Document:

Exhibit 10-1

$200,000,000

THIRD AMENDED AND RESTATED CREDIT AGREEMENT

AMONG

THE NAVIGATORS GROUP, INC.,

as Borrower,

THE LENDERS NAMED HEREIN,

JPMORGAN CHASE BANK, N.A.

as Administrative Agent,

LASALLE BANK NATIONAL ASSOCIATION, as Syndication Agent,

CITIBANK, N.A.,

and

COMMERZBANK AKTIENGESELLSCHAFT, New York and Grand Cayman Branches, 

as Documentation Agents,

CREDIT SUISSE FIRST BOSTON, as Managing Agent

and

U.S. BANK NATIONAL ASSOCIATION and BROWN BROTHERS HARRIMAN & CO.

as Co-Agents

DATED AS OF

February 2, 2007

 

J.P. MORGAN SECURITIES INC.,

as Sole Bookrunner and

Sole Lead Arranger

  
  

TABLE OF CONTENTS

	
  

  	
   

  	
   

  	
   

  	
  Page

  
	
  ARTICLE I

  	
   

  	
  DEFINITIONS

  	
   

  	
   

  	
  1

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE II

  	
   

  	
  THE REVOLVING
  CREDITS

  	
   

  	
   

  	
  17

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.1

  	
   

  	
  Revolving Credit Advances

  	
   

  	
   

  	
  17

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.2

  	
   

  	
  Ratable Loans

  	
   

  	
   

  	
  18

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.3

  	
   

  	
  Types of Revolving Credit Advances

  	
   

  	
   

  	
  18

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.4

  	
   

  	
  Commitment Fee; Reductions in Aggregate Revolving
  Credit Commitment

  	
   

  	
   

  	
  18

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.5

  	
   

  	
  Optional Principal Payments

  	
   

  	
   

  	
  18

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.6

  	
   

  	
  Mandatory Prepayments

  	
   

  	
   

  	
  18

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.7

  	
   

  	
  Revolving Credit Advances

  	
   

  	
   

  	
  19

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.8

  	
   

  	
  Conversion and Continuation of Outstanding Revolving
  Credit Advances

  	
   

  	
   

  	
  19

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.9

  	
   

  	
  Changes in Interest Rate, etc

  	
   

  	
   

  	
  20

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.10

  	
   

  	
  Rates Applicable After Default

  	
   

  	
   

  	
  20

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.11

  	
   

  	
  Method of Payment

  	
   

  	
   

  	
  20

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.12

  	
   

  	
  Noteless Agreement; Evidence of Indebtedness

  	
   

  	
   

  	
  21

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.13

  	
   

  	
  Telephonic Notices

  	
   

  	
   

  	
  21

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.14

  	
   

  	
  Interest Payment Dates; Interest and Fee Basis

  	
   

  	
   

  	
  22

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.15

  	
   

  	
  Notification of Revolving Credit Advances, Interest
  Rates and Prepayments, Commitment Reductions

  	
   

  	
   

  	
  22

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.16

  	
   

  	
  Lending Installations

  	
   

  	
   

  	
  22

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.17

  	
   

  	
  Non-Receipt of Funds by the Agent

  	
   

  	
   

  	
  22

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE III

  	
   

  	
  THE LETTER OF
  CREDIT FACILITY

  	
   

  	
   

  	
  23

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.1

  	
   

  	
  Issuance of Letters of Credit

  	
   

  	
   

  	
  23

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.2

  	
   

  	
  Participating Interests

  	
   

  	
   

  	
  25

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.3

  	
   

  	
  Reductions in Letter of Credit Commitment

  	
   

  	
   

  	
  25

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.4

  	
   

  	
  Reimbursement Obligations

  	
   

  	
   

  	
  25

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.5

  	
   

  	
  Procedure for Issuance

  	
   

  	
   

  	
  27

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.6

  	
   

  	
  Nature of the Lenders’ Obligations

  	
   

  	
   

  	
  28

  	
   

  

 i
 

 

	
  

  	
   

  	
  

  	
   

  	
  Page

  
	
  3.7

  	
   

  	
  Notification of Issuance Requests

  	
   

  	
  28

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.8

  	
   

  	
  Cash Collateral for Letters of Credit

  	
   

  	
  28

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.9

  	
   

  	
  Fees

  	
   

  	
  29

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.10

  	
   

  	
  Extension of Revolving Credit Termination Date

  	
   

  	
  30

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IV

  	
   

  	
  YIELD PROTECTION; TAXES

  	
   

  	
  32

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.1

  	
   

  	
  Yield Protection

  	
   

  	
  32

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.2

  	
   

  	
  Changes in Capital Adequacy Regulations

  	
   

  	
  32

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.3

  	
   

  	
  Availability of Types of Revolving Credit Advances

  	
   

  	
  33

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.4

  	
   

  	
  Funding Indemnification

  	
   

  	
  33

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.5

  	
   

  	
  Taxes

  	
   

  	
  33

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.6

  	
   

  	
  Lender Statements; Survival of Indemnity

  	
   

  	
  35

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE V

  	
   

  	
  CONDITIONS PRECEDENT

  	
   

  	
  36

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5.1

  	
   

  	
  Initial Revolving Credit Loans and Letters of Credit

  	
   

  	
  36

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5.2

  	
   

  	
  Each Revolving Credit Advance and Letter of Credit

  	
   

  	
  37

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VI

  	
   

  	
  REPRESENTATIONS AND WARRANTIES

  	
   

  	
  37

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.1

  	
   

  	
  Existence and Standing

  	
   

  	
  37

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.2

  	
   

  	
  Authorization and Validity

  	
   

  	
  38

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.3

  	
   

  	
  No Conflict; Government Consent

  	
   

  	
  38

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.4

  	
   

  	
  Financial Statements

  	
   

  	
  38

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.5

  	
   

  	
  Statutory Financial Statements

  	
   

  	
  39

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.6

  	
   

  	
  Material Adverse Change

  	
   

  	
  39

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.7

  	
   

  	
  Taxes

  	
   

  	
  39

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.8

  	
   

  	
  Litigation and Contingent Obligations

  	
   

  	
  40

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.9

  	
   

  	
  Subsidiaries

  	
   

  	
  40

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.10

  	
   

  	
  ERISA

  	
   

  	
  40

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.11

  	
   

  	
  Defaults

  	
   

  	
  40

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.12

  	
   

  	
  Accuracy of Information

  	
   

  	
  40

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.13

  	
   

  	
  Regulation U

  	
   

  	
  40

  

 

 ii
 

 

	
  

  	
   

  	
   

  	
   

  	
  Page

  
	
  6.14

  	
   

  	
  Material Agreements

  	
   

  	
   

  	
  41

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.15

  	
   

  	
  Compliance With Laws

  	
   

  	
   

  	
  41

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.16

  	
   

  	
  Ownership of Properties

  	
   

  	
   

  	
  41

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.17

  	
   

  	
  Plan Assets; Prohibited Transactions

  	
   

  	
   

  	
  41

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.18

  	
   

  	
  Environmental Matters

  	
   

  	
   

  	
  41

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.19

  	
   

  	
  Investment Company Act

  	
   

  	
   

  	
  42

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.20

  	
   

  	
  Public Utility Holding Company Act

  	
   

  	
   

  	
  42

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.21

  	
   

  	
  Solvency

  	
   

  	
   

  	
  42

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.22

  	
   

  	
  Insurance Licenses

  	
   

  	
   

  	
  42

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.23

  	
   

  	
  Partnerships

  	
   

  	
   

  	
  42

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.24

  	
   

  	
  Lines of Business

  	
   

  	
   

  	
  42

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.25

  	
   

  	
  Reinsurance Practices

  	
   

  	
   

  	
  43

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.26

  	
   

  	
  Security

  	
   

  	
   

  	
  43

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.27

  	
   

  	
  Disclosure

  	
   

  	
   

  	
  43

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VII

  	
   

  	
  COVENANTS

  	
   

  	
   

  	
  43

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7.1

  	
   

  	
  Financial Reporting

  	
   

  	
   

  	
  43

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7.2

  	
   

  	
  Use of Proceeds

  	
   

  	
   

  	
  46

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7.3

  	
   

  	
  Notice of Default

  	
   

  	
   

  	
  47

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7.4

  	
   

  	
  Conduct of Business

  	
   

  	
   

  	
  47

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7.5

  	
   

  	
  Taxes

  	
   

  	
   

  	
  47

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7.6

  	
   

  	
  Insurance

  	
   

  	
   

  	
  47

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7.7

  	
   

  	
  Compliance with Laws

  	
   

  	
   

  	
  47

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7.8

  	
   

  	
  Maintenance of Properties

  	
   

  	
   

  	
  48

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7.9

  	
   

  	
  Inspection; Maintenance of Books and Records

  	
   

  	
   

  	
  48

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7.10

  	
   

  	
  Dividends and Stock Repurchases

  	
   

  	
   

  	
  48

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7.11

  	
   

  	
  Indebtedness

  	
   

  	
   

  	
  48

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7.12

  	
   

  	
  Merger

  	
   

  	
   

  	
  49

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7.13

  	
   

  	
  Sale of Assets

  	
   

  	
   

  	
  49

  	
   

  

 

 iii
 

 

	
  

  	
   

  	
   

  	
   

  	
  Page

  
	
  7.14

  	
   

  	
  Investments and Acquisitions

  	
   

  	
   

  	
  49

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7.15

  	
   

  	
  Contingent Obligations

  	
   

  	
   

  	
  50

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7.16

  	
   

  	
  Liens

  	
   

  	
   

  	
  50

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7.17

  	
   

  	
  Affiliates

  	
   

  	
   

  	
  51

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7.18

  	
   

  	
  Amendments to Agreements

  	
   

  	
   

  	
  51

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7.19

  	
   

  	
  Change in Fiscal Year

  	
   

  	
   

  	
  52

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7.20

  	
   

  	
  Inconsistent Agreements

  	
   

  	
   

  	
  52

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7.21

  	
   

  	
  Reinsurance

  	
   

  	
   

  	
  52

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7.22

  	
   

  	
  Stock of Subsidiaries

  	
   

  	
   

  	
  52

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7.23

  	
   

  	
  Financial Covenants

  	
   

  	
   

  	
  52

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7.24

  	
   

  	
  Additional Pledge

  	
   

  	
   

  	
  53

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VIII

  	
   

  	
  DEFAULTS

  	
   

  	
   

  	
  53

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IX

  	
   

  	
  ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES

  	
   

  	
   

  	
  56

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  9.1

  	
   

  	
  Acceleration

  	
   

  	
   

  	
  56

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  9.2

  	
   

  	
  Amendments

  	
   

  	
   

  	
  57

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  9.3

  	
   

  	
  Preservation of Rights

  	
   

  	
   

  	
  57

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE X

  	
   

  	
  GENERAL PROVISIONS

  	
   

  	
   

  	
  58

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  10.1

  	
   

  	
  Survival of Representations

  	
   

  	
   

  	
  58

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  10.2

  	
   

  	
  Governmental Regulation

  	
   

  	
   

  	
  58

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  10.3

  	
   

  	
  Headings

  	
   

  	
   

  	
  58

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  10.4

  	
   

  	
  Entire Agreement

  	
   

  	
   

  	
  58

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  10.5

  	
   

  	
  Numbers of Documents

  	
   

  	
   

  	
  58

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  10.6

  	
   

  	
  Several Obligations; Benefits of this Agreement

  	
   

  	
   

  	
  58

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  10.7

  	
   

  	
  Expenses; Indemnification

  	
   

  	
   

  	
  59

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  10.8

  	
   

  	
  Accounting

  	
   

  	
   

  	
  59

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  10.9

  	
   

  	
  Severability of Provisions

  	
   

  	
   

  	
  59

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  10.10

  	
   

  	
  Nonliability of Lenders

  	
   

  	
   

  	
  59

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  10.11

  	
   

  	
  Confidentiality

  	
   

  	
   

  	
  60

  	
   

  

 

 iv
 

 

	
  

  	
   

  	
  

  	
   

  	
  Page

  
	
  10.12

  	
   

  	
  Nonreliance

  	
   

  	
   

  	
  60

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  10.13

  	
   

  	
  Disclosure

  	
   

  	
   

  	
  60

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  10.14

  	
   

  	
  USA Patriot Act Notification

  	
   

  	
   

  	
  60

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XI

  	
   

  	
  THE ADMINISTRATIVE AGENT

  	
   

  	
   

  	
  61

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  11.1

  	
   

  	
  Appointment; Nature of Relationship

  	
   

  	
   

  	
  61

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  11.2

  	
   

  	
  Powers

  	
   

  	
   

  	
  61

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  11.3

  	
   

  	
  General Immunity

  	
   

  	
   

  	
  61

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  11.4

  	
   

  	
  No Responsibility for Revolving Credit Loans,
  Recitals, etc

  	
   

  	
   

  	
  61

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  11.5

  	
   

  	
  Action on Instructions of Lenders

  	
   

  	
   

  	
  62

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  11.6

  	
   

  	
  Employment of Agent and Counsel

  	
   

  	
   

  	
  62

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  11.7

  	
   

  	
  Reliance on Documents; Counsel

  	
   

  	
   

  	
  62

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  11.8

  	
   

  	
  Agent’s Reimbursement and Indemnification

  	
   

  	
   

  	
  62

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  11.9

  	
   

  	
  Notice of Default

  	
   

  	
   

  	
  63

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  11.10

  	
   

  	
  Rights as a Lender

  	
   

  	
   

  	
  63

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  11.11

  	
   

  	
  Lender Credit Decision

  	
   

  	
   

  	
  63

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  11.12

  	
   

  	
  Successor Agent

  	
   

  	
   

  	
  64

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  11.13

  	
   

  	
  Agents’ Fees

  	
   

  	
   

  	
  64

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  11.14

  	
   

  	
  Delegation to Affiliates

  	
   

  	
   

  	
  64

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  11.15

  	
   

  	
  Syndication Agent

  	
   

  	
   

  	
  65

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XII

  	
   

  	
  SETOFF; RATABLE PAYMENTS

  	
   

  	
   

  	
  65

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  12.1

  	
   

  	
  Setoff

  	
   

  	
   

  	
  65

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  12.2

  	
   

  	
  Ratable Payments

  	
   

  	
   

  	
  65

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XIII

  	
   

  	
  BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS

  	
   

  	
   

  	
  65

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  13.1

  	
   

  	
  Successors and Assigns

  	
   

  	
   

  	
  65

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  13.2

  	
   

  	
  Participations

  	
   

  	
   

  	
  66

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  13.3

  	
   

  	
  Assignments

  	
   

  	
   

  	
  67

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  13.4

  	
   

  	
  Dissemination of Information

  	
   

  	
   

  	
  68

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  13.5

  	
   

  	
  Tax Treatment

  	
   

  	
   

  	
  68

  	
   

  

 v
 

 

	
  

  	
   

  	
   

  	
   

  	
  Page

  
	
  ARTICLE XIV

  	
   

  	
  NOTICES

  	
   

  	
   

  	
  68

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  14.1

  	
   

  	
  Notices

  	
   

  	
   

  	
  68

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  14.2

  	
   

  	
  Change of Address

  	
   

  	
   

  	
  69

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XV

  	
   

  	
  COUNTERPARTS

  	
   

  	
   

  	
  69

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XVI

  	
   

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

  	
   

  	
   

  	
  69

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  16.1

  	
   

  	
  CHOICE OF LAW

  	
   

  	
   

  	
  69

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  16.2

  	
   

  	
  CONSENT TO JURISDICTION

  	
   

  	
   

  	
  69

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  16.3

  	
   

  	
  WAIVER OF JURY TRIAL

  	
   

  	
   

  	
  70

  	
   

  

 

SCHEDULES

Pricing
Schedule

	
  Schedule 1

  	
   

  	
  —

  	
   

  	
  Commitments

  
	
  Schedule 3.1

  	
   

  	
  —

  	
   

  	
  Existing Letters of Credit

  
	
  Schedule 6.9

  	
   

  	
  —

  	
   

  	
  Subsidiaries

  
	
  Schedule 6.22

  	
   

  	
  —

  	
   

  	
  Licenses — Navigators Specialty Insurance Company

  
	
  Schedule 6.22A

  	
   

  	
  —

  	
   

  	
  Licenses — Navigators Insurance Company

  
	
  Schedule 6.23

  	
   

  	
  —

  	
   

  	
  Partnerships

  
	
  Schedule 6.24

  	
   

  	
  —

  	
   

  	
  Existing Lines of Business

  
	
  Schedule 7.16

  	
   

  	
  —

  	
   

  	
  Liens

  
	
  Schedule 7.21

  	
   

  	
  —

  	
   

  	
  Reinsurance Guidelines

  

 

EXHIBITS

	
  Exhibit A

  	
   

  	
  Revolving Credit Note

  
	
  Exhibit B

  	
   

  	
  Compliance Certificate

  
	
  Exhibit C

  	
   

  	
  Assignment Agreement

  
	
  Exhibit D

  	
   

  	
  Reimbursement Agreement Excerpt

  
	
  Exhibit E

  	
   

  	
  Increase Request

  

 

 vi

 

THIRD AMENDED AND RESTATED CREDIT AGREEMENT

This Third Amended and Restated Credit Agreement,
dated as of February 2, 2007, is among THE NAVIGATORS GROUP, INC., a
Delaware corporation, the Lenders, and JPMORGAN CHASE BANK, N.A., individually
and as Administrative Agent, LASALLE BANK NATIONAL ASSOCIATION, as Syndication
Agent, CITIBANK, N.A., and COMMERZBANK, NEW YORK AND GRAND CAYMAN BRANCHES, as
Documentation Agents, CREDIT SUISSE FIRST BOSTON, as Managing Agent and U.S.
BANK NATIONAL ASSOCIATION and BROWN BROTHERS HARRIMAN & CO., as Co-Agents.

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 Second Amended and Restated Credit
Agreement, dated as of January 31, 2005 (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 increase the amount of the letter of credit facility and
to make certain other 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.

“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.

“Additional Lender” is defined in Section 3.11.

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

“Aggregate Revolving Credit Commitment” means the
aggregate of the Revolving Credit Commitments of all the Lenders, as reduced
from time to time pursuant to the terms hereof. 
The Aggregate Revolving Credit Commitment as of the date hereof is
$20,000,000.

“Agreement” means this Third 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 6.4; provided, however, that
for purposes of all computations required to be made with respect to compliance
by the Borrower with Section 7.23, 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 6.4.

“Alternate Base Rate” means, for any day, a rate of
interest per annum equal to the higher of (a) the Prime Rate in effect for such
day, and (b) the Federal Funds Effective Rate on such day plus 1/2% per annum.

“Alternate Base Rate Advance” means a Revolving Credit
Advance which, except as otherwise provided in Section 2.10, bears
interest at the Alternate Base Rate.

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

“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

 2
  
 

 

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.

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

“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, with respect to Revolving
Credit Advances of any Type at any time, the percentage rate per annum which is
applicable at such time with respect to Revolving Credit Advances of such Type
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.

 3
  
 

 

“Borrowing Date” means a date on which a Revolving
Credit Advance is made or a Letter of Credit is issued hereunder.

“Borrowing Notice” is defined in Section 2.7.

“Business Day” means (a) with respect to any
borrowing, payment or rate selection of Eurodollar Advances, a day (other than
a Saturday or Sunday) on which banks generally are open in Chicago and New York
for the conduct of substantially all of their commercial lending activities and
on which dealings in United States dollars are carried on in the London
interbank market and (b) for all other purposes, a day (other than a Saturday
or Sunday) on which banks generally are open in Chicago and New York for the
conduct of substantially all of their commercial lending activities.

“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 P-1 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
$100,000,000; 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 and has a maturity of not more than six months.

“Cash Collateral Security Agreement” means a 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 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 P-1 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.

 4
  
 

 

“Change” is defined in Section 4.2.

“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.

“Closing Date” means February 2, 2007.

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

“Condemnation” is defined in Section 8.8.

“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 7.23.3, 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.

“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 7.23.1,
the effect of any unrealized gain or loss reported under Statement of Financial
Accounting Standards No. 115.

 5
  
 

 

“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/Continuation Notice” is defined in Section 2.8.

“Conversion Differential” is defined in Section 3.1(e).

“Default” means an event described in Article VIII.

“Department” is defined in Section 6.5.

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

“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

 6
  
 

 

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 Advance” means a Revolving Credit Advance
which, except as otherwise provided in Section 2.11, bears interest
at the applicable Eurodollar Rate.

“Eurodollar Base Rate” means, with respect to a
Eurodollar Advance for the relevant Interest Period, the rate appearing on Page
3750 of the Dow Jones Market Service (or on any successor or substitute page of
such Service, or any successor to or substitute for such Service, providing
rate quotations comparable to those currently provided on such page of such
Service, as determined by the Agent from time to time for purposes of providing
quotations of interest rates applicable to dollar deposits in the London
interbank market) at approximately 11:00 a.m., London time, two Business Days
prior to the commencement of such Interest Period, as the rate for Dollar
deposits with a maturity comparable to such Interest Period.  In the event that such rate is not available
at such time for any reason, then the “Eurodollar Base Rate” with
respect to such Eurodollar Advance for such Interest Period shall be the rate
at which Dollar deposits of $5,000,000 and for a maturity comparable to such
Interest Period are offered by the principal London office of the Agent in
immediately available funds in the London interbank market at approximately
11:00 a.m., London time, two Business Days prior to the commencement of such
Interest Period.

“Eurodollar Loan” means a Revolving Credit Loan which
bears interest at the applicable Eurodollar Rate.

“Eurodollar Rate” means, with respect to a Eurodollar
Advance for the relevant Interest Period, the sum of (a) the quotient of (i)
the Eurodollar Base Rate applicable to such Interest Period, divided by (ii)
one minus the Reserve Requirement (expressed as a decimal) applicable to such
Interest Period, plus (b) the Applicable Margin.  The Eurodollar Rate shall be rounded to the
next higher multiple of 1/16 of 1% if the rate is not such a multiple.

“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.

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

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

 7
  
 

 

“Existing Lines of Business” is defined in Section 6.24.

“Extension Request” is defined in Section 3.10.

“Facility Documents” means this Agreement, any
Revolving Credit Notes issued pursuant to Section 2.12, 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.

“Federal Funds Effective Rate” means, for any day, an
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 at approximately
10:00 a.m. (Chicago time) 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 10.4.

“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.

“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

 8
  
 

 

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.

“Interest Period” means, with respect to a Eurodollar
Advance, a period of one, two, three or six months commencing on a Business Day
selected by the Borrower pursuant to this Agreement.  Such Interest Period shall end on the day
which corresponds numerically to such date one, two, three or six months
thereafter, provided, however, that if there is no such
numerically corresponding day in such next, second, third or sixth succeeding
month, such Interest Period shall end on the last Business Day of such next,
second, third or sixth succeeding month. 
If an Interest Period would otherwise end on a day which is not a
Business Day, such Interest Period shall end on the next succeeding Business
Day, provided, however, that if said next succeeding Business Day
falls in a new calendar month, such Interest Period shall end on the
immediately preceding Business Day.

“Investment” of a Person means 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; stocks,
bonds, mutual funds, partnership interests, membership interests, notes,
debentures or other securities owned by such Person; any deposit accounts and
certificate of deposit owned by such Person; and structured notes, derivative
financial instruments and other similar instruments or contracts owned by such
Person.

“Issuance Request” is defined in Section 3.5.

“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.

“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 pursuant to Section 2.16.

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

 9
  
 

 

“Letter of Credit Availability Termination Date” means
March 31, 2009 or any later date as may be specified as the Letter of
Credit Availability Termination Date in accordance with Section 3.10
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 Cash Collateral Account” is defined
in Section 9.1.  Such account
and the related cash collateralization 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.

“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 $180,000,000.

“Letter of Credit Obligations” means as 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 (which are approved
by all Lenders in their sole discretion in accordance with Section 3.1)
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 13.3.2, 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
3.1.

 

 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.

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

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

“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 4.5(d).

“Notice of Assignment” is defined in Section 13.3.2.

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

“Obligations” means all unpaid principal of and
accrued and unpaid interest on the Revolving Credit Loans, 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 4.5(b).

“Participants” is defined in Section 13.2.1.

“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 Amended and
Restated Stock Pledge Agreement, dated as of January 31, 2005, 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 Aggregate Revolving
Credit Commitment or the Letter of Credit Commitment, as applicable.

“Purchasers” is defined in Section 13.3.1.

“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 7.21(c).

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

“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

 13
 

 

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 Lenders” means Lenders in the aggregate
having at least 66-2/3% of the Aggregate Revolving Credit Commitment plus the
Letter of Credit Commitment or, if the Aggregate Revolving Credit Commitment
and the Letter of Credit Commitment have been terminated, the sum of the
aggregate unpaid principal amount of the outstanding Revolving Credit Loans plus
the aggregate amount of the outstanding Letter of Credit Obligations.

“Reserve Requirement” means, with respect to an
Interest Period, the maximum aggregate reserve requirement (including all
basic, supplemental, marginal and other reserves) which is imposed under
Regulation D on Eurocurrency liabilities.

“Response Date” is defined in Section 3.10.

“Revolving Credit Advance” means a borrowing hereunder
(a) made by the Lenders on the same Borrowing Date, or (b) converted
or continued by the Lenders on the same date of conversion or continuation,
consisting, in either case, of the aggregate amount of the several Revolving
Credit Loans of the same Type and, in the case of Eurodollar Loans, for the
same Interest Period.

“Revolving Credit Commitment” means, for each Lender,
the obligation of such Lender to make Revolving Credit Loans 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 13.3.2,
as such amount may be modified from time to time pursuant to the terms hereof.

“Revolving Credit Loan” means, with respect to a
Lender, any loan made by such Lender pursuant to Article II (or any
conversion or continuation thereof).

“Revolving Credit Note” means any promissory note
issued at the request of a Lender pursuant to Section 2.12,
including any amendment, modification, renewal or replacement of such
promissory note.

“Revolving Credit Termination Date” means
March 31, 2009 or any later date as may be specified as the Revolving
Credit Termination Date in accordance with Section 3.10 or any earlier
date on which the Aggregate Revolving Credit Commitment is reduced to zero or
otherwise terminated pursuant to the terms hereof.

“Risk-Based Capital Guidelines” is defined in Section 4.2.

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

 14
 

 

“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 6.5.

“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.

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

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

“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 6.5.

“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.

 15
 

 

“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.

“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 13.4.

“Type” means, with respect to any Revolving Credit
Advance, its nature as an Alternate Base Rate Advance or a Eurodollar Advance.

“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

 16
 

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.

ARTICLE
II

THE
REVOLVING CREDITS

2.1  Revolving
Credit Advances.  Subject to the
terms of the Existing Credit Agreement, the lenders party thereto established
in favor of the Borrower, and the Lenders hereby continue, a revolving credit
facility pursuant to which, upon the following terms and subject to the
following conditions:

(a)           From and including the date hereof to
but excluding the Revolving Credit Termination Date, each Lender severally (and
not jointly) agrees, on the terms and conditions set forth in this Agreement,
to make Revolving Credit Loans to the Borrower from time to time in amounts not
to exceed in the aggregate at any one time outstanding the amount of its
pro-rata share of the Aggregate Revolving Credit Commitment existing at such
time.  Subject to the terms of this
Agreement, the Borrower may borrow, repay and reborrow Revolving Credit Advances
at any time prior to the Revolving Credit Termination Date.  The Revolving Credit Commitments shall expire
on the Revolving Credit Termination Date. 
All Revolving Credit Loans shall be in Dollars.

(b)           The Borrower hereby agrees that, if
at any time as a result of reductions in the Aggregate Revolving Credit
Commitment pursuant to Section 2.4(b) or otherwise, the aggregate
balance of the Revolving Credit Loans exceeds the Aggregate Revolving Credit
Commitment, the Borrower shall repay immediately such then amount of Revolving
Credit Loans as may be necessary to eliminate such excess.

(c)           Any outstanding Revolving Credit
Advances and all other unpaid Obligations 
with respect to the Revolving Credit Loans shall be paid in full by the
Borrower on the Revolving Credit Termination Date.

(d)           Upon the effectiveness of this
Agreement pursuant to Section 5.1, each Revolving Credit Advance
which is then outstanding under the Existing Credit Agreement shall be deemed a
Revolving Credit Advance outstanding under this Agreement.

2.2  Ratable
Loans.  Each Revolving Credit Advance
hereunder shall consist of Revolving Credit Loans made from the several Lenders
ratably in proportion to the ratio that

 17
 

 

their
respective Revolving Credit Commitments bear to the Aggregate Revolving Credit
Commitment.

2.3  Types
of Revolving Credit Advances.  The
Revolving Credit Advances may be Alternate Base Rate Advances or Eurodollar
Advances, or a combination thereof, selected by the Borrower in accordance with
Sections 2.7 and 2.8.

2.4  Commitment
Fee; Reductions in Aggregate Revolving Credit Commitment.

(a)           The Borrower agrees to pay to the
Agent for the account of each Lender a commitment fee on its Revolving Credit
Commitment less its Revolving Credit Loans at a per annum rate equal to the
Applicable Commitment Fee Rate from the Closing Date to and including the
Revolving Credit Termination Date, payable on each Payment Date hereafter and
on the Revolving Credit Termination Date or, if later, upon receipt of a bill
from the Agent.  All such accrued
commitment fees shall be payable on the effective date of any termination of
the obligations of the Lenders to make Revolving Credit Loans hereunder or, if
later, upon receipt of a bill from the Agent. 
Accrued and unpaid commitment fees under the Existing Agreement shall be
paid on the Closing Date.

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

2.5  Optional
Principal Payments.  The Borrower may
from time to time pay, without penalty or premium, all outstanding Alternate
Base Rate Advances, or, in a minimum aggregate amount of $1,000,000 or any
integral multiple of $500,000 in excess thereof, any portion of the outstanding
Alternate Base Rate Advances upon two Business Days’ prior notice to the Agent.
The Borrower may from time to time pay, subject to the payment of any funding
indemnification amounts required by Section 4.4 but without penalty
or premium, all outstanding Eurodollar Advances, or, in a minimum aggregate
amount of $1,000,000 or any integral multiple of $1,000,000 in excess thereof,
any portion of the outstanding Eurodollar Advances upon three Business Days’
prior notice to the Agent.

2.6  Mandatory
Prepayments.  Mandatory prepayments
of Revolving Credit Loans shall be required in the amounts and at the times set
forth below:

(a)           concurrently with the receipt thereof
by the Borrower or any Subsidiary, 75% of the aggregate Net Available Proceeds
in excess of $1,000,000 realized upon all Asset Dispositions in any Fiscal
Year; and

(b)           concurrently with the receipt thereof
by the Borrower or any Subsidiary, 75% of the Net Available Proceeds in excess
of $1,000,000 realized upon the issuance or

 18
 

 

sale by the
Borrower or such Subsidiary of any equity or debt securities (other than an
issuance or sale of common stock of a Subsidiary to the Borrower);

provided that, if the outstanding Revolving Credit
Loans at the time of a mandatory prepayment are less than the mandatory
prepayment, the prepayment shall be limited to the outstanding amount of such
Revolving Loans.

2.7  Revolving
Credit Advances.  The Borrower shall
select the Type of Revolving Credit Advance and, in the case of each Eurodollar
Advance, the Interest Period applicable thereto from time to time.  The Borrower shall give the Agent irrevocable
notice (a “Borrowing Notice”) not later than 10:00 a.m. (Chicago
time) at least one (1) Business Day before the Borrowing Date of each Alternate
Base Rate Advance and at least three (3) Business Days before the Borrowing
Date for each Eurodollar Advance, specifying:

(a)           the Borrowing Date of such
Revolving Credit Advance, which shall be a Business Day;

(b)           the aggregate amount of such
Revolving Credit Advance;

(c)           the Type of Revolving Credit
Advance selected; and

(d)            in the case of each Eurodollar
Advance, the Interest Period applicable thereto, which shall end on or prior to
the Revolving Credit Termination Date.

Not later than
noon (Chicago time) on each Borrowing Date, each Lender shall make available
its Revolving Credit Loan or Loans in funds immediately available in Chicago to
the Agent at its address specified pursuant to Article
XIV.

2.8  Conversion
and Continuation of Outstanding Revolving Credit Advances.  Alternate Base Rate Advances shall continue
as Alternate Base Rate Advances unless and until such Alternate Base Rate
Advances are converted into Eurodollar Advances pursuant to this Section 2.8
or are repaid in accordance with Section 2.5.  Each Eurodollar Advance shall continue as a
Eurodollar Advance until the end of the then applicable Interest Period
therefor, at which time such Eurodollar Advance shall be automatically
converted into an Alternate Base Rate Advance unless (x) such Eurodollar
Advance is or was repaid in accordance with Section 2.5 or (y) the
Borrower shall have given the Agent a Conversion/Continuation Notice (as
defined below) requesting that, at the end of such Interest Period, such
Eurodollar Advance continue as a Eurodollar Advance for the same or another
Interest Period.  The Borrower may elect
from time to time to convert all or any part of an Alternate Base Rate Advance
into a Eurodollar Advance.  The Borrower
shall give the Agent irrevocable notice (a “Conversion/Continuation Notice”)
of each conversion of an Alternate Base Rate Advance into a Eurodollar Advance
or continuation of a Eurodollar Advance not later than 10:00 a.m. (Chicago
time) at least three Business Days prior to the date of the requested
conversion or continuation, specifying:

 19
 

 

(a)           the requested date, which shall be a
Business Day, of such conversion or continuation,

(b)           the aggregate amount and Type of the
Revolving Credit Advance which is to be converted or continued, and

(c)           the amount of such Revolving Credit
Advance which is to be converted into or continued as a Eurodollar Advance and
the duration of the Interest Period applicable thereto.

2.9  Changes
in Interest Rate, etc.  Each
Alternate Base Rate Advance shall bear interest on the outstanding principal
amount thereof, for each day from and including the date such Revolving Credit
Advance is made or is automatically converted from a Eurodollar Advance into an
Alternate Base Rate Advance pursuant to Section 2.8, to but
excluding the date it is paid or is converted into a Eurodollar Advance
pursuant to Section 2.8 hereof, at a rate per annum equal to the
Alternate Base Rate for such day. 
Changes in the rate of interest on that portion of any Revolving Credit
Advance maintained as an Alternate Base Rate Advance will take effect
simultaneously with each change in the Alternate Base Rate.  Each Eurodollar Advance shall bear interest
on the outstanding principal amount thereof from and including the first day of
the Interest Period applicable thereto to (but not including) the last day of
such Interest Period at the interest rate determined by the Agent as applicable
to such Eurodollar Advance based upon the Borrower’s selections under Section 2.7
and 2.8 and otherwise in accordance with the terms hereof.  No Interest Period may end after the
Revolving Credit Termination Date.

2.10  Rates
Applicable After Default. 
Notwithstanding anything to the contrary contained in Section 2.7
or 2.8, during the continuance of a Default or Unmatured Default the
Required Lenders may, at their option, by notice to the Borrower (which notice
may be revoked at the option of the Required Lenders notwithstanding any
provision of Section 9.2 requiring unanimous consent of the Lenders
to reductions in interest rates), declare that no Revolving Credit Advance may
be made as, converted into or continued as a Eurodollar Advance.  During the continuance of a Default the
Required Lenders may, at their option, by notice to the Borrower (which notice
may be revoked at the option of the Required Lenders notwithstanding any
provision of Section 9.2 requiring unanimous consent of the Lenders
to reductions in interest rates), declare that (a) each Eurodollar Advance
shall bear interest for the remainder of the applicable Interest Period at the
rate otherwise applicable to such Interest Period plus 2% per annum and
(b) each Alternate Base Rate Advance shall bear interest at a rate per
annum equal to the Alternate Base Rate in effect from time to time plus 2% per
annum, provided that, during the continuance of a Default under Section 8.6
or 8.7, the interest rates set forth in clauses (a) and (b) above shall
be applicable to all Revolving Credit Advances without any election or action
on the part of the Agent or any Lender.

2.11  Method
of Payment.  All payments of the
Obligations hereunder shall be made, without setoff, deduction, or
counterclaim, in immediately available funds to the Agent at the Agent’s
address specified pursuant to Article XIV, or at any other Lending

 20

 

Installation of the Agent specified in
writing by the Agent to the Borrower, by noon (Chicago time) on the date when
due and shall be applied ratably by the Agent among the Lenders.  Each payment delivered to the Agent for the
account of any Lender shall be delivered promptly by the Agent to such Lender
in the same type of funds that the Agent received at its address specified
pursuant to Article XIV or at any Lending Installation specified in a
notice received by the Agent from such Lender. 
The Agent is hereby authorized to charge the account of the Borrower
maintained with JPMorgan Chase Bank for each payment of principal, interest and
fees as it becomes due hereunder.

2.12                 Noteless Agreement; Evidence
of Indebtedness.  (a)  Each Lender shall maintain in accordance with
its usual practice an account or accounts evidencing the indebtedness of the
Borrower to such Lender resulting from each Revolving Credit Loan made by such
Lender from time to time, including the amounts of principal and interest
payable and paid to such Lender from time to time hereunder.

(b)           The Agent shall also maintain
accounts in which it will record (i) the amount of each Revolving Credit Loan
made hereunder, the Type thereof and the Interest Period with respect thereto,
(ii) the amount of any principal or interest due and payable or to become due
and payable from the Borrower to each Lender hereunder and (iii) the amount of
any sum received by the Agent hereunder from the Borrower and each Lender’s
share thereof.

(c)           The entries maintained in the
accounts maintained pursuant to paragraphs (a) and (b) above shall be prima
facie evidence of the existence and amounts of the Obligations therein
recorded; provided, however, that the failure of the Agent or any
Lender to maintain such accounts or any error therein shall not in any manner
affect the obligation of the Borrower to repay the Obligations in accordance
with their terms.

(d)           Any Lender may request that its
Revolving Credit Loans be evidenced by a promissory note in the form of Exhibit
A (a “Revolving Credit Note”). 
In such event, the Borrower shall prepare, execute and deliver to such
Lender a Revolving Credit Note payable to the order of such Lender.  Thereafter, the Revolving Credit Loans
evidenced by such Revolving Credit Note and interest thereon shall at all times
(including after any assignment pursuant to Section 13.3) be
represented by one or more Revolving Credit Notes payable to the order of the
payee named therein or any assignee pursuant to Section 13.3,
except to the extent that any such Lender or assignee subsequently returns any
such Revolving Credit Note for cancellation and requests that such Revolving
Credit Loans once again be evidenced as described in paragraphs (a) and (b)
above.

2.13                Telephonic
Notices.  The Borrower hereby
authorizes the Lenders and the Agent to extend, convert or continue Revolving
Credit Advances, effect selections of Types of Revolving Credit Advances and to
transfer funds based on telephonic notices made by any person or persons the
Agent or any Lender in good faith believes to be acting on behalf of the
Borrower, it being understood that the foregoing authorization is specifically
intended to allow Borrowing Notices and Conversion/Continuation Notices to be
given telephonically.

 21
 

The Borrower
agrees to deliver promptly to the Agent a written confirmation, if such
confirmation is requested by the Agent or any Lender, of each telephonic notice
signed by an Authorized Officer.  If the
written confirmation differs in any material respect from the action taken by
the Agent and the Lenders, the records of the Agent and the Lenders shall
govern absent manifest error.

2.14                Interest
Payment Dates; Interest and Fee Basis. 
Interest accrued on each Alternate Base Rate Advance shall be payable on
each Payment Date, commencing with the first such date to occur after the
Closing Date and at maturity or, if later, upon receipt of a bill from the
Agent.  Interest accrued on each
Eurodollar Advance shall be payable on the last day of its applicable Interest
Period, on any date on which the Eurodollar Advance is prepaid, whether by
acceleration or otherwise, and at maturity. 
Interest accrued on each Eurodollar Advance having an Interest Period
longer than three months shall also be payable on the last day of each
three-month interval during such Interest Period or, if later, upon receipt of
a bill from the Agent.  Interest on
Eurodollar Advances and fees shall be calculated for actual days elapsed on the
basis of a 360-day year, and interest on Alternate Base Rate Advances
shall be calculated for actual days elapsed on the basis of a 365 or 366 day
year, as applicable.  Interest shall be
payable for the day a Revolving Credit Advance is made but not for the day of
any payment on the amount paid if payment is received prior to noon (Chicago
time) at the place of payment.  If any
payment of principal of or interest on a Revolving Credit Advance shall become
due on a day which is not a Business Day, such payment shall be made on the
next succeeding Business Day and, in the case of a principal payment, such
extension of time shall be included in computing interest in connection with
such payment.  Accrued and unpaid
interest under the Existing Credit Agreement shall be paid on the Closing Date.

2.15                Notification
of Revolving Credit Advances, Interest Rates and Prepayments, Commitment
Reductions.  Promptly after receipt
thereof, the Agent will notify each Lender of the contents of each Aggregate
Revolving Credit Commitment reduction notice, Borrowing Notice, Conversion/Continuation
Notice and repayment notice received by it hereunder.  The Agent will notify each Lender of the
interest rate applicable to each Eurodollar Advance promptly upon determination
of such interest rate and will give each Lender prompt notice of each change in
the Alternate Base Rate.

2.16                Lending
Installations.  Each Lender may book
its Revolving Credit Loans at any Lending Installation selected by such Lender
and may change its Lending Installation from time to time.  All terms of this Agreement shall apply to
any such Lending Installation and the Revolving Credit Loans and any Revolving
Credit Notes issued hereunder shall be deemed held by each Lender for the
benefit of such Lending Installation. 
Each Lender may, by written notice to the Agent and the Borrower in
accordance with Article XIV, designate replacement or additional Lending
Installations through which Revolving Credit Loans will be made by it and for
whose account Revolving Credit Loan payments are to be made.

2.17                Non-Receipt
of Funds by the Agent.  Unless the
Borrower or a Lender, as the case may be, notifies the Agent prior to the date
on which it is scheduled to make 

 22
 

payment to the
Agent of (a) in the case of a Lender, the proceeds of a Revolving Credit Loan
or (b) in the case of the Borrower, a payment of principal, interest or fees to
the Agent for the account of the Lenders, that it does not intend to make such
payment, the Agent may assume that such payment has been made.  The Agent may, but shall not be obligated to,
make the amount of such payment available to the intended recipient in reliance
upon such assumption.  If such Lender or
the Borrower, as the case may be, has not in fact made such payment to the
Agent, the recipient of such payment shall, on demand by the Agent, repay to
the Agent the amount so made available together with interest thereon in
respect of each day during the period commencing on the date such amount was so
made available by the Agent until the date the Agent recovers such amount at a
rate per annum equal to (i) in the case of payment by a Lender, the Federal
Funds Effective Rate for such day for the first three days and, thereafter, the
interest rate applicable to the relevant Revolving Credit Loan or (ii) in
the case of payment by the Borrower, the interest rate applicable to the
relevant Revolving Credit Loan.

ARTICLE
III

THE
LETTER OF CREDIT FACILITY

3.1                   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 Letters 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 5.2
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.  Letters
of Credit shall be denominated, at the Borrower’s option, in either Dollars or
Pounds.

 23
 

 

(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 3.1 hereto) or the date for payment of any draft
presented thereunder and accepted by the Issuer, be later than (x) the date one
year after the effective date of such Letter of Credit or (y) in the case of
the Lloyd’s Letters of Credit, four years after notice of expiry from the
Issuer to the Borrower and the beneficiary of the Letter of Credit; provided,
that each Letter of Credit issued with an automatic “evergreen” provision
providing for renewal absent advance notice by the Borrower or the Issuer shall
be automatically renewed unless at least 30 days prior to each anniversary of
the issuance of such Letter of Credit the beneficiary thereof receives notice
from the Issuer that such Letter of Credit shall not be renewed.  The Issuer shall be under no obligation to
permit the renewal or extension of any Letter of Credit at any time (A) when a
Default or Unmatured Default has occurred and is continuing or (B) after the
Letter of Credit Availability Termination Date. 
The Issuer may (and, upon the request of the Required Lenders, shall)
give notice of termination of any Lloyd’s Letters of Credit with an expiry date
based upon notice at any time (A) when a Default has occurred and is continuing
or (B) after the Letter of Credit Availability Termination Date.

(c)           The Borrower agrees that, if at any
time as a result of reductions in the Letter of Credit Commitment pursuant to Section
3.3 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 the Letter of Credit Cash
Collateral Account cash or Cash Collateral Investments in such amount as may be
necessary to eliminate such excess.

(d)           The Letters of Credit identified on
Schedule 3.1 hereto which are issued and outstanding under the Existing Credit
Agreement shall, upon satisfaction of the conditions set forth in Article V
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.

(e)           For purposes of determining usage and
availability under this Section 3.1, 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 the Letter of Credit Cash Collateral Account
cash or Cash Collateral Investments in an amount equal to such difference.

 24
 

 

(f)            At the request of the Borrower,
Letters of Credit may be issued with any Wholly-Owned Subsidiary of the
Borrower as an applicant, so long as the Borrower is also an 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 an applicant shall
include language substantially similar to that set forth in Exhibit D or
otherwise acceptable to the Agent.

3.2                   Participating
Interests.  Immediately upon the
issuance by the Issuer of a Letter of Credit in accordance with Section 3.5
(and with respect to the Letters of Credit identified on Schedule 3.1
hereto, upon satisfaction of the conditions set forth in Article V
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 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.

3.3                   Reductions
in Letter of Credit Commitment.  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.

3.4                   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. (Chicago 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 3.9
or in the applicable Reimbursement Agreement and (ii) interest on any and all
amounts remaining unpaid under this Section 3.4 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 for such day
for the first two days following the due date of any Reimbursement Obligations,
and (B) the Alternate Base Rate for such day plus 2% per annum.  The Borrower agrees to pay to the Issuer the
amount of all Reimbursement Obligations owing in respect of 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 

 25
 

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 Revolving 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 (Chicago 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.

 26
 

 

(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 3.4(b)),
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 at the Issuer’s selling rate for
cable transfers to the place of payment of the Letter of Credit current on the
date of payment or of the Issuer’s settlement of its obligation, as the Issuer
may require or, at the Issuer’s election, in the currency in which the Issuer
was required to pay such Letter of Credit. 
If, for any cause, on the date of payment or settlement, as the case may
be, there is no selling rate or other rate of exchange generally current in
Chicago for effecting such transfers, the Borrower will pay the Issuer on
demand an amount in Dollars equivalent to the Issuer’s actual cost of
settlement on its obligation however or whenever the Issuer shall make such
settlement, with interest at the Alternate Base Rate from the date of
settlement to the date of payment.

3.5   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 3.1(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 four years from the date of issuance
of such Letter of Credit or in the case of a Lloyd’s Letter of Credit, four
years from notice of expiry from the Issuer to the Borrower and the beneficiary
of such Letter of Credit, (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

 27
 

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 3.1 and provided that the
applicable conditions set forth in Section 5.2 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.

3.6                   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.

3.7                   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.

3.8                   Cash
Collateral for Letters of Credit.  If
no Cash Collateral Security Agreement has been previously entered into, then on
the Letter of Credit Availability Termination Date 

 28
 

the Borrower
shall enter into the Cash Collateral Security Agreement and, in any event, on
and after such date the Borrower shall pledge and deliver to the Agent, for the
benefit of the Lenders, cash or Cash Collateral Investments in sufficient
amounts to maintain in the Letter of Credit Cash Collateral Account an amount
at least equal to the following percentage of the Letter of Credit Obligations
outstanding from time to time during the following periods:

	
      Period
  

  	
   

  	
   

  	
   

  	
  Percentage of Letter of Credit

  Obligations Collateralized

  
	
   

  	
   

  	
   

  
	
  Letter of Credit
  Availability Termination Date to but not

  including first anniversary of Letter of Credit Availability

  Termination Date

  	
   

  	
  20%

  
	
   

  	
   

  	
   

  
	
  First
  anniversary of Letter of Credit Availability

  Termination Date to but not including second

  anniversary of Letter of Credit Availability Termination Date

  	
   

  	
  40%

  
	
   

  	
   

  	
   

  
	
  Second
  anniversary of Letter of Credit Availability

  Termination Date to but not including third

  anniversary of Letter of Credit Availability Termination Date

  	
   

  	
  60%

  
	
   

  	
   

  	
   

  
	
  Third
  anniversary of Letter of Credit Availability

  Termination Date to but not including fourth

  anniversary of Letter of Credit Availability Termination Date

  	
   

  	
  80%

  
	
   

  	
   

  	
   

  
	
  Fourth
  anniversary of Letter of Credit Availability

  Termination Date and at all times thereafter

  	
   

  	
  100%

  

 

The Letter of Credit Cash Collateral Account shall be
maintained by JPMorgan Chase Bank in the name of the Agent for the ratable
benefit of the Lenders and the Agent pursuant to the terms of Article IX;
provided, however, that if no Default has occurred and is
continuing, the Borrower may direct the investment of funds therein in Cash
Collateral Investments.  The earnings
thereon shall be for the account of the Borrower.

3.9                   Fees.

(a)           Commitment Fee.  The Borrower agrees to pay to the Agent for
the account of each Lender with respect to its Letter of Credit Participation
Amount a commitment fee at a rate per annum equal to the Applicable Commitment
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 commitment fees under the Existing Credit Agreement
shall be paid on the Closing Date or, if later, upon receipt of a bill from the
Agent.

 29
 

 

(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 3.1,
the date on which such Letters of Credit are deemed issued under this Agreement
pursuant to Section 3.1(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.

(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 8.6 or 8.7,
the Applicable Letter of Credit Participation Fee Rate shall be increased by 2%
without any election or action on the part of the Agent or any Lender.

3.10                 Extension of Revolving
Credit Termination Date.  The
Borrower may request an extension of the Letter of Credit Availability
Termination Date and the Revolving Credit 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 or Revolving Credit Termination Date.  The Extension Request must specify the new
Letter of Credit Availability Termination Date or new Revolving Credit
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 or new Revolving Credit Termination Date shall
not be more than two years after the Letter of Credit Availability Termination
Date or Revolving Credit Termination Date, as applicable, in effect at the time
the Extension Request is received, including the Letter of Credit Availability
Termination

 30

 

Date or Revolving Credit 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 or Revolving Credit Termination Date specified in the
Extension Request shall become effective on the existing Letter of Credit
Availability Termination Date or Revolving Credit 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 and the new Revolving
Credit Termination Date.  Otherwise the
Letter of Credit Availability Termination Date or Revolving Credit Termination
Date shall be unchanged.

3.11 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 E, request that the
Letter of Credit Commitment be increased by an aggregate amount (for all such
increases) not exceeding $20,000,000 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 VI 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 3.11 shall be
effective three 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 E (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 E (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 3.11 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 3.11 is not expressly authorized
pursuant to resolutions or consents delivered pursuant to Section 5.1(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.

 31
  
 

 

ARTICLE
IV

YIELD
PROTECTION; TAXES

4.1   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
Eurodollar Loans or its interest in the Letters of Credit, or

(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 maintaining its Eurodollar Loans or issuing
Letters of Credit or reduces any amount receivable by any Lender or any
applicable Lending Installation in connection with its Eurodollar Loans or any
Letter of Credit, or requires any Lender or any applicable Lending Installation
to make any payment calculated by reference to the amount of Eurodollar Loans
held, 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 Eurodollar Loans, the Letter of Credit Commitment or Revolving
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 Eurodollar Loans, the Letter of Credit Commitment or Revolving Credit
Commitment or interest in Letters of Credit, then, within 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.

4.2   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 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

 32
  
 

 

increased
capital which such Lender determines is attributable to this Agreement, its
Revolving Credit Loans, its Revolving Credit Commitment to make Revolving
Credit Loans 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 July 1988 report of the Basle Committee on
Banking Regulation and Supervisory Practices Entitled “International
Convergence of Capital Measurements and Capital Standards,” including
transition rules, and any amendments to such regulations adopted prior to the
Closing Date.

4.3   Availability of Types of Revolving Credit
Advances.  If any Lender determines
that maintenance of its Eurodollar Loans at a suitable Lending Installation
would violate any applicable law, rule, regulation, or directive, whether or
not having the force of law, or if the Required Lenders determine that (i)
deposits of a type and maturity appropriate to match fund Eurodollar Advances
are not available or (ii) the interest rate applicable to Eurodollar Advances
does not accurately reflect the cost of making or maintaining Eurodollar
Advances, then the Agent shall suspend the availability of Eurodollar Advances
and require any affected Eurodollar Advances to be repaid or converted to
Alternate Base Rate Advances, subject to the payment of any funding
indemnification amounts required by Section 4.4.

4.4   Funding Indemnification.  If any payment of a Eurodollar Advance occurs
on a date which is not the last day of the applicable Interest Period, whether
because of acceleration, prepayment or otherwise, or a Eurodollar Advance is
not made on the date specified by the Borrower for any reason other than
default by the Lenders, the Borrower will indemnify each Lender for any loss or
cost incurred by it resulting therefrom, including, without limitation, any
loss or cost in liquidating or employing deposits acquired to fund or maintain
such Eurodollar Advance.

4.5           Taxes.  (a) 
All payments by the Borrower to or for the account of any Lender or the
Agent hereunder or under any Revolving Credit Note 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 4.5) 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.

 33
  
 

(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 Revolving Credit Note or from the execution
or delivery of, or otherwise with respect to, this Agreement or any Revolving
Credit Note (“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 4.5) 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 4.6.

(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, (i) 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 4.5
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

 34
  
 

 

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 Revolving Credit Note 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.

(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 4.5(g)
shall survive the payment of the Obligations and termination of this Agreement.

4.6   Lender Statements; Survival of Indemnity.  To the extent reasonably possible, each
Lender shall designate an alternate Lending Installation with respect to its
Eurodollar Loans to reduce any liability of the Borrower to such Lender under Sections
4.1, 4.2 and 4.5 or to avoid the unavailability of Eurodollar
Advances under Section 4.3, 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 4.1, 4.2, 4.4 or 4.5.  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.  Determination
of amounts payable under such Sections in connection with a Eurodollar Loan
shall be calculated as though each Lender funded its Eurodollar Loan through
the purchase of a deposit of the type and maturity corresponding to the deposit
used as a reference in determining the Eurodollar Rate applicable to such
Revolving Credit Loan, whether in fact that is the case or not.  Unless otherwise provided herein, the amount
specified in the written statement of any Lender shall be payable on demand
after receipt by the Borrower of such written statement.  The obligations of the Borrower under Sections 4.1,
4.2, 4.4 and 4.5 shall survive payment of the Obligations
and termination of this Agreement.

 35
  
 

 

ARTICLE V

CONDITIONS
PRECEDENT

5.1   Initial Revolving Credit Loans and Letters
of Credit.  The amendments to the
Existing Credit Agreement embodied in this Agreement shall not be effective (in
which case the Existing Credit Agreement shall remain in full force and effect)
and the Lenders shall have no obligation to make Revolving Credit Advances hereunder
and the Issuer shall have no obligation to issue any Letter of Credit hereunder
unless and until all loans 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.

(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 VI of this Agreement is true and correct on and as of the
Closing Date.

(e)           Legal Opinions.  A written opinion of Elliot Orol, internal
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)            Revolving Credit Notes. Any
Revolving Credit Notes requested by a Lender pursuant to Section 2.12
payable to the order of each such requesting Lender.

(g)           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,

 36
  
 

 

instruments,
opinions and documents required to be delivered pursuant hereto and thereto.

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

5.2   Each Revolving Credit Advance and Letter
of Credit.  The Lenders shall not be
required to make any Revolving Credit Advance (other than a Revolving Credit
Advance that, after giving effect thereto and to the application of the
proceeds thereof, does not increase the aggregate amount of outstanding
Revolving Credit Advances), and the Issuer shall not be obligated to issue any
Letter of Credit, unless on the applicable Borrowing Date:

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

(b)           The representations and warranties
contained in Article VI are true and correct as of such Borrowing 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)           A Borrowing Notice or Issuance
Request, as applicable, shall have been properly submitted; and

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

Each Borrowing Notice with respect to each such
Revolving Credit Advance and 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 5.2 (a) and (b)
have been satisfied.  Any Lender may
require a duly completed compliance certificate in substantially the form of Exhibit B
hereto as a condition to making a Revolving Credit Advance or issuing a Letter
of Credit.

ARTICLE
VI

REPRESENTATIONS
AND WARRANTIES

The Borrower represents and warrants to the Lenders
that:

6.1   Existence and Standing.  Each of the Borrower and its Subsidiaries is
a corporation, duly and properly incorporated, validly existing and in good
standing under the laws of its jurisdiction of incorporation or organization
and has all requisite authority to conduct its business in each jurisdiction in
which its business is conducted.

 37
  
 

 

6.2   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.

6.3   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, the California 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.

6.4   Financial Statements.  (a) 
The consolidated balance sheets of the Borrower and the Consolidated
Subsidiaries as of December 31, 2005 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 Peat Marwick, 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

 38
  
 

 

Consolidated
Subsidiaries for the periods covered by such statements, all in accordance with
Agreement Accounting Principles consistently applied.

(b)           The consolidated balance sheets of
the Borrower and the Consolidated Subsidiaries as of September 30, 2006 and 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 Quarter then ended, 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 the Consolidated Subsidiaries for
the periods covered by such statements, all in accordance with Agreement
Accounting Principles consistently applied (subject to changes resulting from
normal year-end audit adjustments).

(c)           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 September 30, 2006.

6.5   Statutory Financial Statements.  (a) 
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 2005 Fiscal Year,
and as of and for the Fiscal Quarter ended September 30, 2006 (collectively,
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 compliance with applicable law when filed.

(b)           No dividends or other distributions
have been declared, paid or made upon any shares of capital stock of the
Borrower, nor have any shares of capital stock of the Borrower been redeemed,
retired, purchased or otherwise acquired by the Borrower since September 30,
2006, except to the extent permitted under the terms of this Agreement.

6.6   Material Adverse Change.  Since December 31, 2005 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.

6.7   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

 39
  
 

 

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.

6.8   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 making of any
Revolving Credit Loans or 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 6.4.

6.9   Subsidiaries.  Schedule 6.9 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.  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.

6.10   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.

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

6.12   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.

6.13   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 making of any

 40
  

 

Revolving Credit Advance nor 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.

6.14   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.

6.15   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.

6.16   Ownership
of Properties.  The Borrower and each
of its Subsidiaries has good title, free of all Liens other than those
permitted by Section 7.16, to all of the Property and assets
reflected in the Borrower’s most recent consolidated financial statements
provided to the Agent as owned by the Borrower and its Subsidiaries.

6.17   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 making of Revolving Credit Loans 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.

6.18   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.

 41
  
 

 

6.19   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.

6.20   Public
Utility Holding Company Act.  Neither
the Borrower nor any Subsidiary is a “holding company” or a “subsidiary company”
of a “holding company”, or an “affiliate” of a “holding company” or of a “subsidiary
company” of a “holding company”, within the meaning of the Public Utility
Holding Company Act of 1935, as amended.

6.21   Solvency.  Immediately after the consummation of the
transactions to occur on the date hereof and immediately following each
extension of credit, if any, made hereunder on the date hereof and after giving
effect to the application of the proceeds of such extensions 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.

6.22   Insurance
Licenses.  Schedule 6.22
hereto lists all of the jurisdictions in which any Insurance Subsidiary holds a
License and is authorized to transact insurance business as of the date of this
Agreement.  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.  Schedule 6.22
also indicates the line or lines of insurance in which each such Insurance
Subsidiary is engaged and the state or states in which such Insurance
Subsidiary is licensed to engage in any line of insurance, in each case as of
the date of this Agreement.  The
Insurance Subsidiaries do not transact any business, directly or indirectly,
requiring any license, permit, governmental approval, consent or other
authorization other than those listed on Schedule 6.22.

6.23   Partnerships.  Except as disclosed in Schedule 6.23,
neither the Borrower nor any of its Subsidiaries is a partner of any
partnership.

6.24   Lines
of Business.  Schedule 6.24
sets forth a complete statement of each line of business conducted as of the
date hereof by the Borrower and each of its Subsidiaries (the “Existing
Lines of Business”).

 42
  
 

 

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

6.26   Security.  The Pledge Agreement is effective to create
and give the Agent, for the benefit of the Lenders, 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.  The Borrower, the Agent
and the Lender agree that all references in the Pledge Agreement or any Cash
Collateral Security Agreement (including without limitation the Amended and
Restated Pledge Agreement dated as of January 31, 2005 among the Borrower,
the Agent, the Issuer and JPMorgan Chase Bank, as depository), to the “Credit
Agreement” shall be to this Agreement, as it may be amended, modified or
restated and in effect from time to time.

6.27   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
VII

COVENANTS

During the term of this Agreement, unless the Lenders
shall otherwise consent in writing:

7.1   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 one hundred (100) 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,

 43
  
 

 

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 10K
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.

(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 (ii)
within seventy (70) days after the close of each Fiscal Year of each Insurance
Subsidiary, 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,
(iii) 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
(iv) 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.

 44
  
 

 

(f)            As soon as available, but in any
event within 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 B 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.

(h)           As soon as possible and in any event
within 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.

(i)            As soon as possible and in any event
within 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 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 10K 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 days after (i) learning thereof, notification of any changes after
the date hereof in the Borrower’s S&P Rating or

 45
  
 

 

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 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.

(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)(iv) 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 paragraph (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 7.1(a), (b), (k),
and (l) by posting such information on EDGAR and giving notice to the
Agent of such posting.

7.2   Use
of Proceeds.  The proceeds of the
Revolving Credit Loans shall be used for general corporate purposes including
acquisitions.

 46
  
 

 

7.3   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.

7.4   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 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.

7.5   Taxes.  The Borrower will, and will cause each
Subsidiary to, timely file complete and correct United States federal and
applicable foreign, state and local tax returns required by applicable law and
pay when due all 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.

7.6   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.

 47
  
 

 

7.7   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.

7.8   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.

7.9   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.

7.10   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 Revolving
Credit Termination Date and 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 Revolving Credit Termination Date and 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 Borrower would be in pro forma compliance with the terms
of this Agreement.

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

(a)           the Revolving Credit Loans and other
Obligations;

 48
  
 

 

(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; and;

(c)           guaranties permitted under Section
7.15; and

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

7.12   Merger.  The Borrower will not, nor will it permit any
Subsidiary to, merge or consolidate with or into any other Person, except that
a Subsidiary may merge into the Borrower or any Wholly-Owned Subsidiary.

7.13   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 for:

(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 7.13
since the Closing Date, do not constitute a Substantial Portion of the Property
of the Borrower and its Subsidiaries.

7.14   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, A-3 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 not
satisfying any of the standards set forth in clause (b) above but rated
BBB- or better by S&P, Baa-3 or better by Moody’s or NAIC-2 or better by
the NAIC; provided, that if any such Investment ceases to meet such
ratings requirements, then such Investment shall be permitted hereby for a
period of 180 days after the date on which such ratings requirement is no
longer satisfied; provided, further, that all such Investments
under this clause (d) do not exceed, in the aggregate at

 49
  
 

 

any one time
outstanding, 10% of the combined Investments of the Borrower and its
Subsidiaries;

(e)           Investments in debt securities not
satisfying any of the standards set forth in clause (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.

7.15   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
Millennium Underwriting Ltd. or Navigators Corporate Underwriters Ltd. 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 7.14 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.

7.16   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:

 50
  

 

(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;

(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 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 7.16 hereto;

(f)            Liens in favor of the Agent, for the
benefit of the Lenders, 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 7.11(d).

7.17   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.

7.18   Amendments
to Agreements.  The Borrower will
not, and will not permit any Subsidiary to, amend, waive, modify or terminate
its certificate or articles of incorporation.

 51
 

 

7.19   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.

7.20   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 making of Revolving Credit Advances, 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.

7.21   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 7.21 hereto, as amended with the consent of the Lenders
(the “Reinsurance Guidelines”).

7.22   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.

7.23   Financial
Covenants.

7.23.1 Minimum
Consolidated Tangible Net Worth.  The
Borrower will at all times maintain Consolidated Tangible Net Worth of not less
than $415,000,000.

7.23.2 Minimum
Statutory Surplus.  The Borrower will
cause the Significant Insurance Subsidiaries to maintain an aggregate Statutory
Surplus of not less than $400,000,000.

 52
 

 

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

7.23.4 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%.

7.24   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 Lenders
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
VIII

DEFAULTS

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

8.1   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 Revolving Credit Loan, 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.

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

8.3   The breach by the Borrower of any of the
terms or provisions of Sections 3.8, 7.2, 7.3, Sections 7.10
through 7.13, Sections 7.15 through 7.20 or Sections 7.22
through 7.23.

8.4   The breach by the Borrower (other than a
breach which constitutes a Default under Section 8.1, 8.2 or
8.3) of any of the terms or provisions of this Agreement which is not
remedied within thirty (30) days (or in the case of Section 7.14,
ten (10) days) after written notice from the Agent or any Lender.

8.5   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 

 53
 

 

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.

8.6   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 8.6,
(f) fail to contest in good faith any appointment or proceeding described in Section 8.7
or (g) become unable to pay, not pay, or admit in writing its inability to pay,
its debts generally as they become due.

8.7   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 8.6(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
consecutive days.

8.8   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.

8.9   The Borrower or any of its Subsidiaries shall
fail within thirty 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.

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

 54
 

 

8.11   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.

8.12   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.

8.13   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.

8.14   Any
Change in Control shall occur.

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

8.16   The
Pledge Agreement 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 thereof, or the Pledge Agreement
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 the Pledge
Agreement, or the Borrower shall fail to comply with any of the terms or
provisions of the Pledge Agreement.

8.17   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.

8.18   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.

 55
 

 

8.19   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.

ARTICLE
IX

ACCELERATION,
WAIVERS, AMENDMENTS AND REMEDIES

9.1   Acceleration.  If any Default described in Section 8.6
or 8.7 occurs with respect to the Borrower, the obligations of the
Lenders to make Revolving Credit Loans and 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 Lenders to make Revolving Credit
Loans and/or 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 an account (the “Letter of Credit Cash
Collateral Account”) maintained with JPMorgan Chase Bank in the name of the
Agent, for the ratable benefit of the Lenders and the Agent, cash or Cash
Collateral Investments in an amount necessary to make the balance in such
account equal to 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.  Following the
occurrence and during the continuance of a Default, the Borrower shall have no
control over funds deposited in the Letter of Credit Cash Collateral Account
pursuant to this Section, which funds shall be invested by the Agent from time
to time in its discretion in certificates of deposit of JPMorgan Chase Bank
having a maturity not exceeding thirty (30) days.  Such funds shall be promptly applied by the
Agent to reimburse the Issuer for drafts drawn from time to time under the
Letters of Credit.  Such funds, if any,
remaining in the Letter of Credit Cash Collateral Account following the payment
of all Obligations in full or the earlier termination of all Defaults shall,
unless the Agent is otherwise directed by a court of competent jurisdiction, be
promptly paid over to the Borrower.

If, within thirty (30) days after acceleration of the
maturity of the Obligations or termination of the obligations of the Lenders to
make Revolving Credit Loans and/or issue Letters of Credit hereunder as a
result of any Default (other than any Default as described in Section 8.6
or 8.7 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 

 56
 

 

their sole discretion)
shall so direct, the Agent shall, by notice to the Borrower, rescind and annul
such acceleration and/or termination.

9.2   Amendments.  Subject to the provisions of this Article IX,
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
Revolving Credit Loan or forgive all or any portion of the principal amount
thereof, 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 the mandatory payments and commitment and facility reductions required
under Section 2.1(b) or 2.6, or increase the amount of the
Revolving Credit Commitment or Letter of Credit Participation Amount of any
Lender hereunder;

(d)           Extend the Revolving Credit
Termination Date or 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 3.5,
permit the amendment or extension of any Letter of Credit; or, except as
otherwise set forth in Section 3.1(b), permit the renewal of any
Letter of Credit;

(e)           Release any guarantor of any
Obligations or, except as provided in the Pledge Agreement, release all or
substantially all of the collateral for the Obligations;

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

(g)           Permit any amendment of the Reinsurance
Guidelines;

provided, further, that no such supplemental agreement
shall, without the consent of each Lender, amend this Section 9.2.  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 13.3.2 without obtaining
the consent of any other party to this Agreement.

9.3   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 making of a Revolving Credit Loan or the issuance of a Letter of Credit
notwithstanding the existence of a Default or the 

 57
 

 

inability of
the Borrower to satisfy the conditions precedent to such Revolving Credit Loan
or 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 9.2,
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.

ARTICLE X

GENERAL
PROVISIONS

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

10.2   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.

10.3   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.

10.4   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 December 14, 2006 in favor of JPMorgan
Chase Bank and JPMorgan Securities Inc. (the “Fee
Letter”).

10.5   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.

10.6   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
10.7, 10.11 and 11.11 to the extent specifically set forth
therein and shall have the right to 

 58
 

 

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.

10.7   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 Revolving Credit Loan 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 10.7 shall survive the termination of
this Agreement.

10.8   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.

10.9   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.

10.10   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 

 59
 

 

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.

10.11   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 13.4; provided, that any recipient of such
disclosure shall be advised by such Lender 
of the confidentiality requirements herein set forth.

10.12   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
Revolving Credit Loans provided for herein.

10.13   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.

10.14   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.

 60

ARTICLE XI

THE ADMINISTRATIVE AGENT

11.1   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
XI.  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.

11.2   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.

11.3   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.

11.4   No Responsibility for Revolving Credit
Loans, 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 V, 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,

 61
 

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).

11.5   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.

11.6   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.

11.7   Reliance on Documents; Counsel.   The
Agent shall be entitled to rely upon any Revolving Credit Note, 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.

11.8   Agent’s Reimbursement and Indemnification.   The
Lenders agree to reimburse and indemnify the Agent ratably in proportion to
their respective Revolving Credit Commitments and Letter of Credit
Participation Amount (or, if the Aggregate Revolving Credit Commitments and
Letter of Credit Commitments have been terminated, in proportion to their
Revolving Credit Commitments and 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

 62
 

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
4.5(g) shall, notwithstanding the provisions of this Section 11.8,
be paid by the relevant Lender in accordance with the provisions thereof.  The obligations of the Lenders under this Section 11.8
shall survive payment of the Obligations and termination of this Agreement.

11.9   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.

11.10   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
Revolving Credit Commitment, its Revolving Credit Loans, 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.

11.11   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,

 63
 

continue to make its own credit decisions in taking or
not taking action under this Agreement and the other Facility Documents.

11.12   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 XI 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 11.12,
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.

11.13   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.

11.14   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 X
and XI.

 64
 

11.15   Syndication Agent.   The
Syndication Agent, Senior Managing Agent, Managing Agent, Documentation Agent
and Co-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, Senior Managing Agent, Managing Agent, Documentation Agent
and Co-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, Senior Managing
Agent, Managing Agent and Co-Agent as it makes to the Agent in Section 11.10.

ARTICLE XII

SETOFF; RATABLE PAYMENTS

12.1   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.

12.2   Ratable Payments.   If
any Lender, whether by setoff or otherwise, has payment made to it upon its
Revolving Credit Loans or Reimbursement Obligations (other than payments
received pursuant to Section 4.1, 4.2, 4.4 or 4.5)
in a greater proportion than that received by any other Lender, such Lender
agrees, promptly upon demand, to purchase a portion of the Revolving Credit
Loans or 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 Revolving Credit Loans or 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 Revolving Credit
Loans and Letter of Credit Participation Amounts.  In case any such payment is disturbed by
legal process, or otherwise, appropriate further adjustments shall be made.

ARTICLE XIII

BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS

13.1   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 13.3.  Notwithstanding clause (b) of

 65
 

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 and any Revolving Credit Note 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 made any Revolving Credit Loan, participated in any Letter of
Credit or holds any Revolving Credit Note as the owner thereof for all purposes
hereof unless and until such Person complies with Section 13.3 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 Revolving Credit Loan, Letter of Credit or Revolving Credit Note 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 Revolving Credit Loan (whether or not a Revolving Credit Note has
been issued in evidence thereof) or any Letter of Credit, shall be conclusive
and binding on any subsequent holder, transferee or assignee of the rights to
such Revolving Credit Loan or Letter of Credit, as the case may be.

13.2   Participations.

13.2.1   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 Revolving Credit Loan owing to such Lender, any
Revolving Credit Note held by such Lender, any Revolving Credit Commitment of
such Lender, 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 Revolving Credit Loans and its interest in any Letters
of Credit and the holder of any Revolving Credit Note 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.

13.2.2   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
9.2.

 66
 

13.2.3   Benefit of Setoff.   The
Borrower agrees that each Participant shall be deemed to have the right of
setoff provided in Section 12.1 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 12.1 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 12.1, 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 12.2 as if each Participant were
a Lender.

13.3   Assignments.

13.3.1   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 C 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 Revolving Credit
Commitment and/or Letter of Credit Participation Amount (calculated as at the
date of such assignment).

13.3.2   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 C
(a “Notice of Assignment”), together with any consents required by Section 13.3.1,
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 Revolving Credit Commitment, Revolving Credit
Loans and 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

 67
 

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 Aggregate Revolving Credit
Commitment, the Letter of Credit Commitment, Revolving Credit Loans and the
participation interests in Letters of Credit assigned to such Purchaser.  Upon the consummation of any assignment to a
Purchaser pursuant to this Section 13.3.2, the transferor Lender,
the Agent and the Borrower shall, if the transferor Lender or the Purchaser
desires that its Revolving Credit Loans be evidenced by Revolving Credit Notes,
make appropriate arrangements so that new Revolving Credit Notes or, as
appropriate, replacement Revolving Credit Notes are issued to such transferor
Lender and new Revolving Credit Notes or, as appropriate, replacement Revolving
Credit Notes, are issued to such Purchaser, in each case in principal amounts
reflecting their respective Revolving Credit Commitments, as adjusted pursuant
to such assignment.

13.4   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 10.11 of this
Agreement.

13.5   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 4.5(d).

ARTICLE XIV

NOTICES

14.1   Notices.   Except
as otherwise permitted by Section 2.12 with respect to borrowing
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 14.1.  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, 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

 68
 

electronic transmission, received) at the address
specified in this Section; provided that notices to the Agent under Articles
II and III shall not be effective until received.

14.2   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 XV

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 XVI

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

16.1   CHOICE OF LAW.   THE
LOAN DOCUMENTS (OTHER THAN THOSE CONTAINING A CONTRARY EXPRESS CHOICE OF LAW
PROVISION) SHALL BE CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS (INCLUDING,
WITHOUT LIMITATION, 735 ILCS SECTION 105/5-1 ET SEQ., BUT
OTHERWISE WITHOUT REGARD TO THE CONFLICTS OF LAWS PROVISIONS) OF THE STATE OF
ILLINOIS, BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS.

16.2   CONSENT TO JURISDICTION.   THE
BORROWER HEREBY IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF
ANY UNITED STATES FEDERAL OR ILLINOIS STATE COURT SITTING IN CHICAGO, ILLINOIS
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

 69
 

ARISING OUT OF, RELATED TO, OR CONNECTED WITH ANY
FACILITY DOCUMENT SHALL BE BROUGHT ONLY IN A COURT IN CHICAGO, ILLINOIS.

16.3   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]

 70

 

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:

  	
   

  
	
   

  	
  Print Name:

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
  Address:

  	
  Reckson Executive Park

  
	
   

  	
   

  	
  6 International Drive

  
	
   

  	
   

  	
  Rye Brook, New York 10573

  
	
   

  	
   

  	
   

  
	
   

  	
  Attn:

  	
  Bradley D. Wiley

  
	
   

  	
   

  
	
   

  	
  Telephone: (914) 933-6025

  
	
   

  	
  Fax: (914) 933-6033

  
						

 S-1
  
 

 

	
  

  	
  JPMORGAN CHASE BANK, N.A., 

  
	
   

  	
  Individually and as Administrative Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:_________________________________

  
	
   

  	
  Print Name: Thomas Kiepura

  
	
   

  	
   

  
	
   

  	
  Title: Vice President

  
	
   

  	
   

  
	
   

  	
  Address:

  	
  10 South Dearborn

  
	
   

  	
   

  	
  Chicago, Illinois 60670

  
	
   

  	
   

  	
   

  
	
   

  	
  Attn:

  	
  Hector Varona

  
	
   

  	
   

  
	
   

  	
  Telephone: (312) 732-7614

  
	
   

  	
  Fax: (312) 325-3060

  

 S-2
  
 

 

	
  

  	
  LASALLE BANK NATIONAL 

  
	
   

  	
  ASSOCIATION, individually and as 

  
	
   

  	
  Syndication Agent

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Print Name:

  
	
   

  	
  Title:

  

 S-3
  
 

 

	
  

  	
  CITIBANK, N.A., individually and as 

  
	
   

  	
  Documentation Agent

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Print Name:

  
	
   

  	
  Title:

  

 S-4
  
 

 

	
  

  	
  COMMERZBANK AKTIEGESELLSCHAFT, 

  
	
  

  	
  New York and Grand Cayman Branches, 

  
	
   

  	
  individually and as Documentation Agent

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Print Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Print Name:

  
	
   

  	
  Title:

  

 S-5
  
 

 

	
  

  	
  CREDIT SUISSE FIRST BOSTON, acting 

  
	
   

  	
  through its Cayman Islands Branch, 

  
	
   

  	
  individually and as Managing Agent

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Print Name:

  
	
   

  	
  Title:

  

 S-6
  
 

 

	
  

  	
  U.S. BANK NATIONAL ASSOCIATION, 

  
	
   

  	
  individually and as Co-Agent

  
	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Print Name:

  
	
   

  	
  Title:

  

 S-7
  
 

 

	
  

  	
  BROWN BROTHERS HARRIMAN & 

  
	
   

  	
  CO., individually and as Co-Agent

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Print Name:

  
	
   

  	
  Title:

  

 

 S-8
  

 

PRICING SCHEDULE

	
   

  	
  Applicable
  Margin

  	
   

  	
   

  	
  Level I
  Status

  	
   

  	
  Level II
  Status

  	
   

  	
  Level III
  Status

  	
   

  	
  Level IV
  Status

  
	
  Eurodollar Rate

  	
   

  	
  0.625%

  	
   

  	
  0.750%

  	
   

  	
  1.000%

  	
   

  	
  1.25%

  

 

	
   

  	
  Applicable Fee Rate

  	
   

  	
   

  	
  Level I Status

  	
   

  	
  Level II Status

  	
   

  	
  Level III Status

  	
   

  	
  Level IV Status

  
	
  Commitment Fee

  	
   

  	
  0.09%

  	
   

  	
  0.100%

  	
   

  	
  0.125%

  	
   

  	
  0.150%

  
	
  Letter
  of Credit Participation Fee

  	
   

  	
  0.625%

  	
   

  	
  0.750%

  	
   

  	
  1.000%

  	
   

  	
  1.25%

  

 

For the purposes of this Schedule, the following terms
have the following meanings, subject to the final paragraph of this Schedule:

“Level I Status” exists at any date if, on such date,
the Borrower’s S&P Rating is BBB+ or better or the Borrower’s Moody’s
Rating is Baa1 or better.

“Level II Status” exists at any date if, on such date,
(i) the Borrower has not qualified for Level I Status and (ii) the Borrower’s
S&P Rating is BBB or better or the Borrower’s Moody’s Rating is Baa2 or
better.

“Level III Status” exists at any date if, on such
date, (i) the Borrower has not qualified for Level I Status or Level II Status
and (ii) the Borrower’s S&P Rating is BBB- or better or the Borrower’s
Moody’s Rating is Baa3 or better.

“Level IV Status” exists at any date if, on such date,
the Borrower has not qualified for Level I Status, Level II Status or Level III
Status.

“Status” means Level I Status, Level II Status, Level
III Status or Level IV Status.

The Applicable Margin and Applicable Fee Rate shall be
determined in accordance with the foregoing table based on the Borrower’s
Status as determined from its then-current Borrower’s S&P Ratings and
Borrower’s Moody’s Rating; provided that if the Borrower’s S&P Rating and
the Borrower’s Moody’s Rating are not on the same Level, the better Rating
shall apply except that if the Ratings differ by more than one Level than the
Level above the lower Rating shall apply. 
The Rating in effect on any date for the purposes of this Schedule is
that in effect at the close of business on such date.  If at any time the Borrower has neither a
Borrower’s S&P Rating nor a Borrower’s Moody’s Rating, Level IV Status
shall exist.

  
  
 

 

SCHEDULE
1

COMMITMENTS

	
  
Lender

  	
   

  	
   

  	
   

  	
  

  Revolving Credit Facility

  	
   

  	
  

  Letter of Credit Facility

  
	
  JPMorgan Chase
  Bank

  	
   

  	
  $3,900,000

  	
   

  	
  $35,100,000

  
	
  LaSalle Bank
  National Association

  	
   

  	
  $3,300,000

  	
   

  	
  $29,700,000

  
	
  Citibank, N.A.

  	
   

  	
  $3,300,000

  	
   

  	
  $29,700,000

  
	
  Commerzbank
  Aktiegesellschaft — 

  New York and Grand Cayman Branches

  	
   

  	
  $3,300,000

  	
   

  	
  $29,700,000

  
	
  Credit Suisse
  First Boston

  	
   

  	
  $3,200,000

  	
   

  	
  $28,800,000

  
	
  U.S. Bank
  National Association

  	
   

  	
  $2,000,000

  	
   

  	
  $18,000,000

  
	
  Brown Brothers
  Harriman & Co.

  	
   

  	
  $1,000,000

  	
   

  	
  $9,000,000

  
	
  TOTAL:

  	
   

  	
  $20,000,000.00

  	
   

  	
  $180,000,000.00

  

 

  
  
 

 

SCHEDULE
3.1

EXISTING
LETTERS OF CREDIT AS OF 02/02/07

	
   

  	
   

  	
  Pounds

  	
   

  	
   

  	
   

  	
   

  
	
  L/C Number

  	
   

  	
  Outstandings

  	
   

  	
  Applicant

  	
   

  	
  Beneficiary

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ST4028/96

  	
   

  	
  £13,250,000.00

  	
   

  	
  Navigators Corporate Underwriters Ltd

  	
   

  	
  Society of Lloyd’s

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ST4027/97

  	
   

  	
  £1,500,000.00

  	
   

  	
  Navigators Corporate Underwriters Ltd

  	
   

  	
  Society of Lloyd’s

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ST4033/98

  	
   

  	
  £5,689,000.00

  	
   

  	
  Navigators Corporate Underwriters Ltd

  	
   

  	
  The Council of Lloyd’s

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ST4034/98

  	
   

  	
  £12,624,000.00

  	
   

  	
  Millennium Underwriting Ltd

  	
   

  	
  The Council of Lloyd’s

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ST4029/03 / 343952

  	
   

  	
  £12,804,000.00

  	
   

  	
  Millennium Underwriting Ltd

  	
   

  	
  The Society and Council of Lloyd’s

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ST4030/03 / 343953

  	
   

  	
  £7,462,000.00

  	
   

  	
  Navigators Corporate Underwriters Ltd

  	
   

  	
  The Society and Council of Lloyd’s

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total

  	
   

  	
  £53,329,000.00

  	
   

  	
   

  	
   

  	
   

  

 

	
   

  	
   

  	
  USD

  	
   

  	
   

  	
   

  	
   

  
	
  L/C Nos

  	
   

  	
  Outstandings

  	
   

  	
  Applicant

  	
   

  	
  Beneficiary

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  321745

  	
   

  	
  $133,645.33

  	
   

  	
  The Navigators Group Inc

  	
   

  	
  One Penn Plaza LLC

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  S-202661

  	
   

  	
  $400,000.00

  	
   

  	
  The Navigators Group Inc

  	
   

  	
  Union Cycliste Internationale (UCI)

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  S-290392

  	
   

  	
  $400,000.00

  	
   

  	
  The Navigators Group Inc

  	
   

  	
  Union Cycliste Internationale (UCI)

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total

  	
   

  	
  $933,645.33

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

  
  

EXHIBIT A

REVOLVING
CREDIT NOTE

	
  $

  	
   

  	
   

  	
   

  	
  , 2007

  

 

The Navigators Group, Inc., a Delaware corporation (the “Borrower”),
promises to pay to the order of                                                           
(the “Lender”) the lesser of the principal sum of                                 
Dollars ($                )
or the aggregate unpaid principal amount of all Revolving Credit Loans made by
the Lender to the Borrower pursuant to Article II of the Agreement (as hereinafter
defined), in immediately available funds at the main office of JPMorgan Chase
Bank, N.A. in Chicago, Illinois, as Administrative Agent, together with
interest on the unpaid principal amount hereof at the rates and on the dates
set forth in the Agreement.  The Borrower
shall pay the principal of and accrued and unpaid interest on the Revolving
Credit Loans in full on the Revolving Credit Termination Date and shall make
such mandatory payments as are required to be made under the terms of Article
II of the Agreement.

The Lender shall, and is hereby authorized to, record on the schedule
attached hereto, or to otherwise record in accordance with its usual practice,
the date and amount of each Revolving Credit Loan and the date and amount of
each principal payment hereunder.

This Revolving Credit Note is one of the Revolving Credit Notes issued
pursuant to, and is entitled to the benefits of, the Third Amended and Restated
Credit Agreement, dated as of                         ,
2007 (which, as it may be amended or modified and in effect from time to time,
is herein called the “Agreement”), among the Borrower, the lenders party
thereto, including the Lender, as Administrative Agent, to which Agreement
reference is hereby made for a statement of the terms and conditions governing
this Revolving Credit Note, including the terms and conditions under which this
Revolving Credit Note may be prepaid or its maturity date accelerated.  This Revolving Credit Note is secured pursuant
to the Security Documents, as more specifically described in the Agreement, and
reference is made thereto for a statement of the terms and provisions
thereof.  Capitalized terms used herein
and not otherwise defined herein are used with the meanings attributed to them
in the Agreement.

This Note shall be governed by, and construed in accordance with, the
internal laws (and not the law of conflicts) of the State of Illinois.

	
  

  	
  THE NAVIGATORS GROUP, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Print Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
					

 A-1
  
 

SCHEDULE OF LOANS AND PAYMENTS OF
PRINCIPAL

TO

REVOLVING CREDIT NOTE OF THE NAVIGATORS GROUP, INC.

DATED                         ,
2007

 

	
  Date

  	
   

  	
  Principal
  

  Amount of

  Loan

  	
   

  	
  Maturity

  of Interest

  Period

  	
   

  	
  Principal

  Amount

  Paid

  	
   

  	
  Unpaid

  Balance

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

 A-2
  

EXHIBIT B

COMPLIANCE
CERTIFICATE

To:          The Lenders parties to the
                Credit Agreement Described
Below

This Compliance Certificate is furnished pursuant to that certain Third
Amended and Restated Credit Agreement, dated as of __________, 2007 (as
amended, modified, renewed or extended from time to time, the “Agreement”),
among The Navigators Group, Inc. (the “Borrower”), the lenders party
thereto, and JPMorgan Chase Bank, N.A., as Administrative Agent.  Unless otherwise defined herein, capitalized
terms used in this Compliance Certificate have the meanings ascribed thereto in
the Agreement.

THE UNDERSIGNED HEREBY CERTIFIES THAT:

1.             I am the duly
elected ___________ of the Borrower;

2.             I have reviewed the
terms of the Agreement and I have made, or have caused to be made under my
supervision, a detailed review of the transactions and conditions of the
Borrower and its Subsidiaries during the accounting period covered by the
attached financial statements;

3.             The examinations
described in paragraph 2 did not disclose, and I have no knowledge of, the
existence of any condition or event which constitutes a Default or Unmatured
Default during or at the time of the accounting period covered by the attached
financial statements or as of the date of this Certificate, except as set forth
below; and

4.             Schedule I
attached hereto sets forth financial data and computations evidencing the
Borrower’s compliance with certain covenants of the Agreement, all of which
data and computations are true, complete and correct.

Described below are the exceptions, if any, to paragraph 3 by listing,
in detail, the nature of the condition or event, the period during which it has
existed and the action which the Borrower has taken, is taking, or proposes to
take with respect to each such condition or event:

	
  

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  

 

 B-1
 

The foregoing certifications, together with the computations set forth
in Schedule I hereto and the financial statements delivered with
this Certificate in support hereof, are made and delivered this ___ day of
______, ____.

	
  

  	
   

  
	
   

  	
   

  
	
   

  	
   

  

 

 B-2
 

SCHEDULE I TO COMPLIANCE CERTIFICATE

Compliance as of _________, ____ with

Provisions of Sections 7.14 and 7.23 of

the Agreement

	
  Section 7.14 — Investments and Acquisitions

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.

  	
  Clause (d)

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (a)

  	
  Required:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (i)

  	
  Combined Investments of the Borrower and its
  Subsidiaries on the date of determination:

  	
  $                            

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (ii)

  	
  10% of (a)(i):

  	
  $                            

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (b)

  	
  Actual:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Investments in debt securities not rated A- or
  better by S&P, A-3 or better by Moody’s or NAIC-1 or better by the NAIC
  but rated BBB- or better by S&P, Baa-3 or better by Moody’s or NAIC-2 or
  better by the NAIC on the date of determination (or downgraded from such
  ratings within the last 180 days):

  	
  $                            

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
  Clause (e)

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (a)

  	
  Required:

  	
   

  	
   

  	
  $                            

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (i)

  	
  Consolidated Net Worth of Borrower and its Consolidated
  Subsidiaries on the date of determination:

  	
  $                            

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (ii)

  	
  5% of (a)(i)

  	
  $                            

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (b)

  	
  Actual:

  	
   

  	
   

  	
  $                            

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Aggregate Investment in Investments not satisfying
  standards set forth in clause (b) or (d):

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
									

 

 B-3
 

 

	
  3.

  	
  Clause (f)

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (a)

  	
  Aggregate Investments in equity securities:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (i)

  	
  Required:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  (A)

  	
  Consolidated Net Worth of the Borrower and its
  Consolidated Subsidiaries on the date of determination:

  	
  $                            

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  (B)

  	
  20% of (a)(i)(A):

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (ii)

  	
  Actual:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Aggregate Investments by the Borrower in equity
  securities on the date of determination:

  	
  $                            

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (b)

  	
  Individual Investments:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (i)

  	
  Required:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  (A)

  	
  Consolidated Net Worth of the Borrower and its
  Consolidated Subsidiaries on the date of determination:

  	
  $                            

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  (B)

  	
  5% of (b)(i)(A):

  	
  $                            

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (ii)

  	
  Actual:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Largest single equity securities investment by the
  Borrower and its Subsidiaries on the date of determination:

  	
  $                            

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
  Clause (g)

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (a)

  	
  Required:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (i)

  	
  Consolidated Net Worth of the Borrower and its
  Consolidated Subsidiaries on the date of determination:

  	
  $                            

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (ii)

  	
  5% of (a)(i):

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  

  	
  (b)

  	
  Actual:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Other Investments on date of determination:

  	
  $                            

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

 B-4
 

 

	
  5.

  	
  Clause (h)

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (a)

  	
  Required:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (i)

  	
  Consolidated Net Worth of the Borrower and its
  Consolidated Subsidiaries on the date of determination:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  $                            

  
	
   

  	
   

  	
  (ii)

  	
  5% of (a)(i):

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (b)

  	
  Actual:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Amount of Acquisitions from beginning of Fiscal Year
  through date of determination:

  	
  $                            

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

 B-5
 

 

	
  Section 7.23.1 —
  Minimum Consolidated Tangible Net Worth

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Period:

  	
  Fiscal Quarter ended _____________, _______

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.

  	
  Required:

  	
   

  	
   

  	
  $        415,000,000

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
  Actual:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Consolidated Tangible Net Worth (excluding the
  effect of unrealized gain or loss under SFAS 115):

  	
  $                           

  

 

 B-6
 

 

	
  Section 7.23.2 —
  Minimum Statutory Surplus

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Period:

  	
   

  	
  Fiscal Quarter ended _____________, _______

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.

  	
  Required:

  	
   

  	
   

  	
   

  	
  $        400,000,000

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
  Actual:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Aggregate Statutory Surplus of the Significant
  Insurance Subsidiaries:

  	
  $                            

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 7.23.3 — Leverage Ratio

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.

  	
  Required:

  	
   

  	
   

  	
   

  	
                   0.30:1.0

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
  Actual:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (a)

  	
  Consolidated Indebtedness of the Borrower and its
  Consolidated Subsidiaries (excluding letter of credit obligations incurred in
  the ordinary course of business) on date of determination:

  	
  $                            

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (b)

  	
  Consolidated Net Worth on date of determination:

  	
  $                            

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (c)

  	
  (a) plus (b):

  	
   

  	
  $                            

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (d)

  	
  Ratio of (a) to (c):

  	
   

  	
                          :1.0

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 7.23.4 — Minimum Risk-Based Capital

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.

  	
  Required:

  	
   

  	
   

  	
   

  	
                      150%

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
  Actual:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (a)

  	
  Total Adjusted Capital on date of determination:

  	
  $                            

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (b)

  	
  Company Action Level RBC on date of determination:

  	
  $                            

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (c)

  	
  Ratio of (a) to (b) (expressed as a percentage):

  	
                            %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

 B-7

EXHIBIT C

ASSIGNMENT AGREEMENT

This Assignment Agreement (this “Assignment Agreement”) between               
(the “Assignor”) and                      
(the “Assignee”) is dated as of                            .  The parties hereto agree as follows:

1.             PRELIMINARY STATEMENT.  The Assignor is a party to a Credit Agreement
(which, as it may be amended, modified, renewed or extended from time to time
is herein called the “Credit Agreement”) described in Item 1 of Schedule
1 attached hereto (“Schedule 1”). 
Capitalized terms used herein and not otherwise defined herein shall
have the meanings attributed to them in the Credit Agreement.

2.             ASSIGNMENT AND ASSUMPTION.  The Assignor hereby sells and assigns to the
Assignee, and the Assignee hereby purchases and assumes from the Assignor, an
interest in and to the Assignor’s rights and obligations under the Credit
Agreement such that after giving effect to such assignment the Assignee shall
have purchased pursuant to this Assignment Agreement the percentage interest
specified in Item 3 of Schedule 1 of all outstanding rights and
obligations under the Credit Agreement relating to the loans listed in Item 3
of Schedule 1 and the other Facility Documents.  The total of the Revolving Credit Commitment
and the Letter of Credit Participation Amount purchased by the Assignee
hereunder is set forth in Item 4 of Schedule 1.

3.             EFFECTIVE DATE. 
The effective date of this Assignment Agreement (the “Effective Date”)
shall be the later of the date specified in Item 5 of Schedule 1 or two
Business Days (or such shorter period agreed to by the Agent) after a Notice of
Assignment substantially in the form of Exhibit I attached hereto has
been delivered to the Agent.  Such Notice
of Assignment must include any consents required to be delivered to the Agent
by Section 13.3.1 of the Credit Agreement. 
In no event will the Effective Date occur if the payments required to be
made by the Assignee to the Assignor on the Effective Date under Sections 4 and
5 hereof are not made on the proposed Effective Date or if any other condition
precedent agreed to by the Assignor and the Assignee has not been
satisfied.  The Assignor will notify the
Assignee of the proposed Effective Date not later than the Business Day prior
to the proposed Effective Date.  As of
the Effective Date, (i) the Assignee shall have the rights and obligations of a
Lender under the Facility Documents with respect to the rights and obligations
assigned to the Assignee hereunder and (ii) the Assignor shall relinquish its
rights and be released from its corresponding obligations under the Facility
Documents with respect to the rights and obligations assigned to the Assignee
hereunder.

4.             PAYMENT OBLIGATIONS.  On and after the Effective Date, the Assignee
shall be entitled to receive from the Agent all payments of principal, interest
and fees with respect to the interest assigned hereby.  The Assignee shall advance funds directly to
the Agent with respect to all Revolving Credit Loans and reimbursement payments
made on or after the Effective Date with respect to the interest assigned
hereby.  In the event that either party
hereto receives any payment to which the other party hereto is entitled under
this Assignment Agreement, then the party receiving such amount shall promptly
remit it to the other party hereto.

 C-1
 

5.             FEES PAYABLE BY THE ASSIGNEE.  The Assignee agrees to pay the $3,500
processing fee required to be paid to the Agent in connection with this
Assignment Agreement.

6.             REPRESENTATIONS OF THE ASSIGNOR; LIMITATIONS ON THE
ASSIGNOR’S LIABILITY.  The Assignor
represents and warrants that it is the legal and beneficial owner of the
interest being assigned by it hereunder and that such interest is free and
clear of any adverse claim created by the Assignor.  It is understood and agreed that the
assignment and assumption hereunder are made without recourse to the Assignor
and that the Assignor makes no other representation or warranty of any kind to
the Assignee.  Neither the Assignor nor
any of its officers, directors, employees, agents or attorneys shall be
responsible for (i) the due execution, legality, validity, enforceability,
genuineness, sufficiency or collectability of any Facility Document, including
without limitation, documents granting the Assignor and the other Lenders a security
interest in assets of the Borrower or any guarantor, (ii) any representation,
warranty or statement made in any Facility Document or in connection with any
of the Facility Documents, (iii) the financial condition or creditworthiness of
the Borrower or any guarantor, (iv) the performance of or compliance with any
of the terms or provisions of any of the Facility Documents, (v) inspecting any
of the Property, books or records of the Borrower, (vi) the validity,
enforceability, perfection, priority, condition, value or sufficiency of any
collateral securing or purporting to secure the Revolving Credit Loans or the
Reimbursement Obligations or (vii) any mistake, error of judgment, or action
taken or omitted to be taken in connection with the Revolving Credit Loans, the
Letters of Credit or the Facility Documents.

7.             REPRESENTATIONS OF THE ASSIGNEE.  The Assignee (i) confirms that it has
received a copy of the Credit Agreement, together with copies of the financial
statements requested by the Assignee and such other documents and information
as it has deemed appropriate to make its own credit analysis and decision to
enter into this Assignment Agreement, (ii) agrees that it will, independently
and with reliance upon the Agent, the Assignor 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
the Facility Documents, (iii) appoints and authorizes the Agent to take such
action as agent on its behalf and to exercise such powers under the Facility
Documents as are delegated to the Agent by the terms thereof, together with
such powers as are reasonably incidental thereto, (iv) agrees that it will
perform in accordance with their terms all of the obligations which by the
terms of the Facility Documents are required to be performed by it as a Lender,
(v) agrees that its payment instructions and notice instructions are as set
forth in the attachment to Schedule 1, (vi) confirms that none of the
funds, monies, assets or other consideration being used to make the purchase
and assumption hereunder are “plan assets” as defined under ERISA and that its
rights, benefits and interests in and under the Facility Documents will not be “plan
assets” under ERISA, [and (vii) attaches the forms prescribed by the Internal
Revenue Service of the United States certifying that the Assignee is entitled
to receive payments under the Facility Documents without deduction or
withholding of any United States federal income taxes].

8.             INDEMNITY. 
The Assignee agrees to indemnify and hold the Assignor harmless against
any and all losses, costs and expenses (including, without limitation,
reasonable attorneys’ fees) and liabilities incurred by the Assignor in
connection with or arising in any manner from the Assignee’s non-performance of
the obligations assumed under this Assignment Agreement.

 C-2
 

9.             SUBSEQUENT ASSIGNMENTS.  After the Effective Date, the Assignee shall
have the right pursuant to Section 13.3.1 of the Credit Agreement to assign the
rights which are assigned to the Assignee hereunder to any entity or person, provided
that (i) any such subsequent assignment does not violate any of the terms and
conditions of the Facility Documents or any law, rule, regulation, order, writ,
judgment, injunction or decree and that any consent required under the terms of
the Facility Documents has been obtained and (ii) unless the prior written
consent of the Assignor is obtained, the Assignee is not hereby released from
its obligations to the Assignor hereunder, if any remain unsatisfied,
including, without limitation, its obligations under Sections 4, 5
and 8 hereof.

10.           REDUCTIONS OF AGGREGATE COMMITMENT.  If any reduction in the Aggregate Revolving
Credit Commitment or the Letter of Credit Commitment occurs between the date of
this Assignment Agreement and the Effective Date, the percentage interest
specified in Item 3 of Schedule 1 shall remain the same, but the dollar
amount purchased shall be recalculated based on the reduced Aggregate Revolving
Credit Commitment or Letter of Credit Commitment, as the case may be.

11.           ENTIRE AGREEMENT.  This Assignment Agreement and the attached
Notice of Assignment embody the entire agreement and understanding between the
parties hereto and supersede all prior agreements and understandings between
the parties hereto relating to the subject matter hereof.

12.           GOVERNING LAW.  This Assignment Agreement shall be governed
by the internal law, and not the law of conflicts, of the State of Illinois.

13.           NOTICES.  Notices shall be given under this Assignment
Agreement in the manner set forth in the Credit Agreement.  For the purpose hereof, the addresses of the
parties hereto (until notice of a change is delivered) shall be the address set
forth in the attachment to Schedule 1.

[signature page follows]

 C-3
 

IN WITNESS WHEREOF, the parties hereto have executed this Assignment
Agreement by their duly authorized officers as of the date first above written.

	
  

  	
   

  	
  [NAME OF ASSIGNOR]

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Address:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  [NAME OF ASSIGNEE]

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Address:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
						

 

 C-4

SCHEDULE 1

TO ASSIGNMENT AGREEMENT

	
  1.

  	
   

  	
  Description and Date of Credit Agreement:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  That certain Third Amended and Restated Credit Agreement,
  dated as of
                      ,
  2007, among the Navigators Group, Inc., the financial institutions named
  therein, and JPMorgan Chase Bank, N.A., as Administrative Agent.

  
	
   

  	
   

  	
   

  
	
  2.

  	
   

  	
  Date of Assignment Agreement:

  
	
   

  	
   

  	
   

  
	
  3.

  	
   

  	
  Amounts (As of Date of Item 2 above):

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Revolving Credit

  Facility

  	
   

  	
  Letter of Credit

  Facility

  	
   

  
	
  

  	
   

  	
  (a)

  	
   

  	
  Aggregate Revolving Credit Commitment (total
  Revolving Credit Loans)* and Letter of Credit Commitment (total outstanding
  Letter of Credit Obligations)** under Credit Agreement

  	
   

  	
  $

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (b)

  	
   

  	
  Assignee’s Percentage of each Facility purchased
  under the Assignment Agreement (taken to five decimal places);

  	
   

  	
   

  	
  %

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  

  	
   

  	
  (c)

  	
   

  	
  Amount of Assigned Share in each Facility purchased
  under the Assignment Agreement:

  	
   

  	
  $

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
   

  	
  Total of Assignee’s Revolving Credit Commitment
  (Revolving Credit Loan amount)* and Letter of Credit Participation Amount
  (outstanding Letter of Credit Obligations)** purchased hereunder:

  	
   

  	
  $

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5.

  	
   

  	
  Proposed Effective Date:

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

 C-5
 

 

	
  Accepted and Agreed:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [NAME OF ASSIGNOR]

  	
   

  	
  [NAME OF ASSIGNEE]

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

*                    If
the Aggregate Revolving Credit Commitment has been terminated, insert
outstanding Revolving Credit Loans in place of Aggregate Revolving Credit
Commitment or Revolving Credit Commitment, as the case may be.

**             If
the Letter of Credit Commitment has been terminated, insert total outstanding
Letter of Credit Obligations in place of Letter of Credit Commitment or Letter
of Credit Participation Amount, as the case may be.

 C-6
 

 

ATTACHMENT TO
SCHEDULE 1 to ASSIGNMENT AGREEMENT

ADMINISTRATIVE
INFORMATION SHEET

Attach Assignor’s Administrative Information Sheet,
which must

include notice addresses for the Assignor and the Assignee

(Sample form shown below)

ASSIGNOR
INFORMATION

Contact:

	
  Name:

  	
   

  	
   

  	
   

  	
  Telephone No.:

  	
   

  	
   

  
	
  Fax No.:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

Payment Information:

	
  Name & ABA # of Destination Bank:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Account Name & Number for Wire Transfer:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Other Instructions:

  	
   

  	
   

  
	
   

  

 

	
  Address for Notices for Assignee:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  

 

ASSIGNEE
INFORMATION

Credit Contact:

	
  Name:

  	
   

  	
   

  	
   

  	
  Telephone No.:

  	
   

  	
   

  
	
  Fax No.:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

 C-7
 

Key Operations Contacts:

	
  Booking Installation:

  	
   

  	
   

  	
   

  	
  Booking Installation:

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
  Telephone No.:

  	
   

  	
   

  	
   

  	
  Telephone No.:

  	
   

  	
   

  
	
  Fax No.:

  	
   

  	
   

  	
   

  	
  Fax No.:

  	
   

  	
   

  

 

Payment
Information:

	
  Name & ABA # of Destination Bank:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Account Name & Number for Wire Transfer:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Other Instructions:

  	
   

  	
   

  
	
   

  
					

 

	
  Address for Notices for Assignor:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  

 

 C-8

 

EXHIBIT I

TO ASSIGNMENT
AGREEMENT

NOTICE

OF ASSIGNMENT

                          ,           

To:                          The Navigators Group,
Inc.

                                JPMorgan Chase Bank, N.A., as
Administrative Agent

From:                      [NAME OF ASSIGNOR] (the “Assignor”)

                                [NAME OF ASSIGNEE] (the “Assignee”)

1.             We
refer to that certain Credit Agreement (the “Credit Agreement”)
described in Item 1 of Schedule 1 attached hereto (“Schedule 1”).  Capitalized terms used herein and not
otherwise defined herein shall have the meanings attributed to them in the
Credit Agreement.

2.             This
Notice of Assignment (the “Notice of Assignment”) is given and delivered
to [the Borrower and] the Agent pursuant to Section 13.3.2 of the Credit
Agreement.

3.             The
Assignor and the Assignee have entered into an Assignment Agreement, dated as
of ___________, _____ (the “Assignment Agreement”), pursuant to which,
among other things, the Assignor has sold, assigned, delegated and transferred
to the Assignee, and the Assignee has purchased, accepted and assumed from the
Assignor the percentage interest specified in Item 3 of Schedule 1 of
all outstandings, rights and obligations under the Credit Agreement relating to
the facilities listed in Item 3 of Schedule 1.  The Effective Date of the Assignment
Agreement shall be the later of the date specified in Item 5 of Schedule 1
or two Business Days (or such shorter period as agreed to by the Agent) after
this Notice of Assignment and any consents and fees required by Sections 13.3.1
and 13.3.2 of the Credit Agreement have been delivered to the Agent; provided
that the Effective Date shall not occur if any condition precedent agreed to by
the Assignor and the Assignee has not been satisfied.

4.             The
Assignor and the Assignee hereby give to the Borrower and the Agent notice of
the assignment and delegation referred to herein.  The Assignor will confer with the Agent
before the date specified in Item 5 of Schedule 1 to determine if the
Assignment Agreement will become effective on such date pursuant to Section
3 hereof, and will confer with the Agent to determine the Effective Date
pursuant to Section 3 hereof if it occurs thereafter.  The Assignor shall notify the Agent if the
Assignment Agreement does not become effective on any proposed Effective Date
as a result of the failure to satisfy the conditions precedent agreed to by the
Assignor and the Assignee.  At the
request of the Agent, the Assignor will give the Agent written confirmation of
the satisfaction of the conditions precedent.

5.             The
Assignor or the Assignee shall pay to the Agent on or before the Effective Date
the processing fee of $3,500 required by Section 13.3.2 of the Credit
Agreement.

 C-9
 

6.             If
Revolving Credit Notes are outstanding on the Effective Date, the Assignor and
the Assignee request and direct that the Agent prepare and cause the Borrower
to execute and deliver new Revolving Credit Notes or, as appropriate,
replacement notes, to the Assignor and the Assignee.  The Assignor and, if applicable, the Assignee
each agree to deliver to the Agent for forwarding to the Borrower the original
Revolving Credit Note received by it from the Borrower upon its receipt of a
new Revolving Credit Note in the appropriate amount.

7.             The
Assignee advises the Agent that notice and payment instructions are set forth
in the attachment to Schedule 1.

8.             The
Assignee hereby represents and warrants that none of the funds, monies, assets
or other consideration being used to make the purchase pursuant to the
Assignment Agreement are “plan assets” as defined under ERISA and that its
rights, benefits, and interests in and under the Facility Documents will not be
“plan assets” under ERISA.

9.             The
Assignee authorizes the Agent to act as its agent under the Facility Documents
in accordance with the terms thereof. 
The Assignee acknowledges that the Agent has no duty to supply
information with respect to the Borrower or the Facility Documents to the
Assignee until the Assignee becomes a party to the Credit Agreement.

	
  [NAME OF ASSIGNOR]

  	
   

  	
  [NAME OF ASSIGNEE]

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  
	
  Title:

  	
   

  	
   

  	
  Title:

  	
   

  
							

 

 C-10
 

 

	
  ACKNOWLEDGED AND CONSENTED
  TO BY JPMORGAN CHASE BANK, N.A., as Administrative Agent

  	
   

  	
  ACKNOWLEDGED AND CONSENTED TO BY THE NAVIGATORS
  GROUP, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  
	
  Title:

  	
   

  	
   

  	
  Title:

  	
   

  
							

[Attach photocopy
of Schedule 1 to Assignment Agreement]

 

 C-11

 

EXHIBIT D

REIMBURSEMENT AGREEMENT
EXCERPT

This
Letter of Credit is issued under, and is subject to the terms and conditions
of, that certain Third Amended and Restated Credit Agreement dated as of                 ,
2007 as amended, among The Navigators Group, Inc., a Delaware corporation,
certain financial institutions and JPMorgan Chase Bank, N.A., as administrative
agent.  In the event of a conflict
between the terms and conditions of this letter of credit application and those
of the Credit Agreement, the terms and conditions of the Credit Agreement shall
govern.

 D-1

EXHIBIT E

FORM OF INCREASE REQUEST

	
  

  	
   

  	
  , 20

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  

JPMorgan Chase
Bank, N.A., as Administrative Agent

under the
Credit Agreement referred to below

Ladies/Gentlemen:

Please refer to the Third
Amended and Restated Credit Agreement dated as of               ,
2007 among The Navigators Group, Inc., as borrower (the “Borrower”), various financial institutions
and JPMorgan Chase Bank, N.A., as Administrative Agent (as amended, modified,
extended or restated from time to time, the “Credit
Agreement”).  Capitalized
terms used but not defined herein have the respective meanings set forth in the
Credit Agreement.

In accordance with
Section 3.11 of the Credit Agreement, the Borrower hereby requests an increase
in the Letter of Credit Commitment from $                   
to $               .  Such increase shall be made by [increasing
the Letter of Credit Participation Amount of                    
from $             
to $               ]
[adding                          
as a Lender under the Credit Agreement with a Letter of Credit Participation
Amount of $____________] as set forth in the letter attached hereto.  Such increase shall be effective three
Business Days after the date that the Administrative Agent accepts the letter
attached hereto or such other date as is agreed among the Borrower, the
Administrative Agent and the [increasing] [new] Lender.

The Borrower certifies
that (A) the representations and warranties contained in Article VI of the
Credit Agreement will be correct on the date of the increase requested hereby,
before and after giving effect to such increase, as though made on and as of
such date; and (B) no event has occurred and is continuing, or shall have
occurred and be continuing as of the date of the increase requested hereby,
that constitutes a Default or Unmatured Default.

	
   

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  THE NAVIGATORS GROUP, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  
	
   

  	
  Name:

  
	
   

  	
  Its:

  

 E-1
 

ANNEX I TO EXHIBIT E

	
  

  	
   

  	
  , 20

  	
   

  	
   

  

 

JPMorgan Chase
Bank, N.A., as Administrative Agent

under the
Credit Agreement referred to below

Ladies/Gentlemen:

Please refer to the
letter dated               ,
20     from The Navigators Group, Inc. (the “Borrower”) requesting an increase in the
Letter of Credit Commitment from $              
to $                
pursuant to Section 3.11 of the Third Amended and Restated Credit Agreement
dated as of               ,
2007 among the Borrower, various financial institutions and JPMorgan Chase
Bank, N.A., as Administrative Agent (as amended, modified, extended or restated
from time to time, the “Credit Agreement”).  Capitalized terms used but not defined herein
have the respective meanings set forth in the Credit Agreement.

The undersigned hereby
confirms that it has agreed to increase its Letter of Credit Participation
Amount under the Credit Agreement from $              
to $              
effective on the date which is three Business Days after the acceptance hereof
by the Administrative Agent or on such other date as may be agreed among the
Borrower, the Administrative Agent and the undersigned.

	
   

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  [NAME OF INCREASING LENDER]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Title:

  	
   

  
				

 

	
  Accepted as of

  
	
   

  	
  , 20

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  JPMORGAN CHASE BANK, N.A.,

  
	
  as Administrative Agent

  
	
   

  
	
   

  
	
  By:

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  
	
  Title: 

  	
   

  	
   

  
								

 E-2
 

ANNEX II TO EXHIBIT E

	
  

  	
   

  	
  , 20

  	
   

  	
   

  

 

JPMorgan Chase
Bank, N.A., as Administrative Agent

under the
Credit Agreement referred to below

Ladies/Gentlemen:

Please refer to the
letter dated               ,
20     from The Navigators Group, Inc. (the “Borrower”) requesting an increase in the
Letter of Credit Commitment from $              
to $              
pursuant to Section 3.11 of the Third Amended and Restated Credit Agreement
dated as of                  ,
2007 among the Borrower, various financial institutions and JPMorgan Chase
Bank, N.A., as Administrative Agent (as amended, modified, extended or restated
from time to time, the “Credit Agreement”).  Capitalized terms used but not defined herein
have the respective meanings set forth in the Credit Agreement.

The undersigned hereby
confirms that it has agreed to become a Lender under the Credit Agreement with
a Letter of Credit Participation Amount of $              
effective on the date which is three Business Days after the acceptance hereof,
and consent hereto, by the Administrative Agent or on such other date as may be
agreed among the Borrower, the Administrative Agent and the undersigned.

The undersigned (a)
acknowledges that it has received a copy of the Credit Agreement and the
Schedules and Exhibits thereto, together with copies of the most recent
financial statements delivered by the Borrower pursuant to the Credit
Agreement, and such other documents and information as it has deemed appropriate
to make its own credit and legal analysis and decision to become a Lender under
the Credit Agreement; and (b) agrees that it will, independently and without
reliance upon the Administrative Agent 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 and legal decisions in taking or not taking action under
the Credit Agreement.

The undersigned
represents and warrants that (i) it is duly organized and existing and it has
full power and authority to take, and has taken, all action necessary to
execute and deliver this letter and to become a Lender under the Credit
Agreement; and (ii) no notices to, or consents, authorizations or approvals of,
any Person are required (other than any already given or obtained) for its due
execution and delivery of this letter and the performance of its obligations as
a Lender under the Credit Agreement.

The undersigned agrees to
execute and deliver such other instruments, and take such other actions, as the
Administrative Agent may reasonably request in connection with the transactions
contemplated by this letter.

 E-3
 

The following
administrative details apply to the undersigned:

	
  

  	
  (A)

  	
  Notice Address:

  	
   

  
	
   

  	
  Legal name:

  	
   

  	
   

  
	
   

  	
  Address:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Attention:

  	
   

  	
   

  
	
   

  	
  Telephone: (

  	
   

  	
  )

  	
   

  	
   

  
	
   

  	
  Facsimile: 

  	
  (

  	
   

  	
  )

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  (B)

  	
  Payment Instructions:

  
	
   

  	
  Account No.:

  	
   

  	
   

  
	
   

  	
  At:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Reference:

  	
   

  	
   

  
	
   

  	
  Attention:

  	
   

  	
   

  
												

 

The undersigned
acknowledges and agrees that, on the date on which the undersigned becomes a
Lender under the Credit Agreement as set forth in the second paragraph hereof,
the undersigned will be bound by the terms of the Credit Agreement as fully and
to the same extent as if the undersigned were an original Lender under the
Credit Agreement.

	
   

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  [NAME OF NEW LENDER]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Title:

  	
   

  
				

 

	
  Accepted as of

  
	
   

  	
  , 20

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  JPMORGAN CHASE BANK, N.A.,

  
	
  as Administrative Agent

  
	
   

  
	
   

  
	
  By:

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  
	
  Title: 

  	
   

  	
   

  
								

 

 E-4

Schedule 6.9

The Navigators Group, Inc.

SUBSIDIARIES

	
  Subsidiary

  	
   

  	
  State of Incorporation

  	
   

  	
  % ownership by the Borrower or a

  Subsidiary as otherwise indicated

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Navigators Insurance Company(1)

  	
   

  	
  New York

  	
   

  	
  100%

  
	
  Navigators Specialty Insurance Company

  	
   

  	
  New York

  	
   

  	
  100% Navigators Insurance Co.

  
	
  Navigators Management Company, Inc.

  	
   

  	
  New York

  	
   

  	
  100%

  
	
  Navigators Insurance Services of Texas, Inc.

  	
   

  	
  Texas

  	
   

  	
  100%

  
	
  Navigators Special Risk, Inc.

  	
   

  	
  Texas

  	
   

  	
  100% Navigators Insurance Services of Texas

  
	
  Navigators California Insurance Services, Inc.

  	
   

  	
  California

  	
   

  	
  100%

  
	
  Navigators Insurance Services of Washington, Inc.

  	
   

  	
  Washington

  	
   

  	
  100%

  
	
  Navigators Corporate Underwriters Ltd.

  	
   

  	
  U.K.

  	
   

  	
  100% Navigators Holdings (UK) Ltd.

  
	
  Navigators Management (UK) Ltd.

  	
   

  	
  U.K.

  	
   

  	
  100% Navigators Holdings (UK) Ltd.

  
	
  Navigators Holdings (UK) Ltd.

  	
   

  	
  U.K.

  	
   

  	
  100%

  
	
  Navigators Underwriting Agency Ltd.

  	
   

  	
  U.K.

  	
   

  	
  100% Navigators Holdings (UK) Ltd.

  
	
  Millennium Underwriting Ltd.

  	
   

  	
  U.K.

  	
   

  	
  100% Navigators Underwriting Agency Ltd.

  
	
  Navigators Underwriting Ltd.

  	
   

  	
  U.K.

  	
   

  	
  100% Navigators Underwriting Agency Ltd.

  
	
  Navigators NV

  	
   

  	
  Belgium

  	
   

  	
  100% Navigators Underwriting Agency Ltd.

  

(1) Significant
Subsidiary

 

 

Schedule 6.9

Schedule 6.22

	
  

  	
  NAVIGATORS SPECIALTY
  INSURANCE COMPANY

  

  THE FOLLOWING IS THE
  CURRENT STATUS OF OUR STATE LICENSES AS OF JANUARY 26,
  2007:

  
	
   

  

 

	
  SURPLUS LINES ELIGIBLE

  	
   

  	
  LICENSED

  	
   

  	
  TO BE FILED

  	
   

  
	
  ALASKA

  	
   

  	
  NEW YORK

  	
   

  	
  ARKANSAS

  
	
  ARIZONA

  	
   

  	
   

  	
   

  	
  MINNESOTA

  
	
  CALIFORNIA

  	
   

  	
   

  	
   

  	
  MISSISSIPPI

  
	
  COLORADO

  	
   

  	
   

  	
   

  	
  NEW MEXICO

  
	
  CONNECTICUT

  	
   

  	
   

  	
   

  	
  OKLAHOMA

  
	
  DELAWARE

  	
   

  	
   

  	
   

  	
  RHODE ISLAND

  
	
  FLORIDA

  	
   

  	
   

  	
   

  	
  VERMONT

  
	
  IDAHO

  	
   

  	
   

  	
   

  	
  WEST VIRGINIA

  
	
  INDIANA

  	
   

  	
   

  	
   

  	
   

  
	
  IOWA

  	
   

  	
   

  	
   

  	
   

  
	
  KANSAS

  	
   

  	
   

  	
   

  	
   

  
	
  KENTUCKY

  	
   

  	
   

  	
   

  	
   

  
	
  LOUISIANA

  	
   

  	
   

  	
   

  	
   

  
	
  MAINE

  	
   

  	
   

  	
   

  	
   

  
	
  MARYLAND

  	
   

  	
   

  	
   

  	
   

  
	
  MASSACHUSETTS

  	
   

  	
  (1) Licensed for all major lines indicated on
  Schedule 6.24

  
	
  MICHIGAN

  	
   

  	
   

  	
   

  	
   

  
	
  MISSOURI

  	
   

  	
   

  	
   

  	
   

  
	
  MONTANA

  	
   

  	
   

  	
   

  	
   

  
	
  NEVADA

  	
   

  	
   

  	
   

  	
   

  
	
  NEW HAMPSHIRE

  	
   

  	
   

  	
   

  	
   

  
	
  NEW JERSEY

  	
   

  	
   

  	
   

  	
   

  
	
  NORTH CAROLINA

  	
   

  	
   

  	
   

  	
   

  
	
  NORTH DAKOTA

  	
   

  	
   

  	
   

  	
   

  
	
  OHIO

  	
   

  	
   

  	
   

  	
   

  
	
  OREGON

  	
   

  	
   

  	
   

  	
   

  
	
  PENNSYLVANIA

  	
   

  	
   

  	
   

  	
   

  
	
  SOUTH CAROLINA

  	
   

  	
   

  	
   

  	
   

  
	
  TENNESSEE

  	
   

  	
   

  	
   

  	
   

  
	
  TEXAS

  	
   

  	
   

  	
   

  	
   

  
	
  UTAH

  	
   

  	
   

  	
   

  	
   

  
	
  VIRGINIA

  	
   

  	
   

  	
   

  	
   

  
	
  WISCONSIN

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  

The
following jurisdictions do not review eligibility of surplus lines
insurers.  The burden of determining
eligibility and assuring a company’s financial conditions, rests solely upon
the licensed surplus lines broker:

	
  ALABAMA

  	
   

  	
  SOUTH DAKOTA

  	
   

  	
   

  
	
  DISTRICT OF COLUMBIA

  	
   

  	
  WASHINGTON

  	
   

  	
   

  
	
  GEORGIA

  	
   

  	
  WYOMING

  	
   

  	
   

  
	
  HAWAII

  	
   

  	
   

  	
   

  	
   

  
	
  ILLINOIS

  	
   

  	
   

  	
   

  	
   

  
	
  NEBRASKA

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  

 

One Penn Plaza, New York,
NY 10119

Tel. (212) 244-2333  Fax (212) 244-4077

 

 

Schedule 6.22

Schedule 6.22A

	
  

  	
  NAVIGATORS INSURANCE
  COMPANY

  
	
  The following is the current
  status of our state licenses as of January 26, 2007:

  

 

	
  LICENSED

  	
   

  	
  (continued)

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Alabama

  	
   

  	
  New Mexico

  	
   

  	
   

  
	
  Alaska

  	
   

  	
  New York

  	
   

  	
   

  
	
  Arizona

  	
   

  	
  North Carolina

  	
   

  	
   

  
	
  Arkansas

  	
   

  	
  North Dakota

  	
   

  	
   

  
	
  California

  	
   

  	
  Ohio

  	
   

  	
   

  
	
  Colorado

  	
   

  	
  Oklahoma

  	
   

  	
   

  
	
  Connecticut

  	
   

  	
  Oregon

  	
  (1)  Licensed
  for all major lines indicated on Schedule 6.24

  
	
  Delaware

  	
   

  	
  Pennsylvania

  	
   

  	
   

  
	
  District of Columbia

  	
   

  	
  Puerto Rico

  	
   

  	
   

  
	
  Florida

  	
   

  	
  Rhode Island

  	
   

  	
   

  
	
  Georgia

  	
   

  	
  South Carolina

  	
   

  	
   

  
	
  Hawaii

  	
   

  	
  South Dakota

  	
   

  	
   

  
	
  Idaho

  	
   

  	
  Tennessee

  	
   

  	
   

  
	
  Indiana

  	
   

  	
  Texas

  	
   

  	
   

  
	
  Illinois

  	
   

  	
  Utah

  	
   

  	
   

  
	
  Iowa

  	
   

  	
  Vermont

  	
   

  	
   

  
	
  Kansas

  	
   

  	
  Virginia

  	
   

  	
   

  
	
  Kentucky

  	
   

  	
  Washington

  	
   

  	
   

  
	
  Louisiana

  	
   

  	
  West Virginia

  	
   

  	
   

  
	
  Maine

  	
   

  	
  Wisconsin

  	
   

  	
   

  
	
  Maryland

  	
   

  	
  Wyoming

  	
   

  	
   

  
	
  Massachusetts

  	
   

  	
  U.S. Treasury

  	
   

  	
   

  
	
  Michigan

  	
   

  	
   

  	
   

  	
   

  
	
  Minnesota

  	
   

  	
   

  	
   

  	
   

  
	
  Mississippi

  	
   

  	
   

  	
   

  	
   

  
	
  Missouri

  	
   

  	
   

  	
   

  	
   

  
	
  Montana

  	
   

  	
   

  	
   

  	
   

  
	
  Nebraska

  	
   

  	
   

  	
   

  	
   

  
	
  Nevada

  	
   

  	
   

  	
   

  	
   

  
	
  New Hampshire

  	
   

  	
   

  	
   

  	
   

  
	
  New Jersey

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  

 

 

 

 

Reckson Executive Park, 6 International Drive,
Suite 100

Rye Brook, New York 10573

Tel. (914)
934-8999  Fax (914) 934-2355

 

 

 

 

 

 

 

Schedule 6.22A

Schedule 6.23

THE
NAVIGATORS GROUP, INC.

Partnerships:                         None

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Schedule 6.23

Schedule 6.24

LINES OF
BUSINESS

The
Borrower and its Subsidiaries are active in the following lines of business:

Commercial Multi Peril

Ocean Marine

Inland Marine

Other Liability

Commercial Auto Liability

Auto Physical Damage

Aircraft

Surety

Reinsurance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Schedule 6.24

Schedule 7.16

THE
NAVIGATORS GROUP, INC.

Liens:                    None

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Schedule 7.16

 

Schedule 7.21

Navigators
Insurance Company

Reinsurance Guidelines

·                                          Minimum A.M.
Best rating of “A-” and

·                                          Policyholders’
surplus of US $250 million

·                                          Or, if not
rated by A.M. Best, an equivalent rating from a major rating agency along with
the following:

o                                         Shareholder’s
funds must be in excess of US $250 million and

o                                         Must
pass a minimum of 5 ISI tests

For purpose of this Credit Agreement, the following applies, net of any
collateral from the reinsurers:

1.                                       Reinsurers
constituting the lessor of $10,000,000 or 25% of the credit risk on any
reinsurance program can be outside of the above guidelines.

2.                                       Any
reinsurer, falling within the Reinsurance Guidelines, rated A- or below cannot
exceed an aggregate exposure across all programs of 66 2/3% of the Consolidated
Surplus of the Insurance Subsidiaries.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Schedule 7.21Exhibit 10.1

AMENDMENT TO
CHANGE OF CONTROL AGREEMENT

Now,
on this 13th day of November 2006, the Change of Control
Agreement dated September 8, 2006, between International Aluminum
Corporation, a California corporation, and Ronald L. Rudy is hereby amended as
follows:

Section
3.4 entitled “Payment of Severance Payment; Release Agreement” is hereby
amended to include as a new paragraph (c) thereof, the following:

(c)   The parties
intend that any Severance Payment pursuant to this Agreement either shall not constitute
“deferred compensation” or shall otherwise qualify for exemption from excise
and other tax penalties applicable under Section 409A of the Internal
Revenue Code.  If it is determined that a
Severance Payment under this Agreement otherwise would be subject to excise or
other tax penalty under said Section 409A the Company and the Executive
shall amend the terms of this Agreement to the minimum extent necessary so that
such Severance Payment will not be subject to excise or other tax penalty under
said Section 409A.

IN
WITNESS WHEREOF, the Company and the Executive have executed this amendment as
of the date set forth above.

International Aluminum
Corporation

	
  By:

  	
  /s/ Cornelius C. Vanderstar

  	
   

  
	
   

  	
  Cornelius C.
  Vanderstar

  
	
   

  	
  Chairman of the
  Board

  
	
   

  
	
   

  
	
  /s/ Ronald L. Rudy

  	
   

  
	
  Ronald L. Rudy

  
				

 

 20

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00116-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00116-of-00352.parquet"}]]