “Risk Factors” and any
disclosure of risks included in any “forward-looking statements” disclaimer or other statements
that are similarly non-specific and are predictive or forward-looking in nature) or in the
disclosure schedule (the “Company Disclosure Schedule”) delivered by the Company to
Purchasers at or prior to the execution of this Agreement, the Company represents and warrants to,
and agrees with, Purchasers as follows:

(a) Organization and Good Standing of the Company; Organizational Documents. (i) The
Company is a Delaware corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware and is duly registered as a savings and loan holding company under
the Home Owners Loan Act, as amended, and has all requisite corporate power and authority and
governmental authorizations to own, operate and lease its properties and to carry on its business
as it is being conducted on the date of this Agreement. The Company is duly licensed or qualified
as a foreign corporation for the transaction of business and is in good standing under the laws of
each jurisdiction in which it owns or leases properties, or conducts any business, so as to require
such qualification, except where the failure to be so licensed or qualified in any such
jurisdiction would not reasonably be expected to have a Material Adverse Effect. True, complete
and correct copies of the Company Certificate and the Company Bylaws, as in effect as of the date
of this Agreement, have previously been made available to Purchasers.

(b) Organization and Good Standing of Subsidiaries. Each Subsidiary of the Company is
duly organized, validly existing and in good standing under the laws of its jurisdiction of
organization, and has all requisite corporate power and authority and governmental authorizations
to own, operate and lease its properties and to carry on its business as it is now being conducted,
and is duly licensed or qualified to do business in each jurisdiction in which it owns or leases
properties, or conducts any business, so as to require such qualification, except where the failure
to be so authorized, licensed or qualified in any such jurisdiction, individually or in the
aggregate, would not reasonably be expected to have a Material Adverse Effect. The deposit
accounts of FNB are insured by the FDIC to the fullest extent permitted by the Federal Deposit
Insurance Act and the rules and regulations of the FDIC
thereunder, and all premiums and assessments required to be paid in connection therewith have
been paid when due.

 

8

 

(c) Authorization; No Conflicts.

(i) The Company has full corporate power and authority to execute and deliver this
Agreement and the Ancillary Documents to which it is a party and to consummate the
transactions contemplated hereby and thereby (the “Transactions”). The execution,
delivery and performance by the Company of this Agreement and each Ancillary Document to
which it is a party and the consummation of the Transactions have been duly authorized by
the Board of Directors of the Company. No other corporate proceedings on the part of the
Company are necessary to authorize the execution, delivery and performance by the Company of
this Agreement and each Ancillary Document and consummation of the Transactions. This
Agreement has been, and at or prior to the Closing, each Ancillary Document to which it is a
party will be, duly and validly executed and delivered by the Company. This Agreement is,
and upon its execution at or prior to the Closing each Ancillary Document to which it is a
party will be, a valid and binding obligation of the Company, enforceable against it in
accordance with its terms.

(ii) The execution, delivery and performance of this Agreement and the Ancillary
Documents to which it is a party, the consummation by the Company of the Transactions and
the compliance by the Company with any of the provisions hereof and thereof will not
conflict with, violate or result in a breach of any provision of, or constitute a default
(or an event which, with notice or lapse of time or both would constitute a default) under,
or result in the termination of or accelerate the performance required by, or result in a
right of termination or acceleration under, (A) any provision of the Company Certificate,
the Company Bylaws or the certificate of incorporation, charter, by-laws or other governing
instrument of any Subsidiary of the Company or (B) any mortgage, note, indenture, deed of
trust, lease, loan agreement or other agreement or instrument or any permit, concession,
grant, franchise, license, judgment, order, decree, ruling, injunction, statute, law,
ordinance, rule or regulation applicable to the Company or any of its Subsidiaries or any of
their respective properties or assets, other than any such conflict, violation, breach,
default, termination and acceleration under clause (B) that, individually or in the
aggregate, would not reasonably be expected to have a Material Adverse Effect.

(d) Consents. No consent, approval, order or authorization of, or registration,
declaration or filing with, any Regulatory Authority is required on the part of the Company or any
of its Subsidiaries in connection with the execution, delivery and performance by the Company of
this Agreement and the Ancillary Documents to which it is a party and the consummation by the
Company of the Transactions.

(e) Capitalization.

 

9

 

(i) The authorized capital stock of the Company consists of (A) 250,000,000 shares of
Common Stock, par value $0.01 per share, of the Company (the “Common 
Stock”) and (B) 50,000,000 shares of Preferred Stock, par value $0.01 per
share, of the Company, of which 184,011 shares have been designated as Fixed Rate Cumulative
Preferred Stock, par value $0.01 per share, of the Company (the “Company Cumulative
Preferred Stock”). As of March 25, 2009, (A) 118,687,368 shares of Common Stock were
issued and outstanding, (B) 184,011 shares of Company Cumulative Preferred Stock were issued
and outstanding, (C) 6,731,893 shares of Common Stock were held by the Company in its
treasury, (D) 3,743,081 shares of Common Stock were reserved for issuance in connection with
employee benefit, stock option and dividend reinvestment and stock purchase plans, and (E)
1,906,091 shares of Common Stock were reserved for issuance in connection with warrants held
by the United States Department of the Treasury pursuant to the Capital Purchase Program
under the Troubled Assets Relief Program. All of the issued and outstanding shares of the
Company’s capital stock have been duly and validly authorized and issued and are fully paid
and nonassessable, and are not subject to preemptive rights. No bonds, debentures, notes or
other indebtedness having the right to vote on any matters on which the stockholders of the
Company may vote (“Voting Debt”) are issued and outstanding. Other than as set
forth in this subsection (e) or pursuant to this Agreement (1) no equity securities or
Voting Debt of the Company are or may be required to be issued by reason of any options,
warrants, rights to subscribe to, calls or commitments of any character whatsoever,
(2) there are outstanding no securities or rights convertible into or exchangeable for any
equity securities or Voting Debt of the Company and (3) there are no contracts, commitments,
understandings or arrangements by which the Company is bound to issue additional equity
securities or Voting Debt or options, warrants or rights to purchase or acquire any
additional equity securities or Voting Debt.

(ii) All of the issued and outstanding shares of capital stock or other equity
ownership interests of each Subsidiary of the Company are owned by the Company, directly or
indirectly, free and clear of any material liens, pledges, charges and security interests
and similar encumbrances, and all of such shares or equity ownership interests have been
duly and validly authorized and issued and are fully paid and nonassessable, and are not
subject to preemptive rights. No Subsidiary of the Company has or is bound by any
outstanding subscriptions, options, warrants, calls, commitments or agreements of any
character calling for the purchase or issuance of any shares of capital stock or any other
equity security of such Subsidiary or any securities representing the right to purchase or
otherwise receive any shares of capital stock or any other equity security of such
Subsidiary.

(f) Reports; Financial Statements; Controls.

(i) Since December 31, 2007, the Company and each of its Subsidiaries have timely filed
all reports, registration statements, proxy statements and other materials, together with
any amendments required to be made with respect thereto, that were required to be filed with
(A) the SEC under the Securities Act or the Exchange Act, (B) the OTS, (C) the FDIC and (D)
any other federal, state or foreign Regulatory Authority (all such reports and statements
are collectively referred to herein as the “Reports”), and have paid all fees and
assessments due and payable in connection therewith. As of their

 

10

 

respective dates, the
Reports complied in all material respects with all of the statutes
and published rules and regulations enforced or promulgated by the regulatory authority
with which they were filed and (A) with respect to Reports furnished or filed with the SEC,
did not as of the date of furnishing or filing thereof with the SEC contain any untrue
statement of a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading and (B) with respect to all other Reports, were
complete and accurate in all material respects as of their respective dates. There are no
facts existing as of the date hereof peculiar to the Company or any of its Subsidiaries that
the Company has not disclosed in the Reports or to Purchasers in writing that, individually
or in the aggregate, have had or would reasonably be expected to have a Material Adverse
Effect. No executive officer of the Company has failed in any respect to make the
certifications required of him or her under Sections 302 or 906 of the Sarbanes-Oxley Act of
2002.

(ii) Each of the consolidated statements of condition and the related consolidated
statements of income, changes in stockholders’ equity and cash flows, included in the
Reports filed with the SEC under the Exchange Act (A) have been prepared from, and are in
accordance with, the books and records of the Company and its Subsidiaries, (B) fairly
present in all material respects the consolidated financial position of the Company and its
consolidated Subsidiaries as of the dates shown and the results of the consolidated
operations, changes in stockholders’ equity and cash flows of the Company and its
consolidated Subsidiaries for the respective fiscal periods or as of the respective dates
therein set forth, subject, in the case of any unaudited financial statements, to normal
recurring year-end audit adjustments, (C) complied as to form, as of their respective dates
of filing with the SEC, in all material respects with applicable accounting requirements and
with the published rules and regulations of the SEC with respect thereto and (D) have been
prepared in accordance with GAAP consistently applied during the periods involved, except as
otherwise set forth in the notes thereto.

(iii) The records, systems, controls, data and information of the Company and its
Subsidiaries are recorded, stored, maintained and operated under means (including any
electronic, mechanical or photographic process, whether computerized or not) that are under
the exclusive ownership and direct control of the Company or its Subsidiaries or accountants
(including all means of access thereto and therefrom), except for any non-exclusive
ownership and non-direct control that would not reasonably be expected to have a material
adverse effect on the system of internal accounting controls described below in this Section
3.1(f)(iii). The Company (A) has implemented and maintains disclosure controls and
procedures (as defined in Rule 13a-15(e) of the Exchange Act) to ensure that material
information relating to the Company, including its consolidated Subsidiaries, is made known
to the chief executive officer and the chief financial officer of the Company by others
within those entities, and (B) has disclosed, based on its most recent evaluation prior to
the date hereof, to the Company’s outside auditors and the audit committee of the Board of
Directors of the Company (x) any significant deficiencies and material weaknesses in the
design or operation of internal controls over financial reporting (as defined in Rule
13a-15(f) of the Exchange Act) and (y) any fraud, whether or not material, that involves
management or other employees who have a significant role in the Company’s internal controls
over financial reporting. As of the date hereof, to

 

11

 

the
knowledge of the Company, there is no reason that its outside auditors and its chief
executive officer and chief financial officer will not be able to give the certifications
and attestations required pursuant to the rules and regulations adopted pursuant to Section
404 of the Sarbanes-Oxley Act of 2002, without qualification, when next due. Since December
31, 2006, (A) neither the Company nor any of its Subsidiaries nor, to the knowledge of the
Company, any director, officer, employee, auditor, accountant or representative of the
Company or any of its Subsidiaries has received or otherwise had or obtained knowledge of
any material complaint, allegation, assertion or claim, whether written or oral, regarding
the accounting or auditing practices, procedures, methodologies or methods of the Company or
any of its Subsidiaries or their respective internal accounting controls, including any
material complaint, allegation, assertion or claim that the Company or any of its
Subsidiaries has engaged in questionable accounting or auditing practices, and (B) no
attorney representing the Company or any of its Subsidiaries, whether or not employed by the
Company or any of its Subsidiaries, has reported evidence of a material violation of
securities laws, breach of fiduciary duty or similar violation by the Company or any of its
officers, directors, employees or agents to the Board of Directors of the Company or any
committee thereof or to any director or officer of the Company.

(g) Absence of Certain Changes. Since December 31, 2008 until the date hereof, (i)
the Company and its Subsidiaries have conducted their respective businesses in all material
respects in the ordinary course, consistent with prior practice, (ii) except for publicly disclosed
ordinary dividends on the Common Stock, the Company has not made or declared any distribution in
cash or in kind to its stockholders or issued or repurchased any shares of its capital stock or
other equity interests and (iii) no event or events have occurred that, individually or in the
aggregate, has had or would reasonably be expected to have a Material Adverse Effect.

(h) No Undisclosed Liabilities, etc. Neither the Company nor its Subsidiaries has any
liabilities or obligations of any nature (absolute, accrued, contingent or otherwise) which are not
fully reflected or reserved against in the financial statements described in Section 3.01(f),
except for liabilities that have arisen since December 31, 2008 in the ordinary and usual course of
business and consistent with past practice and that, individually or in the aggregate, have not had
and would not reasonably be expected to have a Material Adverse Effect.

(i) Compliance with Applicable Law. Each of the Company and its Subsidiaries holds
all licenses, franchises, permits and authorizations necessary for the lawful conduct of its
business under, and has complied in all material respects and is not in default or violation in any
respect of, any law, statute, order, rule, regulation, policy or guideline of any federal, state or
local governmental authority applicable to the Company or such Subsidiary.

(j) Legal Proceedings. Neither the Company nor any of its Subsidiaries is a party to
any, and there are no pending, or to the knowledge of the Company, threatened, legal,
administrative, arbitral or other proceedings, claims, actions or governmental investigations of
any nature against the Company or any of its Subsidiaries or to which any of their assets are
subject (i) that, individually or in the aggregate, have had or would reasonably be expected to
have a Material Adverse Effect or (ii) relating to or which challenges the validity or propriety of
the Transactions. Neither the Company nor any of its Subsidiaries

 

12

 

is
subject to any order, judgment, decree, agreement or memorandum of understanding with, or commitment letter or
similar submission to, any federal or state regulatory agency or authority charged with the
supervision or regulation of depository institutions, nor has any of them been advised by any such
agency or authority that it is contemplating issuing or requesting any such order, decree,
agreement, memorandum of understanding, commitment letter or submission, in each case which,
individually or in the aggregate, would reasonably be expected to have a Material Adverse Effect.
Except as, individually or in the aggregate, has not had and would not reasonably be expected to
have a Material Adverse Effect, (i) there is no unresolved violation, criticism or exception by any
Regulatory Authority with respect to any Report or relating to any examinations or inspections of
the Company or any of its Subsidiaries and (ii) since December 31, 2006, there has been no formal
or informal inquiries by, or disagreements or disputes with, any Regulatory Authority with respect
to the business, operations, policies or procedures of the Company or any of its Subsidiaries.

(k) ERISA.

(i) Each Company Plan has been maintained and administered in compliance with its terms
and with applicable law, including ERISA and the Code to the extent applicable thereto,
except for such non-compliance which would not reasonably be expected to have, individually
or in the aggregate, a Material Adverse Effect. Any Company Plan intended to be qualified
under Section 401(a) or 401(k) of the Code is so qualified. Neither the Company nor any of
its Affiliates maintains or contributes to any plan or arrangement which provides retiree
medical or welfare benefits, except as required by applicable Law. Except as would not
reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect,
with respect to each Company Plan that is subject to Title IV or Section 302 of ERISA: (A)
the fair market value of the assets of such plan equals or exceeds the actuarial present
value of all accrued benefits under such plan (whether or not vested) on a termination
basis; (B) no reportable event within the meaning of Section 4043(c) of ERISA for which the
30-day notice requirement has not been waived has occurred; (C) all premiums to the Pension
Benefit Guaranty Corporation (the “PBGC”) have been timely paid in full; (D) no
liability (other than for premiums to the PBGC) under Title IV of ERISA has been or is
expected to be incurred by the Company or any of its subsidiaries; (E) the PBGC has not
instituted proceedings to terminate any such plan and no condition exists that presents a
risk that such proceedings will be instituted or which would constitute grounds under
Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer,
any such plan, and (F) no employees actively accrue benefits under such plan.

(ii) Except as, individually or in the aggregate, would not reasonably be expected to
have a Material Adverse Effect, the consummation of the Transactions will not (either alone
or in combination with another event) result in an increase in the amount of, or
acceleration in the timing of payment or vesting of, any compensation payable or awarded by
the Company or any of its Affiliates to any of its or their current or former employees
under any Company Plans or entitle any current or former employee, consultant or officer of
the Company or any of its Affiliates to severance pay, unemployment compensation or any
other payment, except as expressly provided in this Agreement or as required by applicable
law.

 

13

 

(l) Taxes and Tax Returns. Except as, individually or in the aggregate, has not had
and would not reasonably be expected to have a Material Adverse Effect:

(i) each of the Company and its Subsidiaries has duly and timely filed (including all
applicable extensions) all material Tax Returns required to be filed by it on or prior to
the date hereof (all such returns being true, accurate and complete in all material
respects), has paid all Taxes shown thereon as arising and has duly paid or made provision
for the payment of all material Taxes that have been incurred or are due or claimed to be
due from it by federal, state, foreign or local taxing authorities other than Taxes that are
not yet delinquent or are being contested in good faith through appropriate proceedings,
have not been finally determined and have been adequately reserved against;

(ii) each of the Company and its Subsidiaries have withheld and paid over to the proper
taxing authority all Taxes required to be withheld from amounts owing to any employee,
creditor or third party;

(iii) the federal, state and local income Tax returns of the Company and its
Subsidiaries have been examined by the Internal Revenue Service (the “IRS”) and any
applicable state and local taxing authorities for all years to and including 2006 and any
liability with respect thereto has been satisfied or any liability with respect to
deficiencies asserted as a result of such examination is covered by reserves that are
adequate under GAAP;

(iv) there are no disputes pending, or claims asserted, for Taxes or assessments upon
the Company or any of its Subsidiaries for which the Company does not have reserves that are
adequate under GAAP;

(v) neither the Company nor any of its Subsidiaries (A) is a party to or is bound by
any Tax sharing, allocation or indemnification agreement or arrangement (other than such an
agreement or arrangement exclusively between or among the Company and its Subsidiaries) or
(B) has any liability for the Taxes of any Person (other than the Company or any of its
Subsidiaries) under Treasury Regulation Section 1.1502-6 (or any similar provision of state,
local or foreign law);

(vi) within the past two years, neither the Company nor any of its Subsidiaries has
been a “distributing corporation” or a “controlled corporation” in a distribution intended
to qualify under Section 355(a) of the Code;

(vii) neither the Company nor any of its Subsidiaries is required to include in income
any adjustment pursuant to Section 481(a) of the Code, no such adjustment has been proposed
by the IRS and no pending request for permission to change any accounting method has been
submitted by the Company or any of its Subsidiaries; and

(viii) neither the Company nor any of its Subsidiaries has participated in a “listed
transaction” within the meaning of Treasury Regulation Section 1.6011-4(b)(2).

 

14

 

(m) Intellectual Property. Except as, individually or in the aggregate, has not had
and would not reasonably be expected to have a Material Adverse Effect:

(i) the Company and each of its Subsidiaries owns, or is licensed to use (in each case,
free and clear of any claims, liens or encumbrances), all Intellectual Property used in or
necessary for the conduct of its business as currently conducted;

(ii) the use of any Intellectual Property by the Company and its Subsidiaries does not,
to the knowledge of the Company, infringe on or otherwise violate the rights of any person
and is in accordance with any applicable license pursuant to which the Company or any of its
Subsidiaries acquired the right to use any Intellectual Property;

(iii) no person is challenging, infringing on or otherwise violating any right of the
Company or any of its Subsidiaries with respect to any material Intellectual Property owned
by or licensed to the Company or its Subsidiaries;

(iv) to the knowledge of the Company, neither the Company nor any of its Subsidiaries
has received any notice of any pending claim with respect to any Intellectual Property used
by the Company or any of its Subsidiaries; and

(v) to the knowledge of the Company, no Intellectual Property owned or licensed by the
Company or any of its Subsidiaries is being used or enforced in a manner that would be
expected to result in the abandonment, cancellation or unenforceability of such Intellectual
Property.

(n) Environmental Liability. Except as, individually or in the aggregate, has not had
and would not reasonably be expected to have a Material Adverse Effect:

(i) there are no legal, administrative, arbitral or other proceedings, claims, actions,
causes of action or notices with respect to any environmental, health or safety matters or
any private or governmental environmental, health or safety investigations or remediation
activities of any nature seeking to impose, or that are reasonably likely to result in, any
liability or obligation of the Company or any of its Subsidiaries arising under any
Environmental Law, pending or threatened against the Company or any of its Subsidiaries;

(ii) to the knowledge of the Company, there is no reasonable basis for, or
circumstances that are reasonably likely to give rise to, any such proceeding, claim,
action, investigation or remediation by any Regulatory Authority or any third party that
would give rise to any liability or obligation on the part of the Company or any of its
Subsidiaries; and

(A) neither the Company nor any of its Subsidiaries is subject to any agreement, order,
judgment, decree, letter or memorandum by or with any Regulatory Authority or third party
imposing any liability or obligation with respect to any of the foregoing.

 

15

 

(o) Company Information. None of the information to be contained in any document
filed with any Regulatory Authority in connection with the transactions contemplated by this
Agreement (the “Regulatory Filings”), including without limitation any registration
statement or offering document with respect to the Common Stock and/or the Senior Notes, in each
case, other than Purchaser Information, as to which no representation is made by the Company, will,
at the time such filing is made, contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements therein, in light
of the circumstances in which they are made, not misleading.

(p) State Takeover Laws. The Board of Directors of the Company has taken all action,
if any, necessary to render inapplicable to Purchasers the restrictions on “business combinations”
set forth in Section 203 of the DGCL and, to the knowledge of the Company, any similar
“moratorium,” “control share,” “fair price,” “takeover” or “interested stockholder” law applicable
to transactions between PNC and/or NCB, on the one hand, and the Company, on the other hand.

(q) Status of Securities. The Securities have been duly authorized by all necessary
corporate action. When issued and sold against receipt of the consideration therefor, the Common
Stock will be validly issued, fully paid and nonassessable, will not subject the holders thereof to
personal liability and will not be subject to preemptive rights of any other securityholder of the
Company. When issued and sold against receipt of the consideration therefor, the Senior Notes will
constitute valid and binding obligations of the Company, enforceable against the Company in
accordance with their terms, except as the enforcement thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws relating to or affecting enforcement of
creditor’s rights generally, or by general principles of equity (regardless of whether enforcement
is considered in a proceeding in equity or at law).

(r) Offering of Securities. Except pursuant to the Registration and Exchange Rights
Agreement, neither the Company nor any Person acting on its behalf has taken or will take any
action (including, without limitation, any offering of any securities of the Company under
circumstances which would require the integration of such offering with the offering of any of the
Securities under the Securities Act and the rules and regulations of the SEC thereunder) which
might subject the offering, issuance or sale of any of the Securities to the registration
requirements of the Securities Act.

(s) Brokers and Finders. Neither the Company nor any of its Subsidiaries nor any of
their respective officers, directors, employees or agents has utilized any broker, finder,
placement agent or financial advisor or incurred any liability for any fees or commissions in
connection with any of the Transactions, other than any such parties the fees and expenses of which
will be paid solely by the Company.

 

16

 

Section 3.02. Representations and Warranties of PNC. PNC represents and warrants to,
and agrees with, the Company as follows:

(a) Organization. PNC is a corporation duly incorporated, validly existing and in
good standing under the laws of the Commonwealth of Pennsylvania and has all requisite
corporate power and authority to own, operate and lease its properties and to carry on its
business as it is being conducted on the date of this Agreement.

(b) Authorization; No Conflicts.

(i) PNC has full corporate power and authority to execute and deliver this Agreement
and the Ancillary Documents to which it is a party and to consummate the Transactions. The
execution, delivery and performance by PNC of this Agreement and each Ancillary Document to
which it is a party and the consummation of the Transactions have been duly authorized by
all necessary corporate action on behalf of PNC. No other corporate proceedings on the part
of PNC are necessary to authorize the execution, delivery and performance by PNC of this
Agreement and each Ancillary Document and consummation of the Transactions. This Agreement
has been, and on or prior to the Closing each Ancillary Document to which it is a party will
be, duly and validly executed and delivered by PNC. This Agreement is, and upon its
execution at or prior to the Closing each Ancillary Document to which it is a party will be,
a valid and binding obligation of PNC, enforceable against it in accordance with its terms.

(ii) The execution, delivery and performance of this Agreement and the Ancillary
Documents to which it is a party, the consummation by PNC of the Transactions and the
compliance by PNC with any of the provisions hereof and thereof will not conflict with,
violate or result in a breach of any provision of, or constitute a default (or an event,
which, with notice or lapse of time or both would constitute a default) under, or result in
the termination of or accelerate the performance required by, or result in a right of
termination or acceleration under, (A) any provision of the Amended and Restated Articles of
Incorporation or Bylaws of PNC or (B) any mortgage, note, indenture, deed of trust, lease,
loan agreement or other agreement or instrument of PNC or any permit, concession, grant,
franchise, license, judgment, order, decree, ruling, injunction, statute, law, ordinance,
rule or regulation applicable to PNC or its properties or assets other than any such
conflict, violation, breach, default, termination and acceleration under clause (B) that,
individually or in the aggregate, would not reasonably be expected to materially and
adversely affect or delay the consummation of the Transactions.

(c) Consents and Approvals. Except for approvals required pursuant to Section 4 of
the Bank Holding Company Act (12 U.S.C. §1843), no consent, approval, order or authorization of, or
registration, declaration or filing with, any Regulatory Authority is required on the part of PNC
in connection with the execution, delivery and performance by PNC of this Agreement and the
Ancillary Documents to which it is a party and the consummation by PNC of the Transactions.

(d) Brokers and Finders. Except for Sandler O’Neill + Partners, L.P., neither PNC nor
any of its officers, directors, employees or agents has utilized any broker, finder, placement
agent or financial advisor or incurred any liability for any fees or commissions in connection with
any of the Transactions.

 

17

 

(e) Sufficient Funds. PNC has, and as of the Closing Date will have, sufficient funds
to consummate the Transactions required to be consummated by it hereunder.

Section 3.03. Representations and Warranties of NCB. NCB represents and warrants to,
and agrees with, the Company as follows:

(a) Organization. NCB is a national banking association, duly organized and validly
existing under the laws of the United States, and has all requisite corporate power and authority
to own, operate and lease its properties and to carry on its business as it is being conducted on
the date of this Agreement.

(b) Authorization; No Conflicts. (i) NCB has full corporate power and authority to
execute and deliver this Agreement and the Ancillary Documents to which it is a party and to
consummate the Transactions. The execution, delivery and performance by NCB of this Agreement and
each Ancillary Document to which it is a party and the consummation of the Transactions have been
duly authorized by all necessary corporate action on behalf of NCB. No other corporate proceedings
on the part of NCB are necessary to authorize the execution, delivery and performance by NCB of
this Agreement and each Ancillary Document and consummation of the Transactions. This Agreement
has been, and on or prior to the Closing each Ancillary Document to which it is a party will be,
duly and validly executed and delivered by NCB. This Agreement is, and upon its execution at or
prior to the Closing each Ancillary Document to which it is a party will be, a valid and binding
obligation of NCB, enforceable against it in accordance with its terms.

(ii) The execution, delivery and performance of this Agreement and the Ancillary
Documents to which it is a party, the consummation by NCB of the Transactions and the
compliance by NCB with any of the provisions hereof and thereof will not conflict with,
violate or result in a breach of any provision of, or constitute a default (or an event,
which, with notice or lapse of time or both would constitute a default) under, or result in
the termination of or accelerate the performance required by, or result in a right of
termination or acceleration under, (A) any provision of the Amended and Restated Articles of
Incorporation or Bylaws of NCB or (B) any mortgage, note, indenture, deed of trust, lease,
loan agreement or other agreement or instrument of NCB or any permit, concession, grant,
franchise, license, judgment, order, decree, ruling, injunction, statute, law, ordinance,
rule or regulation applicable to NCB or its properties or assets other than any such
conflict, violation, breach, default, termination and acceleration under clause (B) that,
individually or in the aggregate, would not reasonably be expected to materially and
adversely affect or delay the consummation of the Transactions.

(c) Consents and Approvals. Except for approvals required pursuant to Section 4 of
the Bank Holding Company Act (12 U.S.C. §1843), no consent, approval, order or authorization of, or
registration, declaration or filing with, any Regulatory Authority is required on the part of NCB
in connection with the execution, delivery and performance by NCB of this Agreement and the
Ancillary Documents to which it is a party and the consummation by NCB of the Transactions.

 

18

 

(d) Brokers and Finders. Except for Sandler O’Neill + Partners, L.P., neither NCB nor
any of its officers, directors, employees or agents has utilized any broker, finder, placement
agent or financial advisor or incurred any liability for any fees or commissions in connection with
any of the Transactions.

(e) Sufficient Funds. NCB has, and as of the Closing Date will have, sufficient funds
to consummate the Transactions required to be consummated by it hereunder.

ARTICLE IV

Additional Agreements of the Parties

Section 4.01. Taking of Necessary Action. Subject to the conditions set forth in
Article V hereof, each of the parties hereto agrees to use all reasonable best efforts promptly to
take or cause to be taken all action and promptly to do or cause to be done all things necessary,
proper or advisable under applicable laws and regulations to consummate and make effective the
Transactions. Each party shall execute and deliver both before and after the Closing such further
certificates, agreements and other documents and take such other actions as another party may
reasonably request to consummate or implement the Transactions or to evidence such events or
matters.

Section 4.02. Financial Statements and Other Reports.

(a) The Company covenants that, to the extent it has not previously publicly filed such
information with the SEC in an annual report on Form 10-K or periodic report on Form 10-Q, it will
deliver to Purchasers:

(i) within 40 days after the end of each quarterly period (other than the last
quarterly period) in each fiscal year, consolidated statements of income, changes in
stockholders’ equity and cash flows of the Company and its consolidated Subsidiaries (for
the period from the beginning of the then current fiscal year to the end of such quarterly
period, and a consolidated statement of condition of the Company and its consolidated
Subsidiaries as of the end of such quarterly period; and

(ii) within 75 days after the end of each fiscal year, a consolidated statement of
condition of the Company and its consolidated Subsidiaries as of the end of such fiscal
year and the related consolidated statements of income, changes in stockholders’ equity and
cash flows for such fiscal year, together with the audit report of KPMG LLP or other
independent public accountants of recognized standing selected by the Company.

(b) The obligations of the Company to deliver the materials described in Section 4.02(a) shall
continue in full force and effect until such time as Purchasers shall no longer own either shares
of Common Stock representing at least three percent (3%) of the Common Stock then outstanding or
Senior Notes having an aggregate principal amount at least equal to $50,000,000.

 

19

 

Section 4.03. Common Stock Lockup.

(a) Subject to the Company’s compliance with its obligations under this Agreement, and except
as may be otherwise provided in the Registration and Exchange Rights Agreement, PNC shall not,
without the Company’s prior written consent, sell, transfer, otherwise dispose of or enter into any
hedge with respect to any of the shares of Common Stock until such time as the Company shall have
filed, and the SEC shall have declared effective, a registration statement with respect to the
resale of such shares as contemplated by the Registration and Exchange Rights Agreement. From and
after such time as such a registration statement shall have become effective, PNC may (i) enter
into hedges with respect to all or a portion of its Common Stock and (ii) from time to time sell
shares of Common Stock, either (A) in a registered public offering using an underwriter or
underwriters approved by the Company (such approval not to be unreasonably withheld or delayed), or
(B) in open market transactions, subject to a daily limit equal to 20% of the 30-day trailing
average daily trading volume of the Common Stock on the NASDAQ; provided that until the Blackout
Release Date, such hedges or sales shall be subject to customary blackout periods applicable to the
Company’s officers and directors. The Company shall apprise PNC with respect to the timing of any
blackout periods until the Blackout Release Date. Notwithstanding the foregoing, PNC may sell,
transfer or otherwise dispose any or all of such shares of Common Stock by tendering such
securities pursuant to any tender offer or exchange offer commenced by any third party that has not
been solicited, directly or indirectly, by PNC or any of its Affiliates or in connection with any
merger or consolidation to which the Company is a party or pursuant to a plan of liquidation of the
Company.

(b) The restrictions set forth in Section 4.03(a) shall not apply to PNC and its Affiliates’
ordinary course fiduciary activities or to the ordinary course activities of PNC or its Affiliates’
affiliated proprietary and third party fund and asset management activities or affiliated brokerage
and trading or financing activities.

Section 4.04. Standstill.

(a) PNC covenants to and agrees with the Company that, without the Company’s prior written
consent, neither it nor any of its Affiliates will, directly or indirectly (including by way of
cooperating or coordinating with any third party with respect to the following actions or by
encouraging, assisting, advising or facilitating the taking of any of the following actions by any
third party):

(i) In any way acquire Beneficial Ownership of any Voting Securities or any direct or
indirect rights or options to acquire Beneficial Ownership of any Voting Securities other
than those acquired by PNC from the Company pursuant to the terms of this Agreement or
pursuant to a stock split, stock dividend or similar corporate action initiated by the
Company; provided that PNC and its Affiliates may acquire Beneficial Ownership of additional
Voting Securities to the extent that such acquisition would not result in PNC and its
Affiliates owning more than 9.9% of the aggregate voting power of the Voting Securities.

(ii) Seek or propose to influence, advise, change or control the management, Board of
Directors, governing instruments or policies or affairs of the Company by way of any public
communication or communication with any Person other than the Company, or make, or in any
way participate in, any “solicitation” of
“proxies” (as such terms are defined or used in Regulation 14A under the Exchange Act) to vote any Voting
Securities or become a “participant” in any “election contest” (as such terms are defined
and used in Rule 14a-11 under the Exchange Act) with respect to Voting Securities or
exercise voting rights associated with such Voting Securities other than in accordance with
the recommendation of the Board of Directors of the Company; or

 

20

 

(iii) Make a request to amend or waive any provision of this Section 4.04(a);

provided, however, that, the restrictions set forth in this Section 4.04(a) shall not apply
to any acquisition of Voting Securities by PNC or its Affiliates in connection with PNC and
its Affiliates’ ordinary course fiduciary activities or to the ordinary course activities of
PNC or its Affiliates’ affiliated proprietary and third party fund and asset management
activities or affiliated brokerage and trading or financing activities; provided, further,
that the restrictions set forth in this Section 4.04(a) shall cease to apply to any Voting
Securities sold or transferred by PNC to any person other than an Affiliate of PNC.

(b) For purposes of this Section 4.04, a Person shall be deemed to “Beneficially Own”
any securities of which such Person or any such Person’s Affiliates is considered to be a
“Beneficial Owner” under Rule 13d-3 under the Exchange Act as in effect on the date hereof or of
which such Person or any of such Person’s Affiliates or associates, directly or indirectly, has the
right to acquire (whether such right is exercisable immediately or only after the passage of time
or upon the satisfaction of conditions) pursuant to any agreement, arrangement or understanding
(whether or not in writing) or upon the exercise of conversion rights, exchange rights, rights,
warrants or options, or otherwise and “Voting Securities” means at any time shares of any
class of capital stock of the Company that are then entitled to vote generally in the election of
directors or any securities that are convertible into, or exchangeable or exercisable for, any such
shares.

(c) The obligations of PNC and its Affiliates under Section 4.04(a) shall continue in full
force and effect until such time as PNC and its Affiliates shall Beneficially Own less than one
percent (1%) of the Common Stock then outstanding (disregarding any shares of Common Stock that are
held in the context of PNC and its Affiliates’ ordinary course fiduciary activities or the ordinary
course activities of PNC or its Affiliates’ affiliated proprietary and third party fund and asset
management activities or affiliated brokerage and trading or financing activities).

Section 4.05. Securities Laws; Legends. (a) Purchasers acknowledge and agree that as
of the date hereof the Securities have not been registered under the Securities Act or the
securities laws of any state and that they may be sold or otherwise disposed of only in one or more
transactions registered under the Securities Act and, where applicable, such laws or as to which an
exemption from the registration requirements of the Securities Act and, where applicable, such laws
is available. Purchasers acknowledge that, except as provided in the Ancillary Documents,
Purchasers have no right to require the Company to register the Securities. Purchasers further
acknowledge and agree that each certificate for the Common Stock and each Senior Note shall bear a
legend substantially as set forth in paragraphs (b) and (c), respectively, of this Section 4.05.

 

21

 

(b) Certificates for the Common Stock shall bear customary legends in accordance with the
requirements of the Securities Act and any applicable state securities laws.

(c) The Senior Notes shall bear customary legends in accordance with the requirements of the
Securities Act and any applicable state securities laws.

(d) Any holder of Securities may request the Company to remove any or all of the legends
described in this Section 4.05 from the certificates or notes evidencing such Securities by
submitting to the Company such certificates or notes, together with an opinion of counsel
reasonably satisfactory to the Company to the effect that such legend or legends are no longer
required under the Securities Act or applicable state laws, as the case may be.

Section 4.06. Lost, Stolen, Destroyed or Mutilated Securities. Upon receipt of
evidence satisfactory to the Company of the loss, theft, destruction or mutilation of any
certificate or note representing any security of the Company and, in the case of loss, theft or
destruction, upon delivery of an undertaking by the holder thereof to indemnify the Company (and,
if requested by the Company, the delivery of an indemnity bond sufficient in the judgment of the
Company to protect the Company from any loss it may suffer if a certificate or note is replaced),
or, in the case of mutilation, upon surrender and cancellation thereof, the Company will issue a
new certificate for an equivalent number of shares or another note of like tenor, as the case may
be.

Section 4.07. Regulatory Matters.

(a) Purchasers and the Company shall use commercially reasonable efforts to promptly prepare
and file all necessary documentation, to effect all applications, notices, petitions and filings,
and to obtain as promptly as practicable all permits, consents, approvals and authorizations of all
third parties and Governmental Entities which are necessary or advisable to consummate the
Transactions. The Company and Purchasers shall consult with the other, in each case subject to
applicable laws relating to the exchange of information, with respect to any filing made with, or
written materials submitted to, any third party or any Regulatory Authority in connection with the
Transactions. In connection with the foregoing, each of the parties hereto shall act reasonably
and as promptly as practicable. The parties hereto agree that they will consult with each other
with respect to the obtaining of all permits, consents, approvals and authorizations of all third
parties and Regulatory Authorities necessary or advisable to consummate the Transactions and each
party will keep the other appraised of the status of matters relating to completion of the
Transactions.

(b) Purchasers and the Company shall, upon request, furnish each other with all information
concerning themselves, their Subsidiaries, directors, officers and stockholders and such other
matters as may be reasonably necessary or advisable in connection with any statement, filing,
notice or application made by or on behalf of Purchasers, the Company or any of their respective
Subsidiaries to any Regulatory Authority in connection with the Transactions.

(c) Purchasers and the Company shall promptly furnish the other with copies of written
communications received by them or their Subsidiaries from, or delivered by any of the foregoing
to, any Regulatory Authority in respect of the Transactions (other than in respect of
information filed or otherwise submitted to any such Regulatory Authority and designated as
confidential with respect to the other party or parties, as applicable).

 

22

 

(d) Purchasers and the Company shall, and shall cause their Subsidiaries to, use commercially
reasonable efforts (i) to take, or cause to be taken, all actions necessary, proper or advisable to
comply promptly with all legal requirements that may be imposed on them or their Subsidiaries with
respect to the Transactions and, subject to the conditions set forth in Article V hereof, to
consummate the Transactions and (ii) subject to the conditions set forth in Article V hereof, to
obtain (and to cooperate with the other party to obtain) any consent, authorization, order or
approval of, or any exemption by, any Regulatory Authority and any other third party which is
required to be obtained by the Company or Purchasers or any of their respective Subsidiaries in
connection with the Transactions, and to comply with the terms and conditions of such consent,
authorization, order or approval.

Section 4.08. Company Lockup. The Company agrees that from the commencement of the
Reference Period until ninety (90) calendar days following the date that the Company shall have
filed with the SEC its Quarterly Report on Form 10-Q with respect to the quarterly period ended
September 30, 2009, except as PNC may otherwise consent in its sole discretion, and except for the
Transactions and ordinary course compensation practices in accordance with past practice, the
Company will not issue, sell, contract to sell, offer, or otherwise transfer any shares of Common
Stock, or any warrants, options or other securities convertible into, exchangeable for or that
represent the right to receive shares of Common Stock.

Section 4.09. Public Disclosure. Upon reasonable notice and subject to applicable
laws relating to the confidentiality of information, the Company shall afford to Purchasers
reasonable access, during normal business hours, to its personnel, properties, books and records in
connection with the Transactions and any potential offer and sale by Purchasers of the Securities.
The Company further agrees that, not later than the third (3rd) Business Day preceding
the date of any planned offer or sale of Securities by Purchasers (provided that Purchasers have
given the Company at least eight (8) Business Days’ advance written notice of such intent, and
provided further that no such offer or sale shall precede the date that the Company shall have
filed with the SEC its Quarterly Report on Form 10-Q with respect to the quarterly period ended
September 30, 2009), it shall make public disclosure of any information with respect to the Company
furnished or made available to the Purchasers in connection with the Transactions (including
pursuant to the preceding sentence) to the extent necessary to ensure that all material non-public
information made available to the Purchasers is made public and no registration statement, report
or filing of the Company with the SEC (including any registration statement or prospectus relating
to the Securities) contains any untrue statement of a material fact or omits to state a material
fact required to be stated therein, or necessary to make the statements therein not misleading.

 

23

 

ARTICLE V

Conditions; Termination

Section 5.01. Conditions of Purchasers. The obligations of Purchasers to purchase and
pay for the Securities at the Closing are subject to satisfaction or waiver of each of the
following conditions precedent:

(a) Representations and Warranties; Covenants.

(i) The representations and warranties of the Company (i) contained in Section
3.01(e)(i) of this Agreement shall be true and correct in all material respects, (ii)
contained in Section 3.01(g)(iii) shall be true and correct in all respects and (iii)
contained in any other Section of this Agreement and in the Ancillary Documents shall be
true and correct (disregarding all qualifications or limitations set forth in such
representations and warranties as to “materiality,” “Material Adverse Effect” and words of
similar import), except, in the case of clause (iii), where the failure of such
representations and warranties to be so true and correct would not, individually or in the
aggregate, have a Material Adverse Effect, in each case on and as of the date of this
Agreement or the date of such Ancillary Documents, as the case may be, and on and as of the
Closing Date with the same effect as though made on and as of such respective dates (unless
any such representation or warranty is made only as of a specific date, in which event such
representation or warranty shall be true and correct only as of such specific date); and

(ii) The Company shall have performed all obligations and complied with all covenants
required hereunder to be performed by it at or prior to the Closing.

(b) Material Adverse Effect. There shall not have occurred, since the date hereof,
any event, circumstance, change or effect that, individually or in the aggregate, has had or would
reasonably be expected to have a Material Adverse Effect.

(c) Company Certificate. The Company shall have delivered to Purchasers a
certificate, dated the Closing Date, signed by its chief executive officer and its chief financial
officer, to the effect that the conditions set forth in Sections 5.01(a) and (b) have been
satisfied to the best knowledge of the officer executing the same.

(d) Opinion. The Purchasers shall have received from counsel to the Company an
opinion substantially in the form attached hereto as Exhibit C.

(e) No Adverse Law, Action or Decision or Injunction. There shall be no law, statute,
order, rule or regulation of, and no action, suit, investigation or proceeding pending by, a
Regulatory Authority of competent jurisdiction that seeks to restrain, enjoin or prevent the
consummation of the Transactions, and there shall not be in effect any order, decree or injunction
of a court or agency of competent jurisdiction which enjoins or prohibits consummation of the
Transactions.

 

24

 

(f) Registration and Exchange Rights Agreement. The Registration and Exchange Rights
Agreement shall have been executed and delivered by the Company.

(g) NASDAQ Listing. The shares of Common Stock issuable to PNC hereunder shall have
been approved for listing on the NASDAQ, subject to official notice of issuance.

(h) P&A Transaction. The Company shall have consummated the transactions contemplated
by the P&A Agreement in accordance with the terms thereof (it being understood that subject to the
terms and conditions of the P&A Agreement, such transactions will close substantially
simultaneously with the Closing).

Section 5.02. Conditions of the Company. The obligation of the Company to sell the
Securities at the Closing is subject to satisfaction or waiver of each of the following conditions
precedent:

(a) Representations and Warranties; Covenants. The representations and warranties of
each Purchaser contained in this Agreement shall be true and correct in all material respects on
and as of the date of this Agreement and on and as of the Closing Date with the same effect as
though made on and as of such dates (unless any such representation or warranty is made only as of
a specific date, in which event such representation or warranty shall be true and correct in all
material respects only as of such specific date), and each Purchaser shall have performed all
obligations and complied with all covenants required hereunder to be performed by them at or prior
to the Closing.

(b) Purchaser’s Certificate. An executive officer of each Purchaser shall have
delivered to the Company a certificate, dated the Closing Date, to the effect that, with respect to
such Purchaser, the condition set forth in Section 5.02(a) has been satisfied to the best knowledge
of the officer executing the certificate.

(c) No Adverse Action or Decision or Injunction. There shall be no law, statute,
order, rule or regulation of, and no action, suit, investigation or proceeding pending by, a
Regulatory Authority of competent jurisdiction that seeks to restrain, enjoin or prevent the
consummation of the Transactions, and there shall not be in effect any order, decree or injunction
of a court or agency of competent jurisdiction which enjoins or prohibits consummation of the
Transactions.

(d) P&A Transaction. Purchasers shall have consummated the transactions contemplated
by the P&A Agreement in accordance with the terms thereof (it being understood that subject to the
terms and conditions of the P&A Agreement, such transactions will close substantially
simultaneously with the Closing.)

Section 5.03. Termination. This Agreement may be terminated at any time prior to the
Closing:

(a) Mutual Consent. By mutual consent of Purchasers and the Company in a written
instrument;

 

25

 

(b) P&A Agreement Termination. By either Purchasers or the Company in the event that
the P&A Agreement shall have been terminated;

(c) Breaches by the Company. By Purchasers, if there has been a material violation or
breach by the Company of any covenant, agreement, representation or warranty contained in this
Agreement which has prevented the satisfaction of any condition to the obligations of Purchasers
set forth in Section 5.01 at the Closing and such violation or breach has not been waived by
Purchasers or, in the case of a covenant or agreement breach, cured by the Company within 30 days
after notice thereof to the Company from Purchasers;

(d) Breaches by Purchasers. By the Company, if there has been a material violation or
breach by a Purchaser of any covenant, agreement, representation or warranty contained in this
Agreement which has prevented the satisfaction of any condition to the obligations of the Company
set forth in Section 5.02 at the Closing and such violation or breach has not been waived by the
Company or, in the case of a covenant or agreement breach, cured by Purchasers within 30 days after
notice thereof to Purchasers from the Company;

(e) Governmental Authority. By either Purchasers or the Company if there shall be any
law, statute, order, rule or regulation of, or action, suit, investigation or proceeding pending
by, a Regulatory Authority of competent jurisdiction that seeks to restrain, enjoin or prevent the
consummation of the Transactions, or there shall be in effect any order, decree or injunction of a
court or agency of competent jurisdiction which enjoins or prohibits consummation of the
Transactions; or

(f) Sufficient Capital. By the Company at its election effective immediately prior to
the closing of the transactions contemplated by the P&A Agreement in accordance with its terms, if
no Regulatory Authority of competent jurisdiction shall require that in connection with such
closing the Transactions also be consummated.

(g) Change of Control. By Purchasers if there shall have occurred, or the Company
shall have entered into any agreement providing for, a Change of Control.

Section 5.04. Effect of Termination. In the event of termination of this Agreement by
either or both of the Company and Purchasers pursuant to Section 5.03, written notice thereof shall
forthwith be given by the terminating party to the other, and this Agreement shall thereupon
terminate and become void and have no effect, and the transactions contemplated hereby shall be
abandoned without further action by the parties hereto, except that the provisions of this Section
5.04 and Article VI shall survive the termination of this Agreement and except that neither party
shall be relieved or released from any liabilities or damages arising out of any willful breach of
this Agreement.

ARTICLE VI

Miscellaneous

Section 6.01. Survival of Representations and Warranties. All covenants and
agreements, other than those which by their terms apply in whole or in part after the Closing Date,
shall terminate as of the Closing Date. Except for the warranties and representations
contained in clauses (a), (b), (c) and (p) of Section 3.01, which shall survive the Closing
without limitation, the warranties and representations made herein or in any certificates delivered
in connection with the Closing shall survive the Closing for a period of one (1) year and shall
then expire.

 

26

 

Section 6.02. Notices. All notices, requests, demands, consents and other
communications given or required to be given under this Agreement and under the related documents
shall be in writing and delivered to the applicable party at the address indicated below:

	 	 	 	 	 
	 
	 	If to Purchasers:	 	National City Bank
	 
	 	 	 	c/o The PNC Financial Services Group, Inc.
	 
	 	 	 	One PNC Plaza
	 
	 	 	 	249 Fifth Avenue Pittsburgh, Pennsylvania
	 
	 	 	 	15222-2707 
	 
	 	 	 	Attention: Mergers & Acquisitions Department
	 
	 	 	 	Fax: (412) 762-6238
	 
	 	 	 	 
	 
	 	With a copy to:	 	The PNC Financial Services Group, Inc.
	 
	 	 	 	One PNC Plaza
	 
	 	 	 	249 Fifth Avenue Pittsburgh, Pennsylvania
	 
	 	 	 	15222-2707 
	 
	 	 	 	Attention: Mergers & Acquisitions Department
	 
	 	 	 	Fax: (412) 762-6238
	 
	 	 	 	 
	 
	 	 	 	and
	 
	 	 	 	 
	 
	 	 	 	Wachtell, Lipton, Rosen & Katz
	 
	 	 	 	51 West 52nd Street
	 
	 	 	 	New York, New York 10019
	 
	 	 	 	Attention: Nicholas G. Demmo
	 
	 	 	 	Fax: (212) 403-2000
	 
	 	 	 	 
	 
	 	If to the Company:	 	First Niagara Financial Group, Inc.
	 
	 	 	 	6950 South Transit Road, P.O. Box 514, Lockport, NY
	 
	 	 	 	14095-0514 
	 
	 	 	 	Fax: (716) 625-8405
	 
	 	 	 	Attention: Michael W. Harrington
	 
	 	 	 	                  John Mineo
	 
	 	 	 	 
	 
	 	With a copy to:	 	Luse Gorman Pomerenk & Schick, P.C.
	 
	 	 	 	5335 Wisconsin Avenue, NW
	 
	 	 	 	Suite 400
	 
	 	 	 	Washington DC 20015
	 
	 	 	 	Attention: John J. Gorman
	 
	 	 	 	Fax: (202) 362-2902

 

27

 

or, as to each party at such other address as shall be designated by such party in a written notice
to the other party complying as to delivery with the terms of this Section. Any notices shall be
in writing, including facsimile communication, and may be sent by registered or certified mail,
return receipt requested, postage prepaid, or by fax, or by overnight delivery service. Notice
shall be effective upon actual receipt thereof.

Section 6.03. Entire Agreement; Amendment. This Agreement and the P&A Agreement
contain the entire understanding of and all agreements between the parties hereto with respect to
the subject matter hereof and supersedes any prior or contemporaneous agreement or understanding,
oral or written, pertaining to any such matters which agreements or understandings shall be of no
force or effect for any purpose; provided, however, that the terms of any confidentiality agreement
between the parties hereto previously entered into, to the extent not inconsistent with any
provisions of this Agreement or the P&A Agreement, shall continue to apply. This Agreement may not
be amended or supplemented in any manner except by mutual agreement of the parties and as set forth
in a writing signed by the parties hereto or their respective successors in interest. The waiver
of any beach of any provision under this Agreement by any party shall not be deemed to be a waiver
of any preceding or subsequent breach under this Agreement. No such waiver shall be effective
unless in writing.

Section 6.04. Third Party Beneficiaries. Except as expressly provided in Sections
4.05(d) and 6.10, this Agreement shall not benefit or create any right or cause of action in or on
behalf of any person other than the Company and Purchasers.

Section 6.05. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to constitute any original, but all of which together
shall constitute one and the same document.

Section 6.06. Governing Law. This Agreement shall be governed by and interpreted in
accordance with the laws of the Commonwealth of Pennsylvania applicable to agreements made and
entirely to be performed in such commonwealth and without regard to its principles of conflict of
laws. The parties hereto agree that any suit, action or proceeding seeking to enforce any
provision of, or based on any matter arising out of or in connection with, this Agreement or the
transactions contemplated hereby shall be brought in any federal or state court sitting in
Pittsburgh, Pennsylvania.

Section 6.07. Confidentiality. Each party to this Agreement shall hold, and shall
cause its respective directors, officers, employees, agents, consultants and advisors to hold, in
strict confidence, except to the extent necessary to discharge obligations pursuant to Section 4.07
or unless compelled to disclose by judicial or administrative process or, based on the advice of
its counsel, by other requirements of law or the applicable requirements of any regulatory agency
or relevant stock exchange, all non-public records, books, contracts, instruments, computer data
and other data and information (collectively, “Information”) concerning the other party
(or, if required under a contract with a third party, such third party) furnished it by such other
party or its representatives pursuant to this Agreement (except to the extent that such information
can be shown to have been (i) previously known by such party on a non-confidential basis, (ii) in
the public domain through no fault of such party or (iii) later lawfully acquired from other
sources
by the party to which it was furnished), and neither party shall release or disclose such
Information to any other person, except its auditors, attorneys, financial advisors, bankers, other
consultants and advisors and, to the extent permitted above, any Regulatory Authority.

 

28

 

Section 6.08. Expenses. Each party hereto shall bear its own costs and expenses
(including attorneys’ fees) incurred in connection with this Agreement and the Ancillary Documents
and the Transactions.

Section 6.09. Indemnification.

(a) The Company agrees to indemnify and hold harmless each Purchaser, each person who controls
a Purchaser within the meaning of the Exchange Act, and each of the respective officers, directors,
employees, agents and Affiliates of the foregoing in their respective capacities as such (the
“Purchaser Indemnitees”), to the fullest extent lawful, from and against any and all
actions, suits, claims, proceedings, costs, damages, judgments, amounts paid in settlement (subject
to Section 6.09(d) below) and expenses (including, without limitation, attorneys’ fees and
disbursements) (collectively, “Loss”) arising out of or resulting from (i) any inaccuracy
in or breach of the representations, warranties or covenants made by the Company in this Agreement
or any Ancillary Document or (ii) any action or failure to act undertaken by a Purchaser Indemnitee
at the written request of or with the written consent of the Company.

(b) Each Purchaser, severally and not jointly, agrees to indemnify and hold harmless the
Company and each of its officers, directors, employees, agents and Affiliates in their respective
capacities as such (the “Company Indemnitees”), to the fullest extent lawful, from and
against any and all Losses arising out of or resulting from (i) any inaccuracy in or breach of the
representations, warranties or covenants made by such Purchaser in this Agreement or any Ancillary
Document or (ii) any action or failure to act undertaken by a Company Indemnitee at the written
request of or with the written consent of a Purchaser.

(c) To exercise its indemnification rights under this Section 6.09 as a result of the
assertion against it of any claim or potential liability for which indemnification is provided, a
party (the “Indemnified Party”) shall promptly notify the party obligated to provide
indemnification under this Section 6.09 (the “Indemnifying Party”) of the assertion of such
claim, discovery of any such potential liability or the commencement of any action or proceeding in
respect of which indemnity under this Section 6.09 may be sought hereunder; provided, however, that
in no event shall notice of claim for indemnification under this Agreement be given later than the
expiration of one (1) year from the Closing Date; provided, further, that any delay or failure by
the Indemnified Party to give notice shall relieve the Indemnifying Party of its obligations
hereunder only to the extent, if at all, that the Indemnifying Party is actually and materially
prejudiced by reason of such delay or failure. The Indemnified Party shall advise the Indemnifying
Party of all facts relating to such assertion within the knowledge of the Indemnified Party, and
shall afford the Indemnifying Party the opportunity, at the Indemnifying Party’s sole cost and
expense, to defend against such claims for liability. In any such action or proceeding, the
Indemnified Party shall have the right to retain its own counsel, but the fees and expenses of such
counsel shall be at its own expense unless (i) the Indemnifying Party and the Indemnified Party
mutually agree to the retention of such counsel or (ii) the named parties to any such suit, action,
or proceeding (including any impleaded parties) include both the Indemnifying
Party and the Indemnified Party, and in the reasonable judgment of the Indemnified Party,
representation of the Indemnifying Party and the Indemnified Party by the same counsel would be
inadvisable due to actual or potential differing defenses or conflicts of interest between them.

 

29

 

(d) Neither party to this Agreement shall settle, compromise, discharge or consent to an entry
of judgment with respect to a claim or liability subject to indemnification under this Section 6.09
without the other party’s prior written consent (which consent shall not be unreasonably withheld,
conditioned or delayed); provided, that the Indemnifying Party may agree without the prior written
consent of the Indemnified Party to any settlement, compromise, discharge or consent to an entry of
judgment in each case that by its terms obligates the Indemnifying Party to pay the full amount of
the liability in connection with such claim and which unconditionally releases the Indemnified
Party from all liability in connection with such claim.

(e) Notwithstanding anything to the contrary contained in this Agreement:

(i) An Indemnifying Party shall not be liable under this Section 6.09 for any Loss sustained
by the Indemnified Party unless and until the aggregate amount of all indemnifiable Losses
sustained by the Indemnified Party shall exceed $1,000,000, in which event the Indemnifying Party
shall provide indemnification hereunder in respect of all such indemnifiable Losses in excess of
$1,000,000; provided, however, that any individual items where the loss relating thereto is less
than $25,000 shall not be aggregated for purposes hereof; and provided, further, that the maximum
aggregate amount of indemnification payments payable by Seller or Purchasers pursuant to this
Section 6.09 shall be $49,000,000.

(ii) In no event shall either party hereto be entitled to consequential or punitive damages or
damages for lost profits in any action relating to the subject matter of this Agreement.

Section 6.10. Successors and Assigns. Except as otherwise expressly provided herein,
the provisions hereof shall inure to the benefit of, and be binding upon, the Company’s successors
and assigns and Purchasers’ successors and assigns, and no other person; provided, that, subject to
applicable law, a Purchaser may assign its rights under this Agreement to any of its Affiliates,
but no such assignment shall relieve a Purchaser of its obligations hereunder. For the avoidance
of doubt, none of the covenants or obligations of a Purchaser hereunder shall be binding on any
other Person, and no such Person shall be entitled to any of the Purchaser’s rights hereunder
(other than under Section 4.05(d)), solely as a result of the transfer of any of the Securities to
such Person.

Section 6.11. Remedies; Waiver. To the extent permitted by law, all rights and
remedies existing under this Agreement or any Ancillary Documents are cumulative to, and are
exclusive of, any rights or remedies otherwise available under applicable law. No failure on the
part of any party to exercise, or delay in exercising, any right hereunder shall be deemed a waiver
thereof, nor shall any single or partial exercise preclude any further or other exercise of such or
any other right.

 

30

 

Section 6.12. Waiver of Jury Trial. The parties hereby waive, to the fullest extent
permitted by law, any right to trial by jury of any claim, demand, action, or cause of action
(i) arising under this Agreement or (ii) in any way connected with or related or incidental to the
dealings of the parties in respect of this Agreement or any of the Transactions, in each case,
whether now existing or hereafter arising, and whether in contract, tort, equity, or otherwise.
The parties hereby further agree and consent that any such claim, demand, action, or cause of
action shall be decided by court trial without a jury and that the parties may file a copy of this
Agreement with any court as written evidence of the consent of the parties to the waiver of their
right to trial by jury.

Section 6.13. Severability. If any provision of this Agreement is determined to be
invalid, illegal, or unenforceable, the remaining provisions of this Agreement shall remain in full
force and effect provided that the economic and legal substance of, any of the Transactions is not
affected in any manner materially adverse to any party. In the event of any such determination,
the parties agree to negotiate in good faith to modify this Agreement to fulfill as closely as
possible the original intent and purpose hereof. To the extent permitted by law, the parties
hereby to the same extent waive any provision of law that renders any provision hereof prohibited
or unenforceable in any respect.

[Remainder of page intentionally left blank. Signature page follows.]

 

31

 

IN WITNESS WHEREOF, this Agreement has been executed by the parties hereto or by their
respective duly authorized officers, all as of the date first above written.

	 	 	 	 	 
	 	THE PNC FINANCIAL SERVICES GROUP, INC.

 	 
	 	By:  	/s/
David J. Williams 	 
	 	 	Name:  	David J. Williams 	 
	 	 	Title:  	Senior Vice President 	 
	 
	 	NATIONAL CITY BANK

 	 
	 	By:  	/s/
David J. Williams 	 
	 	 	Name:  	David J. Williams 	 
	 	 	Title:  	Senior Vice President 	 
	 
	 	FIRST NIAGARA FINANCIAL GROUP, INC.

 	 
	 	By:  	/s/ John R. Koelmel	 
	 	 	Name:  	John R. Koelmel	 
	 	 	Title:  	President and Chief Executive Officer 	 
	 

 

 

Exhibit A — Terms of Registration and Exchange Rights Agreement

	 	 	 
	Common Stock Registration

	 	The Company will file with the SEC
a shelf registration statement for
the resale of the Common Stock in
an offering on a delayed or
continuous basis pursuant to Rule
415 under the Securities Act.
	 
	 	 
	Timing of Common Stock Registration

	 	•     Upon the earlier of: (i) 75
days following the Closing and (ii)
as soon as can be accomplished
given the best efforts by both the
Company, the Purchasers and their
respective representatives to
effect the appropriate disclosure.

	 
	 	 
	 

	 	•     if the shelf registration statement is not an automatic
shelf registration statement, use commercially reasonable
efforts to cause the shelf registration statement to become
effective within 180 days after the first date of original
issuance of the Common Stock.

	 
	 	 
	Senior Notes Registration on Demand

	 	Upon NCB’s demand, the Company will
file with the SEC a registration
statement relating to an offer to
exchange any and all of the Senior
Notes for a like aggregate
principal amount of debt securities
issued by the Company which are
substantially identical to the
Senior Notes (and are entitled to
the benefits of the indenture)
except that they have been
registered with the SEC.
	 
	 	 
	Timing of Senior Notes Registration

	 	As promptly as reasonably
practicable following a demand.
Company will use reasonable best
efforts to cause any exchange
registration statement to be
declared effective by the SEC no
later than 90 days after the filing
thereof.
	 
	 	 
	Senior Notes Exchange Offer

	 	Company will use reasonable best
efforts to commence exchange offer
no later than 10 business days
after the effective time of the
exchange registration statement;
offer to be held open for at least
20 business days after the date
notice of the offer is mailed to
the holders of Senior Notes in
accordance with Regulation 14E
under the Exchange Act.
	 
	 	 
	Senior Notes Indenture

	 	At or before the effective time of
the exchange registration, the
Company will qualify the Indenture
under the Trust Indenture Act, as
amended.
	 
	 	 
	Expenses

	 	Company to bear registration
expenses, including reasonable fees
and disbursements of holders’
counsel.
	 
	 	 
	Other Provisions

	 	Customary representations and
warranties and covenants for a
transaction of this type.

 

 

 

Exhibit B — Terms of the Senior Notes

	 	 	 
	Issue

	 	12% Senior Notes due 2014 (the “Senior Notes”)
	 
	 	 
	Issuer

	 	Company
	 
	 	 
	Aggregate Principal 

Amount

	 	Aggregate Notes Principal Amount
	 
	 	 
	Coupon

	 	The Senior Notes will bear interest at a rate of
12.00% per annum. Interest will be payable
quarterly in arrears on the Coupon Dates of each
year, beginning on October 10, 2009. Interest
will be computed on the basis of a 360-day year
comprised of twelve 30-day months. Interest
shall be payable in cash.
	 
	 	 
	Price to Purchaser

	 	100.00% of Aggregate Notes Principal Amount
	 
	 	 
	Coupon Dates

	 	March 10, June 10, September 10 and December 10
	 
	 	 
	First Coupon Date

	 	December 10, 2009
	 
	 	 
	Maturity Date

	 	September 10, 2014
	 
	 	 
	Prepayment /Redemption 

Right

	 	The Company will have the right to call/prepay
the Senior Notes in whole or in part prior to the
Maturity Date at par plus accrued interest to the
date of redemption. Prepayments would have to be
made in increments of $10 million (or, if lesser,
the Aggregate Notes Principal Amount).
	 
	 	 
	Ranking

	 	The Senior Notes will be the Company’s senior
unsecured obligations and will rank equal in
right of payment with all of the Company’s
existing and future indebtedness that is not
contractually subordinated to the Senior Notes.
	 
	 
	 	The Senior Notes will be effectively subordinated
to all of the Company’s existing and future
indebtedness to the extent of the collateral
securing the same and to all liabilities and
preferred equity of all of the Company’s
subsidiaries.

 

 

 

	 	 	 
	Indenture / Covenants
/ Events of Default

	 	The Senior Notes will be issued pursuant to an
indenture dated the Closing Date by and between
the Company and the Trustee (the “Indenture”)
containing customary covenants and other
customary terms substantially similar to those
contained in that certain Indenture among PNC
Funding Corp., PNC Financial Corp. and J.P.
Morgan Chase & Co. as successor to Manufacturers
Hanover Trust Company, dated as of December 1,
1991, including, but not exclusive, to, terms
related to covenants, default and events of
default, Trustee matters, the Trust Indenture Act
of 1939, as amended, exchange mechanisms and
other provisions, except that the Senior Notes
will not be guaranteed at issuance, with such
modifications to be agreed upon by the
Purchasers.
	 
	 	 
	Registration Rights

	 	The Company will register the Senior Notes
pursuant to the terms of the Registration and
Exchange Rights Agreement.
	 
	 	 
	DTC Eligibility

	 	If the notes are issued in book entry form, at
NCB’s request the Company will reasonably
cooperate to cause the Senior Notes to be
DTC-eligible.
	 
	 	 
	Trading

	 	The Senior Notes will not be listed on any
securities exchange or for quotation on any
quotation system.
	 
	 	 
	Trustee

	 	The Trustee shall be eligible for appointment as
trustee under the Trust Indenture Act of 1939, as
amended, such Trustee to be chosen by the
Purchasers with the consent of the Company, such
consent not to be unreasonably withheld.
	 
	 	 
	Governing Law

	 	New York or DelawareExhibit 10.1

Exhibit 10.1

FOURTH AMENDED AND RESTATED CREDIT AGREEMENT

AMONG

THE NAVIGATORS GROUP, INC.,

as Borrower,

THE LENDERS NAMED HEREIN,

JPMORGAN CHASE BANK, N.A.

as Administrative Agent,

and

BARCLAYS BANK PLC,

as Joint Lead Arranger and Syndication Agent

DATED AS OF

April 3, 2009

J.P. MORGAN SECURITIES INC.,

as Sole Bookrunner and

Joint Lead Arranger

 

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	 	 	Page	 
	 
	 	 	 	 
	ARTICLE I DEFINITIONS
	 	 	1	 
	ARTICLE II THE LETTER OF CREDIT FACILITY
	 	 	17	 
	2.1 Issuance of Letters of Credit
	 	 	17	 
	2.2 Participating Interests
	 	 	19	 
	2.3 Reductions in Letter of Credit Commitment
	 	 	19	 
	2.4 Reimbursement Obligations
	 	 	19	 
	2.5 Procedure for Issuance
	 	 	21	 
	2.6 Nature of the Lenders’ Obligations
	 	 	22	 
	2.7 Notification of Issuance Requests
	 	 	22	 
	2.8 Cash Collateral for Letters of Credit
	 	 	23	 
	2.9 Fees
	 	 	23	 
	2.10 Extension of Letter of Credit Availability Termination Date
	 	 	25	 
	2.11 Optional Increase in Letter of Credit Commitment
	 	 	25	 
	2.12 Collateral Account
	 	 	26	 
	ARTICLE III YIELD PROTECTION; TAXES
	 	 	27	 
	3.1 Yield Protection
	 	 	27	 
	3.2 Changes in Capital Adequacy Regulations
	 	 	28	 
	3.3 Taxes
	 	 	28	 
	3.4 Lender Statements; Survival of Indemnity
	 	 	30	 
	ARTICLE IV CONDITIONS PRECEDENT
	 	 	30	 
	4.1 Initial Letters of Credit
	 	 	30	 
	4.2 Each Letter of Credit
	 	 	31	 
	ARTICLE V REPRESENTATIONS AND WARRANTIES
	 	 	32	 
	5.1 Existence and Standing
	 	 	32	 
	5.2 Authorization and Validity
	 	 	32	 
	5.3 No Conflict; Government Consent
	 	 	32	 
	5.4 Financial Statements
	 	 	33	 

 

- i -

 

TABLE OF CONTENTS

(continued)

	 	 	 	 	 
	 	 	Page	 
	 
	 	 	 	 
	5.5 Statutory Financial Statements
	 	 	33	 
	5.6 Material Adverse Change
	 	 	33	 
	5.7 Taxes
	 	 	33	 
	5.8 Litigation and Contingent Obligations
	 	 	34	 
	5.9 Subsidiaries
	 	 	34	 
	5.10 ERISA
	 	 	34	 
	5.11 Defaults
	 	 	34	 
	5.12 Accuracy of Information
	 	 	34	 
	5.13 Regulation U
	 	 	34	 
	5.14 Material Agreements
	 	 	35	 
	5.15 Compliance With Laws
	 	 	35	 
	5.16 Ownership of Properties
	 	 	35	 
	5.17 Plan Assets; Prohibited Transactions
	 	 	35	 
	5.18 Environmental Matters
	 	 	35	 
	5.19 Investment Company Act
	 	 	35	 
	5.20 Solvency
	 	 	36	 
	5.21 Insurance Licenses
	 	 	36	 
	5.22 Partnerships
	 	 	36	 
	5.23 Lines of Business
	 	 	36	 
	5.24 Reinsurance Practices
	 	 	36	 
	5.25 Security
	 	 	36	 
	5.26 Disclosure
	 	 	37	 
	ARTICLE VI COVENANTS
	 	 	37	 
	6.1 Financial Reporting
	 	 	37	 
	6.2 Purpose
	 	 	40	 
	6.3 Notice of Default
	 	 	40	 
	6.4 Conduct of Business
	 	 	41	 
	6.5 Taxes
	 	 	41	 

 

- ii -

 

TABLE OF CONTENTS

(continued)

	 	 	 	 	 
	 	 	Page	 
	 
	 	 	 	 
	6.6 Insurance
	 	 	41	 
	6.7 Compliance with Laws
	 	 	41	 
	6.8 Maintenance of Properties
	 	 	41	 
	6.9 Inspection; Maintenance of Books and Records
	 	 	42	 
	6.10 Dividends and Stock Repurchases
	 	 	42	 
	6.11 Indebtedness
	 	 	42	 
	6.12 Merger
	 	 	43	 
	6.13 Sale of Assets
	 	 	43	 
	6.14 Investments and Acquisitions
	 	 	43	 
	6.15 Contingent Obligations
	 	 	44	 
	6.16 Liens
	 	 	44	 
	6.17 Affiliates
	 	 	45	 
	6.18 Amendments to Agreements
	 	 	45	 
	6.19 Change in Fiscal Year
	 	 	45	 
	6.20 Inconsistent Agreements
	 	 	46	 
	6.21 Reinsurance
	 	 	46	 
	6.22 Stock of Subsidiaries
	 	 	46	 
	6.23 Financial Covenants
	 	 	46	 
	6.24 Additional Pledge
	 	 	47	 
	ARTICLE VII DEFAULTS
	 	 	47	 
	ARTICLE VIII ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES
	 	 	50	 
	8.1 Acceleration
	 	 	50	 
	8.2 Amendments
	 	 	50	 
	8.3 Preservation of Rights
	 	 	51	 
	8.4 Application of Funds.
	 	 	51	 
	ARTICLE IX GENERAL PROVISIONS
	 	 	52	 
	9.1 Survival of Representations
	 	 	52	 
	9.2 Governmental Regulation
	 	 	52	 

 

- iii -

 

TABLE OF CONTENTS

(continued)

	 	 	 	 	 
	 	 	Page	 
	 
	 	 	 	 
	9.3 Headings
	 	 	52	 
	9.4 Entire Agreement
	 	 	52	 
	9.5 Numbers of Documents
	 	 	53	 
	9.6 Several Obligations; Benefits of this Agreement
	 	 	53	 
	9.7 Expenses; Indemnification
	 	 	53	 
	9.8 Accounting
	 	 	53	 
	9.9 Severability of Provisions
	 	 	54	 
	9.10 Nonliability of Lenders
	 	 	54	 
	9.11 Confidentiality
	 	 	54	 
	9.12 Nonreliance
	 	 	54	 
	9.13 Disclosure
	 	 	54	 
	9.14 USA Patriot Act Notification
	 	 	55	 
	ARTICLE X THE ADMINISTRATIVE AGENT
	 	 	55	 
	10.1 Appointment; Nature of Relationship
	 	 	55	 
	10.2 Powers
	 	 	55	 
	10.3 General Immunity
	 	 	55	 
	10.4 No Responsibility for Recitals, etc.
	 	 	56	 
	10.5 Action on Instructions of Lenders
	 	 	56	 
	10.6 Employment of Agent and Counsel
	 	 	56	 
	10.7 Reliance on Documents; Counsel
	 	 	56	 
	10.8 Agent’s Reimbursement and Indemnification
	 	 	57	 
	10.9 Notice of Default
	 	 	57	 
	10.10 Rights as a Lender
	 	 	57	 
	10.11 Rights with Respect to Designated Lenders
	 	 	58	 
	10.12 Lender Credit Decision
	 	 	58	 
	10.13 Successor Agent
	 	 	59	 
	10.14 Agents’ Fees
	 	 	59	 
	10.15 Delegation to Affiliates
	 	 	59	 

 

- iv -

 

TABLE OF CONTENTS

(continued)

	 	 	 	 	 
	 	 	Page	 
	 
	 	 	 	 
	10.16 Syndication Agent
	 	 	59	 
	ARTICLE XI SETOFF; RATABLE PAYMENTS
	 	 	60	 
	11.1 Setoff
	 	 	60	 
	11.2 Ratable Payments
	 	 	60	 
	ARTICLE XII BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS
	 	 	60	 
	12.1 Successors and Assigns
	 	 	60	 
	12.2 Participations
	 	 	61	 
	12.3 Assignments
	 	 	62	 
	12.4 Dissemination of Information
	 	 	62	 
	12.5 Tax Treatment
	 	 	62	 
	ARTICLE XIII NOTICES
	 	 	63	 
	13.1 Notices
	 	 	63	 
	13.2 Change of Address
	 	 	63	 
	ARTICLE XIV COUNTERPARTS
	 	 	63	 
	ARTICLE XV CHOICE OF LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL
	 	 	63	 
	15.1 CHOICE OF LAW
	 	 	63	 
	15.2 CONSENT TO JURISDICTION
	 	 	64	 
	15.3 WAIVER OF JURY TRIAL
	 	 	64	 

	 	 	 	 	 
	SCHEDULES
	 
	 
	 	 	 	 
	Pricing Schedule
	 	 	 	 
	Schedule 1

	 	-
	 	Commitments
	Schedule 1.1

	 	-
	 	Cash Collateral Investments
	Schedule 2.1

	 	-
	 	Existing Letters of Credit
	Schedule 5.9

	 	-
	 	Subsidiaries
	Schedule 5.22

	 	-
	 	Partnerships
	Schedule 5.23

	 	-
	 	Existing Lines of Business
	Schedule 6.16

	 	-
	 	Liens
	Schedule 6.21

	 	-
	 	Reinsurance Guidelines

 

- v -

 

TABLE OF CONTENTS

(continued)

	 	 	 
	EXHIBITS
	 	 
	 
	 	 
	Exhibit A

	 	Compliance Certificate
	Exhibit B

	 	Assignment Agreement
	Exhibit C

	 	Reimbursement Agreement Excerpt
	Exhibit D

	 	Increase Request

 

- vi -

 

FOURTH AMENDED AND RESTATED CREDIT AGREEMENT

This Fourth Amended and Restated Credit Agreement, dated as of April 3, 2009, is among THE
NAVIGATORS GROUP, INC., a Delaware corporation, the Lenders and JPMORGAN CHASE BANK, N.A.,
individually and as Administrative Agent and Barclays Bank PLC, as Joint Lead Arranger and
Syndication Agent.

R E C I T A L S:

A. The Borrower, JPMorgan Chase Bank, N.A., as agent and certain financial institutions have
entered into that certain Third Amended and Restated Credit Agreement, dated as of February 2, 2007
(as heretofore amended, the “Existing Credit Agreement”), pursuant to which the lenders
party thereto agreed to make financial accommodations to the Borrower under revolving credit and
letter of credit facilities.

B. The Borrower has requested that the Existing Credit Agreement be amended and restated in
order to make changes to the Existing Credit Agreement.

C. The Borrower, the Agent and the Lenders desire to amend and restate the Existing Credit
Agreement to, among other things, accomplish such amendments.

NOW, THEREFORE, in consideration of the mutual covenants and undertakings herein contained and
for other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Borrower, the Lenders and the Agent hereby agree to amend and restate the
Existing Credit Agreement as follows:

ARTICLE I

DEFINITIONS

As used in this Agreement:

“Acquisition” means any transaction, or any series of related transactions, consummated on or
after the date of this Agreement, by which the Borrower or any of its Subsidiaries (a) acquires any
on-going business or all or substantially all of the assets of any firm, corporation or limited
liability company, or division thereof, whether through purchase of assets, merger, amalgamation or
otherwise or (b) directly or indirectly acquires (in one transaction or as the most recent
transaction in a series of transactions) at least a majority (in number of votes) of the securities
of a corporation which have ordinary voting power for the election of directors (other than
securities having such power only by reason of the happening of a contingency) or a majority (by
percentage or voting power) of the outstanding ownership interests of a partnership or limited
liability company.

“Additional Lender” is defined in Section 2.10.

 

 

 

“Adjusted Fair Market Value” means with respect to any Cash Collateral Investment, an amount
equal to the product of the Fair Market Value of such Cash Collateral Investment and the applicable
percentage with respect to such Cash Collateral Investment as set forth on Schedule 1.1.

“Affiliate” of any Person means any other Person directly or indirectly controlling,
controlled by or under common control with such Person. A Person shall be deemed to control
another Person if the controlling Person owns 10% or more of any class of voting securities (or
other ownership interests) of the controlled Person or possesses, directly or indirectly, the power
to direct or cause the direction of the management or policies of the controlled Person, whether
through ownership of stock, by contract or otherwise.

“Agent” means JPMorgan Chase Bank in its capacity as administrative agent pursuant to
Article X and not in its individual capacity as a Lender and any successor Agent appointed
pursuant to Article X.

“Agreement” means this Fourth Amended and Restated Credit Agreement, as it may be amended,
modified or restated and in effect from time to time.

“Agreement Accounting Principles” means generally accepted accounting principles as in effect
from time to time, applied in a manner consistent with those used in preparing the financial
statements referred to in Section 5.4; provided, however, that for purposes
of all computations required to be made with respect to compliance by the Borrower with
Section 6.23, such term shall mean generally accepted accounting principles as in effect on
the Closing Date, applied in a manner consistent with those used in preparing the financial
statements referred to in Section 5.4.

“Alternate Base Rate” means, for any day, a rate of interest per annum equal to the highest of
(a) the Prime Rate in effect for such day, (b) the Federal Funds Effective Rate on such day plus
1/2% per annum or (c) the Eurodollar Rate that would be applicable for a one month loan equal to
the amount of the applicable Letter of Credit (or after a Default, all outstanding Letters of
Credit) beginning on such day (or if such day is not a Business Day, the immediately preceding
Business Day) plus 1%.

“A.M. Best Rating” means, as to any insurance company, its financial strength rating assigned
by The A.M. Best Company, Inc.

“Annual Statement” means the annual statutory financial statement of any Insurance Subsidiary
required to be filed with the insurance commissioner (or similar authority) of its jurisdiction of
incorporation, which statement shall be in the form required by such Insurance Subsidiary’s
jurisdiction of incorporation or, if no specific form is so required, in the form of financial
statements permitted by such insurance commissioner (or such similar authority) to be used for
filing annual statutory financial statements and shall contain the type of information permitted by
such insurance commissioner (or such similar authority) to be disclosed therein, together with all
exhibits or schedules filed therewith.

 

- 2 -

 

“Applicable Letter of Credit Participation Fee Rate” means, at any time, the percentage per
annum at which letter of credit participation fees are accruing on the Letters of Credit at such
time as set forth in the Pricing Schedule.

“Applicable Margin” means the percentage rate per annum which is applicable at such time as
set forth in the Pricing Schedule.

“Applicable Unused Fee Rate” means, at any time, the percentage per annum at which unused fees
are accruing on the unused portion of the Letter of Credit Commitment at such time as set forth in
the Pricing Schedule.

“Approved Reinsurer” means a reinsurer which satisfies the criteria set forth in the
Reinsurance Guidelines for entering into reinsurance or retrocession agreements with the Borrower.

“Arranger” means J.P. Morgan Securities Inc. and its successors.

“Article” means an article of this Agreement unless another document is specifically
referenced.

“Asset Disposition” means any sale, transfer or other disposition of any asset of the Borrower
or any Subsidiary in a single transaction or in a series of related transactions (other than the
sale of Investments (other than stock in Subsidiaries) in the ordinary course).

“Authorized Officer” means any of the president, chief financial officer or treasurer of the
Borrower, acting singly.

“Bankruptcy Code” means Title 11, United States Code, sections 1 et seq., as
the same may be amended from time to time and any successor thereto or replacement therefor which
may be hereafter enacted.

“Borrower” means The Navigators Group, Inc., a Delaware corporation and its successors and
assigns.

“Borrower’s Moody’s Rating” means, at any time, the rating issued by Moody’s with respect to
the Borrower’s senior unsecured long-term debt securities without third-party credit enhancement.

“Borrower’s S&P Rating” means, at any time, the rating issued by S&P with respect to the
Borrower’s senior unsecured long-term debt securities without third-party credit enhancement.

“Business Day” means a day (other than a Saturday or Sunday) on which banks generally are open
in New York for the conduct of substantially all of their commercial lending activities.

 

- 3 -

 

“Capitalized Lease” of a Person means any lease of Property by such Person as lessee which
would be capitalized on a balance sheet of such Person prepared in accordance with Agreement
Accounting Principles.

“Capitalized Lease Obligations” of a Person means the amount of the obligations of such Person
under Capitalized Leases which would be shown as a liability on a balance sheet of such Person
prepared in accordance with Agreement Accounting Principles.

“Cash Collateral Investments” means (a) short-term obligations of, or fully guaranteed by, the
United States of America, (b) commercial paper rated A-1 or better by S&P or P1 or better by
Moody’s, (c) cash and (d) certificates of deposit issued by and time deposits with commercial banks
(whether domestic or foreign) having capital and surplus in excess of $1,000,000,000 and a rating
of A-1 or better; provided in each case that the same provides for payment of both
principal and interest (and not principal alone or interest alone) and is not subject to any
contingency regarding the payment of principal or interest and has a maturity of not more than six
months.

“Cash Collateral Security Agreement” means (i) that certain Second Amended and Restated Pledge
Agreement, dated as of the date hereof, and (ii) any security agreement in form and substance
satisfactory to the Agent executed by the Borrower in favor of the Agent, on behalf of itself and
the Lenders, pursuant to this Agreement, pledging to the Agent a security interest in a Collateral
Account and all Cash Collateral Investments delivered to the Agent pursuant to the terms hereof, as
the same may be amended, supplemented or otherwise modified from time to time.

“Cash Equivalent Investments” means (a) short-term obligations of, or fully guaranteed by, the
United States of America, (b) commercial paper rated A-1 or better by S&P or P1 or better by
Moody’s, (c) demand deposit accounts maintained in the ordinary course of business and
(d) certificates of deposit issued by and time deposits with commercial banks (whether domestic or
foreign) having capital and surplus in excess of $500,000,000; provided in each case that
the same provides for payment of both principal and interest (and not principal alone or interest
alone) and is not subject to any contingency regarding the payment of principal or interest.

“Change” is defined in Section 3.2.

“Change in Control” means (a) the acquisition by any Person, or two or more Persons acting in
concert of beneficial ownership (within the meaning of Rule 13d-3 of the Securities and Exchange
Commission under the Securities Exchange Act of 1934) of (i) 20% or more of the outstanding shares
of voting stock of the Borrower or (ii), if less, a percentage of such stock, greater than the
percentage owned by members of the Terence Deeks Family, or (b) the members of the Terence Deeks
Family shall cease to own, in the aggregate, free and clear of all Liens and other encumbrances, at
least 10% of the outstanding shares of voting stock of the Borrower on a fully diluted basis.

 

- 4 -

 

“Closing Date” means April 3, 2009.

“Code” means the Internal Revenue Code of 1986, as amended or otherwise modified from time to
time.

“Collateral” means any property or asset in which the Borrower has granted a security interest
to the Agent for the benefit of the Secured Parties.

“Collateral Account” means each of (a) 2748001563 and (b) any other “demand deposit account”,
“securities account” or “custodial account” (as such terms are defined in the UCC) maintained by
the Agent or its Affiliate as to which the Agent has “control” (as such term is defined in the UCC)
into which Cash Collateral Investments are deposited from time to time pursuant to the terms of
this Agreement. Each Collateral Account and the related Cash Collateral Investments shall be
subject to documentation satisfactory to the Agent and the taking of all steps required to give the
Agent a perfected security interest in the Cash Collateral Investments.

“Collateral Excess” is defined in Section 2.12.

“Collateral Shortfall” is defined in Section 2.12.

“Collateral Value” means, on any date, an amount equal to the sum of the Adjusted Fair Market
Value of all Cash Collateral Investments in all Collateral Accounts.

“Condemnation” is defined in Section 7.8.

“Consolidated” or “consolidated”, when used in connection with any calculation, means a
calculation to be determined on a consolidated basis for the Borrower and its Consolidated
Subsidiaries in accordance with Agreement Accounting Principles.

“Consolidated Net Income” means, for any period, the net income (or loss) of the Borrower and
its Consolidated Subsidiaries calculated on a consolidated basis for such period, all as determined
in accordance with Agreement Accounting Principles.

“Consolidated Net Worth” means, for any period, the consolidated stockholders’ equity of the
Borrower and its Consolidated Subsidiaries calculated on a consolidated basis for such period, all
as determined in accordance with Agreement Accounting Principles, excluding,
however, for the purposes of Section 6.23(c), the effect of any unrealized gain or
loss reported under Statement of Financial Accounting Standards No. 115.

“Consolidated Person” means, for the taxable year of reference, each Person which is a member
of the affiliated group of the Borrower if Consolidated returns are or shall be filed for such
affiliated group for federal income tax purposes or any combined or unitary group of which the
Borrower is a member for state income tax purposes.

 

- 5 -

 

“Consolidated Subsidiaries” means all Subsidiaries of the Borrower which should be included in
the Borrower’s consolidated financial statements, all as determined in accordance with Agreement
Accounting Principles.

“Consolidated Tangible Net Worth” means the excess of (a) Consolidated Total Tangible Assets
over (b) Consolidated Total Liabilities, excluding, however, for the
purposes of Section 6.23(a), the effect of any unrealized gain or loss reported under
Statement of Financial Accounting Standards No. 115.

“Consolidated Total Assets” means, at any time, the total assets of the Borrower and its
Consolidated Subsidiaries calculated on a consolidated basis as of such time, all as determined in
accordance with Agreement Accounting Principles.

“Consolidated Total Intangible Assets” means, at any time, the total intangible assets of the
Borrower and its Consolidated Subsidiaries calculated on a consolidated basis as of such time
including, but not limited to, goodwill, patents, trademarks, tradenames, copyrights and franchises
and excluding deferred policy acquisition costs.

“Consolidated Total Liabilities” means, at any time, the total liabilities of the Borrower and
its Consolidated Subsidiaries calculated on a consolidated basis as of such time, all as determined
in accordance with Agreement Accounting Principles.

“Consolidated Total Tangible Assets” means, at any time, Consolidated Total Assets
minus Consolidated Total Intangible Assets.

“Contingent Obligation” of a Person means any agreement, undertaking or arrangement by which
such Person assumes, guarantees, endorses, contingently agrees to purchase or provide funds for the
payment of, or otherwise becomes or is contingently liable upon, the obligation or liability of any
other Person, or agrees to maintain the net worth or working capital or other financial condition
of any other Person, or otherwise assures any creditor of such other Person against loss,
including, without limitation, any comfort letter, operating agreement, take-or-pay contract or the
obligations of any such Person as general partner of a partnership with respect to the liabilities
of the partnership. The term “Contingent Obligation” shall not include (a) the obligations of any
Insurance Subsidiary arising under any insurance policy or reinsurance agreement entered into in
the ordinary course of business or (b) operating leases.

“Controlled Group” means all members of a controlled group of corporations or other business
entities and all trades or businesses (whether or not incorporated) under common control which,
together with the Borrower or any of its Subsidiaries, are treated as a single employer under
Section 414 of the Code.

“Conversion Differential” is defined in Section 2.1(f).

“Default” means an event described in Article VII.

 

- 6 -

 

“Defaulting Lender” means any Lender that (i) has not reimbursed the Issuer for such Lender’s
pro-rata share of the amount of a payment made by the Issuer under a Letter of Credit within three
(3) Business Days after the date due therefor in accordance with Section 2.4(c), (ii) has
notified the Borrower or the Agent that it does not intend to comply with its obligations under
Section 2.4(c) or (iii) is the subject of a bankruptcy, insolvency or similar receivership
proceeding.

“Department” is defined in Section 5.5.

“Designated Lender” means a Defaulting Lender or a Downgraded Lender.

“Dollars” and the sign “$” mean lawful money of the United States of America.

“Downgraded Lender” means any Lender that (a) has a rating below BBB- from S&P, below Baa3
from Moody’s or below BBB- from Fitch, Inc. or (b) is a Subsidiary of a Person that is the subject
of a bankruptcy, insolvency or similar proceeding.

“Environmental Laws” means any and all federal, state, local and foreign statutes, laws,
judicial decisions, regulations, ordinances, rules, judgments, orders, decrees, plans, injunctions,
permits, concessions, grants, franchises, licenses, agreements and other governmental restrictions
relating to (a) the protection of the environment, (b) the effect of the environment on human
health, (c) emissions, discharges or releases of pollutants, contaminants, hazardous substances or
wastes into surface water, ground water or land or (d) the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of pollutants, contaminants, hazardous
substances or wastes or the clean-up or other remediation thereof.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to
time and any rule or regulation issued thereunder.

“Eurodollar Rate” means the applicable British Bankers’ Association LIBOR rate for deposits in
U.S. dollars having a maturity of a one month period, as reported by any generally recognized
financial information service as of 11:00 A.M. (London time) two Business Days prior to the first
day of such applicable period; provided that if no such British Bankers’ Association LIBOR
rate is available to the Agent, the Eurodollar Rate shall instead be the rate determined by the
Agent to be the rate at which JPMorgan Chase Bank or one of its Affiliate banks offers to place
deposits in U.S. dollars with first class banks in the London interbank market, in the approximate
amount of the related Letter of Credit and having a maturity of one month.

“Excluded Taxes” means, in the case of each Lender or applicable Lending Installation and the
Agent, taxes imposed on its overall net income and franchise taxes imposed on it, by (a) the
jurisdiction under the laws of which such Lender or the Agent is incorporated or organized or (b)
the jurisdiction in which the Agent’s or such Lender’s principal executive office or such Lender’s
applicable Lending Installation is located.

 

- 7 -

 

“Exhibit” refers to an exhibit to this Agreement, unless another document is specifically
referenced.

“Existing Credit Agreement” is defined in the Recitals hereto.

“Existing Lines of Business” is defined in Section 5.23.

“Expiry Notice” means, with respect to a Lloyd’s Letter of Credit, written notice from the
Issuer to the beneficiary of any such Lloyd’s Letter of Credit stating that such Lloyd’s Letter of
Credit shall expire four (4) years from the date of such notice.

“Extension Request” is defined in Section 2.10.

“Facility Documents” means this Agreement, the Security Documents, the Reimbursement
Agreements and the other documents and agreements contemplated hereby and executed by the Borrower
in favor of the Agent or any Lender.

“Fair Market Value” means (a) with respect to any Cash Collateral Investments described in
clauses (a) or (b) of the definition thereof, the closing price for such security
on Bloomberg, Inc. or, if Bloomberg, Inc. is not available, another quotation service reasonably
acceptable to the Agent, and (b) with respect to any Cash Collateral Investments described in
clauses (c) or (d) of the definition thereof, the amounts thereof.

“Federal Funds Effective Rate” means, for any day, a fluctuating interest rate per annum equal
to the weighted average of the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers on such day, as published for such day
(or, if such day is not a Business Day, for the immediately preceding Business Day) by the Federal
Reserve Bank of New York, or, if such rate is not so published for any day which is a Business Day,
the average of the quotations on such day on such transactions received by the Agent from three
Federal funds brokers of recognized standing selected by the Agent in its sole discretion.

“Fee Letter” is defined in Section 9.4.

“Fiscal Quarter” means one of the four three-month accounting periods comprising a Fiscal
Year.

“Fiscal Year” means the twelve-month accounting period commencing on January 1 and ending
December 31 of each year.

“Governmental Authority” means any government (foreign or domestic) or any state or other
political subdivision thereof or any governmental body, agency, authority, department or commission
(including without limitation any taxing authority or political subdivision) or any instrumentality
or officer thereof (including without limitation any court or tribunal and any board of insurance,
insurance department or insurance commissioner) exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to government and
any corporation, partnership or other entity directly or indirectly owned or controlled by or
subject to the control of any of the foregoing.

 

- 8 -

 

“Indebtedness” of a Person means such Person’s (a) obligations for borrowed money,
(b) obligations representing the deferred purchase price of Property or services (other than
accounts payable arising in the ordinary course of such Person’s business payable on terms
customary in the trade), (c) obligations, whether or not assumed, secured by Liens or payable out
of the proceeds or production from Property now or hereafter owned or acquired by such Person, (d)
obligations which are evidenced by notes, acceptances, or other instruments, (e) obligations of
such Person to purchase securities or other Property arising out of or in connection with the sale
of the same or substantially similar securities or Property, (f) Capitalized Lease Obligations, (g)
Contingent Obligations, (h) actual and contingent reimbursement obligations in respect of letters
of credit, (i) any other obligation for borrowed money or other financial accommodation which in
accordance with Agreement Accounting Principles would be shown as a liability on the consolidated
balance sheet of such Person, (j) any liability under any financing lease or so-called “synthetic
lease” transaction entered into by such Person and (k) any obligation arising with respect to any
other transaction which is the functional equivalent of or takes the place of borrowing but which
does not constitute a liability on the consolidated balance sheet of such Person.

“Insurance Subsidiary” means each of Navigators, NSIC and any other domestic Subsidiary
acquired or formed after the Closing Date which is engaged in, or is authorized to engage in, the
insurance business.

“Investment” of a Person means (a) any loan, advance (other than commission, travel and
similar advances to officers and employees made in the ordinary course of business), extension of
credit (other than accounts receivable arising in the ordinary course of business on terms
customary in the trade) or contribution of capital by such Person, (b) stocks, bonds, mutual funds,
partnership interests, membership interests, notes, debentures or other securities owned by such
Person, (c) any deposit accounts and certificate of deposit owned by such Person and (d) structured
notes, derivative financial instruments and other similar instruments or contracts owned by such
Person.

“Issuance Request” is defined in Section 2.5.

“Issue Date” means a date on which a Letter of Credit is issued hereunder.

“Issuer” means JPMorgan Chase Bank.

“JPMorgan Chase Bank” means JPMorgan Chase Bank, N.A., in its individual capacity and its
successor.

“Lenders” means the lending institutions listed on the signature pages of this Agreement and
their respective successors and assigns.

 

- 9 -

 

“Lending Installation” means, with respect to a Lender or the Agent, the office, branch,
subsidiary or affiliate of such Lender or the Agent listed on the signature pages hereof or on a
Schedule or otherwise selected by such Lender or the Agent.

“Letter of Credit” means a letter of credit issued pursuant to Article II.

“Letter of Credit Availability Termination Date” means April 2, 2010 or any later date as may
be specified as the Letter of Credit Availability Termination Date in accordance with Section
2.10 or any earlier date on which the Letter of Credit Commitment is reduced to zero or
otherwise terminated pursuant to the terms hereof.

“Letter of Credit Commitment” means the aggregate Letter of Credit Participation Amounts of
all of the Lenders, as reduced or increased from time to time pursuant to the terms hereof. The
Letter of Credit Commitment as of the date hereof is $75,000,000.

“Letter of Credit Obligations” means, at the time of determination thereof, the sum of (a) the
Reimbursement Obligations then outstanding and (b) the aggregate then undrawn face amount of the
then outstanding Letters of Credit.

“Letter of Credit Participation Amount” means, for each Lender, the maximum face amount of
Letters of Credit in which such Lender participates not exceeding the amount set forth on
Schedule 1 or as set forth in any Notice of Assignment relating to any assignment that has
become effective pursuant to Section 12.3(b), as such amount may be modified from time to
time pursuant to the terms hereof.

“Leverage Ratio” means, at any time, the ratio of (a) the consolidated Indebtedness of the
Borrower and its Consolidated Subsidiaries (excluding any letter of credit obligations incurred by
the Borrower and its Consolidated Subsidiaries in the ordinary course of business prior to any
drawing under such a letter of credit but including any letter of credit obligations after any
drawing) at such time to (b) the sum of (i) the consolidated Indebtedness of the Borrower and its
Consolidated Subsidiaries (excluding any letter of credit obligations incurred by the Borrower and
its Consolidated Subsidiaries in the ordinary course of business) plus (ii) Consolidated
Net Worth at such time.

“License” means any license, certificate of authority, permit or other authorization which is
required to be obtained from any Governmental Authority in connection with the operation, ownership
or transaction of insurance business.

“Lien” means any security interest, lien (statutory or other), mortgage, pledge,
hypothecation, assignment, deposit arrangement, encumbrance or preference, priority or other
security agreement or preferential arrangement of any kind or nature whatsoever (including, without
limitation, the interest of a vendor or lessor under any conditional sale, Capitalized Lease or
other title retention agreement).

“Lloyd’s Letters of Credit” is defined in Section 2.1.

 

- 10 -

 

“Loss Reserves” means, with respect to any Insurance Subsidiary at any time, the sum of
(a) all losses, including incurred losses of such Insurance Subsidiary at such time shown on
page 3, line 1 of the Annual Statement of such Insurance Subsidiary plus (b) all loss
adjustment expenses of such Insurance Subsidiary at such time shown on page 3, line 3 of the Annual
Statement of such Insurance Subsidiary, as determined in accordance with SAP.

“Margin Stock” has the meaning assigned to that term under Regulation U.

“Material Adverse Effect” means a material adverse effect on (a) the business, Property,
condition (financial or otherwise) or results of operations of any of (i) the Borrower or (ii) the
Subsidiaries taken as a whole, (b) the ability of the Borrower to perform its obligations under the
Facility Documents, or (c) the validity or enforceability of any of the Facility Documents or the
rights or remedies of the Agent or the Lenders thereunder.

“Moody’s” means Moody’s Investors Service, Inc.

“MUL” means Millennium Underwriting Limited, which entity is a corporate name with limited
liability at Lloyd’s of London.

“Multiemployer Plan” means a Plan maintained pursuant to a collective bargaining agreement or
any other arrangement to which the Borrower or any member of the Controlled Group is a party to
which more than one employer is obligated to make contributions.

“NAIC” means the National Association of Insurance Commissioners or any successor thereto, or
in lieu thereof, any other association, agency or other organization performing advisory,
coordination or other like functions among insurance departments, insurance commissioners and
similar Governmental Authorities of the various states of the United States toward the promotion of
uniformity in the practices of such Governmental Authorities.

“Navigators” means Navigators Insurance Company, a New York corporation.

“NCUL” means Navigators Corporate Underwriters Limited, which entity is a corporate name with
limited liability at Lloyd’s of London.

“Net Available Proceeds” means (a) with respect to any Asset Disposition, the sum of cash or
readily marketable cash equivalents received (including by way of a cash generating sale or
discounting of a note or account receivable) therefrom, whether at the time of such disposition or
subsequent thereto, or (b) with respect to any sale or issuance of any debt or equity securities of
the Borrower or any Subsidiary, cash or readily marketable cash equivalents received therefrom,
whether at the time of such disposition or subsequent thereto, net, in either case, of all legal,
title and recording tax expenses, commissions and other fees and all costs and expenses incurred
and, in the case of an Asset Disposition, net of all payments made by the Borrower or any of its
Subsidiaries on any Indebtedness which is secured by such assets pursuant to a permitted Lien upon
or with respect to such assets or which must, by the terms of such Lien, in order to obtain a
necessary consent to such Asset Disposition, or by applicable law, be repaid out of the proceeds
from such Asset Disposition.

 

- 11 -

 

“Non-U.S. Lender” is defined in Section 3.3(d).

“Notice of Assignment” is defined in Section 12.3(b).

“NSIC” means Navigators Specialty Insurance Company, a New York corporation.

“Obligations” means the Letter of Credit Obligations and all other liabilities (if any),
whether actual or contingent, of the Borrower with respect to Letters of Credit, all accrued and
unpaid fees and all expenses, reimbursements, indemnities and other obligations of the Borrower to
the Lenders or to any Lender, the Agent or any indemnified party hereunder arising under any of the
Facility Documents.

“Other Taxes” is defined in Section 3.3(b).

“Participants” is defined in Section 12.2(a).

“Payment Date” means the last day of each March, June, September and December.

“PBGC” means the Pension Benefit Guaranty Corporation or any successor thereto.

“Person” means any natural person, corporation, firm, joint venture, partnership, association,
enterprise, limited liability company, trust or other entity or organization, or any government or
political subdivision or any agency, department or instrumentality thereof.

“Plan” means an employee pension benefit plan which is covered by Title IV of ERISA or subject
to the minimum funding standards under Section 412 of the Code as to which the Borrower or any
member of the Controlled Group may have any liability.

“Pledge Agreement” means that certain Second Amended and Restated Stock Pledge Agreement,
dated as of the Closing Date, between the Borrower and the Agent, as the same may be amended,
supplemented or otherwise modified from time to time.

“Pounds” and the sign “£” mean lawful money of the United Kingdom.

“Pricing Schedule” means the Schedule attached hereto identified as such.

“Prime Rate” means the rate of interest per annum publicly announced by JPMorgan Chase Bank
from time to time as its prime rate in effect at its principal office in New York City; each change
in the Prime Rate shall be effective from and including the date such change is publicly announced
as being effective.

“Property” of a Person means any and all property, whether real, personal, tangible,
intangible, or mixed, of such Person, or other assets owned, leased or operated by such Person.

 

- 12 -

 

“pro-rata” means, when used with respect to a Lender and any described aggregate or total
amount, an amount equal to such Lender’s pro-rata share or portion based on its percentage of the
Letter of Credit Commitment.

“Purchasers” is defined in Section 12.3(a).

“Regulation D” means Regulation D of the Board of Governors of the Federal Reserve System as
from time to time in effect and shall include any successor thereto or other regulation or official
interpretation of said Board of Governors relating to reserve requirements applicable to member
banks of the Federal Reserve System.

“Regulation T” means Regulation T of the Board of Governors of the Federal Reserve System as
from time to time in effect and shall include any successor thereto or other regulation or official
interpretation of such Board of Governors relating to the extension of credit by securities brokers
and dealers for the purpose of purchasing or carrying margin stocks applicable to such Persons.

“Regulation U” means Regulation U of the Board of Governors of the Federal Reserve System as
from time to time in effect and shall include any successor thereto or other regulation or official
interpretation of said Board of Governors relating to the extension of credit by banks for the
purpose of purchasing or carrying margin stocks applicable to member banks of the Federal Reserve
System.

“Regulation X” means Regulation X of the Board of Governors of the Federal Reserve Systems
from time to time in effect and shall include any successor thereto or other regulation or official
interpretation of said Board of Governors relating to the extension of credit by the specified
lenders for the purpose of purchasing or carrying margin stocks applicable to such Persons.

“Reimbursement Agreement” means a letter of credit application and reimbursement agreement in
such form as the Issuer may from time to time employ in the ordinary course of business.

“Reimbursement Obligations” means, at any time, the aggregate (without duplication) of the
Obligations of the Borrower to the Lenders, the Issuer and/or the Agent in respect of all
unreimbursed payments or disbursements made by the Lenders, the Issuer and/or the Agent under or in
respect of draws made under the Letters of Credit.

“Reinsurance Guidelines” is defined in Section 6.21(c).

“Release” is defined in the Comprehensive Environmental Response, Compensation and Liability
Act, as amended, 42 U.S.C. 39601 et seq.

 

- 13 -

 

“Reportable Event” means a reportable event as defined in Section 4043 of ERISA and the
regulations issued under such section, with respect to a Plan, excluding, however, such events as
to which the PBGC has by regulation waived the requirement of Section 4043(a) of ERISA
that it be notified within 30 days of the occurrence of such event; provided,
however, that a failure to meet the minimum funding standard of Section 412 of the Code and
of Section 302 of ERISA shall be a Reportable Event regardless of the issuance of any such waiver
of the notice requirement in accordance with either Section 4043(a) of ERISA or Section 412(d) of
the Code.

“Required Amount” means the aggregate amount required to be deposited and held in Collateral
Accounts pursuant to Sections 2.1(d), 2.1(f), 2.8, 2.12(a) and
8.1 hereof.

“Required Lenders” means Lenders in the aggregate having at least 75% of the Letter of Credit
Commitment or, if the Letter of Credit Commitment has been terminated, the aggregate amount of the
outstanding Letter of Credit Obligations; provided, however, the Letter of Credit
Commitment or pro-rata share of any outstanding Letter of Credit Obligations of any Defaulting
Lender shall be deemed to be zero (and the Letter of Credit Commitment or pro-rata shares any
outstanding Letter of Credit Obligations of the other Lenders shall be correspondingly increased).

“Response Date” is defined in Section 2.10.

“Risk-Based Capital Guidelines” is defined in Section 3.2.

“S&P” means Standard and Poor’s Ratings Services, a division of The McGraw Hill Companies,
Inc.

“SAP” means, with respect to any Insurance Subsidiary, the statutory accounting practices
prescribed or permitted by the insurance commissioner (or other similar authority) in the
jurisdiction of such Person for the preparation of annual statements and other financial reports by
insurance companies of the same type as such Person in effect from time to time, applied in a
manner consistent with those used in preparing the Statutory Financial Statements referred to in
Section 5.5.

“Schedule” refers to a specific schedule to this Agreement, unless another document is
specifically referenced.

“Section” means a numbered section of this Agreement, unless another document is specifically
referenced.

“Secured Parties” means the Agent, the Issuer and the Lenders.

“Security Documents” means the Pledge Agreement and each Cash Collateral Security Agreement.

“Significant Insurance Subsidiary” means a Significant Subsidiary which is an Insurance
Subsidiary.

 

- 14 -

 

“Significant Subsidiary” means, at any time, a direct domestic Subsidiary of the Borrower the
assets of which are greater than or equal to five percent (5%) of the Consolidated Total Assets of
the Borrower and its Consolidated Subsidiaries.

“Single Employer Plan” means a Plan maintained by the Borrower or any member of the Controlled
Group for employees of the Borrower or any member of the Controlled Group.

“Statutory Financial Statements” is defined in Section 5.5.

“Statutory Net Income” means, with respect to any Insurance Subsidiary for any computation
period, the net income earned by such Insurance Subsidiary during such period, as determined in
accordance with SAP (“Underwriting and Investment Exhibit, Statement of Income” statement, Page 4,
Line 20 of the Annual Statement).

“Statutory Surplus” means, with respect to any Insurance Subsidiary at any time, the statutory
capital and surplus of such Insurance Subsidiary at such time, as determined in accordance with SAP
(“Liabilities, Surplus and Other Funds” statement, page 3, line 35 of the Annual Statement).

“Subsidiary” of a Person means (a) any corporation more than 50% of the outstanding securities
having ordinary voting power of which shall at the time be owned or controlled, directly or
indirectly, by such Person or by one or more of its Subsidiaries or by such Person and one or more
of its Subsidiaries or (b) any partnership, association, joint venture, limited liability company
or similar business organization more than 50% of the ownership interests having ordinary voting
power of which shall at the time be so owned or controlled. Unless otherwise expressly provided,
all references herein to a “Subsidiary” shall mean a Subsidiary of the Borrower.

“Substantial Portion” means, with respect to the Property of the Borrower and its Consolidated
Subsidiaries, Property which (a) represents more than 10% of the Consolidated Total Assets of the
Borrower and its Consolidated Subsidiaries, as would be shown in the consolidated financial
statements of the Borrower and its Consolidated Subsidiaries as at the end of the quarter next
preceding the date on which such determination is made or (b) is responsible for more than 10% of
the consolidated net sales or of the Consolidated Net Income of the Borrower and its Consolidated
Subsidiaries for the 12-month period ending as of the end of the quarter next preceding the date of
determination.

“Taxes” means any and all present or future taxes, duties, levies, imposts, deductions,
charges or withholdings and any and all liabilities with respect to the foregoing, but excluding
Excluded Taxes.

“Terence Deeks Family” means, collectively, Terence N. Deeks; his spouse; any natural person
who is a lineal descendant of Terence N. Deeks; the spouse, children, or grandchildren of any such
natural person; any trust of which any of the foregoing is or are the sole beneficiary or
beneficiaries; or the estate, executor, administrator, or legal guardian of any of the foregoing.

 

- 15 -

 

“Termination Event” means, with respect to a Plan which is subject to Title IV of ERISA, (a) a
Reportable Event, (b) the withdrawal of the Borrower or any other member of the Controlled Group
from such Plan during a plan year in which the Borrower or any other member of the Controlled Group
was a “substantial employer” as defined in Section 4001(a)(2) of ERISA or was deemed such under
Section 4068(f) of ERISA, (c) the termination of such Plan, the filing of a notice of intent to
terminate such Plan or the treatment of an amendment of such Plan as a termination under
Section 4041 of ERISA, (d) the institution by the PBGC of proceedings to terminate such Plan or (e)
any event or condition which might constitute grounds under Section 4042 of ERISA for the
termination of, or appointment of a trustee to administer, such Plan.

“Transferee” is defined in Section 12.4.

“UCC” means the Uniform Commercial Code as in effect in the State of New York.

“Unfunded Liabilities” means the amount (if any) by which the present value of all vested and
unvested accrued benefits under all Single Employer Plans exceeds the fair market value of all such
Plan assets allocable to such benefits, all determined as of the then most recent valuation date
for such Plans using PBGC actuarial assumptions for single employer plan terminations.

“Unmatured Default” means an event which but for the lapse of time or the giving of notice, or
both, would constitute a Default.

“Wholly-Owned Subsidiary” of a Person means (a) any Subsidiary all (or, in the case of
Navigators N.V., all but one) of the outstanding voting securities of which shall at the time be
owned or controlled, directly or indirectly, by such Person or one or more Wholly-Owned
Subsidiaries of such Person, or by such Person and one or more Wholly-Owned Subsidiaries of such
Person, or (b) any partnership, limited liability company, association, joint venture or similar
business organization 100% of the ownership interests having ordinary voting power of which shall
at the time be so owned or controlled.

The foregoing definitions shall be equally applicable to both the singular and plural forms of
the defined terms.

 

- 16 -

 

ARTICLE II

THE LETTER OF CREDIT FACILITY

2.1 Issuance of Letters of Credit. (a) From and after the date hereof to but
excluding the Letter of Credit Availability Termination Date, the Issuer agrees, upon the terms
and conditions set forth in this Agreement, to issue at the request and for the account of the
Borrower, one or more Letters of Credit for the account of the Borrower (x) to support the
obligations of Wholly-Owned Subsidiaries of the Borrower with respect to specific syndicates at
the Society of Lloyd’s (the Letters of Credit issued under this clause (x) being
called the “Lloyd’s Letters of Credit”) and (y) to support other obligations, provided that
the aggregate face amount of all outstanding Letter of Credit Obligations with respect to this
clause (y) does not at any time exceed the lesser of (A) the Letter of Credit Commitment and (B)
$5,000,000; provided, however, that the Issuer shall not be under any obligation
to issue, and shall not issue, any Letter of Credit if: (i) any order, judgment or decree of any
governmental authority or other regulatory body with jurisdiction over the Issuer shall purport
by its terms to enjoin or restrain such Issuer from issuing such Letter of Credit, or any law or
governmental rule, regulation, policy, guideline or directive (whether or not having the force
of law) from any governmental authority or other regulatory body with jurisdiction over the
Issuer shall prohibit, or request that the Issuer refrain from, the issuance of Letters of
Credit in particular or shall impose upon the Issuer with respect to any Letter of Credit any
restriction or reserve or capital requirement (for which the Issuer is not otherwise
compensated) or any unreimbursed loss, cost or expense which was not applicable, in effect and
known to the Issuer as of the date of this Agreement and which the Issuer in good faith deems
material to it, (ii) one or more of the conditions to such issuance contained in Section
4.2 is not then satisfied or (iii) after giving effect to such issuance, the aggregate
outstanding amount of the Letter of Credit Obligations would exceed the Letter of Credit
Commitment. For purposes of clause (iii) of the immediately preceding sentence, at any
time there is a Defaulting Lender, the Letter of Credit Commitment shall be automatically
reduced by an amount equal to the remainder of (A) such Defaulting Lender’s pro-rata share of
the Letter of Credit Commitment minus (B) such Defaulting Lender’s pro-rata share of the Letter
of Credit Obligations then outstanding; provided, however, the Letter of Credit
Commitment shall be restored if either (i) such Defaulting Lender provides cash collateral to
the Agent for the account of such Defaulting Lender pursuant to Section 10.11 in the
amount of such Defaulting Lender’s pro-rata share of the Letter of Credit Commitment or (ii) the
Borrower has entered into satisfactory arrangements with the Issuer to eliminate the Issuer’s
risk with respect to such Defaulting Lender, it being agreed that such satisfactory arrangements
may include collateral or the charging of a fee and the Lenders agree that any such collateral
or fee shall belong solely to the Issuer and shall not be subject to the sharing provisions of
this Agreement. Letters of Credit shall be denominated, at the Borrower’s option, in either
Dollars or Pounds.

(b) In no event shall: (i) the aggregate amount of the Letter of Credit Obligations at
any time exceed the Letter of Credit Commitment or (ii) the expiration date of any Letter of
Credit (other than the Letters of Credit identified on Schedule 2.1 hereto) or the date for
payment of any draft presented thereunder and accepted by the Issuer, be later than (x) the
date one (1) year after the effective date of such Letter of Credit or (y) in the case of
the Lloyd’s Letters of Credit, four (4) years after the date of the related Expiry Notice.
The Issuer shall not permit the renewal or extension of any Letter of Credit at any time (A)
during the continuation of a Default or Unmatured Default or (B) after the Letter of Credit
Availability Termination Date.

 

- 17 -

 

(c) The Issuer (i) shall issue an Expiry Notice on the Letter of Credit Availability
Termination Date and (ii) may, and upon the request of the Required Lenders shall, issue an
Expiry Notice when a Default has occurred and is continuing; provided,
however, that upon the occurrence of an Unmatured Default pursuant to
Sections 7.6 and 7.7, the Issuer shall immediately issue an Expiry Notice.

(d) The Borrower agrees that, if at any time as a result of reductions in the Letter of
Credit Commitment pursuant to Section 2.3 or otherwise the aggregate balance of the
Letter of Credit Obligations exceeds the Letter of Credit Commitment, the Borrower shall
cash collateralize the Letter of Credit Obligations by depositing, into a Collateral
Account, Cash Collateral Investments with a Collateral Value equal to the product of one
hundred and three percent (103%) of the amount as may be necessary to eliminate such excess.

(e) The Letters of Credit identified on Schedule 2.1 hereto (the “Existing
Letter of Credit”) which are issued and outstanding under the Existing Credit Agreement
shall, upon satisfaction of the conditions set forth in Article IV hereto,
automatically and without further action on the part of the Agent, the Issuer, the Lenders
or the Borrower be deemed Letters of Credit issued under this Agreement.

(f) For purposes of determining usage and availability under this Section 2.1,
when a Letter of Credit is issued in Pounds, such Pounds will be converted to Dollars upon
issuance, upon the proposed issuance of any other Letter of Credit and at the end of each
calendar quarter and at any time thereafter as requested by the Agent or any Lender
(including the Issuer) and such determination shall be made by the Agent in its sole
determination based upon the spot exchange rate between Dollars and Pounds as quoted by the
Agent’s foreign exchange desk as of such date of determination. Notwithstanding any other
provisions of this Agreement, if at any time, after giving effect to the conversion of
Pounds into Dollars as set forth above, the aggregate face amount of all outstanding Letters
of Credit is greater than the Letter of Credit Commitment (“Conversion Differential”), then
the Borrower shall cash collateralize such Conversion Differential by depositing into a
Collateral Account Cash Collateral Investments with a Collateral Value equal to the product
of one hundred and three percent (103%) of the Conversion Differential.

(g) At the request of the Borrower, Letters of Credit may be issued with any
Wholly-Owned Subsidiary of the Borrower as a co-applicant, so long as the Borrower is also a
co-applicant under the applicable Reimbursement Agreement. The fact that such Subsidiary is
an applicant shall not affect the obligations of the Borrower with respect to such Letters
of Credit hereunder or under any Facility Document in any way. Any Reimbursement Agreement
for a Letter of Credit with respect to which such Subsidiary is a co-applicant shall include
language substantially similar to that set forth in Exhibit C or otherwise
acceptable to the Agent.

 

- 18 -

 

2.2 Participating Interests. Immediately upon the issuance by the Issuer of a
Letter of Credit in accordance with Section 2.5 (and with respect to the Letters of
Credit identified on Schedule 2.1 hereto, upon satisfaction of the conditions set forth
in Article IV hereof), each Lender shall be deemed to have irrevocably and
unconditionally purchased and
received from the Issuer, without recourse, representation or warranty, an undivided
participation interest equal to its pro-rata share of the Letter of Credit Commitment (including
as may be adjusted pursuant to Section 2.1(a)) of the face amount of such Letter of
Credit and each draw paid by the Issuer thereunder. Each Lender’s obligation to pay its
proportionate share of all draws under the Letters of Credit, absent gross negligence or willful
misconduct by the Issuer in honoring any such draw, shall be absolute, unconditional and
irrevocable and in each case shall be made without counterclaim or set-off by such Lender.

2.3 Reductions in Letter of Credit Commitment. (a) The Borrower may permanently
reduce the Letter of Credit Commitment in whole, or in part ratably among the Lenders in
integral multiples of $2,500,000, upon at least five (5) Business Days’ written notice to the
Agent, which notice shall specify the amount of such reduction; provided,
however, that the amount of the Letter of Credit Commitment may not be reduced below the
aggregate amount of the outstanding Letter of Credit Obligations.

(b) At any time a Lender is a Designated Lender, the Borrower may terminate in full the
commitment of such Designated Lender by giving notice to such Designated Lender and the
Agent; provided that (i) at the time of such termination, no Default or Unmatured
Default exists (or the Required Lenders consent to such termination) and (ii) concurrently
with such termination, (A) the Letter of Credit Commitment shall be reduced by the
commitment amount of such Designated Lender (it being understood that the Borrower may not
terminate the commitment of a Designated Lender if, after giving effect to such termination,
the Letter of Credit Obligations would exceed the reduced Letter of Credit Commitment), (B)
the Borrower shall pay all amounts owed to such Designated Lender hereunder and (C) the
Agent shall return to such Lender any cash collateral held for the account of such Lender
pursuant to Section 2.9(d). The termination of the commitment of a Defaulting
Lender pursuant to this Section 2.3 shall not be deemed to be a waiver of any right
that (x) the Borrower, the Agent, the Issuer or any other Lender may have against such
Defaulting Lender or (y) such Defaulting Lender may have against the Borrower based on the
estimate described in clause (B) of the preceding sentence.

2.4 Reimbursement Obligations. (a) The Borrower agrees to pay to the Issuer of a
Letter of Credit (i) on each date that any amount is drawn under each Letter of Credit (or, if
any draw is paid by the Issuer after 3:00 p.m. (New York time) on such date, on the next
succeeding Business Day) a sum (and interest on such sum as provided in clause (ii)
below) equal to the amount so drawn plus all other charges and expenses with respect thereto
specified in Section 2.9 or in the applicable Reimbursement Agreement and (ii) interest
on any and all amounts remaining unpaid under this Section 2.4 until payment in full at
the rate per annum, computed for actual days elapsed based on a 365 or 366 day year, as
applicable, equal to (A) the Alternate Base Rate plus the Applicable Margin for such day for the
first two days following the due date of any Reimbursement Obligations and (B) the Alternate
Base Rate plus the Applicable Margin for such day plus 2% per annum thereafter. The Borrower
agrees to pay to the Issuer the amount of all Reimbursement Obligations owing in respect of

 

- 19 -

 

any Letter of Credit immediately when due, under all circumstances, including, without
limitation, any of the following circumstances: (w) any lack of validity or enforceability of
this Agreement or any of the other Facility Documents, (x) the existence of any claim, set-off,
defense or other right which the Borrower may have at any time against a beneficiary named in a
Letter of Credit, any transferee of any Letter of Credit (or any Person for whom any such
transferee may be acting), any Lender or any other Person, whether in connection with this
Agreement, any Letter of Credit, the transactions contemplated herein or any unrelated
transactions (including any underlying transaction between the Borrower and the beneficiary
named in any Letter of Credit), (y) the validity, sufficiency or genuineness of any document
which the Issuer has determined in good faith complies on its face with the terms of the
applicable Letter of Credit, even if such document should later prove to have been forged,
fraudulent, invalid or insufficient in any respect or any statement therein shall have been
untrue or inaccurate in any respect or (z) the surrender or impairment of any security for the
performance or observance of any of the terms hereof.

(b) Notwithstanding any provisions to the contrary in any Reimbursement Agreement, the
Borrower agrees to reimburse the Issuer for amounts which the Issuer pays under such Letter
of Credit no later than the time specified in this Agreement. If the Borrower does not pay
any such Reimbursement Obligations when due at any time prior the Letter of Credit
Termination Date, such Reimbursement Obligations, if in Pounds, shall be deemed to have been
converted into the equivalent amount of Dollars on the date due based upon the spot rate of
exchange between Dollars and Pounds as determined by the Agent on the Reuters WRLD Page as
of the time of determination on such date. In the event that such rate does not appear on
any Reuters WRLD Page, the exchange rate shall be determined by reference to such other
publicly available service for displaying exchange rates as may be agreed upon by the Agent
and the Borrower, or, in the absence of such an agreement, such exchange rate shall instead
be the arithmetic average of the spot rates of exchange of the Agent in London at or about
such time between Dollars and Pounds for delivery two Business Days later; provided
that if at the time of any such determination, for any reason, no such spot rate is being
quoted, the Agent may use any reasonable method it deems appropriate to determine such rate
and such determination shall be presumed correct absent manifest error.

(c) If the Issuer makes a payment on account of any Letter of Credit and is not
concurrently reimbursed therefor by the Borrower, then as promptly as practical during
normal banking hours on the date of its receipt of such notice or, if not practicable on
such date, not later than noon (New York time) on the Business Day immediately succeeding
such date of notification, each Lender shall deliver to the Agent for the account of the
Issuer, in immediately available funds, the purchase price for such Lender’s interest in
such unreimbursed Reimbursement Obligations, which shall be an amount equal to such Lender’s
pro-rata share of such payment. Each Lender shall, upon demand by the Issuer, pay the
Issuer interest on such Lender’s pro-rata share of such draw from the date of payment by the
Issuer on account of such Letter of Credit until the date of delivery of such funds to the
Issuer by such Lender at a rate per annum, computed for actual days elapsed based on a
360-day year, equal to the Federal Funds Effective
Rate on the amount of the unreimbursed Reimbursement Obligations, if in Dollars, or the
equivalent amount of Dollars calculated in the manner provided in paragraph (b), if
in Pounds, for such period; provided, that such payments shall be made by the
Lenders only in the event and to the extent that the Issuer is not reimbursed in full by the
Borrower for interest on the amount of any draw on the Letters of Credit.

 

- 20 -

 

(d) At any time after the Issuer has made a payment on account of any Letter of Credit
and has received from any other Lender such Lender’s pro-rata share of such payment, such
Issuer shall, forthwith upon its receipt of any reimbursement (in whole or in part) by the
Borrower for such payment, or of any other amount from the Borrower or any other Person in
respect of such payment (including, without limitation, any payment of interest or penalty
fees and any payment under any collateral account agreement of the Borrower or any Facility
Document but excluding any transfer of funds from any other Lender pursuant to
Section 2.4(c)), transfer to such other Lender such other Lender’s ratable share of
such reimbursement or other amount; provided, that interest shall accrue for the
benefit of such Lender from the time such Issuer has made a payment on account of any Letter
of Credit; provided, further, that in the event that the receipt by the
Issuer of such reimbursement or other amount is found to have been a transfer in fraud of
creditors or a preferential payment under the United States Bankruptcy Code or is otherwise
required to be returned, such Lender shall promptly return to the Issuer any portion thereof
previously transferred by the Issuer to such Lender, but without interest to the extent that
interest is not payable by the Issuer in connection therewith.

(e) All payments in respect of Reimbursement Obligations shall be in Dollars.

2.5 Procedure for Issuance. Prior to the issuance of each new Letter of Credit and
as a condition of such issuance, the Borrower shall deliver to the Issuer (with a copy to the
Agent) a Reimbursement Agreement signed by the Borrower, together with such other documents or
items as may be required pursuant to the terms thereof, and the proposed form and content of
such Letter of Credit shall be reasonably satisfactory to the Issuer. Each Letter of Credit
shall be issued no earlier than two (2) Business Days after delivery of the foregoing documents,
which delivery may be by the Borrower to the Issuer by telecopy, telex or other electronic means
followed by delivery of executed originals within five (5) days thereafter. The documents so
delivered shall be in compliance with the requirements set forth in Section 2.1(b), and
shall specify therein (a) the stated amount of the Letter of Credit requested, (b) the effective
date of issuance of such requested Letter of Credit, which shall be a Business Day, (c) the date
on which such requested Letter of Credit is to expire, which shall be no later than one (1) year
from the date of issuance of such Letter of Credit or in the case of a Lloyd’s Letter of Credit,
four years from the date of the related Expiry Notice, (d) whether the Letter of Credit is to be
denominated in Dollars or Pounds and (e) the aggregate amount of Letter of Credit Obligations
which are outstanding and which will be outstanding after giving effect to the requested Letter
of Credit issuance. The delivery of the foregoing documents and information shall constitute an
“Issuance Request” for purposes of this Agreement. Subject to the terms and conditions
of Section 2.1 and provided that the applicable conditions set forth in
Section 4.2 hereof have been satisfied, the Issuer shall, on
the requested date, issue a Letter of Credit on behalf of the Borrower in accordance with
the Issuer’s usual and customary business practices. In addition, any amendment of an existing
Letter of Credit shall be deemed to be an issuance of a new Letter of Credit and shall be
subject to the requirements set forth above. The Issuer shall give the Agent prompt written
notice of the issuance of any Letter of Credit.

 

- 21 -

 

2.6 Nature of the Lenders’ Obligations. (a) As between the Borrower and the
Lenders, the Borrower assumes all risks of the acts and omissions of, or misuse of the Letters
of Credit by, the respective beneficiaries of the Letters of Credit; provided,
however, that the Borrower may have a claim against the Issuer and the Issuer may be
liable to the Borrower, to the extent, but only to the extent, of any direct (as opposed to
consequential or exemplary) damages suffered by the Borrower which the Borrower proves were
caused by the Issuer’s willful misconduct or gross negligence in determining whether documents
presented under a Letter of Credit comply with the terms of such Letter of Credit. In
furtherance and not in limitation of the foregoing, the Lenders shall not be responsible for:
(i) the form, validity, sufficiency, accuracy, genuineness or legal effect of any document
submitted by any party in connection with the application for an issuance of a Letter of Credit,
even if it should in fact prove to be in any or all respects invalid, insufficient, inaccurate,
fraudulent or forged, (ii) the validity or sufficiency of any instrument transferring or
assigning or purporting to transfer or assign a Letter of Credit or the rights or benefits
thereunder or proceeds thereof, in whole or in part, which may prove to be invalid or
ineffective for any reason, (iii) the failure of the beneficiary of a Letter of Credit to comply
fully with conditions required to be satisfied by any Person other than the Issuer in order to
draw upon such Letter of Credit, (iv) errors, omissions, interruptions or delays in transmission
or delivery of any messages, by mail, cable, telegraph, telex or otherwise, (v) errors in the
interpretation of technical terms, (vi) the misapplication by the beneficiary of a Letter of
Credit of the proceeds of any drawing under such Letter of Credit or (vii) any consequences
arising from causes beyond control of the Issuer.

(b) In furtherance and extension and not in limitation of the specific provisions
hereinabove set forth, any action taken or omitted by the Issuer under or in connection with
the Letters of Credit or any related certificates, if taken or omitted in good faith, shall
not put the Agent or any Lender under any resulting liability to the Borrower or relieve the
Borrower of any of its obligations hereunder to the Issuer or any such Person.

2.7 Notification of Issuance Requests. Promptly after receipt thereof, the Agent
will notify each Lender of the contents of each Issuance Request received by it hereunder.

 

- 22 -

 

2.8 Cash Collateral for Letters of Credit. On the Letter of Credit Availability
Termination Date, the Borrower shall pledge and deliver to the Agent, for the benefit of the
Secured Parties, Cash Collateral Investments in a Collateral Account with a Collateral Value
equal to the product of one hundred and three percent (103%) of the amount
equal to the following percentage of the Letter of Credit Obligations outstanding from time
to time during the following periods:

	 	 	 	 	 
	 	 	Percentage of Letter of Credit	 
	Period	 	Obligations Collateralized	 
	 
	 	 	 	 
	Letter of Credit Availability Termination Date to but not including the date nine (9) months after the Letter of Credit Availability
Termination Date
	 	 	50	%
	 
	 	 	 	 
	the date nine (9) months after the Letter of Credit Availability Termination Date and at all times thereafter
	 	 	100	%

2.9 Fees.

(a) Unused Fee. The Borrower agrees to pay to the Agent for the account of
each Lender with respect to its Letter of Credit Participation Amount an unused fee at a
rate per annum equal to the Applicable Unused Fee Rate on the daily unused portion of such
Lender’s Letter of Credit Participation Amount from the Closing Date to and including the
Letter of Credit Availability Termination Date, payable on each Payment Date hereafter and
on the Letter of Credit Availability Termination Date or, if later, upon receipt of a bill
from the Agent. Accrued and unpaid unused fees under the Existing Credit Agreement shall be
paid on the Closing Date or, if later, upon receipt of a bill from the Agent.

(b) Letter of Credit Fronting Fee. The Borrower hereby agrees to pay to the
Agent, for the account of the Issuer, a letter of credit fronting fee with respect to each
Letter of Credit from and including the date of issuance thereof (or, with respect to the
Letters of Credit identified on Schedule 2.1, the date on which such Letters of
Credit are deemed issued under this Agreement pursuant to Section 2.1(d)) until the
date such Letter of Credit is fully drawn, canceled or expired, in an amount equal to the
rate provided in the Fee Letter of the aggregate initial face amount of such Letter of
Credit, calculated with respect to actual days elapsed on the basis of a 360-day year and
payable quarterly in arrears on each Payment Date in each year and upon the expiration,
cancellation or utilization in full of such Letter of Credit. In addition to the foregoing,
the Borrower agrees to pay the Issuer any other fees customarily charged by it in respect of
the issuance, amendment, cancellation, negotiation or transfer of each Letter of Credit and
each drawing made thereunder. The letter of credit fronting fee is in addition to (and not
included in) the letter of credit participation fee provided for in paragraph (c)
below. Accrued and unpaid fronting fees under the Existing Credit Agreement shall be paid
on the Closing Date or, if later, upon receipt of a bill from the Agent.

 

- 23 -

 

(c) Letter of Credit Participation Fee. The Borrower agrees to pay to the
Agent for the pro-rata account of the Lenders (including the Issuer) a letter of credit
participation fee with respect to each Letter of Credit from and including the date of
issuance thereof until the date such Letter of Credit is fully drawn, canceled or
expired, in an amount equal to the Applicable Letter of Credit Participation Fee Rate on the
aggregate amount from time to time available to be drawn on such Letter of Credit,
calculated with respect to actual days elapsed on the basis of a 360-day year and payable
quarterly in arrears on each Payment Date in each year and upon the expiration, cancellation
or utilization in full of such Letter of Credit. During the continuance of a Default, the
Required Lenders may, at their option, by notice to the Borrower, declare that the
Applicable Letter of Credit Participation Fee Rate shall be increased by 2% per annum;
provided, that during the continuance of a Default under Section 7.6 or
7.7, the Applicable Letter of Credit Participation Fee Rate shall be increased by
two percent (2%) without any election or action on the part of the Agent or any Lender.
Accrued and unpaid Letter of Credit Participation Fees under the Existing Credit Agreement
shall be paid on the Closing Date or, if later, upon receipt of a bill from the Agent.

(d) If at any time a Lender is a Defaulting Lender, then, to the extent
permitted by applicable law (and notwithstanding any other provision of this Agreement), (i)
any payment of Reimbursement Obligations with respect to Letters of Credit (including
through sharing of payments pursuant to Section 10.2, but excluding any payment
pursuant to Section 2.3(b) shall, if the Borrower so directs at the time of making
such payment, be applied first to amounts owed to Lenders other than such Defaulting Lender,
as if the amount owed to such Defaulting Lender hereunder in respect of Reimbursement
Obligations were zero, and then to amounts owed to such Defaulting Lender; (ii) such
Defaulting Lender’s pro-rata share of the Letter of Credit Obligations shall be excluded for
purposes of calculating facility fees pursuant to Section 2.9 in respect of each day
on which such Lender is a Defaulting Lender, and such Defaulting Lender shall not be
entitled to receive any facility fees for any such day and (iii) such Defaulting Lender’s
pro-rata share shall be deemed to be zero for purposes of calculating letter of credit fees
pursuant to Section 2.9 in respect of each day on which such Lender is a Defaulting
Lender (and the pro-rata shares of the other Lenders shall be correspondingly increased for
such purposes), and such Defaulting Lender shall not be entitled to receive any letter of
credit fees for any such day. In addition, if any Lender is a Defaulting Lender at the time
any payment is to be made by the Lenders to the Issuer pursuant to Section 2.4(c)
and such Defaulting Lender fails to make its pro-rata share of such payment, then, solely
for purposes of determining the amount of the payment to be made by each Lender to the
Issuer (and without limiting the liability of such Defaulting Lender for its failure to make
such payment), the pro-rata shares of the other Lenders shall be correspondingly increased
so that, subject to the following proviso, the Issuer receives the full amount of the
payments to which it is entitled from the Lenders; provided that under no
circumstances shall any Lender be obligated to make a payment to the Issuer pursuant to this
sentence that would cause the aggregate principal amount of such Lender’s pro-rata share
(without giving effect to any adjustment pursuant to the foregoing provisions of this
sentence) of all Letter of Credit Obligations to exceed such Lender’s commitment amount (or,
if the Letter of Credit Commitment has terminated, such Lender’s commitment amount at the
time of such termination, adjusted for any assignments by or to such Lender). Any payment
made pursuant to this Section shall be
taken into account for purposes of calculating the Unused Fee and Letter of Credit
Participation Fee. The provisions of this Section 2.9(d) do not limit, but are in
addition to, any other claim or right that the Borrower, the Agent, the Issuer or any other
Lender may have against a Defaulting Lender.

 

- 24 -

 

2.10 Extension of Letter of Credit Availability Termination Date. The Borrower may
request an extension of the Letter of Credit Availability Termination Date by submitting a
request for an extension to the Agent (an “Extension Request”) on any Business Day that is not
less than 30 days prior to the then Letter of Credit Availability Termination Date. The
Extension Request must specify the new Letter of Credit Availability Termination Date requested
by the Borrower and the date as of which date (which must be at least 30 days after the
Extension Request is delivered to the Agent) the Lenders (including the Issuer) must respond to
the Extension Request (the “Response Date”). The new Letter of Credit Availability Termination
Date shall not be more than two years after the Letter of Credit Availability Termination Date
in effect at the time the Extension Request is received, including the Letter of Credit
Availability Termination Date as one of the days in the calculation of the days elapsed.
Promptly upon receipt of an Extension Request, the Agent shall notify each Lender of the
contents thereof and shall request the Issuer and each Lender to approve the Extension Request.
Each Lender approving the Extension Request shall deliver its written consent no later than the
Response Date. If the consent of all of the Lenders in their sole discretion is received by the
Agent, the Letter of Credit Availability Termination Date specified in the Extension Request
shall become effective on the existing Letter of Credit Availability Termination Date and the
Agent shall promptly notify the Borrower and each Lender (including the Issuer) of the new
Letter of Credit Availability Termination Date. Otherwise the Letter of Credit Availability
Termination Date shall be unchanged.

2.11 Optional Increase in Letter of Credit Commitment. The Borrower may, from time
to time, by means of a letter delivered to the Agent substantially in the form of Exhibit
D, request that the Letter of Credit Commitment be increased by an aggregate amount (for all
such increases) not exceeding $25,000,000 by (a) increasing the Letter of Credit Participation
Amount of one or more Lenders that have agreed to such increase (in their sole discretion)
and/or (b) adding one or more commercial banks or other Persons as a party hereto (each an
“Additional Lender”) with a Letter of Credit Participation Amount in an amount agreed to by any
such Additional Lender; provided that (i) any increase in the Letter of Credit Commitment shall
be in an aggregate amount of $1,000,000 or a higher integral multiple of $1,000,000, (ii) no
Additional Lender shall be added as a party hereto without the written consent of the Agent and
the Issuer (which consents shall not be unreasonably withheld) or if a Default or an Unmatured
Default exists and (iii) the Borrower may not request an increase in the Letter of Credit
Commitment unless the Borrower has delivered to the Agent (with a copy for each Lender) a
certificate stating that the representations and warranties contained in Article V are correct
on and as of the date of such certificate as though made on and as of such date and that no
Default or Unmatured Default exists on such date. Any increase in the Letter of Credit
Commitment pursuant to this Section 2.11 shall be effective three (3) Business Days
after the date on which the Agent has
received and accepted the applicable increase letter in the form of Annex 1 to
Exhibit D (in the case of an increase in the Letter of Credit Participation Amount of an
existing Lender) or assumption letter in the form of Annex 2 to Exhibit D (in
the case of the addition of a commercial bank or other Person as a new Lender). The Agent shall
promptly notify the Borrower and the Lenders of any increase in the Letter of Credit Commitment
pursuant to this Section 2.11 and of the Letter of Credit Participation Amount and
pro-rata share of each Lender after giving effect thereto. To the extent that any increase
pursuant to this Section 2.11 is not expressly authorized pursuant to resolutions or
consents delivered pursuant to Section 4.1(b), the Borrower shall, prior to the
effectiveness of such increase, deliver to the Agent a certificate signed by an authorized
officer of the Borrower certifying and attaching the resolutions or consents that have been
adopted to approve or consent to such increase.

 

- 25 -

 

2.12 Collateral Account.

(a) The Borrower shall at all times maintain Cash Collateral Investments in Collateral
Accounts with a Collateral Value of not less than the Required Amount. If at any time the
Required Amount shall exceed (the amount of such excess, the “Collateral Shortfall”) the
Collateral Value for three (3) consecutive Business Days, the Agent shall provide the
Borrower notice, by telephone or in writing, of such Collateral Shortfall and it shall be a
Default unless within three (3) Business Days of the Borrower’s receipt of such notice, no
Collateral Shortfall exists as a result of (i) a change in the Collateral Value due to
market fluctuations and/or (ii) a deposit by the Borrower of additional Cash Collateral
Investments in a Collateral Account.

(b) Cash Collateral Investments held in a Collateral Account shall be invested (i) so
long as no Default has occurred, at the direction of the Borrower, provided that all
such Cash Collateral Investments must be reasonably acceptable to the Agent and otherwise
permitted by this Agreement, and (ii) following the occurrence and continuation of a
Default, at the direction of the Agent. All income from such Cash Collateral Investments
shall be retained in a Collateral Account and added to the Collateral.

(c) So long as no Default has occurred and is continuing, if at any time the
Obligations become due and payable hereunder, the Borrower may direct the application of all
or any part of the Cash Collateral Investments held in a Collateral Account for the amount
which is due and payable, including with respect to any Reimbursement Obligations;
provided, however, the Agent shall have the right, upon five (5) days’ prior
notice to the Borrower, to apply all or any part of the Cash Collateral Investments held in
a Collateral Account for the amount which is due and payable unless the Borrower shall
object in writing and otherwise pay the amount due and payable within such five (5) day
period. Upon the occurrence and continuation of a Default, the Agent may apply (without
prior notice to the Borrower) all or any part of the Cash Collateral Investments held in a
Collateral Account pursuant to and in accordance with Section 8.4.

(d) So long as no Default or Unmatured Default under Section 7.2 has occurred,
at any time the Collateral Value exceeds (the amount of such excess, the “Collateral
Excess”) the Required Amount, the Borrower can request to receive or otherwise direct
the application of such Collateral Excess and the Agent shall release any Lien it has with
respect to such Collateral Excess; provided, however, upon the occurrence
and continuation of a Default, the Agent shall have sole control over any such Collateral
Excess, including the application of such amount pursuant to and in accordance with
Section 8.4.

 

- 26 -

 

ARTICLE III

YIELD PROTECTION; TAXES

3.1 Yield Protection. If, on or after the Closing Date, the adoption of any law or
any governmental or quasi-governmental rule, regulation, policy, guideline or directive (whether
or not having the force of law), or any change in the interpretation or administration thereof
by any governmental or quasi-governmental authority, central bank or comparable agency charged
with the interpretation or administration thereof, or compliance by any Lender or applicable
Lending Installation with any request or directive (whether or not having the force of law) of
any such authority, central bank or comparable agency:

(a) subjects any Lender or any applicable Lending Installation to any Taxes, or changes
the basis of taxation of payments (other than with respect to Excluded Taxes) to any Lender
in respect of its interest in the Letters of Credit,

(b) imposes or increases or deems applicable any reserve, assessment, insurance charge,
special deposit or similar requirement against assets of, deposits with or for the account
of, or credit extended by, any Lender or any applicable Lending Installation (other than
reserves and assessments taken into account in determining the interest rate applicable to
Eurodollar Advances), or

(c) imposes any other condition the result of which is to increase the cost to any
Lender or any applicable Lending Installation of making, funding or issuing Letters of
Credit or reduces any amount receivable by any Lender or any applicable Lending Installation
in connection with any Letter of Credit, or requires any Lender or any applicable Lending
Installation to make any payment calculated by reference to the amount of Letters of Credit
issued or participated in or interest received by it, by an amount deemed material by such
Lender,

and the result of any of the foregoing is to increase the cost to such Lender or applicable Lending
Installation of making or maintaining its Letter of Credit Commitment or its interest in the
Letters of Credit or to reduce the return received by such Lender or applicable Lending
Installation in connection with such Letter of Credit Commitment or interest in Letters of Credit,
then, within fifteen (15) days of demand by such Lender, the Borrower shall pay such Lender
such additional amount or amounts as will compensate such Lender for such increased cost or
reduction in amount received.

 

- 27 -

 

3.2 Changes in Capital Adequacy Regulations. If a Lender determines the amount of
capital required or expected to be maintained by such Lender, any Lending Installation of such
Lender or any corporation controlling such Lender is increased as a result of a Change, then,
within fifteen (15) days of demand by such Lender, the Borrower shall pay such Lender the amount
necessary to compensate for any shortfall in the rate of return on the portion of such increased
capital which such Lender determines is attributable to this Agreement, or its commitment to
participate in Letters of Credit hereunder (after taking into account such Lender’s policies as to
capital adequacy). “Change” means (a) any change after the Closing Date in the Risk-Based Capital
Guidelines or (b) any adoption of or change in any other law, governmental or quasi-governmental
rule, regulation, policy, guideline, interpretation, or directive (whether or not having the force
of law) after the Closing Date which affects the amount of capital required or expected to be
maintained by any Lender or any Lending Installation or any corporation controlling any Lender.
“Risk-Based Capital Guidelines” means (i) the risk-based capital guidelines in effect in the United
States on the Closing Date, including transition rules and (ii) the corresponding capital
regulations promulgated by regulatory authorities outside the United States implementing the
November 2005 updated report of the Basel Committee on Banking Regulation and Supervisory Practices
Entitled “International Convergence of Capital Measurements and Capital Standards: A Revised
Framework,” including transition rules, and any amendments to such regulations adopted prior to the
Closing Date.

3.3 Taxes. (a) All payments by the Borrower to or for the account of any Lender or
the Agent hereunder or under any Reimbursement Agreement shall be made free and clear of and
without deduction for any and all Taxes. If the Borrower shall be required by law to deduct any
Taxes from or in respect of any sum payable hereunder to any Lender or the Agent, (i) the sum
payable shall be increased as necessary so that after making all required deductions (including
deductions applicable to additional sums payable under this Section 3.3) such Lender or the
Agent (as the case may be) receives an amount equal to the sum it would have received had no such
deductions been made, (ii) the Borrower shall make such deductions, (iii) the Borrower shall pay
the full amount deducted to the relevant authority in accordance with applicable law and (iv) the
Borrower shall furnish to the Agent the original copy of a receipt evidencing payment thereof
within thirty (30) days after such payment is made.

(b) In addition, the Borrower hereby agrees to pay any present or future stamp or
documentary taxes and any other excise or property taxes, charges or similar levies which
arise from any payment made hereunder or under any other Facility Document or from the
execution or delivery of, or otherwise with respect to, this Agreement or any other Facility
Document (“Other Taxes”).

(c) The Borrower hereby agrees to indemnify the Agent and each Lender for the full
amount of Taxes or Other Taxes (including, without limitation, any Taxes or Other Taxes
imposed on amounts payable under this Section 3.3) paid by the Agent or such Lender
and any liability (including penalties, interest and expenses) arising
therefrom or with respect thereto. Payments due under this indemnification shall be
made within thirty (30) days of the date the Agent or such Lender makes demand therefor
pursuant to Section 3.4.

 

- 28 -

 

(d) Each Lender that is not incorporated under the laws of the United States of America
or a state thereof (each a “Non-U.S. Lender”) agrees that it will, not less than ten
(10) Business Days after the date of this Agreement, deliver to each of the Borrower and the
Agent such properly completed and executed documentation prescribed by applicable law or
reasonably requested by the Borrower, certifying that such Lender is entitled to receive
payments under this Agreement without deduction or withholding of any United States federal
income taxes. Each Non-U.S. Lender further undertakes to deliver to each of the Borrower
and the Agent (x) renewals or additional copies of such form (or any successor form) on or
before the date that such form expires or becomes obsolete and (y) after the occurrence of
any event requiring a change in the most recent forms so delivered by it, such additional
forms or amendments thereto as may be reasonably requested by the Borrower or the Agent.
All forms or amendments described in the preceding sentence shall certify that such Lender
is entitled to receive payments under this Agreement without deduction or withholding of any
United States federal income taxes, unless an event (including without limitation any change
in treaty, law or regulation) has occurred prior to the date on which any such delivery
would otherwise be required which renders all such forms inapplicable or which would prevent
such Lender from duly completing and delivering any such form or amendment with respect to
it and such Lender advises the Borrower and the Agent that it is not capable of receiving
payments without any deduction or withholding of United States federal income tax.

(e) For any period during which a Non-U.S. Lender has failed to provide the Borrower
with an appropriate form pursuant to paragraph (d) above (unless such failure is due
to a change in treaty, law or regulation, or any change in the interpretation or
administration thereof by any governmental authority, occurring subsequent to the date on
which a form originally was required to be provided), such Non-U.S. Lender shall not be
entitled to indemnification under this Section 3.3 with respect to Taxes imposed by
the United States; provided that, should a Non-U.S. Lender which is otherwise exempt
from or subject to a reduced rate of withholding tax become subject to Taxes because of its
failure to deliver a form required under paragraph (d) above, the Borrower shall
take such steps as such Non-U.S. Lender shall reasonably request to assist such Non-U.S.
Lender to recover such Taxes.

(f) Any Lender that is entitled to an exemption from or reduction of withholding tax
with respect to payments under this Agreement or any other Facility Document pursuant to the
law of any relevant jurisdiction or any treaty shall deliver to the Borrower (with a copy to
the Agent), at the time or times prescribed by applicable law, such properly completed and
executed documentation prescribed by applicable law as will permit such payments to be made
without withholding or at a reduced rate.

 

- 29 -

 

(g) If the U.S. Internal Revenue Service or any other governmental authority of the
United States or any other country or any political subdivision thereof asserts a claim that
the Agent did not properly withhold tax from amounts paid to or for the account of any
Lender (because the appropriate form was not delivered or properly completed, because such
Lender failed to notify the Agent of a change in circumstances which rendered its exemption
from withholding ineffective, or for any other reason), such Lender shall indemnify the
Agent fully for all amounts paid, directly or indirectly, by the Agent as tax, withholding
therefor, or otherwise, including penalties and interest, and including taxes imposed by any
jurisdiction on amounts payable to the Agent under this subsection, together with all costs
and expenses related thereto (including attorneys fees and time charges of attorneys for the
Agent, which attorneys may be employees of the Agent). The obligations of the Lenders under
this Section 3.3(g) shall survive the payment of the Obligations and termination of
this Agreement.

3.4 Lender Statements; Survival of Indemnity. To the extent reasonably possible,
each Lender shall designate an alternate Lending Installation to reduce any liability of the
Borrower to such Lender under Sections 3.1, 3.2 and 3.3 so long as such
designation is not, in the judgment of such Lender, disadvantageous to such Lender. Each Lender
shall deliver a written statement of such Lender to the Borrower (with a copy to the Agent) as
to the amount due, if any, under Section 3.1, 3.2 or 3.3. Such written
statement shall set forth in reasonable detail the calculations upon which such Lender
determined such amount and shall be final, conclusive and binding on the Borrower in the absence
of manifest error. The obligations of the Borrower under Section 3.1, 3.2 and
3.3 shall survive payment of the Obligations and termination of this Agreement.

ARTICLE IV

CONDITIONS PRECEDENT

4.1 Initial Letters of Credit. The Issuer shall not issue any Letter of Credit
hereunder unless and until all loans and other amounts due and owing (including fees accrued
with respect thereto) under the Existing Credit Agreement have been paid in full and the
Borrower has furnished the following to the Agent with sufficient copies for the Lenders and the
other conditions set forth below have been satisfied:

(a) Charter Documents; Good Standing Certificates. Copies of the articles or
certificate of incorporation of the Borrower, together with all amendments, and a
certificate of good standing, each certified by the appropriate governmental officer in its
jurisdiction of incorporation.

(b) By-Laws and Resolutions. Copies, certified by the Secretary or Assistant
Secretary of the Borrower, of its by-laws and of its Board of Directors’ resolutions and of
resolutions or actions of any other body authorizing the execution of the Facility Documents
to which the Borrower is a party.

(c) Secretary’s Certificate. An incumbency certificate, executed by the
Secretary or Assistant Secretary of the Borrower, which shall identify by name and title and
bear the signature of the officers of the Borrower authorized to sign the Facility
Documents, upon which certificate the Agent and the Lenders shall be entitled to rely until
informed of any change in writing by the Borrower.

 

- 30 -

 

(d) Officer’s Certificate. A certificate, signed by an Authorized Officer of
the Borrower, stating that: (i) on the Closing Date no Default or Unmatured Default has
occurred and is continuing and (ii) each of the representations and warranties set forth in
Article V of this Agreement is true and correct on and as of the Closing Date.

(e) Legal Opinions. A written opinion of Emily B. Miner, counsel to the
Borrower and its Subsidiaries, addressed to the Agent and the Lenders in form and substance
acceptable to the Agent and its counsel.

(f) Facility Documents. Executed originals of this Agreement and each of the
Facility Documents, which shall be in full force and effect, together with all schedules,
exhibits, certificates, stock certificates (including stock certificates representing all of
the outstanding stock of each Significant Subsidiary other than NSIC), related stock powers,
instruments, opinions and documents required to be delivered pursuant hereto and thereto.

(g) Existing Letters of Credit. The Existing Letters of Credit shall not
exceed the Letter of Credit Commitment.

(h) Other. Such other documents as the Agent, any Lender or their counsel may
have reasonably requested.

4.2 Each Letter of Credit. The Issuer shall not be obligated to issue any Letter
of Credit, unless on the applicable Issue Date:

(a) There exists no Default or Unmatured Default and none would result from such
issuance of such Letter of Credit.

(b) The representations and warranties contained in Article V are true and
correct as of such Issue Date except to the extent any such representation or warranty is
stated to relate solely to an earlier date, in which case such representation or warranty
shall have been true and correct on and as of such earlier date.

(c) An Issuance Request, as applicable, shall have been properly submitted.

(d) All legal matters incident to the issuance of such Letter of Credit shall be
satisfactory to the Lenders and their counsel.

Each Issuance Request with respect to each such Letter of Credit shall constitute a
representation and warranty by the Borrower that the conditions contained in Section 4.2
(a) and
(b) have been satisfied. Any Lender may require a duly completed compliance
certificate in substantially the form of Exhibit A hereto as a condition to issuing a
Letter of Credit.

 

- 31 -

 

ARTICLE V

REPRESENTATIONS AND WARRANTIES

The Borrower represents and warrants to the Lenders that:

5.1 Existence and Standing. Each of the Borrower and its Subsidiaries is duly and
properly formed, validly existing and in good standing under the laws of its jurisdiction of
incorporation or organization and, except as could not reasonably be expected to have a Material
Adverse Effect, has all requisite authority to conduct its business in each jurisdiction in
which its business is conducted.

5.2 Authorization and Validity. The Borrower has the corporate power and authority
and legal right to execute and deliver the Facility Documents and to perform its obligations
thereunder. The execution and delivery by the Borrower of the Facility Documents and the
performance of its obligations thereunder have been duly authorized by proper corporate
proceedings, and the Facility Documents to which the Borrower is a party constitute legal, valid
and binding obligations of the Borrower enforceable against the Borrower in accordance with
their terms, except as enforceability may be limited by bankruptcy, insolvency or similar laws
affecting the enforcement of creditors’ rights generally.

5.3 No Conflict; Government Consent. Neither the execution and delivery by the
Borrower of the Facility Documents, nor the consummation of the transactions therein
contemplated, nor compliance with the provisions thereof will violate (a) any law, rule,
regulation, order, writ, judgment, injunction, decree or award binding on the Borrower or any of
its Subsidiaries or (b) the Borrower’s or any Subsidiary’s articles or certificate of
incorporation, partnership agreement, certificate of partnership, articles or certificate of
organization, by-laws, or operating or other management agreement, as the case may be, or (c)
the provisions of any indenture, instrument or agreement to which the Borrower or any of its
Subsidiaries is a party or is subject, or by which it, or its Property, is bound, or conflict
with or constitute a default thereunder, or result in, or require, the creation or imposition of
any Lien in, of or on the Property of the Borrower or a Subsidiary pursuant to the terms of any
such indenture, instrument or agreement. No order, consent, adjudication, approval, license,
authorization, or validation of, or filing, recording or registration with, or exemption by, or
other action in respect of any governmental or public body or authority, or any subdivision
thereof, which has not been obtained by the Borrower or any of its Subsidiaries, is required to
be obtained by the Borrower or any of its Subsidiaries in connection with the execution and
delivery of the Facility Documents, the extensions of credit under this Agreement, the payment
and performance by the Borrower of the Obligations or the legality, validity, binding effect or
enforceability of any of the Facility Documents, except that approval of the New York Insurance
Department and/or one or more other state insurance
departments would be required in order for the Lenders to acquire control of Navigators and
NSIC. Neither the Borrower nor any Subsidiary is in default under or in violation of any
foreign, federal, state or local law, rule, regulation, order, writ, judgment, injunction,
decree or award binding upon or applicable to the Borrower or such Subsidiary, in each case the
consequences of which default or violation could reasonably be expected to have a Material
Adverse Effect.

 

- 32 -

 

5.4 Financial Statements. (a) The consolidated balance sheets of the Borrower and
the Consolidated Subsidiaries as of December 31, 2008, the related consolidated statements of
income, consolidated statements of stockholders’ equity, and consolidated statements of cash
flows of the Borrower and such Consolidated Subsidiaries for the Fiscal Year then ended, and the
accompanying footnotes, together, with the opinion thereon, of KPMG LLP, independent certified
public accountants, copies of which have been furnished to the Lenders, fairly present the
financial condition of the Borrower and the Consolidated Subsidiaries as at such dates and the
results of the operations of the Borrower and Consolidated Subsidiaries for the periods covered
by such statements, all in accordance with Agreement Accounting Principles consistently applied.

(b) There are no liabilities of the Borrower or any of the Consolidated Subsidiaries,
fixed or contingent, which are material but are not reflected in the most recent financial
statements referred to above or in the notes thereto, other than liabilities arising in the
ordinary course of business since December 31, 2008.

5.5 Statutory Financial Statements. The Annual Statement of each of the Insurance
Subsidiaries (including, without limitation, the provisions made therein for investments and the
valuation thereof, reserves, policy and contract claims and statutory liabilities) as filed with
the appropriate Governmental Authority of its state of domicile (the “Department”) and
delivered to each Lender prior to the execution and delivery of this Agreement, as of and for
the 2008 Fiscal Year (the “Statutory Financial Statements”), have been prepared in
accordance with SAP applied on a consistent basis (except as noted therein). Each such
Statutory Financial Statement was in material compliance with applicable law when filed.

5.6 Material Adverse Change. Since December 31, 2008 there has been no change in
the business, Property, condition (financial or otherwise) or results of operations of the
Borrower and its Subsidiaries which could reasonably be expected to have a Material Adverse
Effect.

5.7 Taxes. The Borrower and its Subsidiaries have filed all United States federal
tax returns and all other tax returns which are required to be filed and have paid all taxes due
pursuant to said returns or pursuant to any assessment received by the Borrower or any of its
Subsidiaries, except such taxes, if any, as are being contested in good faith and as to which
adequate reserves have been provided in accordance with Agreement Accounting Principles and as
to which no Lien exists. No tax liens have been filed and no claims are being asserted with
respect to any such taxes. The charges, accruals and reserves on the
books of the Borrower and its Subsidiaries in respect of any taxes or other governmental
charges are adequate.

 

- 33 -

 

5.8 Litigation and Contingent Obligations. There is no litigation, arbitration,
governmental investigation, proceeding or inquiry pending or, to the knowledge of any of their
officers, threatened against or affecting the Borrower or any of its Subsidiaries which could
reasonably be expected to have a Material Adverse Effect or which seeks to prevent, enjoin or
delay the issuance of any Letters of Credit. Other than any liability incident to any
litigation, arbitration or proceeding which could not reasonably be expected to have a Material
Adverse Effect, the Borrower has no material contingent obligations not provided for or
disclosed in the financial statements referred to in Section 5.4.

5.9 Subsidiaries. Schedule 5.9 contains an accurate list of all
Subsidiaries of the Borrower as of the date of this Agreement, setting forth their respective
jurisdictions of organization and the percentage of their respective capital stock or other
ownership interests owned by the Borrower or other Subsidiaries and indicating which
Subsidiaries are Significant Subsidiaries and which Subsidiaries are Insurance Subsidiaries.
All of the issued and outstanding shares of capital stock or other ownership interests of such
Subsidiaries have been (to the extent such concepts are relevant with respect to such ownership
interests) duly authorized and issued and are fully paid and non-assessable.

5.10 ERISA. The Unfunded Liabilities of all Single Employer Plans is $0 except
that funding of any money purchase pension plan may be delayed each Fiscal Year until the end of
the first Fiscal Quarter thereof. Neither the Borrower nor any other member of the Controlled
Group has incurred, or is reasonably expected to incur, any withdrawal liability to any
Multiemployer Plan. Each Plan complies in all material respects with all applicable
requirements of law and regulations, no Reportable Event has occurred with respect to any Plan,
neither the Borrower nor any other member of the Controlled Group has withdrawn from any Plan or
initiated steps to do so, and no steps have been taken to reorganize or terminate any Plan.

5.11 Defaults. No Default or Unmatured Default has occurred and is continuing.

5.12 Accuracy of Information. No information, exhibit or report furnished by the
Borrower or any of its Subsidiaries to the Agent or to any Lender in connection with the
negotiation of, or compliance with, the Facility Documents contained any material misstatement
of fact or omitted to state a material fact or any fact necessary to make the statements
contained therein not misleading.

5.13 Regulation U. Margin stock (as defined in Regulation U) constitutes less than
25% of the value of those assets of the Borrower and its Subsidiaries which are subject to any
limitation on sale, pledge, or other restriction hereunder. Neither the issuance of any Letters
of Credit hereunder nor the use of the proceeds thereof, will violate or be inconsistent with
the provisions of Regulation T, Regulation U or Regulation X.

 

- 34 -

 

5.14 Material Agreements. Neither the Borrower nor any Subsidiary is a party to
any agreement or instrument or subject to any charter or other corporate restriction which could
reasonably be expected to have a Material Adverse Effect. Neither the Borrower nor any
Subsidiary is in default in the performance, observance or fulfillment of any of the
obligations, covenants or conditions contained in (a) any agreement to which it is a party which
default could reasonably be expected to have a Material Adverse Effect or (b) any agreement or
instrument evidencing or governing Indebtedness.

5.15 Compliance With Laws. The Borrower and its Subsidiaries have complied with
all applicable statutes, rules, regulations, orders and restrictions of any domestic or foreign
government or any instrumentality or agency thereof having jurisdiction over the conduct of
their respective businesses or the ownership of their respective Property, except where the
failure to comply could not reasonably be expected to have a Material Adverse Effect.

5.16 Ownership of Properties. The Borrower and each of its Subsidiaries has good
title, free of all Liens other than those permitted by Section 6.16, to all of the
Property and assets reflected in the Borrower’s most recent consolidated financial statements
filed with the Securities and Exchange Commission as owned by the Borrower and its Subsidiaries.

5.17 Plan Assets; Prohibited Transactions. The Borrower is not an entity deemed to
hold “plan assets” within the meaning of 29 C.F.R. § 2510.3-101 of an employee benefit plan (as
defined in Section 3(3) of ERISA) which is subject to Title I of ERISA or any plan (within the
meaning of Section 4975 of the Code), and neither the execution of this Agreement nor the
issuance of Letters of Credit hereunder gives rise to a prohibited transaction within the
meaning of Section 406 of ERISA or Section 4975 of the Code.

5.18 Environmental Matters. In the ordinary course of its business, the officers
of the Borrower consider the effect of Environmental Laws on the business of the Borrower and
its Subsidiaries, in the course of which they identify and evaluate potential risks and
liabilities accruing to the Borrower due to Environmental Laws. On the basis of this
consideration, the Borrower has concluded that Environmental Laws cannot reasonably be expected
to have a Material Adverse Effect. Neither the Borrower nor any Subsidiary has received any
notice to the effect that its operations are not in material compliance with any of the
requirements of applicable Environmental Laws or are the subject of any federal or state
investigation evaluating whether any remedial action is needed to respond to a release of any
toxic or hazardous waste or substance into the environment, which non-compliance or remedial
action could reasonably be expected to have a Material Adverse Effect.

5.19 Investment Company Act. Neither the Borrower nor any Subsidiary is an
“investment company” or a company “controlled” by an “investment company”, within the meaning of
the Investment Company Act of 1940, as amended.

 

- 35 -

 

5.20 Solvency. Immediately after the consummation of the transactions to occur on
the date hereof and immediately following each issuance of a Letter of Credit (including the
Existing Letters of Credit) hereunder on the date hereof and after giving effect to the
application of the proceeds of such Letters of Credit, (a) the fair value of the assets of the
Borrower and its Subsidiaries on a consolidated basis, at a fair valuation, will exceed the
debts and liabilities, subordinated, contingent or otherwise, of the Borrower and its
Subsidiaries on a consolidated basis, (b) the present fair saleable value of the Property of the
Borrower and its Subsidiaries on a consolidated basis will be greater than the amount that will
be required to pay the probable liability of the Borrower and its Subsidiaries on a consolidated
basis on their debts and other liabilities, subordinated, contingent or otherwise, as such debts
and other liabilities become absolute and matured, (c) the Borrower and its Subsidiaries on a
consolidated basis will be able to pay their debts and liabilities, subordinated, contingent or
otherwise, as such debts and liabilities become absolute and matured and (d) the Borrower and
its Subsidiaries on a consolidated basis will not have unreasonably small capital with which to
conduct the businesses in which they are engaged as such businesses are now conducted and are
proposed to be conducted after the date hereof.

5.21 Insurance Licenses. To the extent required by applicable law, each Insurance
Subsidiary holds a License and is authorized to transact insurance business in (i) the line or
lines of insurance and (ii) the state, states or jurisdictions it is engaged in, except to the
extent that the failure to have such a License or authority could not reasonably be expected to
have a Material Adverse Effect. No such License, the loss of which could reasonably be expected
to have a Material Adverse Effect, is the subject of a proceeding for suspension, limitation or
revocation. To the Borrower’s knowledge, there is not a sustainable basis for such suspension,
limitation or revocation, and no such suspension, limitation or revocation has been threatened
by any Governmental Authority. The Insurance Subsidiaries do not transact any business,
directly or indirectly, requiring any license, permit, governmental approval, consent or other
authorization other than those currently obtained, except to the extent of which could not
reasonably be expected to have a Material Adverse Effect.

5.22 Partnerships. Except as disclosed in Schedule 5.22, neither the
Borrower nor any of its Subsidiaries is a partner of any partnership.

5.23 Lines of Business. Schedule 5.23 sets forth a complete statement of
each material line of business conducted as of the date hereof by the Borrower and each of its
Subsidiaries (the “Existing Lines of Business”).

5.24 Reinsurance Practices. The business of each Insurance Subsidiary is being
conducted in all material respects in accordance with the Reinsurance Guidelines.

5.25 Security. The Pledge Agreement is effective to create and give the Agent, for
the benefit of the Secured Parties, as security for the repayment of the obligations secured
thereby, a legal, valid, perfected and enforceable first priority Lien upon and security
interest in the capital stock pledged thereby.

 

- 36 -

 

5.26 Disclosure. None of the (a) information, exhibits or reports furnished or to
be furnished by the Borrower or any Subsidiary to the Agent or to any Lender in connection with
the negotiation of the Facility Documents or (b) representations or warranties of the Borrower
or any Subsidiary contained in this Agreement, the other Facility Documents or any other
document, certificate or written statement furnished to the Agent or the Lenders by or on behalf
of the Borrower or any Subsidiary for use in connection with the transactions contemplated by
this Agreement or the Facility Documents contained, contains or will contain any untrue
statement of a material fact or omitted, omits or will omit to state a material fact necessary
in order to make the statements contained herein or therein not misleading in light of the
circumstances in which the same were made. There is no fact known to the Borrower (other than
matters of a general economic nature) that has had or could reasonably be expected to have a
Material Adverse Effect and that has not been disclosed herein or in such other documents,
certificates and statements furnished to the Lenders for use in connection with the transactions
contemplated by this Agreement.

ARTICLE VI

COVENANTS

Until the date that no Letters of Credit are outstanding and all Letter of Credit Obligations
have been indefeasibly paid in full, unless the Lenders shall otherwise consent in writing:

6.1 Financial Reporting. The Borrower will maintain, for itself and each
Subsidiary, a system of accounting established and administered in accordance with generally
accepted accounting principles, consistently applied, and will furnish to the Lenders:

(a) As soon as practicable and in any event within seventy (70) days after the close of
each of its Fiscal Years, an unqualified audit report certified by independent certified
public accountants acceptable to the Required Lenders, prepared in accordance with Agreement
Accounting Principles on a consolidated and consolidating basis and setting forth in
comparative form figures for the preceding Fiscal Year for itself and its Consolidated
Subsidiaries and on a stand alone basis for the Borrower, including balance sheets as of the
end of such period and related statements of income, stockholders’ equity and cash flows
accompanied by any management letter prepared by said accountants; provided that no annual
report other than the report on Form 10-K needs to be delivered.

(b) As soon as practicable and in any event within fifty (50) days after the close of
the first three Fiscal Quarters of each of its Fiscal Years, for itself and its
Subsidiaries, consolidated and consolidating unaudited balance sheets as at the close of
each such period and consolidated and consolidating statement of income, stockholders’
equity and cash flows for the period from the beginning of such Fiscal Year to the end of
such quarter setting forth in each case in comparative form figures for the corresponding
period in the prior Fiscal Year, all prepared in accordance with Agreement Accounting
Principles and in reasonable detail, and all signed by its chief financial officer.

 

- 37 -

 

(c) As soon as available and in any event (i) within seventy (70) days after the close
of each Fiscal Year of each Insurance Subsidiary, the Annual Statement of such Insurance
Subsidiary for such Fiscal Year as filed with the insurance commissioner (or similar
authority) in such Insurance Subsidiary’s state of domicile, together with the signature
thereof of the chief financial officer of the Borrower stating that such Annual Statement
presents the financial condition and results of operations of such Insurance Subsidiary in
accordance with SAP, (ii) on or prior to each June 1 after the close of each Fiscal Year of
each Insurance Subsidiary, the opinion of a firm of certified public accountants reasonably
satisfactory to the Required Lenders, who shall have examined such Annual Statement and
whose opinion shall not be qualified as to the scope of audit or as to the status of such
Insurance Subsidiary as a going concern, and (iii) within one hundred twenty (120) days
after the close of each Fiscal Year of each Insurance Subsidiary, a written review of and
opinion of an accounting or actuarial firm or internal actuary, as delivered to the
Department, reasonably satisfactory to the Required Lenders on the methodology and
assumptions used to calculate the Loss Reserves of such Insurance Subsidiary at the end of
such Fiscal Year (as shown on the Annual Statement of such Insurance Subsidiary prepared in
accordance with SAP).

(d) As soon as available and in any event on or prior to each May 1 after the close of
each Fiscal Year of the Insurance Subsidiaries, the Consolidated Annual Statement of the
Insurance Subsidiaries for such Fiscal Year, prepared in accordance with SAP and filed with
the New York Insurance Department.

(e) As soon as available and in any event within fifty (50) days after the close of
each of the first three Fiscal Quarters in each Fiscal Year of each Insurance Subsidiary,
quarterly financial statements of such Insurance Subsidiary (prepared in accordance with
SAP) for such Fiscal Quarter and as filed with the insurance commissioner (or similar
authority) in such Insurance Subsidiary’s state of domicile, together with the signature
thereon of the chief financial officer of the Borrower stating that such financial
statements present the financial condition and results of operations of such Insurance
Subsidiary in accordance with SAP.

(f) As soon as available, but in any event within one hundred twenty (120) days after
the beginning of each Fiscal Year, a copy of the plan and forecast of the Borrower and its
Subsidiaries for such Fiscal Year in the form customarily prepared by the Borrower.

(g) Together with the financial statements required by clauses (a) and
(b) above, a compliance certificate in substantially the form of Exhibit A
hereto signed by its chief financial officer showing the calculations necessary to determine
compliance with this Agreement and stating that no Default or Unmatured Default exists, or
if any Default
or Unmatured Default exists, stating the nature and status thereof and updating
Schedule 5.9.

(h) As soon as possible and in any event within ten (10) days after the Borrower knows
that any Termination Event has occurred with respect to any Plan, a statement, signed by the
chief financial officer of the Borrower, describing said Termination Event and the action
which the Borrower proposes to take with respect thereto.

 

- 38 -

 

(i) As soon as possible and in any event within ten (10) days after receipt by the
Borrower, a copy of (i) any notice or claim to the effect that the Borrower or any of its
Subsidiaries is or may be liable to any Person as a result of the release by the Borrower,
any of its Subsidiaries or any other Person of any toxic or hazardous waste or substance
into the environment, and (ii) any notice alleging any violation of any federal, state or
local environmental, health or safety law or regulation by the Borrower or any of its
Subsidiaries.

(j) As soon as possible and in any event within ten (10) days after the Borrower learns
thereof, notice of the assertion or commencement of any claims, action, suit or proceeding
against or affecting the Borrower or any Subsidiary which may reasonably be expected to have
a Material Adverse Effect.

(k) Promptly upon the furnishing thereof to the shareholders of the Borrower, copies of
all financial statements, reports and proxy statements so furnished; provided that no annual
report other than the report on Form 10-K needs to be delivered.

(l) Promptly upon the filing thereof, copies of all registration statements and annual,
quarterly, monthly or other regular reports which the Borrower or any of its Subsidiaries
files with the Securities and Exchange Commission.

(m) Promptly and in any event within ten (10) days after learning thereof, notification
of (i) any tax assessment, demand, notice of proposed deficiency or notice of deficiency
received by the Borrower or any Consolidated Person or (ii) the filing of any tax Lien or
commencement of any judicial proceeding by or against any such Consolidated Person, if any
such assessment, demand, notice, Lien or judicial proceeding relates to tax liabilities in
excess of $2,500,000.

(n) Promptly, and in any event within five (5) days after (i) learning thereof,
notification of any changes after the date hereof in the Borrower’s S&P Rating or Borrower’s
Moody’s Rating or in the A.M. Best Rating in respect of any Insurance Subsidiary and
(ii) receipt thereof, copies of any ratings analysis by A.M. Best & Co. relating to any
Insurance Subsidiary.

(o) Copies of any actuarial certificates prepared with respect to any Insurance
Subsidiary, promptly after the receipt thereof, and not later than ninety (90) days after
each Fiscal Year, an actuarial opinion with respect to each Insurance Subsidiary in
form and substance reasonably satisfactory to the Agent and the Required Lenders from an
accounting or actuarial firm or internal actuary, as delivered to the Department, reasonably
satisfactory to the Agent and the Required Lenders.

 

- 39 -

 

(p) Promptly upon the filing thereof, copies of all filings and annual, quarterly,
monthly or other regular reports which the Borrower or any of its Subsidiaries files with
the NAIC or any insurance commission or department or analogous Governmental Authority
(including, without limitation, any filing made by the Borrower or any Subsidiary pursuant
to any insurance holding company act or related rules or regulations), but excluding routine
or non-material filings with the NAIC, any insurance commissioner or department or analogous
Governmental Authority.

(q) In addition to the requirements of clause (c)(iii) above, as promptly as
reasonably practicable following the request of the Required Lenders, a report prepared by
an accounting or actuarial firm or internal actuary, as delivered to the Department,
reviewing the adequacy of Loss Reserves of each Insurance Subsidiary, which firm shall be
provided access to or copies of all reserve analyses and valuations relating to the
insurance business of each Insurance Subsidiary in the possession of or available to the
Borrower or its Subsidiaries; provided, that, in the event that the written review
required to be provided to the Lenders in respect of any Fiscal Year pursuant to clause
(c)(iv) above is provided by an independent actuarial consulting firm reasonably
satisfactory to the Agent, or a written review of an independent actuarial consulting firm
reasonably satisfactory to the Agent satisfying the requirements set forth in clause
(c)(iv) is otherwise delivered to the Lenders at any time other than pursuant to such
clause, then the Required Lenders may not request a report pursuant to this clause
(q) until one year after the delivery date of such report unless, at the time of such
request, a Default is in existence.

(r) Such other information as the Agent or any Lender may from time to time reasonably
request.

The Borrower may provide information required under Sections 6.1(a), (b), (k),
and (l) by posting such information on EDGAR and giving notice to the Agent of such
posting.

6.2 Purpose. The Letters of Credit shall be available to support obligations of
Wholly-Owned Subsidiaries of the Borrower with respect to specific syndicates at the Society of
Lloyd’s and to support other obligations, provided that the aggregate face amount of all
outstanding Letter of Credit Obligations with respect to such other obligations does not at any
time exceed the lesser of (a) the Letter of Credit Commitment and (b) $5,000,000.

6.3 Notice of Default. The Borrower will, promptly after becoming aware of the
occurrence of any of the following, give notice in writing to the Lenders of the occurrence of
(a) any Default or Unmatured Default, (b) of any other event or development, financial or
otherwise which could reasonably be expected to have a Material Adverse Effect,
(c) the receipt of any notice from any Governmental Authority of the expiration without
renewal, revocation or suspension of, or the institution of any proceedings to revoke or
suspend, any License now or hereafter held by any Insurance Subsidiary which is required to
conduct insurance business in compliance with all applicable laws and regulations and the
expiration, revocation or suspension of which could reasonably be expected to have a Material
Adverse Effect, (d) the receipt of any notice from any Governmental Authority of the institution
of any disciplinary proceedings against or in respect of any Insurance Subsidiary, or the
issuance of any order, the taking of any action or any request for an extraordinary audit for
cause by any Governmental Authority which, if adversely determined, could reasonably be expected
to have a Material Adverse Effect, (e) any material judicial or administrative order limiting or
controlling the business of any Subsidiary (and not the industry in which such Subsidiary is
engaged generally) which has been issued or adopted or (f) the commencement of any litigation
which could reasonably be expected to result in a Material Adverse Effect.

 

- 40 -

 

6.4 Conduct of Business. The Borrower will, and will cause each Subsidiary to,
(a) carry on and conduct its business only in the Existing Lines of Business or in other lines
of the insurance business or in activities reasonably incidental to the insurance business, (b)
do all things necessary to remain duly incorporated or organized, validly existing and (to the
extent such concept applies to such entity) in good standing in its jurisdiction of
incorporation and its jurisdiction of incorporation or organization, as the case may be, and
maintain all requisite authority to conduct its business in each other jurisdiction in which
such qualification is required and (c) do all things necessary to renew, extend and continue in
effect all Licenses material to its business which may at any time and from time to time be
necessary for any Insurance Subsidiary to operate its business in compliance with all applicable
laws and regulations. No Insurance Subsidiary shall change its state of domicile or
incorporation without the prior written consent of the Required Lenders.

6.5 Taxes. The Borrower will, and will cause each Subsidiary to, timely file
United States federal and applicable foreign, state and local tax returns required by applicable
law complete and correct in all material respects and pay when due all material taxes,
assessments and governmental charges and levies upon it or its income, profits or Property,
except those which are being contested in good faith by appropriate proceedings and with respect
to which adequate reserves have been set aside in accordance with Agreement Accounting
Principles and SAP, as applicable.

6.6 Insurance. The Borrower will, and will cause each Subsidiary to, maintain with
financially sound and reputable insurance companies insurance on all their Property in such
amounts and covering such risks as is consistent with sound business practice, and the Borrower
will furnish to the Agent and any Lender upon request full information as to the insurance
carried.

6.7 Compliance with Laws. The Borrower will, and will cause each Subsidiary to,
comply with all laws, rules, regulations, orders, writs, judgments, injunctions, decrees or
awards to which it may be subject, including, without limitation, all
Environmental Laws, the noncompliance with which could reasonably be expected to have a
Material Adverse Effect.

6.8 Maintenance of Properties. The Borrower will, and will cause each Subsidiary
to, do all things necessary to maintain, preserve, protect and keep its Property in good repair,
working order and condition, and make all necessary and proper repairs, renewals and
replacements so that its business carried on in connection therewith may be properly conducted
at all times in all material respects.

 

- 41 -

 

6.9 Inspection; Maintenance of Books and Records. The Borrower will, and will
cause each Subsidiary to, permit the Agent and the Lenders, by their respective representatives
and agents, to inspect any of the Property, books and financial records of the Borrower and each
Subsidiary, to examine and make copies of the books of accounts and other financial records of
the Borrower and each Subsidiary, and to discuss the affairs, finances and accounts of the
Borrower and each Subsidiary with, and to be advised as to the same by, their respective
officers at such reasonable times and intervals, during normal business hours and upon
reasonable prior notice to the Borrower, as the Agent or any Lender may designate. The Borrower
will keep or cause to be kept, and cause each Subsidiary to keep or cause to be kept,
appropriate records and books of account in which complete entries are to be made reflecting its
and their business and financial transactions, such entries to be made in accordance with
Agreement Accounting Principles and SAP, as applicable, consistently applied.

6.10 Dividends and Stock Repurchases. The Borrower will not, nor will it permit
any Subsidiary to, declare or pay any dividends or make any distributions on its capital stock
(other than dividends payable in its own capital stock) or redeem, repurchase or otherwise
acquire or retire any of its capital stock or any options or other rights in respect thereof at
any time outstanding, except that (a) any Subsidiary may declare and pay dividends or make
distributions to the Borrower or to a Wholly-Owned Subsidiary of the Borrower and (b) the
Borrower may repurchase capital stock in an aggregate amount not to exceed 5% of Consolidated
Net Worth of the Borrower and its Consolidated Subsidiaries in any Fiscal Year ending prior to
the Letter of Credit Availability Termination Date and may pay dividends in an aggregate amount
not to exceed $10,000,000 in any Fiscal Year ending prior to the Letter of Credit Availability
Termination Date; provided, however, that the Borrower may not repurchase any
capital stock or pay any dividends unless after giving effect thereto (i) Borrower would be in
pro forma compliance with the terms of this Agreement and (ii) no Default shall have occurred.

6.11 Indebtedness. The Borrower will not, nor will it permit any Subsidiary to,
create, incur or suffer to exist any Indebtedness, except:

(a) the Obligations;

(b) up to $125,000,000 Indebtedness of the Borrower issued pursuant
to a senior indenture between the Borrower and JPMorgan Chase Bank, N.A., as trustee,
dated April 17, 2006;

(c) guaranties permitted under Section 6.15; and

(d) capital leases in amounts not in excess of $2,500,000 at any time outstanding.

 

- 42 -

 

6.12 Merger. The Borrower will not, nor will it permit any Subsidiary to, merge or
consolidate with or into any Person, except that (a) a Subsidiary may merge into the Borrower or
any Wholly-Owned Subsidiary and (b) the Borrower may merge with or consolidate with any Person,
provided that (i) the Borrower is the surviving entity, (ii) no Default or Unmatured
Default has occurred or will occur as a result of such merger or consolidation and (iii) the
Agent has received a certificate from the Borrower showing that the Borrower would be in pro
forma compliance with the terms of this Agreement after giving effect to such merger or
consolidation.

6.13 Sale of Assets. The Borrower will not, nor will it permit any Subsidiary to,
lease, sell, transfer or otherwise dispose of its Property, to any other Person except:

(a) sales of inventory in the ordinary course of business; and

(b) leases, sales, transfers or other dispositions of its Property that, together with
all other Property of the Borrower and its Subsidiaries previously leased, sold or disposed
of (other than inventory or Investments (other than Investments in Subsidiaries) sold in the
ordinary course of business) as permitted by this Section 6.13 since the Closing
Date, do not constitute a Substantial Portion of the Property of the Borrower and its
Subsidiaries.

6.14 Investments and Acquisitions. The Borrower will not, nor will it permit any
Subsidiary to, make or suffer to exist any Investment (including, without limitation, loans and
advances to, and other Investments in, Subsidiaries), or commitments therefor, or to create any
Subsidiary or to become or remain a partner in any partnership or joint venture, or to make any
Acquisitions, except:

(a) Cash Equivalent Investments;

(b) Investments in debt securities rated A- or better by S&P, A3 or better by Moody’s
or NAIC-1 or better by the NAIC;

(c) existing Investments in Subsidiaries and other Investments in existence on the
Closing Date;

(d) Investments in debt securities rated less than A- by S&P, A3 by Moody’s or NAIC-1
by the NAIC but BBB- or better by S&P, Baa3 or better by Moody’s or
NAIC-2 or better by the NAIC; provided, that all such Investments under this
clause (d) do not exceed, in the aggregate at any one time outstanding, ten percent (10%) of
the combined Investments of the Borrower and its Subsidiaries; provided,
further, that if any such Investment ceases to meet such ratings requirements, then
such Investment shall be permitted hereby for a period of one hundred and eighty (180) days
after the date on which such ratings requirement is no longer satisfied;

 

- 43 -

 

(e) Investments in debt securities not satisfying any of the standards, including the
percentage limitations, set forth in clauses (b) or (d) above in an
aggregate amount not exceeding 5% of Consolidated Net Worth of the Borrower and its
Consolidated Subsidiaries;

(f) Investments by the Borrower (not including Investments in Subsidiaries) in equity
securities in an aggregate amount not to exceed 20% of the Consolidated Net Worth of the
Borrower and its Consolidated Subsidiaries; provided that no single Investment in
equity securities shall be in an amount in excess of 5% of the Consolidated Net Worth of the
Borrower and its Consolidated Subsidiaries;

(g) other Investments after the Closing Date in an aggregate amount not to exceed 5% of
Consolidated Net Worth of the Borrower and its Consolidated Subsidiaries;

(h) Acquisitions in an aggregate amount not to exceed 5% of Consolidated Net Worth of
the Borrower and its Consolidated Subsidiaries in any Fiscal Year; and

(i) Investments by Navigators in Wholly-Owned Subsidiaries of Navigators (including new
Wholly-Owned Subsidiaries of Navigators);

provided that the Borrower will not, and will not permit any Subsidiary to, make any
Investments not in conformity with its then applicable investment guidelines.

6.15 Contingent Obligations. The Borrower will not, nor will it permit any
Subsidiary to, make or suffer to exist any Contingent Obligation (including, without limitation,
any Contingent Obligation with respect to the obligations of a Subsidiary), except (a) by
endorsement of instruments for deposit or collection in the ordinary course of business, (b)
Contingent Obligations in respect of Letters of Credit and (c) obligations with respect to
letters of credit not issued pursuant to this Agreement with MUL or NCUL as applicant so long as
none of the Borrower or its Subsidiaries is a co-applicant with respect thereto or otherwise
guaranties such obligations; provided, however, that the Borrower or any of its
Wholly-Owned Subsidiaries may guarantee (i) the obligations of any Person that is its or its
Subsidiary’s employee so long as the aggregate amount of all such guaranteed obligations, taken
together with the aggregate amount of any and all loans to such Persons by the Borrower in
accordance with Section 6.14 outstanding at any time do not in the aggregate exceed
$500,000 and (ii) the obligations of any Wholly-Owned Subsidiary under office space leases for
space used by such Wholly-Owned Subsidiary.

6.16 Liens. The Borrower will not, nor will it permit any Subsidiary to, create,
incur, or suffer to exist any Lien in, of or on the Property of the Borrower or any of its
Subsidiaries, except:

(a) Liens for taxes, assessments or governmental charges or levies on its Property if
the same shall not at the time be delinquent or thereafter can be paid without penalty, or
are being contested in good faith and by appropriate proceedings and for which adequate
reserves in accordance with Agreement Accounting Principles shall have been set aside on its
books;

 

- 44 -

 

(b) Liens imposed by law, such as carriers’, warehousemen’s and mechanics’ Liens and
other similar Liens arising in the ordinary course of business which secure the payment of
obligations not more than sixty (60) days past due or which are being contested in good
faith by appropriate proceedings and for which adequate reserves shall have been set aside
on its books;

(c) Liens arising out of pledges or deposits under worker’s compensation laws,
unemployment insurance, old age pensions, or other social security or retirement benefits,
or similar legislation;

(d) Utility easements, building restrictions and such other encumbrances or charges
against real property as are of a nature generally existing with respect to properties of a
similar character and which do not in any material way affect the marketability of the same
or interfere with the use thereof in the business of the Borrower or its Subsidiaries;

(e) Liens existing on the Closing Date and described in Schedule 6.16 hereto;

(f) Liens in favor of the Agent, for the benefit of the Secured Parties, granted
pursuant to the Pledge Agreement or pursuant to the Cash Collateral Security Agreement;

(g) Deposits of cash or securities with or on behalf of state insurance departments
reflected in the Insurance Subsidiaries’ Statutory Financial Statements;

(h) Deposits of cash or securities by the Borrower with Lloyd’s of London; and

(i) Liens on assets subject to capital leases permitted under Section 6.11(d).

6.17 Affiliates. The Borrower will not, and will not permit any Subsidiary to,
enter into any transaction (including, without limitation, the purchase or sale of any Property
or service) with, or make any payment or transfer to, any Affiliate except in the ordinary
course of business and pursuant to the reasonable requirements of the Borrower’s or such
Subsidiary’s business and upon fair and reasonable terms no less favorable to the Borrower or
such Subsidiary than the Borrower or such Subsidiary would obtain in a comparable arms-length
transaction.

6.18 Amendments to Agreements. The Borrower will not, and will not permit any
Subsidiary to, amend, waive, modify or terminate any of its constituent documents in any manner
that could reasonably be expected to have a negative effect on the Secured Parties.

6.19 Change in Fiscal Year. The Borrower shall not, nor shall it permit any
Subsidiary to, change its Fiscal Year to end on any date other than December 31 of each year.

 

- 45 -

 

6.20 Inconsistent Agreements. The Borrower shall not, nor shall it permit any
Subsidiary to, enter into any indenture, agreement, instrument or other arrangement which, (a)
directly or indirectly prohibits or restrains, or has the effect of prohibiting or restraining,
or imposes materially adverse conditions upon, the incurrence of the Obligations, the granting
of Liens to secure the Obligations, the amending of the Facility Documents, the amending of the
Facility Documents or the ability of any Subsidiary to (i) pay dividends or make other
distributions on its capital stock, (ii) make loans or advances to the Borrower or (iii) repay
loans or advances from the Borrower or (b) contains any provision which would be violated or
breached by the issuance of Letters of Credit or by the performance by the Borrower or any
Subsidiary of any of its Obligations under any Facility Document.

6.21 Reinsurance. (a) The Borrower shall cause each Insurance Subsidiary to
maintain reinsurance protection with respect to each type of risk it writes which reinsurance
protection, in the event of a loss, limits the net loss of such Insurance Subsidiary to 2.5% or
less of the Statutory Surplus of such Insurance Subsidiary.

(b) The Borrower shall not cause or permit an Insurance Subsidiary to enter into or
maintain, as a cedent, reinsurance agreements or retrocession agreements with any Person
other than an Approved Reinsurer.

(c) The Borrower shall not cause or permit an Insurance Subsidiary to enter into or
maintain, as a cedent, reinsurance agreements or retrocesssion agreements with any Person
which do not comply with the guidelines for reinsurance by Insurance Subsidiaries set forth
on Schedule 6.21 hereto, as amended with the consent of the Lenders (the
“Reinsurance Guidelines”).

6.22 Stock of Subsidiaries. The Borrower shall not sell or otherwise dispose of
(including the granting of any security interest in) any shares of capital stock of any
Subsidiary other than pursuant to the Pledge Agreement, or permit any Subsidiary to issue
additional shares of its capital stock, except the minimum number of directors’ qualifying
 shares required by applicable law.

6.23 Financial Covenants.

(a) Minimum Consolidated Tangible Net Worth. The Borrower will at all times
maintain Consolidated Tangible Net Worth of not less than $593,000,000.

(b) Minimum Statutory Surplus. The Borrower will cause the Significant
Insurance Subsidiaries to maintain an aggregate Statutory Surplus of not less than
$465,000,000.

(c) Leverage Ratio. The Borrower will not permit the Leverage Ratio to exceed
0.30 to 1.0 at any time.

(d) Minimum Risk-Based Capital. The Borrower will cause each Significant
Insurance Subsidiary to maintain a ratio of (a) Total Adjusted Capital (as defined in the
Risk-Based Capital Act or in the rules and procedures prescribed from time to time by the
NAIC with respect thereto) to (b) the Company Action Level RBC (as defined in the Risk-Based
Capital Act or in the rules and procedures prescribed from time to time by the NAIC with
respect thereto) of at least 150%.

 

- 46 -

 

6.24 Additional Pledge. Effective upon any Person becoming a Significant
Subsidiary, the parent thereof shall pledge the stock or other equity interests thereof to the
Agent for the benefit of the Secured Parties pursuant to documentation reasonably acceptable to
the Agent provided that no pledge of the stock of NSIC shall be required so long as NSIC is not
a direct Subsidiary of the Borrower.

ARTICLE VII

DEFAULTS

The occurrence of any one or more of the following events shall constitute a Default:

7.1 Any representation or warranty made or deemed made by or on behalf of the Borrower or
any of its Subsidiaries to the Lenders or the Agent under or in connection with this Agreement,
any other Facility Document, any Letter of Credit or any certificate or information delivered in
connection with this Agreement or any other Facility Document shall be false in any material
respect on the date as of which made or deemed made.

7.2 Nonpayment of (a) any principal of any Reimbursement Obligation when due, or (b) any
interest upon any commitment or other fee or obligations under any of the Facility Documents
within five (5) days after written notice from the Agent or any Lender.

7.3 The breach by the Borrower of any of the terms or provisions of Sections 2.8,
6.2, 6.3, Sections 6.10 through 6.13, Sections 6.15
through 6.20 or Sections 6.22 through 6.23.

7.4 The breach by the Borrower (other than a breach which constitutes a Default under
Sections 7.1, 7.2 or 7.3) of any of the terms or provisions of this
Agreement which is not remedied within thirty (30) days (or in the case of Section 6.14,
ten (10) days) after the Borrower has knowledge thereof or written notice from the Agent or any
Lender.

7.5 Failure of the Borrower or any of its Subsidiaries to pay any Indebtedness aggregating
in excess of $2,500,000 when due; or the default by the Borrower or any of its Subsidiaries in
the performance of any term, provision or condition contained in any agreement under which any
such Indebtedness was created or is governed, or the occurrence of any other event or existence
of any other condition, the effect of any of which is to cause, or to permit the holder or
holders of such Indebtedness to cause, such Indebtedness to become due prior to its stated
maturity; or any such Indebtedness of the Borrower or any of its Subsidiaries shall be declared
to be due and payable or required to be prepaid (other than by a regularly scheduled payment)
prior to the stated maturity thereof.

 

- 47 -

 

7.6 The Borrower or any of its Subsidiaries shall (a) have an order for relief entered with
respect to it under the Federal bankruptcy laws as now or hereafter in effect, (b) make an
assignment for the benefit of creditors, (c) apply for, seek, consent to, or acquiesce in, the
appointment of a receiver, custodian, trustee, examiner, liquidator or similar official for it
or any Substantial Portion of its Property, (d) institute any proceeding seeking an order for
relief under the Federal bankruptcy laws as now or hereafter in effect or seeking to adjudicate
it a bankrupt or insolvent, or seeking dissolution, winding up, liquidation, reorganization,
arrangement, adjustment or composition of it or its debts under any law relating to bankruptcy,
insolvency or reorganization or relief of debtors or fail to file an answer or other pleading
denying the material allegations of any such proceeding filed against it, (e) take any corporate
action to authorize or effect any of the foregoing actions set forth in this
Section 7.6, (f) fail to contest in good faith any appointment or proceeding described
in Section 7.7 or (g) become unable to pay, not pay, or admit in writing its inability
to pay, its debts generally as they become due.

7.7 Without the application, approval or consent of the Borrower or any of its
Subsidiaries, a receiver, trustee, examiner, liquidator or similar official shall be appointed
for the Borrower or any of its Subsidiaries or any Substantial Portion of its Property, or a
proceeding described in Section 7.6(d) shall be instituted against the Borrower or any
of its Subsidiaries and such appointment continues undischarged or such proceeding continues
undismissed or unstayed for a period of thirty (30) consecutive days.

7.8 Any court, government or governmental agency shall condemn, seize or otherwise
appropriate, or take custody or control of (each a “Condemnation”), all or any portion
of the Property of the Borrower and its Subsidiaries which, when taken together with all other
Property of the Borrower and its Subsidiaries so condemned, seized, appropriated, or taken
custody or control of, during the twelve-month period ending with the month in which any such
Condemnation occurs, constitutes a Substantial Portion.

7.9 The Borrower or any of its Subsidiaries shall fail within thirty (30) days to pay, bond
or otherwise discharge one or more (a) final, nonappealable judgments or orders for the payment
of money in excess of $2,500,000 (or the equivalent thereof in currencies other than U.S.
Dollars) in the aggregate, or (b) final, nonappealable nonmonetary judgments or orders which,
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect, which judgment(s), in any such case, is/are not stayed on appeal
or otherwise being appropriately contested in good faith.

7.10 Any Reportable Event shall occur in connection with any Plan.

7.11 The Borrower or any other member of the Controlled Group shall have been notified by
the sponsor of a Multiemployer Plan that it has incurred withdrawal liability to such
Multiemployer Plan in an amount which, when aggregated with all other amounts required to be
paid to Multiemployer Plans by the Borrower or any other member of the Controlled Group as
withdrawal liability (determined as of the date of such notification), exceeds $2,500,000.

 

- 48 -

 

7.12 The Borrower or any other member of the Controlled Group shall have been notified by
the sponsor of a Multiemployer Plan that such Multiemployer Plan is in reorganization or is
being terminated, within the meaning of Title IV of ERISA, if as a result of such reorganization
or termination the aggregate annual contributions of the Borrower and the other members of the
Controlled Group (taken as a whole) to all Multiemployer Plans which are then in reorganization
or being terminated have been or will be increased over the amounts contributed to such
Multiemployer Plans for the respective plan years of each such Multiemployer Plan immediately
preceding the plan year in which the reorganization or termination occurs by an amount exceeding
$2,500,000.

7.13 The Borrower or any of its Subsidiaries shall (a) be the subject to any proceeding or
investigation pertaining to the release by the Borrower, any of its Subsidiaries or any other
Person of any toxic or hazardous waste or substance into the environment, or (b) violate any
Environmental Law, which, in the case of an event described in clause (a) or (b), could
reasonably be expected to have a Material Adverse Effect.

7.14 Any Change in Control shall occur.

7.15 The occurrence of any “default”, as defined in any Facility Document (other than this
Agreement) or the breach of any of the terms or provisions of any Facility Document (other than
this Agreement), which default or breach continues beyond any period of grace therein provided.

7.16 There shall occur a change in the business, Property, condition (financial or
otherwise) or results of operations of the Borrower and its Subsidiaries which has a Material
Adverse Effect.

7.17 The Borrower or any of its Subsidiaries incurs or becomes subject to action or
threatened action of any Governmental Authority, including, without limitation, a fine, penalty,
cease and desist order or revocation, suspension or limitation of a License, the effect of which
could reasonably be expected to have a Material Adverse Effect.

7.18 Any Security Document shall for any reason fail to create a valid and perfected, first
priority security interest in any collateral purported to be covered thereby,
except as permitted by the terms of such Security Document, or any Security Document, once
executed, shall fail to remain in full force or effect or any action shall be taken to
discontinue or to assert the invalidity or unenforceability of any Security Document.

 

- 49 -

 

ARTICLE VIII

ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES

8.1 Acceleration. If any Default described in Section 7.6 or 7.7
occurs with respect to the Borrower, the obligations of the Issuer and the Lenders to issue
Letters of Credit hereunder shall automatically terminate and the Obligations shall immediately
become due and payable without any election or action on the part of the Agent or any Lender.
If any other Default occurs, the Required Lenders (or the Agent with the consent of the Required
Lenders) may terminate or suspend the obligations of the Issuer and the Lenders to issue Letters
of Credit hereunder, or declare the Obligations to be due and payable, or both, whereupon the
Obligations shall become immediately due and payable, without presentment, demand, protest or
notice of any kind, all of which the Borrower hereby expressly waives. In addition to the
foregoing, following the occurrence and during the continuance of a Default, so long as any
Letter of Credit has not been fully drawn and has not been canceled or expired by its terms,
upon demand by the Agent (which demand shall be made upon the request of the Required Lenders),
the Borrower shall deposit, in a Collateral Account, Cash Collateral Investments with a
Collateral Value equal to the product of one hundred and three percent (103%) of the aggregate
undrawn face amount of all outstanding Letters of Credit and all fees and other amounts due or
which may become due with respect thereto.

If, within thirty (30) days after acceleration of the maturity of the Obligations or
termination of the obligations of the Lenders to issue Letters of Credit hereunder as a result
of any Default (other than any Default as described in Section 7.6 or 7.7 with
respect to the Borrower) and before any judgment or decree for the payment of the Obligations
due shall have been obtained or entered, the Required Lenders (in their sole discretion) may
direct the Agent to rescind and annul such acceleration and/or termination.

8.2 Amendments. Subject to the provisions of this Article VIII, the
Required Lenders (or the Agent with the consent of the Required Lenders) and the Borrower may
enter into agreements supplemental hereto for the purpose of adding or modifying any provisions
to the Facility Documents or changing in any manner the rights of the Lenders or the Borrower
hereunder or waiving any Default hereunder; provided, however, that no such
supplemental agreement shall, without the consent of each Lender:

(a) Extend the final maturity of any Obligations or forgive all or any portion of the
Reimbursement Obligations, or reduce the rate or extend the time of payment of interest or
fees (including without limitation letter of credit fees) hereunder;

(b) Reduce the percentage specified in the definition of Required Lenders;

(c) Reduce the amount of or extend the date for payment of Reimbursement Obligations or
commitment and facility reductions required under Section 2.4 or 2.10, or
increase the amount of the Letter of Credit Participation Amount of any Lender hereunder;

(d) Extend the Letter of Credit Availability Termination Date; permit any Letter of
Credit to have an expiry date beyond four years after notice, in the case of Lloyd’s Letters
of Credit, or one year after its effective date in the case of other Letters of Credit;
except as permitted in Section 2.5, permit the amendment or extension of any Letter
of Credit; or, except as otherwise set forth in Section 2.1(b), permit the renewal
of any Letter of Credit;

 

- 50 -

 

(e) Permit any amendment of Sections 2.4(d) or 8.4;

(f) Release any guarantor of any Obligations or, except as provided in the Pledge
Agreement, release any of the collateral for the Obligations or decrease the amount of
collateral required under Sections 2.1(d), 2.1(f), 2.8,
2.12(a) or 8.1;

(g) Permit any assignment by the Borrower of its Obligations or its rights hereunder;
or

(h) Permit any amendment of the Reinsurance Guidelines;

provided, further, that no such supplemental agreement shall, without the
consent of each Lender, amend this Section 8.2. No amendment of any provision of this
Agreement relating to the Agent shall be effective without the written consent of the Agent.
The Agent may waive payment of the fee required under Section 12.3(b) without obtaining
the consent of any other party to this Agreement. Notwithstanding anything to the contrary
herein, no Defaulting Lender shall have any right to approve or disapprove any amendment, waiver
or consent hereunder, except that the commitment of such Lender may not be increased or extended
without the consent of such Lender.

8.3 Preservation of Rights. No delay or omission of the Lenders or the Agent to
exercise any right under the Facility Documents shall impair such right or be construed to be a
waiver of any Default or an acquiescence therein, and the issuance of a Letter of Credit
notwithstanding the existence of a Default or the inability of the Borrower to satisfy the
conditions precedent to such Letter of Credit shall not constitute any waiver or acquiescence.
Any single or partial exercise of any such right shall not preclude other or further exercise
thereof or the exercise of any other right, and no waiver, amendment or other variation of the
terms, conditions or provisions of the Facility Documents whatsoever shall be valid unless in
writing signed by the Lenders required pursuant to Section 8.2, and then only to the
extent in such writing specifically set forth. All remedies contained in the Facility Documents
or by law afforded shall be cumulative and all shall be available to the Agent and the Lenders
until the Obligations have been paid in full.

8.4 Application of Funds. After the occurrence of a Default, any amounts received
on account of the Obligations (including proceeds of Collateral) shall be applied by the Agent
in the following order:

First, to payment of that portion of the Obligations constituting fees, indemnities,
expenses and other amounts (including fees, charges and disbursements of counsel to the Agent and
amounts payable under Article III) payable to the Agent in its capacity as such;

Second, to payment of that portion of the Obligations constituting fees, indemnities
and other amounts (other than Reimbursement Obligations, interest and Letter of Credit fees)
payable to the Lenders and the Issuer (including fees, charges and disbursements of counsel to the
respective Lenders and the Issuer (including, without duplication, fees and time charges for
attorneys who may be employees of any Lender or the Issuer) and amounts payable under Article
III), ratably among them in proportion to the respective amounts described in this clause
Second payable to them;

 

- 51 -

 

Third, to payment of that portion of the Obligations constituting accrued and unpaid
Letter of Credit fees and interest on the Reimbursement Obligations and other Obligations, ratably
among the Lenders and the Issuer in proportion to the respective amounts described in this clause
Third payable to them;

Fourth, to payment of that portion of the Obligations constituting unpaid
Reimbursement Obligations, ratably among the Lenders and the Issuer in proportion to the respective
amounts described in this clause Fourth held by them;

Fifth, to the Agent for the account of the Issuer to be held as Collateral for that
portion of Letter of Credit Obligations comprised of the aggregate undrawn amount of Letters of
Credit; and

Last, the balance, if any, after all of the Obligations have been indefeasibly paid in
full and the Letter of Credit Commitment has been terminated, to the Borrower or as otherwise
required by Law.

Amounts held as Collateral for the aggregate undrawn amount of Letters of Credit pursuant to
clause Fifth above shall be applied to satisfy drawings under such Letters of Credit as
they occur. If any Collateral remains after all Letters of Credit have either been fully drawn or
expired, such remaining amount shall be applied to the other Obligations, if any, in the order set
forth above.

ARTICLE IX

GENERAL PROVISIONS

9.1 Survival of Representations. All representations and warranties of the
Borrower contained in this Agreement or in any Facility Document shall survive the issuance of
the Letters of Credit herein contemplated.

9.2 Governmental Regulation. Anything contained in this Agreement to the contrary
notwithstanding, no Lender shall be obligated to extend credit to the Borrower in violation of
any limitation or prohibition provided by any applicable statute or regulation.

9.3 Headings. Section headings in the Facility Documents are for convenience of
reference only, and shall not govern the interpretation of any of the provisions of the Facility
Documents.

9.4 Entire Agreement. The Facility Documents embody the entire agreement and
understanding among the Borrower, the Agent, and the Lenders and supersede all prior agreements
and understandings among the Borrower, the Agent, and the Lenders relating to the subject matter
thereof other than the fee letter dated March 6, 2009 in favor of JPMorgan Chase Bank and J.P.
Morgan Securities Inc. (the “Fee Letter”).

 

- 52 -

 

9.5 Numbers of Documents. All statements, notices, closing documents, and requests
hereunder shall be furnished to the Agent with sufficient counterparts so that the Agent may
furnish one to each of the Lenders.

9.6 Several Obligations; Benefits of this Agreement. The respective obligations of
the Lenders hereunder are several and not joint and no Lender shall be the partner or agent of
any other (except to the extent to which the Agent is authorized to act as such). The failure
of any Lender to perform any of its obligations hereunder shall not relieve any other Lender
from any of its obligations hereunder. This Agreement shall not be construed so as to confer
any right or benefit upon any Person other than the parties to this Agreement and their
respective successors and assigns, provided, however, that the parties hereto
expressly agree that the Arranger shall enjoy the benefits of the provisions of Sections
9.7, 9.11 and 10.13 to the extent specifically set forth therein and shall
have the right to enforce such provisions on its own behalf and in its own name to the same
extent as if it were a party to this Agreement.

9.7 Expenses; Indemnification. (a) The Borrower shall reimburse the Agent and the
Arranger for any costs, internal charges and out-of-pocket expenses (including reasonable
attorneys’ fees and time charges of attorneys for the Agent) paid or incurred by the Agent or
the Arranger in connection with the preparation, negotiation, execution, delivery, syndication,
review, amendment, modification, and administration of the Facility Documents. The Borrower
also agrees to reimburse the Agent, the Arranger and the Lenders for any costs, internal charges
and out-of-pocket expenses (including reasonable attorneys’ fees and time charges of attorneys
for the Agent, the Arranger and the Lenders), paid or incurred by the Agent, the Arranger or any
Lender in connection with the investigation, collection and enforcement of the Facility
Documents.

(b) The Borrower hereby further agrees to indemnify the Agent, the Arranger, each
Lender, each Affiliate of a Lender, and the directors, officers, partners and employees of
any of the foregoing against all losses, claims, damages, penalties, judgments, liabilities
and expenses (including, without limitation, all expenses of
litigation or preparation therefor whether or not the Agent, the Arranger or any Lender
is a party thereto) which any of them may pay or incur arising out of or relating to this
Agreement, the other Facility Documents, the transactions contemplated hereby or the direct
or indirect application or proposed application of the proceeds of any Letter of Credit
hereunder except to the extent that they have resulted from the gross negligence or willful
misconduct of the party seeking indemnification. The obligations of the Borrower under this
Section 9.7 shall survive the termination of this Agreement.

9.8 Accounting. Except as provided to the contrary herein, all accounting terms
used herein shall be interpreted and all accounting determinations hereunder shall be made in
accordance with Agreement Accounting Principles. In the event the pages, columns, lines or
sections of the Annual Statement referenced herein are changed or renumbered, all such
references shall be deemed references to such page, column, line or section as so renumbered or
changed.

 

- 53 -

 

9.9 Severability of Provisions. Any provision in any Facility Document that is
held to be inoperative, unenforceable, or invalid in any jurisdiction shall, as to that
jurisdiction, be inoperative, unenforceable, or invalid without affecting the remaining
provisions in that jurisdiction or the operation, enforceability, or validity of that provision
in any other jurisdiction, and to this end the provisions of all Facility Documents are declared
to be severable.

9.10 Nonliability of Lenders. The relationship between the Borrower on the one
hand and the Lenders and the Agent on the other hand shall be solely that of borrower and
lender. Neither the Agent, the Arranger nor any Lender shall have any fiduciary
responsibilities to the Borrower. Neither the Agent, the Arranger nor any Lender undertakes any
responsibility to the Borrower to review or inform the Borrower of any matter in connection with
any phase of the Borrower’s business or operations. The Borrower agrees that neither the Agent,
the Arranger nor any Lender shall have liability to the Borrower (whether sounding in tort,
contract or otherwise) for losses suffered by the Borrower in connection with, arising out of,
or in any way related to, the transactions contemplated and the relationship established by the
Facility Documents, or any act, omission or event occurring in connection therewith, unless it
is determined in a final non-appealable judgment by a court of competent jurisdiction that such
losses resulted from the gross negligence or willful misconduct of the party from which recovery
is sought. Neither the Agent, the Arranger nor any Lender shall have any liability with respect
to, and the Borrower hereby waives, releases and agrees not to sue for, any special, indirect,
punitive or consequential damages suffered by the Borrower in connection with, arising out of,
or in any way related to the Facility Documents or the transactions contemplated thereby.

9.11 Confidentiality. Each Lender agrees to hold any confidential information
which it may receive from the Borrower pursuant to this Agreement in confidence, except for
disclosure (a) to its Affiliates and to other Lenders and their respective Affiliates, (b) to
legal counsel, accountants, and other professional advisors to such Lender or to a Transferee,
(c) to regulatory officials, (d) to any Person as requested pursuant to or as
required by law, regulation, or legal process, (e) to any Person in connection with any
legal proceeding to which such Lender is a party, (f) to such Lender’s direct or indirect
contractual counterparties in swap agreements or to legal counsel, accountants and other
professional advisors to such counterparties and (g) permitted by Section 12.4;
provided, that any recipient of such disclosure shall be advised by such Lender of the
confidentiality requirements herein set forth.

9.12 Nonreliance. Each Lender hereby represents that it is not relying on or
looking to any margin stock (as defined in Regulation U of the Board of Governors of the Federal
Reserve System) for the repayment of the Obligations provided for herein.

9.13 Disclosure. The Borrower and each Lender hereby (a) acknowledge and agree
that JPMorgan Chase Bank and/or its Affiliates from time to time may hold other investments in,
make other loans to or have other relationships with the Borrower, and (b) waive any liability
of JPMorgan Chase Bank or such Affiliate to the Borrower or any Lender, respectively, arising
out of or resulting from such investments, loans or relationships other than liabilities arising
out of the gross negligence or willful misconduct of JPMorgan Chase Bank or its Affiliates.

 

- 54 -

 

9.14 USA Patriot Act Notification. Each Lender hereby notifies the Borrower that
pursuant to the requirements of the USA Act (Title III of Pub. L. 107-56 (signed into law on
October 26, 2001) (the “Act”), it is required to obtain, verify and record information that
identifies the Borrower, which information includes the name and address of the Borrower and
other information that will allow such Lender to identify the Borrower in accordance with the
Act. The Borrower agrees to cooperate with each Lender and provide true, accurate and complete
information to such Lender in response to any such request.

ARTICLE X

THE ADMINISTRATIVE AGENT

10.1 Appointment; Nature of Relationship. JPMorgan Chase Bank is hereby appointed
by each of the Lenders as Administrative Agent (herein referred to as the “Agent”)
hereunder and under each other Facility Document, and each of the Lenders irrevocably authorizes
the Agent to act as the Administrative Agent of such Lender with the rights and duties expressly
set forth herein and in the other Facility Documents. The Agent agrees to act as such
Administrative Agent upon the express conditions contained in this Article X.
Notwithstanding the use of the defined term “Agent,” it is expressly understood and agreed that
the Agent shall not have any fiduciary responsibilities to any Lender by reason of this
Agreement or any other Facility Document and that the Agent is merely acting as the
Administrative Agent of the Lenders with only those duties as are expressly set forth in this
Agreement and the other Facility Documents. In its capacity as the Lenders’ Administrative
Agent, the Agent (a) does not hereby assume any fiduciary duties to any of the Lenders, (b) is a
“representative” of the Lenders within the meaning of Section 9-105 of the Uniform Commercial
Code and (c) is acting as an independent contractor, the rights and duties of
which are limited to those expressly set forth in this Agreement and the other Facility
Documents. Each of the Lenders hereby agrees to assert no claim against the Agent on any agency
theory or any other theory of liability for breach of fiduciary duty, all of which claims each
Lender hereby waives.

10.2 Powers. The Agent shall have and may exercise such powers under the Facility
Documents as are specifically delegated to the Agent by the terms of each thereof, together with
such powers as are reasonably incidental thereto. The Agent shall have no implied duties to the
Lenders, or any obligation to the Lenders to take any action thereunder except any action
specifically provided by the Facility Documents to be taken by the Agent.

10.3 General Immunity. Neither the Agent nor any of its directors, officers,
agents or employees shall be liable to the Borrower, the Lenders or any Lender for any action
taken or omitted to be taken by it or them hereunder or under any other Facility Document or in
connection herewith or therewith except to the extent such action or inaction is determined in a
final non-appealable judgment by a court of competent jurisdiction to have arisen from the gross
negligence or willful misconduct of such Person.

 

- 55 -

 

10.4 No Responsibility for Recitals, etc. Neither the Agent nor any of its
directors, officers, agents or employees shall be responsible for or have any duty to ascertain,
inquire into, or verify: (a) any statement, warranty or representation made in connection with
any Facility Document or any borrowing hereunder, (b) the performance or observance of any of
the covenants or agreements of any obligor under any Facility Document, including, without
limitation, any agreement by an obligor to furnish information directly to each Lender, (c) the
satisfaction of any condition specified in Article IV, except receipt of items required
to be delivered solely to the Agent, (d) the existence or possible existence of any Default or
Unmatured Default, (e) the validity, enforceability, effectiveness, sufficiency or genuineness
of any Facility Document or any other instrument or writing furnished in connection therewith,
(f) the value, sufficiency, creation, perfection or priority of any Lien in any collateral
security or (g) the financial condition of the Borrower or any guarantor of any of the
Obligations or of any of the Borrower’s or any such guarantor’s respective Subsidiaries. The
Agent shall have no duty to disclose to the Lenders information that is not required to be
furnished by the Borrower to the Agent at such time, but is voluntarily furnished by the
Borrower to the Agent (either in its capacity as Agent or in its individual capacity).

10.5 Action on Instructions of Lenders. The Agent shall in all cases be fully
protected in acting, or in refraining from acting, hereunder and under any other Facility
Document in accordance with written instructions signed by the Required Lenders, and such
instructions and any action taken or failure to act pursuant thereto shall be binding on all of
the Lenders. The Lenders hereby acknowledge that the Agent shall be under no duty to take any
discretionary action permitted to be taken by it pursuant to the provisions of this Agreement or
any other Facility Document unless it shall be requested in writing to do so by the Required
Lenders. The Agent shall be fully justified in failing or refusing to take any action hereunder
and under any other Facility Document unless it shall first be indemnified to
its satisfaction by the Lenders pro-rata against any and all liability, cost and expense
that it may incur by reason of taking or continuing to take any such action.

10.6 Employment of Agent and Counsel. The Agent may execute any of its duties as
Agent hereunder and under any other Facility Document by or through employees, agents, and
attorneys-in-fact and shall not be answerable to the Lenders, except as to money or securities
received by it or its authorized agents, for the default or misconduct of any such agents or
attorneys-in-fact selected by it with reasonable care. The Agent shall be entitled to advice of
counsel concerning the contractual arrangement between the Agent and the Lenders and all matters
pertaining to the Agent’s duties hereunder and under any other Facility Document.

10.7 Reliance on Documents; Counsel. The Agent shall be entitled to rely upon any
notice, consent, certificate, affidavit, letter, telegram, statement, paper or document believed
by it to be genuine and correct and to have been signed or sent by the proper person or persons,
and, in respect to legal matters, upon the opinion of counsel selected by the Agent, which
counsel may be employees of the Agent.

 

- 56 -

 

10.8 Agent’s Reimbursement and Indemnification. The Lenders agree to reimburse and
indemnify the Agent ratably in proportion to their Letter of Credit Participation Amount (or, if
the Letter of Credit Commitments has been terminated, in proportion to its Letter of Credit
Participation Amount immediately prior to such termination) (a) for any amounts not reimbursed
by the Borrower for which the Agent is entitled to reimbursement by the Borrower under the
Facility Documents, (b) for any other expenses incurred by the Agent on behalf of the Lenders,
in connection with the preparation, execution, delivery, administration and enforcement of the
Facility Documents (including, without limitation, for any expenses incurred by the Agent in
connection with any dispute between the Agent and any Lender or between two or more of the
Lenders) and (c) for any liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind and nature whatsoever which may
be imposed on, incurred by or asserted against the Agent in any way relating to or arising out
of the Facility Documents or any other document delivered in connection therewith or the
transactions contemplated thereby (including, without limitation, for any such amounts incurred
by or asserted against the Agent in connection with any dispute between the Agent and any Lender
or between two or more of the Lenders), or the enforcement of any of the terms of the Facility
Documents or of any such other documents; provided that (i) no Lender shall be liable for any of
the foregoing to the extent any of the foregoing is found in a final non-appealable judgment by
a court of competent jurisdiction to have resulted from the gross negligence or willful
misconduct of the Agent and (ii) any indemnification required pursuant to Section 3.5(g)
shall, notwithstanding the provisions of this Section 10.8, be paid by the relevant
Lender in accordance with the provisions thereof. The obligations of the Lenders under this
Section 10.8 shall survive payment of the Obligations and termination of this Agreement.

10.9 Notice of Default. The Agent shall not be deemed to have knowledge or notice
of the occurrence of any Default or Unmatured Default hereunder unless the Agent
has received written notice from a Lender or the Borrower referring to this Agreement
describing such Default or Unmatured Default and stating that such notice is a “notice of
default”. In the event that the Agent receives such a notice, the Agent shall give prompt
notice thereof to the Lenders.

10.10 Rights as a Lender. In the event the Agent is a Lender, the Agent shall have
the same rights and powers hereunder and under any other Facility Document with respect to its
Letter of Credit Participation Amount, and any Letters of Credit in which it has an interest as
any Lender and may exercise the same as though it were not the Agent, and the term “Lender” or
“Lenders” shall, at any time when the Agent is a Lender, unless the context otherwise indicates,
include the Agent in its individual capacity. The Agent and its Affiliates may accept deposits
from, lend money to, and generally engage in any kind of trust, debt, equity or other
transaction, in addition to those contemplated by this Agreement or any other Facility Document,
with the Borrower or any of its Subsidiaries in which the Borrower or such Subsidiary is not
restricted hereby from engaging with any other Person. The Agent, in its individual capacity,
is not obligated to remain a Lender.

 

- 57 -

 

10.11 Rights with Respect to Designated Lenders. If any Lender is a Designated
Lender, then the Issuer may, by notice to such Designated Lender and the Agent, require such
Designated Lender to (a) deliver to the Agent, for the account of the Issuer, cash collateral in
an amount equal to the product of one hundred and three percent (103%) of the remainder of (i)
such Designated Lender’s pro-rata share of the Letter of Credit Commitment minus (ii) the
principal amount of such Designated Lender’s pro-rata share of the Letter of Credit Obligations
then outstanding (the “Reserve Amount”) or (b) and solely with respect to a Designated
Lender that is not a Defaulting Lender, make other arrangements reasonably satisfactory to the
Issuer to assure that such Designated Lender will reimburse the Issuer for its pro-rata share of
any payment made by the Issuer under any Letter of Credit. Any such cash collateral (i) shall
be held by the Agent pursuant to arrangements reasonably satisfactory to such Designated Lender,
the Issuer and the Agent and (ii) if at any time such Designated Lender becomes obligated to pay
any amount to the Issuer pursuant to Section 2.4, shall be applied (to the extent
required) by the Agent to pay such amount. Upon the expiration, termination or reduction in
amount of any applicable Letter of Credit, the Agent shall release (subject to Section
2.9(d) in the case of a Defaulting Lender) to such Designated Lender (or such other Person
as may be entitled thereto) any cash collateral held by the Agent in excess of the Reserve
Amount. If any Designated Lender fails to provide cash collateral or make other arrangements as
required by the first sentence of this Section 10.11, then the Agent shall retain as
cash collateral all amounts otherwise payable to such Designated Lender under this Agreement
until the Agent has retained an amount equal to the Reserve Amount.

10.12 Lender Credit Decision. Each Lender acknowledges that it has, independently
and without reliance upon the Agent, the Arranger or any other Lender and based on the financial
statements prepared by the Borrower and such other documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter into this Agreement and the
other Facility Documents. Each Lender also acknowledges that it will, independently and without
reliance upon the Agent, the Arranger or any other Lender
and based on such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under this Agreement
and the other Facility Documents.

 

- 58 -

 

10.13 Successor Agent. The Agent may resign at any time by giving written notice
thereof to the Lenders and the Borrower, such resignation to be effective upon the appointment
of a successor Agent or, if no successor Agent has been appointed, forty-five days after the
retiring Agent gives notice of its intention to resign. The Agent may be removed at any time
with or without cause by written notice received by the Agent from the Required Lenders, such
removal to be effective on the date specified by the Required Lenders. Upon any such
resignation or removal, the Required Lenders shall have the right to appoint, on behalf of the
Borrower and the Lenders, a successor Agent. If no successor Agent shall have been so appointed
by the Required Lenders within thirty days after the resigning Agent’s giving notice of its
intention to resign, then the resigning Agent may appoint, on behalf of the Borrower and the
Lenders, a successor Agent. Notwithstanding the previous sentence, the Agent may at any time
without the consent of the Borrower or any Lender, appoint any of its Affiliates which is a
commercial bank as a successor Agent hereunder. If the Agent has resigned or been removed and
no successor Agent has been appointed, the Lenders may perform all the duties of the Agent
hereunder and the Borrower shall make all payments in respect of the Obligations to the
applicable Lender and for all other purposes shall deal directly with the Lenders. No successor
Agent shall be deemed to be appointed hereunder until such successor Agent has accepted the
appointment. Any such successor Agent shall be a commercial bank having capital and retained
earnings of at least $100,000,000. Upon the acceptance of any appointment as Agent hereunder by
a successor Agent, such successor Agent shall thereupon succeed to and become vested with all
the rights, powers, privileges and duties of the resigning or removed Agent. Upon the
effectiveness of the resignation or removal of the Agent, the resigning or removed Agent shall
be discharged from its duties and obligations hereunder and under the Facility Documents. After
the effectiveness of the resignation or removal of an Agent, the provisions of this Article
X shall continue in effect for the benefit of such Agent in respect of any actions taken or
omitted to be taken by it while it was acting as the Agent hereunder and under the other
Facility Documents. In the event that there is a successor to the Agent by merger, or the Agent
assigns its duties and obligations to an Affiliate pursuant to this Section 10.13, then
the term “Prime Rate” as used in this Agreement shall mean the prime rate, base rate or other
analogous rate of the new Agent.

10.14 Agents’ Fees. The Borrower agrees to pay to the Agent, for its own account,
the fees agreed to by the Borrower and the Agent pursuant to the Fee Letter.

10.15 Delegation to Affiliates. The Borrower and the Lenders agree that the Agent
may delegate any of its duties under this Agreement to any of its Affiliates. Any such
Affiliate (and such Affiliate’s directors, officers, agents and employees) which performs duties
in connection with this Agreement shall be entitled to the same benefits of the indemnification,
waiver and other protective provisions to which the Agent is entitled under Articles IX
and X.

10.16 Syndication Agent. The Syndication Agent shall have no right, power,
obligation, liability, responsibility or duty under this Agreement other than those applicable
to all Lenders as such. Without limiting the foregoing, the Syndication Agent shall not have or
be deemed to have a fiduciary relationship with any Lender. Each Lender hereby makes the same
acknowledgements with respect to the Syndication Agent as it makes to the Agent in
Section 10.10.

 

- 59 -

 

ARTICLE XI

SETOFF; RATABLE PAYMENTS

11.1 Setoff. In addition to, and without limitation of, any rights of the Lenders
under applicable law, if the Borrower becomes insolvent, however evidenced, or any Default
occurs, any and all deposits (including all account balances, whether provisional or final and
whether or not collected or available) and any other Indebtedness at any time held or owing by
any Lender to or for the credit or account of the Borrower may be offset and applied toward the
payment of the Obligations owing to such Lender, whether or not the Obligations, or any part
hereof, shall then be due.

11.2 Ratable Payments. If any Lender, whether by setoff or otherwise, has payment
made to it upon its Reimbursement Obligations (other than payments received pursuant to
Section 3.1, 3.2 or 3.3) in a greater proportion than that received by
any other Lender, such Lender agrees, promptly upon demand, to purchase a participation
interests in Letters of Credit, as the case may be, held by the other Lenders so that after such
purchase each Lender will hold its ratable proportion of such participation interests in Letters
of Credit. If any Lender, whether in connection with setoff or amounts which might be subject
to setoff or otherwise, receives collateral or other protection for its Obligations or such
amounts which may be subject to setoff, such Lender agrees, promptly upon demand, to take such
action necessary such that all Lenders share in the benefits of such collateral ratably in
proportion to their Letter of Credit Participation Amounts. In case any such payment is
disturbed by legal process, or otherwise, appropriate further adjustments shall be made.

ARTICLE XII

BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS

12.1 Successors and Assigns. The terms and provisions of the Facility Documents
shall be binding upon and inure to the benefit of the Borrower and the Lenders and their
respective successors and assigns, except that (a) the Borrower shall not have the right to
assign its rights or obligations under the Facility Documents and (b) any assignment by any
Lender must be made in compliance with Section 12.3. Notwithstanding clause (b)
of the foregoing sentence, any Lender may at any time, without the consent of the Borrower or
the Agent, assign all or any portion of its rights under this Agreement to a Federal Reserve
Bank; provided, however, that no such assignment to a Federal Reserve Bank shall
release the transferor Lender from its obligations hereunder. The Agent may treat the Person
which
participated in any Letter of Credit as the owner thereof for all purposes hereof unless
and until such Person complies with Section 12.3 in the case of an assignment thereof
or, in the case of any other transfer, a written notice of the transfer is filed with the Agent.
Any assignee or transferee of the rights to any Letter of Credit agrees by acceptance of such
transfer or assignment to be bound by all the terms and provisions of the Facility Documents.
Any request, authority or consent of any Person, who at the time of making such request or
giving such authority or consent is the owner of the rights to any Letter of Credit, shall be
conclusive and binding on any subsequent holder, transferee or assignee of the rights to such
Letter of Credit, as the case may be.

 

- 60 -

 

12.2 Participations.

(a) Permitted Participants; Effect. Any Lender may, in the ordinary course of
its business and in accordance with applicable law, at any time sell to one or more banks or
other entities (“Participants”) participating interests in any Letter of Credit
Participation Amount of such Lender, any interest of such Lender in any Letters of Credit or
any other interest of such Lender under the Facility Documents. In the event of any such
sale by a Lender of participating interests to a Participant, such Lender’s obligations
under the Facility Documents shall remain unchanged, such Lender shall remain solely
responsible to the other parties hereto for the performance of such obligations, such Lender
shall remain the owner of its interest in any Letters of Credit issued to it in evidence
thereof for all purposes under the Facility Documents, all amounts payable by the Borrower
under this Agreement shall be determined as if such Lender had not sold such participating
interests, and the Borrower and the Agent shall continue to deal solely and directly with
such Lender in connection with such Lender’s rights and obligations under the Facility
Documents.

(b) Voting Rights. Each Lender shall retain the sole right to approve, without
the consent of any Participant, any amendment, modification or waiver of any provision of
the Facility Documents, except to the extent such amendment, modification or waiver would
require the unanimous consent of the Lenders as described in Section 8.2.

(c) Benefit of Setoff. The Borrower agrees that each Participant shall be
deemed to have the right of setoff provided in Section 11.1 in respect of its
participating interest in amounts owing under the Facility Documents to the same extent as
if the amount of its participating interest were owing directly to it as a Lender under the
Facility Documents, provided that each Lender shall retain the right of setoff
provided in Section 11.1 with respect to the amount of participating interests sold
to each Participant. The Lenders agree to share with each Participant, and each
Participant, by exercising the right of setoff provided in Section 11.1, agrees to
share with each Lender, any amount received pursuant to the exercise of its right of setoff,
such amounts to be shared in accordance with Section 11.2 as if each Participant
were a Lender.

 

- 61 -

 

12.3 Assignments.

(a) Permitted Assignments. Any Lender may, in the ordinary course of its
business and in accordance with applicable law, at any time assign to one or more banks or
other entities (“Purchasers”) all or any part of its rights and obligations under
the Facility Documents. Such assignment shall be substantially in the form of
Exhibit B or in such other form as may be agreed to by the parties thereto. The
consent of the Borrower and the Agent shall be required prior to an assignment becoming
effective with respect to a Purchaser which is not a Lender or an Affiliate thereof;
provided, however, that if a Default has occurred and is continuing, the
consent of the Borrower shall not be required. Such consent shall not be unreasonably
withheld or delayed. Each such assignment shall (unless it is to a Lender or an Affiliate
thereof or the Agent otherwise consents) be in an amount not less than the lesser of
(a) $5,000,000 or (b) the remaining amount of the assigning Lender’s Letter of Credit
Participation Amount (calculated as at the date of such assignment).

(b) Effect; Effective Date. Upon (a) delivery to the Agent and the Borrower of
a notice of assignment, substantially in the form attached as Exhibit I to Exhibit B
(a “Notice of Assignment”), together with any consents required by
Section 12.3(b), and (b) payment of a $3,500 fee to the Agent by the assigning
Lender or the Purchaser for processing such assignment, such assignment shall become
effective on the effective date specified in such Notice of Assignment. The Notice of
Assignment shall contain a representation by the Purchaser to the effect that none of the
consideration used to make the purchase of the participation interests in the Letters of
Credit under the applicable assignment agreement are “plan assets” as defined under ERISA
and that the rights and interests of the Purchaser in and under the Facility Documents will
not be “plan assets” under ERISA. On and after the effective date of such assignment, such
Purchaser shall for all purposes be a Lender party to this Agreement and any other Facility
Document executed by or on behalf of the Lenders and shall have all the rights and
obligations of a Lender under the Facility Documents, to the same extent as if it were an
original party hereto, and no further consent or action by the Borrower, the Lenders or the
Agent shall be required to release the transferor Lender with respect to the percentage of
the Letter of Credit Commitment and the participation interests in Letters of Credit
assigned to such Purchaser.

12.4 Dissemination of Information. The Borrower authorizes each Lender to disclose
to any Participant or Purchaser or any other Person acquiring an interest in the Facility
Documents by operation of law (each a “Transferee”) and any prospective Transferee any and all
information in such Lender’s possession concerning the creditworthiness of the Borrower and its
Subsidiaries; provided that each Transferee and prospective Transferee agrees to be
bound by Section 9.11 of this Agreement.

12.5 Tax Treatment. If any interest in any Facility Document is transferred to any
Transferee which is organized under the laws of any jurisdiction other than the United
States or any State thereof, the transferor Lender shall cause such Transferee,
concurrently with the effectiveness of such transfer, to comply with the provisions of
Section 3.5(d).

 

- 62 -

 

ARTICLE XIII

NOTICES

13.1 Notices. All notices, requests and other communications to any party
hereunder shall be in writing (including electronic transmission, facsimile transmission or
similar writing) and shall be given to such party: (a) in the case of the Borrower or the Agent,
at its address or facsimile number set forth on the signature pages hereof, (b) in the case of
any Lender, at its address or facsimile number set forth below its signature hereto or (c) in
the case of any party, at such other address or facsimile number as such party may hereafter
specify for the purpose by notice to the Agent and the Borrower in accordance with the
provisions of this Section 13.1. Each such notice, request or other communication shall
be effective (i) if given by facsimile transmission, when transmitted to the facsimile number
specified in this Section and confirmation of receipt is received, (ii) if given by mail,
seventy-two (72) hours after such communication is deposited in the mails with first class
postage prepaid, addressed as aforesaid, or (iii) if given by any other means, when delivered
(or, in the case of electronic transmission, received) at the address specified in this Section;
provided that notices to the Agent under Article II shall not be effective until
received.

13.2 Change of Address. The Borrower, the Agent and any Lender may each change the
address for service of notice upon it by a notice in writing to the other parties hereto.

ARTICLE XIV

COUNTERPARTS

This Agreement may be executed in any number of counterparts, all of which taken together
shall constitute one agreement, and any of the parties hereto may execute this Agreement by signing
any such counterpart. This Agreement shall be effective when it has been executed by the Borrower,
the Agent and the Lenders and each party has notified the Agent by facsimile transmission or
telephone that it has taken such action.

ARTICLE XV

CHOICE OF LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL

15.1 CHOICE OF LAW. THE FACILITY DOCUMENTS (OTHER THAN THOSE CONTAINING A CONTRARY
EXPRESS CHOICE OF LAW PROVISION) SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS
OF THE STATE OF NEW YORK, WITHOUT REGARDS TO THE CONFLICT OF LAW PROVISIONS THEREOF, BUT GIVING
EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS.

 

- 63 -

 

15.2 CONSENT TO JURISDICTION. THE BORROWER HEREBY IRREVOCABLY SUBMITS TO THE
NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR STATE COURT SITTING IN NEW YORK, NEW
YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO ANY FACILITY DOCUMENTS AND THE
BORROWER HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY
BE HEARD AND DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR
HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR
THAT SUCH COURT IS AN INCONVENIENT FORUM. NOTHING HEREIN SHALL LIMIT THE RIGHT OF THE AGENT OR
ANY LENDER TO BRING PROCEEDINGS AGAINST THE BORROWER IN THE COURTS OF ANY OTHER JURISDICTION.
ANY JUDICIAL PROCEEDING BY THE BORROWER AGAINST THE AGENT OR ANY LENDER OR ANY AFFILIATE OF THE
AGENT OR ANY LENDER INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT OF,
RELATED TO, OR CONNECTED WITH ANY FACILITY DOCUMENT SHALL BE BROUGHT ONLY IN A COURT IN NEW
YORK, NEW YORK.

15.3 WAIVER OF JURY TRIAL. THE BORROWER, THE AGENT AND EACH LENDER HEREBY WAIVE
TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER
SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED
WITH ANY FACILITY DOCUMENT OR THE RELATIONSHIP ESTABLISHED THEREUNDER.

[signature pages follow]

 

- 64 -

 

IN WITNESS WHEREOF, the Borrower, the Lenders and the Agent have executed this Agreement as of
the date first above written.

	 	 	 	 	 
	 	THE NAVIGATORS GROUP, INC.

 	 
	 	By:  	/s/ Bradley D. Wiley
 	 
	 	 	Print Name:  	 Bradley D. Wiley 	 
	 	 	Title:  Sr. Vice President and CRO 	 

	 	 	 	 	 
	 

	 	Address:
	 	Reckson Executive Park
	 

	 	 	 	6 International Drive
	 

	 	 	 	Rye Brook, New York 10573
	 
	 	 	 	 
	 

	 	Attn:
	 	Francis W. McDonnell
	 
	 	 	 	 
	 	 	Telephone: (914) 933-6270
	 	 	Fax: (914) 933-6033

 

S-1 

 

	 	 	 	 	 
	 	JPMORGAN CHASE BANK, N.A., 
Individually and as
Administrative Agent

 	 
	 	By:  	/s/ Thomas Kiepura
 	 
	 	 	Print Name:  	Thomas Kiepura 	 
	 	 	Title: Vice President 	 

	 	 	 	 	 
	 

	 	Address:
	 	10 South Dearborn, Floor 9
	 

	 	 	 	IL1-0364
	 

	 	 	 	Chicago, Illinois 60603
	 
	 	 	 	 
	 	 	Telephone: (312) 325-3195
	 	 	Fax: (312) 325-3190

 

S-2 

 

	 	 	 	 	 
	 	BARCLAYS BANK PLC

 	 
	 	By:  	/s/ Jonathan Bush
 	 
	 	 	Print Name:  	Jonathan Bush 	 
	 	 	Title: Director 	 

 

S-3 

 

	 	 	 	 	 

	 	 	 	 	 
	 	U.S. BANK NATIONAL ASSOCIATION

 	 
	 	By:  	/s/ Dennis Cogan
 	 
	 	 	Print Name:  	 Dennis Cogan 	 
	 	 	Title: Senior Vice President 	 

 

S-4 

 

	 	 	 	 	 

	 	 	 	 	 
	 	BROWN BROTHERS HARRIMAN & CO.

 	 
	 	By:  	/s/ Ann L. Hobart
 	 
	 	 	Print Name:  	 Ann L. Hobart 	 
	 	 	Title: Senior Vice President 	 

 

S-5

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00157-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00157-of-00352.parquet"}]]