Document:

Exhibit 10.3.1

 

PROSPECTOR
PARTNERS, LLC

 

INVESTMENT
MANAGEMENT AGREEMENT

 

PROSPECTOR PARTNERS, LLC, a Delaware limited liability company (the “Adviser”),
having an address at 370 Church Street, Guilford, Connecticut 06437, and OneBeacon
Insurance Group, Ltd., a Bermuda Corporation (“OneBeacon”), having an address
at Bank of Butterfield Building, 42 Reid Street, Hamilton HM 12, Bermuda,
hereby enter into this Investment Management Agreement, dated as of                   ,
2006 (this “Agreement”), and hereby agree that the Adviser shall act as
discretionary adviser with respect to the specified assets of each subsidiary
of OneBeacon identified on Schedule A (each, a “Client”) to this Agreement as
such schedule may be amended from time to time to add new subsidiaries as
Clients on the following terms and conditions:

 

1.     Investment
Accounts The investment account of each of the entities identified in
Schedule A to this Agreement (each an “Investment Account”) shall consist of
cash and securities in an amount equal to at least $30,000,000 (the “Minimum
Account Amount”), or such other amount as may be agreed to by the Adviser,
initially furnished by the Client for investment pursuant to this Agreement, as
well as all other assets which become part of each Investment Account as a
result of trading therein or additions thereto, except for amounts withdrawn
there from and paid to the Client. Each Client may make additions to the
Investment Account in amounts exceeding $100,000, or in such other amount as
may be agreed to by the Adviser, provided that the Adviser shall have received
prompt written notice of such additions. Each Client may make withdrawals from its’
Investment Account in such amounts as it shall determine upon not less than 30
days prior written notice thereof to the Adviser and provided that the
withdrawal shall not cause the assets in the Investment Account to fall below
the Minimum Account Amount, unless otherwise agreed to by the Adviser.

 

2.     Services of
Adviser By execution of this Agreement the Adviser accepts appointment
as adviser for each Investment Account with full discretion and agrees to
supervise and direct the investments of each Investment Account in accordance
with the investment objective, policies and restrictions described in the
investment guidelines attached hereto as Schedule B (the “Investment Guidelines”).
In the performance of its services, the Adviser will not be liable for any
error in judgment or any acts or omissions to act except those resulting from
the Adviser’s gross negligence, willful misconduct or malfeasance. Nothing
herein shall in any way constitute a waiver or limitation of any right of any
person under the federal securities laws. The Adviser shall have no
responsibility whatsoever for the management of any assets of the entities
identified in Schedule A to this Agreement other than such entities’ Investment
Account.

 

3.     Discretionary
Authority Subject to the Investment Guidelines, the Adviser shall have
full discretion and authority, without obtaining any prior approval, as the
Client’s agent and attorney-in-fact: (a) to make all investment decisions
in respect of each Investment Account on the Client’s behalf and at the sole
risk of the Client; (b) to buy, sell, exchange, convert, liquidate or
otherwise trade in any stock, bond and other securities or financial
instruments in respect of each Investment Account; (c) to place orders
with respect to, and to arrange for, any of the foregoing; and (d) in
furtherance of the foregoing, to do anything which the Adviser shall deem
requisite, appropriate or advisable in connection therewith, including, without
limitation, the selection of such brokers, dealers, and others as the Adviser
shall determine in its absolute discretion.

 

4.     Custody The
assets of each Investment Account shall be held in one or more separately
identified accounts in the custody of one or more banks, trust companies,
brokerage firms or other entities designated by the Client and acceptable to
the Adviser. The Adviser will communicate its investment purchase, sale and
delivery instructions directly with the party identified by the Client or other
qualified depositories. The Client shall be responsible for all custodial
arrangements and the payment of all custodial charges and fees, and the Adviser
shall have no responsibility or liability with respect to custody arrangements
or the acts, omissions or other conduct of the custodians.

 

5.     Brokerage
When placing orders for the execution of transactions for an Investment 

 

 

Account, the
Adviser may allocate all transactions to such brokers or dealers, for execution
on such markets, at such prices and commission rates, as are selected by the
Adviser in its sole discretion. In selecting brokers or dealers to execute
transactions, the Adviser need not solicit competitive bids and does not have
an obligation to seek the lowest available commission cost. It is not the
Adviser’s practice to negotiate “execution only” commission rates, and, in
negotiating commission rates, the Adviser shall take into account the financial
stability and reputation of brokerage firms and brokerage and research services
provided by such brokers. An Investment Account may be deemed to be paying for
research provided or paid for by the broker which is included in the commission
rate although the Investment Account may not, in any particular instance, be
the direct or indirect beneficiary of the research services provided. Research
furnished by brokers may include, but is not limited to, written information
and analyses concerning specific securities, companies or sectors; market,
finance and economic studies and forecasts; financial publications; statistics
and pricing services; discussions with research personnel; and software and
data bases utilized in the investment management process. OneBeacon
acknowledges on behalf of each Client that since commission rates are generally
negotiable, selecting brokers on the basis of considerations which are not
limited to applicable commission rates may at times result in higher
transaction costs than would otherwise be obtainable. The Adviser is hereby
authorized to, and OneBeacon acknowledges on behalf of each Client that the
Adviser may aggregate orders on behalf of each Investment Account with orders
on behalf of other clients of the Adviser. In such event, allocation of the
securities purchased or sold, as well as expenses incurred in the transaction,
shall be made in a manner which the Adviser considers to be the most fair and
equitable to all of its clients, including the Clients.

 

6.     Representations
and Warranties

 

(a)   OneBeacon
represents, warrants and agrees that:

 

(i)            it has full legal
power and authority to enter into this Agreement; and

 

(ii)           the appointment of the Adviser hereunder is
permitted by each Client’s governing documents and any investment management
agreement between OneBeacon and the Clients to this Agreement and has been duly
authorized by all necessary corporate or other action;

 

(iii)          it will indemnify the
Adviser and hold it harmless against any and all losses, costs, claims and liabilities
which the Adviser may suffer or incur arising out of any material breach of
these representations and warranties of OneBeacon.

 

(b)   The
Adviser represents, warrants and agrees that:

 

(i)            it has full legal
power and authority to enter into this Agreement;

 

(ii)           it is registered as an
investment adviser with the Securities and Exchange Commission pursuant to the
Investment Advisers Act of 1940, as amended (the “Advisers Act”); and

 

(iii)          entering into this
Agreement has been duly authorized by all necessary action.

 

(iv)          it will indemnify OneBeacon
and hold it harmless against any and all losses, costs, claims and liabilities
which OneBeacon may suffer or the Client may suffer or incur arising out of any
material breach of any representations and warranties of the Adviser.

 

2

 

7.     Reports The
Adviser shall provide OneBeacon with reports containing the status of the
Investment Account at least monthly (i.e. “Flash Report”), and will provide
written advisory report letters on a quarterly basis. All records maintained
pursuant to this Agreement shall be subject to examination by OneBeacon and by
persons authorized by it, or by appropriate governmental authorities, at all
times upon reasonable notice. The Adviser shall provide copies of trade
tickets, custodial reports and other records OneBeacon reasonably requires for
accounting or tax purposes.

 

8.     Management
Fee and Expenses The Adviser will be paid a quarterly management fee (the “Management
Fee”) for its investment advisory services provided hereunder, determined in
accordance with Schedule C to this Agreement. During the term of this
Agreement, the Management Fee shall be billed and payable in arrears on a
quarterly basis within 10 days after the last day of each calendar quarter
based upon the value of the Investment Accounts as of the last day of the
immediately preceding calendar quarter. The Management Fee shall be pro-rated
for any partial quarter. It is understood that, in the event that the Management
Fee is to be paid by the custodian out of the Investment Accounts, OneBeacon or
the Clients will provide written authorization to the custodian to pay the
Management Fee directly from the Investment Accounts.

 

(a)   Each Investment Account shall
be responsible for all expenses incurred directly in connection with
transactions effected on behalf of the Investment Account pursuant to this
Agreement and shall include: custodial fees; PAM accounting service fees,
investment expenses such as commissions; and other expenses reasonably related
to the purchase, sale or transmittal of Investment Account assets (other than
research fees and expenses with respect to the Investment Account).

 

9.     Confidential
Relationship All information and advice furnished by either party to the
other party pursuant to this Agreement shall be treated by the receiving party
as confidential and shall not be disclosed to third parties except as required
by law; provided, however, that the OneBeacon consents to the disclosure by the
Adviser that OneBeacon (and each of the Clients) is a client of the Adviser and
to the inclusion of OneBeacon on a list of representative clients of the
Adviser or in other marketing materials. OneBeacon acknowledges that the
Adviser shall own and be permitted to use its investment track record with
respect to the Investment Accounts, and shall be permitted to retain copies of
all documentation necessary under the Advisers Act to support the track record
or otherwise required to be retained under the Advisers Act and related rules.
The Adviser acknowledges that OneBeacon shall be permitted to report the
investment track record (on a stand-alone basis, as part of its total portfolio
return or otherwise) with respect to the Investment Accounts in any internal or
external reports of it or its affiliates.

 

10.   Non-Assignability
No “assignment”, as that term is defined in the Advisers Act, of this Agreement
shall be made by the Adviser or OneBeacon without the written consent of the
other party.

 

11.   Directions to the
Adviser All directions by OneBeacon by or on behalf of the Clients to the
Adviser shall be in writing signed by or on behalf of OneBeacon. The Adviser
shall be fully protected in relying upon any such writing which the Adviser
believes to be genuine and signed or presented by the proper person or persons,
shall be under no duty to make any investigation or inquiry as to any statement
contained therein and may accept the same as conclusive evidence of the truth
and accuracy of the statements therein contained.

 

12.   Consultation
with Counsel The Adviser may consult with legal counsel (who may be counsel
to OneBeacon) concerning any question that may arise with reference to its
duties under this Agreement, and the opinion of such counsel shall be full and
complete protection in respect of any action taken or omitted by the Adviser
hereunder in good faith and in accordance with such opinion.

 

13.   Services to
Other Clients It is understood that the Adviser acts as investment adviser
to other clients and may give advice and take action with respect to such
clients that differs from the 

 

3

 

advice given or
the action taken with respect to the Investment Accounts. Nothing in this
Agreement shall restrict the right of the Adviser, its members, managers,
officers, employees or affiliates to perform investment management or advisory
services for any other person or entity, and the performance of such service
for others shall not be deemed to violate or give rise to any duty or
obligation to the Client.

 

14.   Investment by the
Adviser for Its Own Account Nothing in this Agreement shall limit or
restrict the Adviser or any of its members, managers, officers, employees or
affiliates from buying, selling or trading any securities for its or their own
account or accounts. OneBeacon on behalf of each Client acknowledges that the
Adviser and its members, managers, officers, employees, affiliates and other
clients may at any time have, acquire, increase, decrease or dispose of securities
which are at or about the same time acquired or disposed of for the account of a
Client. The Adviser shall have no obligation to purchase or sell for the
Investment Accounts or to recommend for purchase or sale by the Investment
Accounts any security that the Adviser or its members, managers, officers,
employees or affiliates may purchase or sell for itself or themselves or for
any other client.

 

15.   Proxies Subject
to any other written instructions of OneBeacon, the Adviser is hereby appointed
OneBeacon’s agent and attorney-in-fact in its discretion to vote, convert or
tender in an exchange or tender offer any securities in the Investment Accounts,
to execute proxies, waivers, consents and other instruments with respect to
such securities, to endorse, transfer or deliver such securities and to
participate in or consent to any plan of reorganization, merger, combination,
consolidation, liquidation or similar plan with reference to such securities.

 

16.   Notices All
notices and instructions with respect to securities transactions or any other
matters contemplated by this Agreement shall be deemed duly given when
delivered in writing or deposited by first-class mail to the following
addresses: (a) if to the Adviser, at its address set forth above, Attention:
Peter N Perugini, CFO, or (b) if to OneBeacon, at its address set forth above,
Attention Paul McDonough, CFO. The Adviser or the Client may change its address
or specify a different manner of addressing itself by giving notice of such
change in writing to the other party.

 

17.   Entire
Agreement; Amendment This Agreement sets forth the entire agreement of the
parties with respect to management of the Investment Account and shall not be
amended except by an instrument in writing signed by the parties hereto.

 

18.   Termination
This Agreement shall continue in force from the date hereof for an initial
term until the third anniversary of the date hereof and then may be renewed by OneBeacon
for up to two additional one-year terms, in each case by providing written
notice of its intention to renew the Agreement not less than 30 days prior
to the relevant anniversary date.    Notwithstanding the
foregoing, this Agreement shall be terminable by OneBeacon upon written notice
to the Adviser at least thirty (30) days prior to the date upon which such
termination is to become effective (i) for cause (including material
non-performance by the Adviser), (ii) if either John Gillespie or Richard
Howard are no-longer affiliated with the Adviser, (iii) if there is a change in
control of the Adviser (change in control in this case shall mean a more than
50% change in the voting interest of the Adviser), or (iv) if White Mountains’
voting interest in OneBeacon falls below 50%.  Each Client shall
honor any trades executed but not settled before the date of any termination
under this Agreement. The fee for the calendar quarter during which any
termination of this Agreement shall occur shall be paid as of the date of
termination and prorated if the effective date does not coincide with the end
of the quarter. 

 

19.   Governing Law
To the extent that the interpretation or effect of this Agreement shall depend
on state law, this Agreement shall be governed by and construed in accordance
with the laws of the State of New York.

 

20.   Effective Date
This Agreement shall become effective on the date first written above.

 

21.   Receipt of
Disclosure Statement OneBeacon acknowledges receipt of a copy of Part II of
the Adviser’s Form ADV in compliance with Rule 204-3(b) under the Advisers Act
more than 48 hours prior to the date of execution of this Agreement. The
Adviser shall annually and without charge, 

 

4

 

upon request by OneBeacon,
deliver to OneBeacon the current version of such form or a written document
containing at least the information then required to be contained in such form.

 

22.   Counterparts
This Agreement may be executed in two counterparts, each one of which shall be
deemed to be an original.

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective duly authorized representatives as of the date
first written above.

 

	
  ADVISER:

  	
  ONEBEACON:

  
	
   

  	
   

  
	
  PROSPECTOR PARTNERS, LLC

  	
  ONEBEACON INSURANCE GROUP, LTD.

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
  Title:

  	
   

  	
   

  
								

 

5

 

SCHEDULE A

 

SUBSIDIARIES OF ONEBEACON INSURANCE GROUP, LTD.
SUBJECT TO THIS INVESTMENT MANAGEMENT AGREEMENT

 

Fund American
Companies, Inc.

 

The Employers’
Fire Insurance Company

 

Homeland Insurance
Company of New York

 

The Northern
Assurance Company of America

 

OneBeacon America
Insurance Company

 

OneBeacon
Insurance Company

 

Pennsylvania
General Insurance Company

 

6

 

SCHEDULE B

 

INVESTMENT GUIDELINES

 

Investment
Objective

 

The Adviser’s
objective is to achieve consistent positive returns and to maximize long-term
total returns within prudent levels of risk through capital appreciation on a
diversified portfolio of equity investments.

 

Performance
Objectives

 

The Adviser will
report to OneBeacon Insurance Group, Ltd. on a quarterly basis to review the Adviser’s
total investment performance. It is understood that there are likely to be
short-term periods during which performance deviates from market indices. During
such times, greater emphasis shall be placed on performance comparisons with
investment managers employing similar styles. The overall performance of the Adviser’s
Investment Accounts will be measured by referencing broad equity market indices
over a 3-year rolling period.

 

Guidelines

 

The Adviser must
remain a registered adviser under the Investment Advisors Act of 1940. Wherever
these guidelines contain a limitation expressed as a percentage of the
portfolio assets, that percentage shall be measured solely with reference to
the assets that are under the Adviser’s control. Subject to these guidelines,
the Adviser shall have full discretion to manage the Investment Account’s
assets.

 

•      The
Adviser may not purchase securities on margin, sell short, or enter into
derivative transactions in the Investment Account without the written consent
of OneBeacon Insurance Group, Ltd.

 

•      The
Adviser may purchase Rule 144A securities provided such securities are judged
by the Adviser to be liquid and do not in the aggregate exceed 20% of the
market value of the Account. The Adviser shall also be able to purchase
securities if such securities are convertible into publicly traded securities.

 

•      At
least 95% of the Investment Account will consist of securities of companies
having a market capitalization of $100 million or greater.

 

•      The
Investment Account may include domestic and non-domestic securities (common
stocks, securities that are convertible into common stocks, preferred stocks,
warrants and rights to subscribe to common stocks) that are listed on
registered exchanges or actively traded in the over-the-counter market.

 

•      Issuers
of securities located in countries other than the United States, including
emerging market countries, shall not exceed 40% of the market value of the Investment
Account.

 

•      In
terms of diversification, investments shall be allocated with the intent to
minimize the risk of large losses to the Investment Account. The maximum total
investment of any one equity shall be limited to 10% of the Investment Account
at the time of purchase, and 25% of the market value of the Investment Account.

 

•      If
the aggregate investment in the equity securities in the Investment Account of
any one company exceeds 5% of that company’s outstanding shares of all classes
of stock of that issuer, the Adviser will notify OneBeacon Insurance Group,
Ltd.

 

•      Notwithstanding
the foregoing, in no event shall the Adviser acquire securities of White
Mountains Insurance Group, Ltd. or any of its affiliated companies.

 

7

 

Exceptions

 

Any exceptions
taken to this Investment Guideline Statement must be submitted in writing to OneBeacon
Insurance Group, Ltd.

 

8

 

SCHEDULE C

 

FEE SCHEDULE TO THE INVESTMENT MANAGEMENT
AGREEMENT, DATED [November 11, 2006] , BETWEEN PROSPECTOR PARTNERS, L.L.C. AND ONEBEACON
INSURANCE GROUP, LTD.

 

Each term used in this Schedule C but not defined herein shall have the
meaning assigned to that term in the Investment Management Agreement, dated [November
11, 2006] (the “Agreement”), between OneBeacon Insurance Group, Ltd. and
Prospector Partners, L.L.C., the adviser (the “Adviser”).

 

1.     The
Adviser shall be paid a Management Fee (pro rated for periods less than a full
calendar quarter) computed in accordance with the table below based on the
value of the aggregate net assets (including cash and cash equivalents) of each
Investment Account and the net assets of each other client of the Adviser
identified on Schedule D to this Agreement (such collective aggregate net
assets shall be referred to as the “Aggregate Net Assets”), determined in
accordance with paragraph Section 2 below. Each entity identified in
Schedule A and each other client of the Adviser identified in Schedule D will
bear its proportionate share of the Management Fee.

 

	
  Aggregate Net Assets

  	
   

  	
  Annual Fee

  	
   

  	
  Quarterly Fee

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Up to $200 million

  	
   

  	
  100 basis points

  (1.00% or 0.0100)

  	
   

  	
  25 basis points

  (0.25% or 0.00250)

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Next $200 million

  (From $200 million to $400 million)

  	
   

  	
  

  50 basis points

  	
   

  	
  

  12.50 basis points

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Amounts over $400 million

  	
   

  	
  25 basis points

  	
   

  	
  6.25 basis points

  

 

2.     For
all purposes under the Agreement, including the determination of the Management
Fee, the market value of securities shall be as follows: securities that are
listed on a national securities exchange shall be valued at their last sales
price on the date of determination and securities that are not so listed shall
be valued at their last sales price on the date of determination, or if no
sales of such securities occurred on the date of determination, such securities
shall be valued at the last “bid” price at the close of business on such day
(or if sold short at the last “asked” price at the close of business on such
day) quoted by the National Association of Securities Dealers, Inc.’s Automatic
Quotation System or, if not quoted on such system, by one of the principal
market makers in such securities selected by the Adviser. Notwithstanding the
foregoing, if the securities to be valued constitute a block which, in the
judgment of the Adviser, could not be liquidated in a reasonable time without
depressing the market, such block shall then be valued by the Adviser but not
at a unit value in excess of the quoted market price for such security. All
other assets of the Investment Accounts shall be assigned such value as the
Adviser may reasonably determine.

 

9

 

SCHEDULE
D

 

CLIENTS
OF PROSPECTOR PARTNERS, LLC SUBJECT TO FEE SCHEDULE SET FORTH IN SCHEDULE C

 

Fund American
Companies, Inc.

 

The Employers’
Fire Insurance Company

 

Homeland Insurance
Company of New York

 

The Northern
Assurance Company of America

 

OneBeacon America
Insurance Company

 

OneBeacon
Insurance Company

 

Pennsylvania
General Insurance Company

 

OneBeacon
Insurance Pension Plan

 

OneBeacon
Insurance Savings Plan- Equity 401k

 

OneBeacon
Insurance Savings Plan- Fully Managed

 

10Exhibit 10.8

 

EXECUTION COPY

 

 

 

CREDIT AGREEMENT

 

Dated as of [            ],
2006

 

among

 

FUND AMERICAN COMPANIES, INC.
as the Borrower,

 

ONEBEACON INSURANCE GROUP, LTD.,
as Parent,

 

BANK OF AMERICA, N.A.,

as Administrative Agent, Swing Line Lender and Issuing Lender,

 

and

 

THE OTHER LENDERS PARTY HERETO

 

LEHMAN BROTHERS INC.,
as Syndication Agent

 

and

 

JPMORGAN CHASE BANK, N.A.,

 

THE BANK OF NEW YORK,

 

THE BANK OF TOKYO-MITSUBISHI UFJ. LTD., NEW
YORK BRANCH,

 

and

 

DEUTSCHE BANK AG NEW YORK BRANCH
as Co-Documentation Agents

 

and

 

BANC OF AMERICA SECURITIES LLC,

 

and

 

LEHMAN BROTHERS INC.
as Joint Lead Arrangers and Joint Book Runners

 

 

 

 

TABLE OF CONTENTS

 

	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  
	
  1.

  	
  DEFINITIONS

  	
  1

  
	
   

  	
  1.1.

  	
  Defined
  Terms

  	
  1

  
	
   

  	
  1.2.

  	
  Other
  Definitional Provisions

  	
  24

  
	
   

  	
  1.3.

  	
  Letter of
  Credit Amounts

  	
  24

  
	
   

  	
  1.4.

  	
  Rounding

  	
  24

  
	
   

  	
  1.5.

  	
  Times of Day

  	
  25

  
	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
  AMOUNT AND
  TERMS OF COMMITMENTS

  	
  25

  
	
   

  	
  2.1.

  	
  Revolving
  Credit Commitments

  	
  25

  
	
   

  	
  2.2.

  	
  Procedure
  for Revolving Credit Borrowing

  	
  25

  
	
   

  	
  2.3.

  	
  Swing Line
  Commitment

  	
  26

  
	
   

  	
  2.4.

  	
  Procedure for
  Swing Line Borrowing; Refunding of Swing Line Loans

  	
  26

  
	
   

  	
  2.5.

  	
  Repayment of
  Loans; Evidence of Debt

  	
  29

  
	
   

  	
  2.6.

  	
  Facility
  Fee, etc

  	
  30

  
	
   

  	
  2.7.

  	
  Termination
  or Reduction of Revolving Credit Commitments

  	
  30

  
	
   

  	
  2.8.

  	
  Prepayments

  	
  31

  
	
   

  	
  2.9.

  	
  Conversion
  and Continuation Options

  	
  31

  
	
   

  	
  2.10.

  	
  Maximum
  Number of Eurodollar Loans

  	
  32

  
	
   

  	
  2.11.

  	
  Interest
  Rates and Payment Dates

  	
  33

  
	
   

  	
  2.12.

  	
  Computation
  of Interest and Fees

  	
  33

  
	
   

  	
  2.13.

  	
  Inability to
  Determine Interest Rate

  	
  34

  
	
   

  	
  2.14.

  	
  Pro Rata
  Treatment and Payments

  	
  34

  
	
   

  	
  2.15.

  	
  Requirements
  of Law

  	
  36

  
	
   

  	
  2.16.

  	
  Taxes

  	
  38

  
	
   

  	
  2.17.

  	
  Compensation
  for Losses

  	
  39

  
	
   

  	
  2.18.

  	
  Illegality

  	
  40

  
	
   

  	
  2.19.

  	
  Change of
  Office

  	
  40

  
	
   

  	
  2.20.

  	
  Replacement
  of Lenders under Certain Circumstances

  	
  40

  
	
   

  	
  2.21.

  	
  Guaranty of
  Payment and Performance

  	
  41

  
	
   

  	
  2.22.

  	
  Increase in
  Commitments

  	
  44

  
	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
  LETTERS OF
  CREDIT

  	
  45

  
	
   

  	
  3.1.

  	
  L/C
  Commitment

  	
  45

  
	
   

  	
  3.2.

  	
  Procedure
  for Issuance and Amendment of Letter of Credit

  	
  45

  
	
   

  	
  3.3.

  	
  Drawings and
  Reimbursements; Funding of Participations

  	
  46

  
	
   

  	
  3.4.

  	
  Repayment of
  Participations

  	
  48

  
	
   

  	
  3.5.

  	
  Obligations
  Absolute

  	
  49

  
	
   

  	
  3.6.

  	
  Role of
  Issuing Lender

  	
  50

  

 

i

 

	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.7.

  	
  Cash
  Collateral

  	
  50

  
	
   

  	
  3.8.

  	
  Applicability
  of ISP98 and UCP

  	
  51

  
	
   

  	
  3.9.

  	
  Fees and
  Other Charges

  	
  51

  
	
   

  	
  3.10.

  	
  Conflict
  with Issuer Documents

  	
  51

  
	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
  CONDITIONS
  PRECEDENT

  	
  51

  
	
   

  	
  4.1.

  	
  Conditions
  to Closing

  	
  51

  
	
   

  	
  4.2.

  	
  Conditions
  to Closing and Each Extension of Credit

  	
  53

  
	
   

  	
   

  	
   

  	
   

  
	
  5.

  	
  REPRESENTATIONS
  AND WARRANTIES

  	
  54

  
	
   

  	
  5.1.

  	
  Financial
  Statements

  	
  54

  
	
   

  	
  5.2.

  	
  Corporate
  Existence; Compliance with Law

  	
  54

  
	
   

  	
  5.3.

  	
  Corporate Power;
  Authorization; Enforceable Obligations

  	
  55

  
	
   

  	
  5.4.

  	
  No Legal Bar

  	
  55

  
	
   

  	
  5.5.

  	
  No Material
  Litigation

  	
  55

  
	
   

  	
  5.6.

  	
  Ownership of
  Property; Liens

  	
  55

  
	
   

  	
  5.7.

  	
  Intellectual
  Property

  	
  56

  
	
   

  	
  5.8.

  	
  Taxes

  	
  56

  
	
   

  	
  5.9.

  	
  Federal
  Regulations

  	
  56

  
	
   

  	
  5.10.

  	
  ERISA

  	
  56

  
	
   

  	
  5.11.

  	
  Investment
  Company Act; Other Regulations

  	
  57

  
	
   

  	
  5.12.

  	
  Use of
  Proceeds

  	
  57

  
	
   

  	
  5.13.

  	
  Accuracy of
  Information, etc

  	
  57

  
	
   

  	
  5.14.

  	
  Insurance
  Regulatory Matters

  	
  57

  
	
   

  	
  5.15.

  	
  Indebtedness
  and Liens

  	
  57

  
	
   

  	
  5.16.

  	
  Taxpayer
  Identification Number

  	
  58

  
	
   

  	
   

  	
   

  	
   

  
	
  6.

  	
  AFFIRMATIVE
  COVENANTS

  	
  58

  
	
   

  	
  6.1.

  	
  Financial
  Statements

  	
  58

  
	
   

  	
  6.2.

  	
  Certificates;
  Other Information

  	
  60

  
	
   

  	
  6.3.

  	
  Payment of
  Obligations

  	
  61

  
	
   

  	
  6.4.

  	
  Conduct of
  Business and Maintenance of Existence, etc

  	
  61

  
	
   

  	
  6.5.

  	
  Maintenance
  of Property; Insurance

  	
  61

  
	
   

  	
  6.6.

  	
  Inspection
  of Property; Books and Records; Discussions

  	
  61

  
	
   

  	
  6.7.

  	
  Notices

  	
  62

  
	
   

  	
  6.8.

  	
  Taxes

  	
  63

  
	
   

  	
  6.9.

  	
  Use of
  Proceeds

  	
  63

  
	
   

  	
  6.10.

  	
  Further
  Assurances

  	
  63

  
	
   

  	
   

  	
   

  	
   

  
	
  7.

  	
  NEGATIVE
  COVENANTS

  	
  63

  
	
   

  	
  7.1.

  	
  Financial
  Condition Covenants

  	
  63

  

 

ii

 

	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.2.

  	
  Limitation
  on Indebtedness and Issuance of Preferred Stock

  	
  64

  
	
   

  	
  7.3.

  	
  Limitation
  on Liens

  	
  65

  
	
   

  	
  7.4.

  	
  Limitation
  on Changes in Fiscal Periods

  	
  66

  
	
   

  	
  7.5.

  	
  Limitation
  on Lines of Business

  	
  66

  
	
   

  	
   

  	
   

  	
   

  
	
  8.

  	
  EVENTS OF
  DEFAULT

  	
  66

  
	
   

  	
  8.1.

  	
  Events of
  Default

  	
  66

  
	
   

  	
  8.2.

  	
  Remedies Upon
  Event of Default

  	
  69

  
	
   

  	
   

  	
   

  	
   

  
	
  9.

  	
  THE
  ADMINISTRATIVE AGENT

  	
  70

  
	
   

  	
  9.1.

  	
  Appointment

  	
  70

  
	
   

  	
  9.2.

  	
  Delegation
  of Duties

  	
  70

  
	
   

  	
  9.3.

  	
  Liability of
  Administrative Agent

  	
  70

  
	
   

  	
  9.4.

  	
  Reliance by
  Administrative Agent

  	
  71

  
	
   

  	
  9.5.

  	
  Notice of
  Default

  	
  71

  
	
   

  	
  9.6.

  	
  Credit
  Decision; Disclosure of Information by Administrative Agent

  	
  72

  
	
   

  	
  9.7.

  	
  Indemnification
  of Administrative Agent

  	
  72

  
	
   

  	
  9.8.

  	
  Administrative
  Agent in its Individual Capacity

  	
  73

  
	
   

  	
  9.9.

  	
  Successor
  Administrative Agent

  	
  73

  
	
   

  	
  9.10.

  	
  Administrative
  Agent May File Proofs of Claim

  	
  74

  
	
   

  	
  9.11.

  	
  Guarantee
  and Collateral Matters

  	
  74

  
	
   

  	
  9.12.

  	
  Other
  Agents; Arrangers and Managers

  	
  75

  
	
   

  	
   

  	
   

  	
   

  
	
  10.

  	
  MISCELLANEOUS

  	
  75

  
	
   

  	
  10.1.

  	
  Amendments,
  Etc

  	
  75

  
	
   

  	
  10.2.

  	
  Notices;
  Effectiveness; Electronic Communication

  	
  77

  
	
   

  	
  10.3.

  	
  No Waiver;
  Cumulative Remedies

  	
  79

  
	
   

  	
  10.4.

  	
  Survival of
  Representations and Warranties

  	
  80

  
	
   

  	
  10.5.

  	
  Attorney
  Costs and Expenses

  	
  80

  
	
   

  	
  10.6.

  	
  Indemnification

  	
  80

  
	
   

  	
  10.7.

  	
  Successors
  and Assigns

  	
  82

  
	
   

  	
  10.8.

  	
  Adjustments;
  Set-off

  	
  87

  
	
   

  	
  10.9.

  	
  Counterparts

  	
  88

  
	
   

  	
  10.10.

  	
  Severability

  	
  88

  
	
   

  	
  10.11.

  	
  Integration

  	
  88

  
	
   

  	
  10.12.

  	
  GOVERNING
  LAW

  	
  88

  
	
   

  	
  10.13.

  	
  SUBMISSION
  TO JURISDICTION; WAIVERS

  	
  89

  
	
   

  	
  10.14.

  	
  WAIVERS OF
  JURY TRIAL

  	
  89

  
	
   

  	
  10.15.

  	
  No Advisory
  or Fiduciary Responsibility

  	
  90

  
	
   

  	
  10.16.

  	
  Confidentiality

  	
  90

  
	
   

  	
  10.17.

  	
  Release of
  Guarantee Obligations

  	
  91

  

 

iii

 

	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  10.18.

  	
  Accounting
  Changes

  	
  91

  
	
   

  	
  10.19.

  	
  USA PATRIOT
  Act Notice

  	
  92

  
	
   

  	
  10.20.

  	
  Interest
  Rate Limitation

  	
  92

  

 

iv

 

	
  SCHEDULES:

  	
   

  
	
   

  	
   

  
	
  1

  	
  Commitment
  Schedule

  	
   

  
	
  1A

  	
  Existing
  Letters of Credit

  	
   

  
	
  5.3

  	
  Consents,
  Authorizations, Filings and Notices

  	
   

  
	
  10.2

  	
  Notice
  Addresses

  	
   

  
	
   

  	
   

  	
   

  
	
  EXHIBITS:

  	
   

  
	
   

  	
   

  
	
  A

  	
  Form of
  Compliance Certificate

  	
   

  
	
  B-1

  	
  Form of
  Borrowing Request

  	
   

  
	
  B-2

  	
  Form of
  Swing Line Loan Notice

  	
   

  
	
  C-1

  	
  Form of
  Revolving Credit Note

  	
   

  
	
  C-2

  	
  Form of Swing
  Line Note

  	
   

  
	
  D

  	
  Form of
  Exemption Certificate

  	
   

  
	
  E

  	
  Form of
  Closing Certificate

  	
   

  
	
  F

  	
  Form of
  Legal Opinion of Thomas Forsyth, Esq.

  	
   

  
	
  G

  	
  Form of
  Legal Opinion of Conyers Dill & Pearman

  	
   

  
	
  H

  	
  Form of
  Assignment and Assumption

  	
   

  
	
  I

  	
  Form of
  Instrument of Accession

  	
   

  

 

v

 

CREDIT AGREEMENT

 

This CREDIT AGREEMENT, dated as of [             ],
2006, among (i) FUND AMERICAN COMPANIES,
INC., a Delaware corporation (the “Borrower”), (ii) ONEBEACON INSURANCE GROUP, LTD., a company
existing under the laws of Bermuda (“Parent” and, together with the
Borrower, collectively, the “Loan Parties” and, individually, a “Loan
Party”), (iii) each lender from time to time party hereto (collectively,
the “Lenders”), (iv) BANK OF AMERICA,
N.A., as Administrative Agent, Swing Line Lender and the Issuing
Lender and (v) LEHMAN BROTHERS INC.,
as Syndication Agent.

 

PRELIMINARY STATEMENTS

 

The Borrower
has requested that the Lenders provide a revolving credit facility, and the
Lenders are willing to do so on the terms and conditions set forth herein.

 

In
consideration of the mutual covenants and agreements herein contained, the
parties hereto covenant and agree as follows:

 

1.                                      DEFINITIONS

 

1.1. Defined
Terms. As used in this Agreement, the terms listed in this Section 1.1
shall have the respective meanings set forth in this Section 1.1.

 

“Act of 1934” means the Securities Exchange Act of 1934 and the
regulations issued thereunder.

 

“Administrative Agent” means Bank of America, N.A., in its
capacity as administrative agent under any of the Loan Documents, or any
successor administrative agent appointed in accordance with Section 9.9.

 

“Administrative Agent’s Office” means the Administrative Agent’s
address and, as appropriate, account as set forth on Schedule 10.2, or
such other address or account as the Administrative Agent may from time to time
notify the Borrower and the Lenders.

 

“Administrative Questionnaire” means an Administrative
Questionnaire in a form supplied by the Administrative Agent.

 

“Affiliate” means, as to any Person, any other Person that,
directly or indirectly, is in control of, is controlled by, or is under common
control with, such Person. For purposes of this definition, “control” of a
Person means the power, directly or indirectly, either to (a) vote 10% or more
of the securities having ordinary voting power for the election of directors
(or persons performing similar functions) of such Person or (b) direct or cause
the direction of the management and policies of such Person, whether by
contract or otherwise.

 

 

“Agent Fee Letter” means that certain letter agreement dated as
of [         ] 2006 by and between
Borrower, White Mountains, White Mountains Re, the Administrative Agent and
Banc of America Securities LLC.

 

“Agent-Related Persons” means the Administrative Agent, together
with its Affiliates (including, Bank of America, N.A. in its capacity as the
Administrative Agent and Banc of America Securities LLC in its capacity as one
of the Arrangers), and the officers, directors, employees, agents and
attorneys-in-fact of such Persons and Affiliates.

 

“Agreement” means this Credit Agreement, as amended, restated,
extended, supplemented or otherwise modified from time to time.

 

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

 

“Applicable Margin” means the applicable percentage per annum
set forth below corresponding to the Debt Rating as set forth below.

 

	
  Pricing Level

  	
   

  	
  Debt Rating

  	
   

  	
  Applicable Margin

  	
   

  
	
  I

  	
   

  	
  3 A-/A3

  	
   

  	
  0.280

  	
  %

  
	
  II

  	
   

  	
  BBB+/Baa1

  	
   

  	
  0.320

  	
  %

  
	
  III

  	
   

  	
  BBB/Baa2

  	
   

  	
  0.400

  	
  %

  
	
  IV

  	
   

  	
  BBB-/Baa3

  	
   

  	
  0.525

  	
  %

  
	
  V

  	
   

  	
  < BBB-/Baa3

  	
   

  	
  0.675

  	
  %

  

 

“Debt
Rating” means, as of any date of determination, the rating as determined by
either S&P or Moody’s (collectively, the “Debt Ratings”) of the
Borrower’s non-credit enhanced (other than through an unsecured guarantee by
Parent), senior unsecured debt; provided  that (a) if the
respective Debt Ratings issued by the foregoing rating agencies differ by one
level, then the pricing level of the higher Debt Rating shall apply (with the
Debt Rating of pricing level I being the highest and the Debt Rating for
pricing level V being the lowest), (b) in the event that there is a split in
Debt Rating of more than one level then the pricing level that is one level
lower than the pricing level of the higher Debt Rating shall apply, (c) if the
Borrower has only one Debt Rating, then the pricing level of that Debt Rating
shall apply, and (d) if the Borrower does not have any Debt

 

2

 

Rating, the
Applicable Margin shall be that corresponding to pricing level V; provided
that, so long as the only rated senior unsecured debt of the Borrower is
credit enhanced through a guarantee provided by White Mountains, the Applicable
Margin shall be that corresponding to the pricing level that is one level below
the pricing level corresponding to such Debt Rating, if there is a lower level.
For the avoidance of doubt, if the only rated senior unsecured debt of the Borrower
is guaranteed by White Mountains and has a Debt Rating of BBB/Baa2, the
applicable pricing level shall be pricing level IV. Each change in the
Applicable Margin resulting from a publicly announced change in the Debt Rating
shall be effective during the period commencing on the date of the public
announcement thereof and ending on the date immediately preceding the effective
date of the next such change.

 

“Application” means an application and agreement for the
issuance or amendment of a Letter of Credit in the form from time to time used
by the Issuing Lender, which shall not be inconsistent with this Agreement or
impose additional obligations on the Borrower.

 

“Approved Fund” means any Fund that is administered or managed
by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate
of an entity that administers or manages a Lender.

 

“Arranger Fee Letter” means that certain letter agreement dated
as of [          ] 2006 by
and among the Borrower, White Mountains, White Mountains Re, the Arrangers and
LBB.

 

“Arrangers” means Banc of America Securities LLC and Lehman
Brothers Inc., in their respective capacities as joint lead arrangers and joint
book runners.

 

“Assignee Group” means two or more Eligible Assignees that are
Affiliates of one another or two or more Approved Funds managed by the same
investment advisor.

 

“Assignment and Assumption” means an assignment and assumption
entered into by a Lender and an Eligible Assignee (with the consent of any
party whose consent is required by Section 10.7(b), and accepted by the
Administrative Agent, in substantially in the form of Exhibit H or any
other form approved by the Administrative Agent.

 

“Attorney Costs” means and includes all reasonable fees,
expenses and disbursements of any law firm or other external counsel.

 

“Available Revolving Credit Commitment” means, with respect to
any Lender at any time, an amount equal to the excess, if any, of (a) such
Lender’s Revolving Credit Commitment then in effect over (b) such Lender’s
Revolving Extensions of Credit then outstanding.

 

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

 

3

 

for such day
as publicly announced from time to time by Bank of America, N.A. as its “prime
rate.”  The “prime rate” is a rate set by
Bank of America, N.A. based upon various factors including Bank of America,
N.A.’s costs and desired return, general economic conditions and other factors,
and is used as a reference point for pricing some loans, which may be priced
at, above, or below such announced rate. Any change in such rate announced by
Bank of America, N.A. shall take effect at the opening of business on the day
specified in the public announcement of such change.

 

“Base Rate Loans” means Loans for which the applicable rate of
interest is based upon the Base Rate.

 

“Benefitted Lender” has the meaning specified in Section 10.8.

 

“Berkshire Hathaway” means, Berkshire Hathaway Inc., or an
Affiliate thereof.

 

“Berkshire Preferred Stock” means the $300,000,000 aggregate
liquidation preference amount of non-voting preferred stock issued by the
Borrower to Berkshire Hathaway pursuant to the Certificate of Designation of
Series A Preferred Stock of TACK Acquisition Corp. (n/k/a Fund American
Companies, Inc.) as amended, supplemented or otherwise modified from time to
time.

 

“Board” means the Board of Governors of the Federal Reserve
System of the United States (or any successor).

 

“Borrower Materials” has the meaning specified in Section
6.2(e).

 

“Borrower” has the meaning specified in the preamble hereto.

 

“Borrowing Date” means any Business Day specified by the
Borrower as a date on which the Borrower requests the relevant Lenders to make
Loans hereunder.

 

“Borrowing Request” means a notice of (a) a borrowing, (b) a
conversion of Loans from one Type to the other, or (c) a continuation of
Eurodollar Loans pursuant to Sections 2.2 or 2.9 which, if in
writing, shall be substantially in the form of Exhibit B-1.

 

“Business Day” means (i) with respect to any borrowing, payment
or rate selection of Eurodollar Loans, a day (other than a Saturday or Sunday)
on which banks generally are open in New York City for the conduct of substantially
all of their commercial lending activities, interbank wire transfers can be
made on the Fedwire system and dealings in Dollars are carried on in the London
interbank market and (ii) for all other purposes, a day (other than a Saturday
or Sunday) on which banks generally are open in New York City for the conduct
of substantially all of the commercial lending activities, and interbank wire
transfers can be made on the Fedwire system.

 

“Capital Lease Obligations” means, with respect to any Person,
the obligations of such Person to pay rent or other amounts under any lease of
(or other

 

4

 

arrangement
conveying the right to use) real or personal property, or a combination
thereof, which obligations are required to be classified and accounted for as
capital leases on a balance sheet of such Person under GAAP; and, for the
purposes of this Agreement, the amount of such obligations at any time shall be
the capitalized amount thereof at such time determined in accordance with GAAP.

 

“Capital and Surplus” means, as of any date, (a) as to any
Insurance Subsidiary domiciled in the United States, the total surplus as
regards policyholders (or any successor line item description that contains the
same information) as shown in its Annual Statement or Quarterly Statement, or
an amount determined in a consistent manner for any date other than one as of
which an Annual Statement or Quarterly Statement is prepared and (b) as to any
other Insurance Subsidiary, the equivalent amount (determined in good faith by
Parent).

 

“Capital Stock” means any and all shares, interests,
participations or other equivalents (however designated) of capital stock or
share capital of a corporation, any and all equivalent ownership interests in a
Person (other than a corporation) and any and all warrants, rights or options
to purchase any of the foregoing.

 

“Cash Collateralize” means to pledge and deposit with or deliver
to the Administrative Agent, for the benefit of the Issuing Lender and the
Lenders, as collateral for the L/C Obligations, cash or deposit account
balances pursuant to documentation in form and substance reasonably
satisfactory to the Administrative Agent and the Issuing Lender (which
documents are hereby consented to by the Lenders). Derivatives of such term
have corresponding meanings.

 

(a)                                  “Change
of Control” means (a) the acquisition of ownership, directly or indirectly,
beneficially or of record, by any Person or group (within the meaning of the
Act of 1934 and the rules of the SEC thereunder as in effect on the date
hereof), other than (i) White Mountains, (ii) Berkshire Hathaway, (iii)
Franklin Mutual or (iv) John J. Byrne or any Related Person with respect to
John J. Byrne (together with, in the case of clauses (i), (ii), (iii)
and (iv), their Affiliates) of Capital Stock representing more than 30%
of the aggregate ordinary voting power represented by the issued and
outstanding Capital Stock of Parent (or, if White Mountains and its
Subsidiaries own 30% or more of the aggregate ordinary voting power represented
by the issued and outstanding Capital Stock of Parent, a percentage greater
than such percentage of ownership), (b) the occupation, within a period of two
years commencing after the IPO, of a majority of the seats (other than vacant
seats) on the board of directors of Parent by Persons who were neither (i)
nominated by the board of directors of Parent nor (ii) appointed by directors
so nominated or (c) neither the Borrower nor, if applicable, its successors
shall be a Subsidiary of Parent. For the avoidance of doubt, none of the
Capital Stock held by the entities listed in clauses (a)(i), (a)(ii),
(a)(iii) and (a)(iv), nor the Capital Stock held by any of their
Affiliates, shall be included as being owned by a Person or group when
determining whether such Person or group has met the 30% threshold set forth in
clause (a).

 

5

 

“Closing Certificate” means a certificate substantially in the
form of Exhibit E.

 

“Closing Date” means the first date on which all the conditions
precedent in Section 4.1 are satisfied or waived in accordance with Section
10.1.

 

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

 

“Commitments” means, collectively the Revolving Credit
Commitments, the Swing Line Commitment, the L/C Commitment or as the context
may require, any such Commitment.

 

“Commonly Controlled Entity” means an entity, whether or not
incorporated, that is under common control with the Loan Parties within the
meaning of Section 4001 (a) (14) of ERISA or that is treated as a single
employer with the Loan Parties under Section 414 of the Code.

 

“Compensation Period” has the meaning specified in Section
2.14(e)(ii).

 

“Compliance Certificate” means a certificate duly executed by a
Responsible Officer on behalf of Parent substantially in the form of Exhibit
A.

 

“Conditional Common Equity” means convertible preferred stock
which will convert to common equity upon shareholder approval (provided that
such shareholder approval is obtained within the period required by the terms
thereof).

 

“Consolidated Net Income” means, for any period, the
consolidated net income (or loss) of Parent and its consolidated Subsidiaries
for such period, determined on a consolidated basis in accordance with GAAP; provided,
that in calculating Consolidated Net Income for any period, there shall be
excluded for purposes of the calculation of Consolidated Net Income (a) the
income (or deficit) of any Person accrued prior to the date it becomes a
Subsidiary of Parent or is merged into or consolidated with Parent or any of
its Subsidiaries and (b) any effects resulting from SFAS158.

 

“Consolidated Net Worth” means, as at any date, the sum of all
amounts that would, in conformity with GAAP be included on a consolidated
balance sheet of Parent and its consolidated Subsidiaries under stockholders’
equity at such date, plus minority interests in Subsidiaries, as determined in
accordance with GAAP; provided, however, that any effects
resulting from (a) SFAS 115 or (b) SFAS 158 shall be excluded for purposes of
the calculation of Consolidated Net Worth.

 

“Cure Period” has the meaning specified in Section 7.1(b).

 

“Contractual Obligation” means, as to any Person, any provision
of any security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
Property is bound.

 

6

 

“Debt” means indebtedness for borrowed money.

 

“Debtor Relief Laws” the Bankruptcy Code of the United States,
and all other liquidation, conservatorship, bankruptcy, assignment for the
benefit of creditors, moratorium, rearrangement, receivership, insolvency,
reorganization, or similar debtor relief laws of the United States or other
applicable jurisdictions, domestic or foreign, from time to time in effect and
affecting the rights of creditors generally.

 

“Default” means any of the events specified in Section 8.1,
whether or not any requirement for the giving of notice, the lapse of time, or
both, has been satisfied.

 

“Defaulting Lender” means any Lender that (a) has failed to fund
any portion of the Loans or participations in the L/C Obligations required to
be funded by it hereunder within one Business Day of the date required to be
funded by it hereunder unless such failure has been cured, (b) has otherwise
failed to pay over to the Administrative Agent or any other Lender any other
amount required to be paid by it hereunder within one Business Day of the date
when due, unless the subject of a good faith dispute or unless such failure has
been cured or (c) has been deemed insolvent or become the subject of a bankruptcy
or insolvency proceeding.

 

“Default Rate” has the meaning specified in Section 2.11(c).

 

“Department” means, with respect to any Insurance Subsidiary, the
insurance commissioner or other Governmental Authority of such Insurance
Subsidiary’s jurisdiction of domicile with which such Insurance Subsidiary is
required to file its Annual Statement.

 

“Dollars” and “$” means lawful currency of the United
States of America.

 

“Eligible Assignee” means any Person that meets the requirements
to be an assignee under Section 10.7(b)(iii), (v), (vi), (vii)
and (viii) (subject to such consents, if any, as may be required under Section
10.7(b)(iii)).

 

“Environmental Liability” means any liability, contingent or
otherwise (including any liability for damages, costs of environmental
remediation, injunctive or equitable relief, fines, penalties or indemnities),
of a Loan Party or any of its Subsidiaries resulting from or based upon (a) a
violation of any environmental law, (b) the generation, use, handling,
transportation, storage, treatment or disposal of any Hazardous Materials, (c)
human exposure to any Hazardous Materials, (d) the release or threatened
release of any Hazardous Materials into the environment or (e) any contract,
agreement or other consensual arrangement pursuant to which liability is
assumed or imposed with respect to any of the foregoing.

 

“ERISA” means the Employee Retirement Income Security Act of
1974, as amended from time to time.

 

“Eurodollar Loans” means Loans for which the applicable rate of
interest is based upon the Eurodollar Rate.

 

7

 

“Eurodollar Rate” means, for any Interest Period with respect to
a Eurodollar Loan, the rate per annum equal to the British Bankers Association
LIBOR Rate (“BBA LIBOR”), as published by Reuters (or other commercially
available source providing quotations of BBA LIBOR as designated by the
Administrative Agent from time to time) at approximately 11:00 A.M., London
time, two Business Days prior to the commencement of such Interest Period, for
Dollar deposits (for delivery on the first day of such Interest Period) with a
term equivalent to such Interest Period. If such rate is not available at such
time for any reason, then the “Eurodollar Rate” for such Interest Period shall
be the rate per annum determined by the Administrative Agent to be the rate at
which deposits in Dollars for delivery on the first day of such Interest Period
in same day funds in the approximate amount of the Eurodollar Loan being made,
continued or converted by Bank of America, N.A. and with a term equivalent to
such Interest Period would be offered by Bank of America, N.A.’s London branch
to major banks in the London interbank eurodollar market at their request at
approximately 11:00 A.M. (London time) two Business Days prior to the
commencement of such Interest Period. “Excluded Taxes” has the meaning
specified in Section 2.16(a).

 

“Existing Credit Agreement” means that certain Credit Agreement,
dated as of August 26, 2004, among the Borrower, White Mountains, the several
banks and other financial institutions or entities from time to time parties
thereto, JP Morgan Chase Bank, as syndication agent, and Bank of America, N.A.,
as administrative agent.

 

“Existing Letters of Credit” means those letters of credit set
forth on Schedule 1A.

 

“Event of Default” means any of the events specified in Section
8.1, provided that any requirement for the giving of notice, the lapse of
time, or both, has been satisfied.

 

“Facility Fee Rate” means the applicable percentage per annum
set forth below corresponding to the most current non-credit enhanced senior
unsecured debt ratings issued by S&P and by Moody’s with respect to Fund
American.

 

	
  Pricing Level

  	
   

  	
  Debt
  Rating

  	
   

  	
  Facility
  Fee Rate

  	
   

  
	
  I

  	
   

  	
  A-/A3

  	
   

  	
  0.070

  	
  %

  
	
  II

  	
   

  	
  BBB+/Baa1

  	
   

  	
  0.080

  	
  %

  
	
  III

  	
   

  	
  BBB/Baa2

  	
   

  	
  0.100

  	
  %

  
	
  IV

  	
   

  	
  BBB-/Baa3

  	
   

  	
  0.125

  	
  %

  
	
  V

  	
   

  	
  < BBB-/Baa3

  	
   

  	
  0.175

  	
  %

  

 

“Debt
Rating” means, as of any date of determination, the rating as determined by
either S&P or Moody’s (collectively, the “Debt Ratings”) of the
Borrower’s non-credit

 

8

 

enhanced
(other than through an unsecured guarantee of Parent), senior unsecured debt; provided
that (a) if the respective Debt Ratings issued by the foregoing rating
agencies differ by one level, then the pricing level of the higher Debt Rating
shall apply (with the Debt Rating of pricing level I being the highest and the
Debt Rating for pricing level V being the lowest), (b) in the event that there
is a split in Debt Rating of more than one level then the pricing level that is
one level lower than the pricing level of the higher Debt Rating shall apply,
(c) if the Borrower has only one Debt Rating, then the pricing level of that
Debt Rating shall apply, and (d) if the Borrower does not have any Debt Rating,
the Facility Fee Rate shall be that corresponding to pricing level V; provided
that, so long as the only rated senior unsecured debt of the Borrower is
credit enhanced through a guarantee provided by White Mountains, the Facility
Fee Rate shall be that corresponding to the pricing level that is one level
below the pricing level corresponding to such Debt Rating, if there is a lower
level. For the avoidance of doubt, if the only rated senior unsecured debt of
the Borrower is guaranteed by White Mountains and has a Debt Rating of
BBB/Baa2, the applicable pricing level shall be pricing level IV. Each change
in the Facility Fee Rate resulting from a publicly announced change in the Debt
Rating shall be effective during the period commencing on the date of the public
announcement thereof and ending on the date immediately preceding the effective
date of the next such change.

 

“Federal Funds Rate” means, for any day, the 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 by the Federal Reserve Bank of New York
on the Business Day next succeeding such day; provided that (a) if such
day is not a Business Day, the Federal Funds Rate for such day shall be such
rate on such transactions on the next preceding Business Day as so published on
the next succeeding Business Day, and (b) if no such rate is so published on
such next succeeding Business Day, the Federal Funds Rate for such day shall be
the average rate (rounded upward, if necessary, to a whole multiple of 1/100 of
1%) charged to Bank of America, N.A. on such day on such transactions as
reasonably determined by the Administrative Agent.

 

“Fee Letters” means, collectively, the Agent Fee Letter and the
Arranger Fee Letter.

 

“Fitch” means Fitch, Inc. (or any successor thereto).

 

“Franklin Mutual” means any investment fund managed by Franklin
Mutual Advisers LLC (or any successor thereto) or any of its Affiliates.

 

“Fund” means any Person (other than a natural person) that is
(or will be) engaged in making, purchasing, holding or otherwise investing in
revolving credit facilities and similar extensions of credit in the ordinary
course of its business.

 

“Fund American Enterprises” means Fund American Enterprises
Holdings, Inc., a Delaware corporation.

 

9

 

“Fund American Notes” means those certain 5.875% Senior Notes
issued pursuant to the Senior Indenture, dated as of May 19, 2003, between the
Borrower, White Mountains and Bank One, National Association, as trustee, in
the aggregate principal amount of $700,000,000 due May 15, 2013.

 

“Fund American Preferred Stock” means collectively, the
Berkshire Preferred Stock and the Zenith Preferred Stock.

 

“Fundamental Change” means any of (a) Parent consolidating or
amalgamating with or merging into any other Person, (b) Parent failing to
preserve, renew and keep, in full force and effect, its corporate existence,
(c) Parent, directly or indirectly through one or more of its Subsidiaries,
conveying or transferring the properties and assets of Parent and its
Subsidiaries (taken as a whole for Parent and its Subsidiaries) substantially
as an entirety (other than to Parent or one or more of its Subsidiaries), or
(d) Parent liquidating, winding up or dissolving itself, other than, in the
case of clauses (a) through (d), any such transaction or
transactions the sole purpose of which is to change the domicile of Parent (in
any such redomiciliation (x) the surviving, amalgamated
or transferee entity shall expressly assume, by an agreement reasonably
satisfactory to the Administrative Agent, the obligations of Parent to be
performed or observed hereunder and deliver to the Administrative Agent such
corporate authority documents and legal opinions as the Administrative Agent
shall reasonably request, (y) the surviving, amalgamated
or transferee entity shall succeed to, and be substituted for, and may exercise
every right and power of, Parent under this Agreement with the same effect as
if such surviving, amalgamated or transferee entity had been named as Parent
herein and (z) the surviving, amalgamated
or transferee entity shall be organized under the laws of the United States of
America, any state thereof, the District of Columbia or Bermuda).

 

“GAAP” means generally accepted accounting principles in the
United States of America as in effect from time to time and set forth in the
opinions and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or such other principles as may be
approved by a significant segment of the accounting profession in the United
States, except that for purposes of Section 7.1, GAAP shall be
determined on the basis of such principles in effect on the date hereof.

 

“Governmental Authority” means any nation or government, any
state or other political subdivision thereof whether state or local and any entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government, and any corporation or other entity
owned or controlled, through stock or capital ownership or otherwise, by any of
the foregoing, including any board of insurance, insurance department or
insurance commissioner.

 

“Granting Lender” has the meaning specified in Section
10.7(h).

 

10

 

“Guarantee Obligation” means as to any Person (the “guaranteeing
person”), any obligation of (a) the guaranteeing person or (b) another
Person (including, without limitation, any bank under any letter of credit) to
induce the creation of which the guaranteeing person has issued a
reimbursement, counterindemnity or similar obligation, in either case
guaranteeing or in effect guaranteeing any Indebtedness, leases, dividends or
other obligations (the “primary obligations”) of any other third Person
(the “primary obligor”) in any manner, whether directly or indirectly, including,
without limitation, any obligation of the guaranteeing person, whether or not
contingent, (i) to purchase any such primary obligation or any Property
constituting direct or indirect security therefor, (ii) to advance or supply
funds (1) for the purchase or payment of any such primary obligation or (2) to
maintain working capital or equity capital of the primary obligor or otherwise
to maintain the net worth or solvency of the primary obligor, (iii) to purchase
Property, securities or services primarily for the purpose of assuring the
owner of any such primary obligation of the ability of the primary obligor to
make payment of such primary obligation or (iv) otherwise to assure or hold
harmless the owner of any such primary obligation against loss in respect
thereof; provided, however, that the term Guarantee Obligation
shall not include endorsements of instruments for deposit or collection in the
ordinary course of business. The amount of any Guarantee Obligation of any
guaranteeing person shall be deemed to be the lower of (a) an amount equal to
the stated or determinable amount of the primary obligation in respect of which
such Guarantee Obligation is made and (b) the maximum amount for which such
guaranteeing person may be liable pursuant to the terms of the instrument
embodying such Guarantee Obligation, unless such primary obligation and the
maximum amount for which such guaranteeing person may be liable are not stated
or determinable, in which case the amount of such Guarantee Obligation shall be
such guaranteeing person’s maximum reasonably anticipated liability in respect
thereof as determined by Parent in good faith.

 

“Guarantor” has the meaning specified in Section 2.21
hereto.

 

“Hazardous Materials” means all explosive or radioactive substances
or wastes, hazardous or toxic substances or wastes, pollutants, solid, liquid
or gaseous wastes, including petroleum or petroleum distillates, asbestos or
asbestos containing materials, polychlorinated biphenyls (“PCBs”) or
PCB-containing materials or equipment, radon gas, infectious or medical wastes
and all other substances or wastes of any nature regulated pursuant to any
environmental law.

 

“Hedge Agreements” means all interest rate swaps, caps or collar
agreements or similar arrangements entered into by the Loan Parties or their
Subsidiaries providing for protection against fluctuations in interest rates or
currency exchange rates or otherwise providing for the exchange of nominal
interest obligations, either generally or under specific contingencies.

 

“Increase Effective Date” has the meaning specified in Section
2.22(b).

 

“Indebtedness” means, as to any Person at any date, without
duplication, all of the following, whether or not included as Indebtedness or
liabilities in accordance with GAAP (a) all Debt of such Person, (b) all
obligations of such Person for the deferred

 

11

 

purchase price
of Property or services (other than trade payables incurred in the ordinary
course of such Person’s business), (c) all obligations of such Person evidenced
by notes, bonds, debentures or other similar instruments, (d) all indebtedness
created or arising under any conditional sale or other title retention
agreement with respect to Property acquired by such Person (even though the
rights and remedies of the seller or lender under such agreement in the event
of default are limited to repossession or sale of such Property), (e) all
Capital Lease Obligations of such Person, (f) all obligations of such Person,
contingent or otherwise, as an account party or applicant under acceptance,
letter of credit, bank guarantees, surety bonds or similar facilities, (g) all
obligations of such Person, contingent or otherwise, to purchase, redeem,
retire, defease or otherwise acquire for value any Capital Stock of such
Person, (h) all Guarantee Obligations of such Person in respect of any of the
foregoing, (i) all obligations of the kind referred to in clauses (a)
through (h) above secured by (or for which the holder of such obligation
has an existing right, contingent or otherwise, to be secured by) any Lien on
Property (including, without limitation, accounts and contract rights) owned by
such Person, whether or not such Person has assumed or become liable for the
payment of such obligation and (j) for the purposes of Section 8.1(i)
only, all obligations of such Person in respect of Hedge Agreements entered
into in the ordinary course of business and not for speculative purposes. For
the avoidance of doubt, Indebtedness shall include Surplus Debentures and shall
in any event not include any obligations (including Guarantee Obligations) in
respect of the Fund American Preferred Stock, provided, that,
arrangements reasonably satisfactory to the Administrative Agent shall have
been made for the establishment of grantor trusts to provide for the payment or
redemption of the Fund American Preferred Stock, it being understood that such
arrangements in effect on the Closing Date are reasonably satisfactory to the
Administrative Agent.

 

“Indemnified Liabilities” has the meaning specified in Section
10.6.

 

“Indemnitees” has the meaning specified in Section 10.6.

 

“Insolvency” means with respect to any Multiemployer Plan, the
condition that such Plan is insolvent within the meaning of Section 4245 of
ERISA.

 

“Insolvent” means pertaining to a condition of Insolvency.

 

“Insurance Regulations” means any Law, directive or order
applicable to an insurance company.

 

“Insurance Regulator” means any Person charged with the
administration, oversight or enforcement of any Insurance Regulation.

 

“Insurance Subsidiary” means any Subsidiary which is required to
be licensed by any Department as an insurer or reinsurer and each direct or
indirect Subsidiary of such Subsidiary.

 

“Intellectual Property” means the collective reference to all
rights, priorities and privileges relating to intellectual property, arising
under Laws, including, without limitation, copyrights, copyright licenses,
patents, patent licenses, trademarks,

 

12

 

trademark
licenses, technology, know-how and processes, and all rights to sue at law or
in equity for any infringement or other impairment thereof, including the right
to receive all proceeds and damages therefrom.

 

“Interest Payment Date” means (a) as to any Base Rate Loan, the
first Business Day of each of January, April, July and October and the last day
of the Revolving Credit Commitment Period, (b) as to any Eurodollar Loan, the
last day of each Interest Period applicable to such Loan and the last day of
the Revolving Credit Commitment Period; provided, however, that
if any Interest Period for a Eurodollar Loan exceeds three months, the
respective dates that fall every three months after the beginning of such
Interest Period shall also be Interest Payment Dates, and (c) as to any Loan
(other than a Base Rate Loan), the date of any repayment or prepayment made in
respect thereof.

 

“Interest Period” means, as to any Eurodollar Loan, (a)
initially, the period commencing on the borrowing or conversion date, as the
case may be, with respect to such Eurodollar Loan and ending one, two, three or
six months (or, unless unavailable to any Lender, nine or twelve months)
thereafter, as selected by the Borrower in its notice of borrowing or notice of
conversion, as the case may be, given with respect thereto; and (b) thereafter,
each period commencing on the last day of the next preceding Interest Period
applicable to such Eurodollar Loan and ending one, two, three or six months
(or, unless unavailable to any Lender, nine or twelve months) thereafter, as
selected by the Borrower by irrevocable notice to the Administrative Agent not
less than three Business Days prior to the last day of the then current
Interest Period with respect thereto; provided that, all of the
foregoing provisions relating to Interest Periods are subject to the following:

 

(i) if any Interest Period would otherwise end on a day that is not a
Business Day, such Interest Period shall be extended to the next succeeding
Business Day unless the result of such extension would be to carry such
Interest Period into another calendar month in which event such Interest Period
shall end on the immediately preceding Business Day;

 

(ii) any Interest Period in respect of the Loans that would otherwise
extend beyond the Revolving Credit Termination Date shall end on the Revolving
Credit Termination Date, and

 

(iii) any Interest Period that begins on the last Business Day of a
calendar month (or on a day for which there is no numerically corresponding day
in the calendar month at the end of such Interest Period) shall end on the last
Business Day of the calendar month at the end of such Interest Period.

 

“IPO” means an initial public offering by Parent of its common
stock pursuant to an effective S-1 Registration Statement under the Securities
Act of 1933, as amended.

 

13

 

“ISP” means, with respect to any Letter of Credit, the “International
Standby Practices 1998” published by the Institute of International Banking Law
& Practice (or such later version thereof as may be in effect at the time
of issuance).

 

“Issuer Documents” means with respect to any Letter of Credit,
the Application, and any other document, agreement and instrument entered into
by the Issuing Lender and the Borrower (or any Subsidiary) or by the Borrower
(or any Subsidiary) in favor of the Issuing Lender and relating to any such
Letter of Credit.

 

“Issuing Lender” means Bank of America, N.A. and any other
Lender from time to time designated by the Borrower as an Issuing Lender, with
the consent of such Lender and the Administrative Agent.

 

“Laws” means any law, treaty, rule, regulation or order of an
arbitrator or a court or other Governmental Authority.

 

“LBB” means Lehman Brothers Bank, FSB.

 

“L/C Advance” means, with respect to each Lender, such Lender’s
funding of its participation in any L/C Borrowing in accordance with its
Revolving Credit Percentage.

 

“L/C Borrowing” means an extension of credit resulting from a
drawing under any Letter of Credit which has not been reimbursed on the date
when made or refinanced as a borrowing.

 

“L/C Commitment” means $20,000,000, as the same may be reduced
from time to time pursuant to Section 2.7.

 

“L/C Credit Extension” means, with respect to any Letter of
Credit, the issuance thereof or extension of the expiry date thereof or the
increase of the amount thereof.

 

“L/C Fee Payment Date” means the first Business Day of each of
January, April, July and October and the last day of the Revolving Credit
Commitment Period.

 

“L/C Obligations” means, at any time, an amount equal to the sum
of (a) the aggregate amount available to be drawn under all outstanding Letters
of Credit and (b) the aggregate amount of drawings under Letters of Credit that
have not then been reimbursed pursuant to Section 3.3. For purposes of
computing the amount available to be drawn under any Letter of Credit, the
amount of such Letter of Credit shall be determined in accordance with Section
1.3. For all purposes of this Agreement, if on any date of determination a
Letter of Credit has expired by its terms but any amount may still be drawn
thereunder by reason of the operation of Rule 3.14 of the ISP, such Letter of
Credit shall be deemed to be “outstanding” in the amount so remaining available
to be drawn.

 

14

 

“L/C Participants” means, with respect to any Letter of Credit,
the collective reference to all of the Lenders, other than the Issuing Lender
that issued such Letter of Credit.

 

“Lenders” has the meaning specified in the preamble hereto.

 

“Letters of Credit” means any letters of credit issued hereunder
and shall include the Existing Letters of Credit.

 

“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 or reinsurance business.

 

“Lien” means any mortgage, pledge, security interest,
encumbrance, charge or security interest of any kind.

 

“Loan” means any loan made by any Lender to the Borrower
pursuant to this Agreement, including any Revolving Credit Loan and any Swing
Line Loan made by the Swing Line Lender.

 

“Loan Documents” means this Agreement, the Applications, the
Notes and any Instrument of Accession executed hereunder pursuant to Section
2.22.

 

“Loan Parties” has the meaning specified in the preamble hereto.

 

“Majority Lenders” means the holders of more than 50% of the
Total Revolving Extensions of Credit (or, if no such Revolving Extensions of
Credit are outstanding, prior to any termination of the Revolving Credit
Commitments, the holders of more than 50% of the Total Revolving Credit
Commitments). The Revolving Credit Commitment in effect (or, when applicable,
Revolving Extensions of Credit outstanding) of any Defaulting Lender shall be
excluded for purposes of any vote of Majority Lenders.

 

“Mandatory Convertible Securities” means equity securities or
subordinated debt securities (which debt securities, if issued by a Loan Party,
will include subordination to the obligations of such Loan Party hereunder),
issued by Parent or one of its Subsidiaries which (i) are not (w) Mandatory
Redeemable Securities or (x) Conditional Common Equity and (ii) provide,
pursuant to the terms thereof, that the issuer of such securities (or an
affiliate of such issuer) may cause (without the payment of additional cash
consideration by the issuer thereof) the conversion of such securities to
equity securities of Parent or one of its Subsidiaries upon the occurrence of a
certain date or of certain events.

 

“Mandatory Redeemable Securities” means debt or equity
securities (other than Conditional Common Equity, so long as such Conditional
Common Equity may not be required, by the holder thereof, to be repurchased or
redeemed during the period provided for shareholder approval of conversion
pursuant to the terms of such Conditional Common Equity) issued by Parent or
one of its Subsidiaries which provide,

 

15

 

pursuant to
the terms thereof, that such securities must be repurchased or redeemed, or the
holder of such securities may require the issuer of such securities to
repurchase or redeem such securities, upon the occurrence of a certain date or
of certain events.

 

“Material Adverse Effect” means a material adverse effect on (a)
the business, assets, property or financial condition of the Borrower and its
Subsidiaries taken as a whole, or (b) the validity or enforceability of this
Agreement or any of the other Loan Documents or the rights and remedies of the
Administrative Agent and the Lenders hereunder or thereunder.

 

“Material Insurance Subsidiary” means any Insurance Subsidiary
(whether existing on or acquired
or formed after the Closing Date) having Capital and Surplus equal to 10% or
more of the Consolidated Net Worth of Parent as of the most recent Annual
Statement or Quarterly Statement of such Insurance Subsidiary.

 

“Maximum Rate” has the meaning specified in Section 10.20(a).

 

“Moody’s” means Moody’s Investors Service, Inc. (or any
successor thereto).

 

“Multiemployer Plan” means a Plan that is a multiemployer plan
as defined in Section 4001(a)(3) of ERISA.

 

“NAIC” means the National Association of Insurance Commissioners
or any successor thereto, or in the absence of the National Association of
Insurance Commissioners or such successor, 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 towards the promotion of
uniformity in the practices of such Governmental Authorities.

 

“Non-Excluded Taxes” has the meaning specified in Section
2.16(a).

 

“Non-Regulated Operating Subsidiary” means each Subsidiary of
the Loan Parties engaged directly (as opposed to indirectly through the
ownership of Capital Stock of a Person engaged in a Principal Business) in a
Principal Business, whether now owned or hereafter acquired, which is not an
Insurance Subsidiary.

 

“Non-U.S. Lender” has the meaning specified in Section
2.16(d).

 

“Note” means any promissory note, including any revolving credit
note or swing line note, made by the Borrower in favor of a Lender evidencing
any Loan, substantially in the forms of Exhibit C-1 and C-2, as
the case may be and as any such Note may be amended, restated, supplemented,
modified or replaced from time to time.

 

“OneBeacon Insurance Group” means OneBeacon Insurance Group,
LLC, a Delaware limited liability company, and, for purposes of Section
6.1(b), the grouping of

 

16

 

Subsidiaries
of OneBeacon Insurance Group identified by NAIC Group Code 1129 (or any
successor grouping equivalent thereto).

 

“Other Taxes” means any and all present or future stamp or
documentary taxes or any other excise or property taxes, charges or similar
levies arising from any payment made hereunder or from the execution, delivery
or enforcement of, or otherwise with respect to, this Agreement or any other
Loan Document.

 

“Parent” has the meaning specified in the preamble hereto.

 

“Parent Guaranty” has the meaning specified in Section
2.21(a).

 

“Participant” has the meaning specified in Section 10.7(d).

 

“PBGC” means the Pension Benefit Guaranty Corporation
established pursuant to Subtitle A of Title IV of ERISA (or any successor).

 

“Permitted Liens” means (a) any Lien upon Property to secure any
part of the cost of development, construction, alteration, repair or
improvement of such Property, or Debt incurred to finance such cost; (b) any
extension, renewal or replacement, in whole or in part, of any Lien referred to
in the foregoing clause (a); (c) any Lien relating to a sale and
leaseback transaction; (d) any Lien in favor of a Loan Party or any Subsidiary
granted by a Loan Party or any Subsidiary in order to secure any intercompany
obligations; (e) mechanic’s, materialmen’s, carriers’ or other like Liens
arising in the ordinary course of business (including construction of facilities)
in respect of obligations which are not due or which are being contested in
good faith; (f) any Lien arising in connection with any legal proceeding which
is being contested in good faith; (g) Liens for taxes not yet subject to
penalties for non-payment or which are being contested in good faith by
appropriate proceedings; (h) minor survey exceptions, minor encumbrances,
easements or reservations of, or rights of others for, licenses, rights-of-way,
sewers, electric lines, telegraph and telephone lines and other similar
purposes, or zoning or other restrictions as to the use of real property or
Liens incidental to the conduct of the business of such Person or to the
ownership of its properties which were not incurred in connection with Debt and
which do not in the aggregate materially adversely affect the value of said
properties or materially impair their use in the operation of the business of
such Person; (i) pledges or deposits under workers’ compensation Laws,
unemployment insurance Laws or similar social security legislation; (j) any
deposit to secure performance of letters of credit, bank guarantees, bids,
leases, statutory obligations, surety and appeal bonds, performance bonds or
other obligations of a like nature in the ordinary course of business; (k) any
interest or title of a lessor under any lease entered into in the ordinary
course of business; (l) Liens on assets of any Insurance Subsidiary securing
(i) short-term Debt (i.e. with a maturity of less than one year when issued,
provided that such Debt may include an option to extend for up to an additional
one year period) incurred to provide short-term liquidity to facilitate claims
payments in the event of catastrophe, (ii) Debt incurred in the ordinary course
of its business or in securing insurance-related obligations (that do not
constitute Debt) and letters of credit issued for the account of any such
Subsidiary in the ordinary course of its business or in

 

17

 

securing
insurance-related obligations (that do not constitute Debt) or (iii)
insurance-related obligations (that do not constitute Debt); and (m) Liens
securing the obligations hereunder.

 

“Person” means an individual, partnership, corporation, limited
liability company, business trust, joint stock company, trust, unincorporated
association, joint venture, Governmental Authority or other entity of whatever
nature.

 

“Plan” means at a particular time, any employee pension benefit
plan that is subject to the provisions of Title IV of ERISA or Section 412 of
the Code or Section 302 of ERISA, and in respect of which either of the Loan
Parties or a Commonly Controlled Entity is (or, if such plan were terminated at
such time, would under Section 4069 of ERISA be deemed to be) an “employer” as
defined in Section 3(5) of ERISA.

 

“Platform” has the meaning specified in Section 6.2(e).

 

“Principal Business” means (a) a business of the type engaged in
by the Loan Parties and their Subsidiaries on the date of this Agreement, (b)
any other insurance, insurance services, insurance related or risk management
related business and (c) any business reasonably incident to any of the
foregoing.

 

“Property” means any property of any kind whatsoever, whether
real, personal or mixed and whether tangible or intangible.

 

“Qualified Mandatory Redeemable Securities” means Mandatory
Redeemable Securities that, pursuant to the terms thereof, must be redeemed or
repurchased, or may be required to be redeemed or repurchased at the option of
the holder of such securities (other than upon the occurrence of one or more
events or conditions other than the occurrence of a certain date), not sooner
than the Revolving Credit Termination Date.

 

“Quarterly Statement” means the quarterly statutory financial
statement of any Insurance Subsidiary required to be filed with the Department
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 Department to be used for filing quarterly statutory financial statements
and shall contain the type of information permitted or required by such
Department to be disclosed therein, together with all exhibits or schedules
filed therewith.

 

“Refunded Swing Line Loans” has the meaning specified in Section
2.4(b).

 

“Refunding Date” has the meaning specified in Section 2.4(c).

 

“Register” has the meaning specified in Section 10.7(c).

 

18

 

“Regulation U” means Regulation U of the Board as in effect from
time to time.

 

“Reimbursement Obligation” means the obligation of the Borrower
to reimburse an Issuing Lender pursuant to Section 3.3(a) for amounts
drawn under Letters of Credit issued by such Issuing Lender for the account of
the Borrower.

 

“Related Person” means, with respect to any Person, such Person’s
Affiliates and the partners, directors, officers, employees, agents and
advisors of such Person and of such Person’s Affiliates.

 

“Reorganization” means, with respect to any Multiemployer Plan,
the condition that such plan is in reorganization within the meaning of Section
4241 of ERISA.

 

“Reportable Event” means any of the events set forth in Section
4043(c) of ERISA, other than those events as to which the thirty day notice
period is waived.

 

“Requested Reimbursement Date” has the meaning specified in Section
3.3(a).

 

“Requirement of Law” means, as to any Person, the Certificate of
Incorporation and By-Laws or other organizational or governing documents of
such Person (excluding, in the case of Section 2.15(a)(i), any of the
foregoing relating to the Administrative Agent or any Lender), and any Law, in
each case applicable to or binding upon such Person or any of its Property or
to which such Person or any of its Property is subject.

 

“Responsible Officer” means, as to any Loan Party or Subsidiary,
the chief executive officer, president, chief financial officer, treasurer,
chief accounting officer, any vice president or any managing director of such
Loan Party or any Subsidiary, as the context requires. Any document delivered
hereunder that is signed by a Responsible Officer on behalf of a Loan Party or
Subsidiary shall be conclusively presumed to have been authorized by all necessary
corporate, partnership and/or other action on the part of such Loan Party or
Subsidiary and such Responsible Officer shall be conclusively presumed to have
acted on behalf of such Loan Party or Subsidiary.

 

“Revolving Credit Commitment” means, as to any Lender, the
obligation of such Lender, if any, to make Revolving Credit Loans and
participate in Swing Line Loans and Letters of Credit, in an aggregate
principal or face amount not to exceed the amount set forth under the heading “Revolving
Credit Commitment” opposite such Lender’s name on Schedule 1 to this
Agreement, or, as the case may be, in the Assignment and Assumption pursuant to
which such Lender became a party hereto, as the same may be adjusted from time
to time pursuant to the terms hereof.

 

“Revolving Credit Commitment Period” means the period from and
including the Closing Date to the earliest of (a) the Revolving Credit
Termination Date, (b) the date of termination of the Revolving Credit
Commitments pursuant to Section 2.7,

 

19

 

and (c) the
date of termination of the commitment of each Lender to make Loans and of the
obligation of the Issuing Lender to make L/C Credit Extensions pursuant to Section
8.2.

 

“Revolving Credit Loans” has the meaning specified in Section
2.1.

 

“Revolving Credit Percentage” means, as to any Lender at any
time, the percentage (carried out to the ninth decimal place) which such Lender’s
Revolving Credit Commitment then constitutes of the Total Revolving Credit
Commitments (or, at any time after the commitment of each Lender to make Loans
and the obligation of the Issuing Lender to make L/C Credit Extensions shall
have terminated pursuant to Section 8.2 or if the Revolving Credit
Commitments shall have expired, then the percentage which the aggregate amount
of such Lender’s Revolving Extensions of Credit then outstanding constitutes of
the amount of the Total Revolving Extensions of Credit then outstanding).

 

“Revolving Credit Termination Date” means [                      ],
2011; provided, however, that, if such date is not a Business
Day, the Revolving Credit Termination Date shall be the next succeeding
Business Day.

 

“Revolving Extensions of Credit” means, as to any Lender at any
time, an amount equal to the sum of (a) the aggregate principal amount of all
Revolving Credit Loans made by such Lender then outstanding, (b) the principal
amount equal to such Lender’s Revolving Credit Percentage of the L/C
Obligations then outstanding and (c) the principal amount equal to such Lender’s
Revolving Credit Percentage of the aggregate principal amount of Swing Line
Loans then outstanding.

 

“S&P” means Standard & Poor’s Rating Services (or any
successor thereto).

 

“SAP” means with respect to any Insurance Subsidiary, the
statutory accounting practices prescribed or permitted by the Department in the
jurisdiction of such Insurance Subsidiary for the preparation of annual
statements and other financial reports by insurance companies of the same type
as such Insurance Subsidiary, which are applicable to the circumstances as of
the date of determination.

 

“SEC” means the Securities and Exchange Commission (or
successors thereto or an analogous Governmental Authority).

 

“SFAS” means the Statements of Financial Accounting Standards
adopted by the Financial Accounting Standards Board.

 

“Single Employer Plan” means any Plan that is covered by Title
IV of ERISA, but which is not a Multiemployer Plan.

 

“SPC” has the meaning specified in Section 10.7(h).

 

20

 

“Specified Event of Default” means an Event of Default pursuant
to Sections 8.1(a), 8.1(b) (with respect to Section 7.1
only) or 8.1(c).

 

“Stated Rate” has the meaning specified in Section 10.20(a).

 

“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, limited liability company, association, joint venture
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 Parent.

 

“Surplus Debentures” means as to any Insurance Subsidiary, debt
securities of such Insurance Subsidiary the proceeds of which are permitted to
be included, in whole or in part, as Capital and Surplus of such Insurance
Subsidiary as approved and permitted by the applicable Department.

 

“Swing Line Commitment” means the obligation of the Swing Line
Lender to make Swing Line Loans pursuant to Section 2.3 in an aggregate
principal amount at any one time outstanding not to exceed $5,000,000.

 

“Swing Line Lender” means Bank of America, N.A., in its capacity
as provider of Swing Line Loans, or any successor swing line lender hereunder.

 

“Swing Line Loans” has the meaning specified in Section
2.3(a).

 

“Swing Line Participation Amount” has the meaning specified in Section
2.4(c).

 

“Syndication Agent” means Lehman Brothers Inc., and any other
Lender as may be designated from time to time by the Borrower as a syndication
agent, with the consent of such Lender and the Arrangers.

 

“Total Consolidated Capitalization” means, as at any date, the
sum, without duplication, of (a) Consolidated Net Worth plus (b) Total
Consolidated Debt plus, (c) the amounts in respect of Trust Preferred
Securities, Mandatory Convertible Securities, Mandatory Redeemable Securities,
Conditional Common Equity and any other preferred stock that would, in
conformity with GAAP, be reflected on a consolidated balance sheet of Parent
and its consolidated Subsidiaries prepared as of such date and which are not
already included in clause (a) or (b) above. Total
Consolidated Capitalization shall in any event not include (x) any obligations
(including Guarantee Obligations) in respect of the Fund American Preferred
Stock, provided that, arrangements reasonably satisfactory
to the Administrative Agent shall have been made for the establishment of
grantor trusts to provide for the payment or redemption of the Fund American
Preferred Stock, it being understood that such arrangements in effect on

 

21

 

the Closing
Date are reasonably satisfactory to the Administrative Agent or (y) any effects
resulting from SFAS 158.

 

“Total Consolidated Debt” means, at any date, the sum, without
duplication, of (a) all amounts that would, in conformity with GAAP, be
reflected and classified as debt on a consolidated balance sheet of Parent and
its consolidated Subsidiaries prepared as of such date, (b) Indebtedness
represented by (i) Trust Preferred Securities or Qualified Mandatory Redeemable
Securities (in each case, owned by Persons other than Parent or any of its
consolidated Subsidiaries) but only to the extent that such securities (other
than Mandatory Convertible Securities) exceed 15% of Total Consolidated
Capitalization or (ii) Mandatory Redeemable Securities (owned by Persons other
than Parent or any of its consolidated Subsidiaries) other than Qualified
Mandatory Redeemable Securities, and (c) Indebtedness represented by Mandatory
Convertible Securities (owned by Persons other than Parent or any of its
consolidated Subsidiaries) but only to the extent that such Mandatory
Convertible Securities plus Trust Preferred Securities and Qualified Mandatory
Redeemable Securities (in each case, owned by Persons other than Parent or any
of its consolidated Subsidiaries) exceed 25% of Total Consolidated
Capitalization; provided, that in the event that the notes related to
the Mandatory Convertible Securities remain outstanding following the exercise
of forward purchase contracts related to such Mandatory Convertible Securities,
then such outstanding notes will be included in Total Consolidated Debt
thereafter. Total Consolidated Debt shall, in any event, not include (1) Hedge
Agreements entered into in the ordinary course of business for non-speculative
purposes, (2) Indebtedness of the type described in Sections 7.2(b), (c),
(d), (f) and (g), (3) Conditional Common Equity, (4) any
obligations (including Guarantee Obligations) in respect of the Fund American
Preferred Stock, provided that, arrangements reasonably
satisfactory to the Administrative Agent shall have been made for the
establishment of grantor trusts to provide for the payment or redemption of the
Fund American Preferred Stock, it being understood that such arrangements in
effect on the Closing Date are reasonably satisfactory to the Administrative
Agent, (5) any other amounts in respect of Trust Preferred Securities,
Mandatory Redeemable Securities or Mandatory Convertible Securities, or (6) any
effects resulting from SFAS 158.

 

“Total Consolidated Debt to Total Consolidated Capitalization Ratio”
means, as at the end of any fiscal quarter of Parent, the ratio of (a) Total
Consolidated Debt to (b) Total Consolidated Capitalization.

 

“Total Revolving Credit Commitments” means, at any time, the
aggregate amount of the Revolving Credit Commitments then in effect. The
aggregate amount of the Total Revolving Credit Commitments on the Closing Date
is $75,000,000.

 

“Total Revolving Extensions of Credit” means, at any time, the
aggregate amount of the Revolving Extensions of Credit of the Lenders
outstanding at such time.

 

“Transferee” means a Participant or an assignee of any Lender’s
rights and obligations under this Agreement pursuant to an Assignment and
Assumption.

 

22

 

“Trust Preferred Securities” means preferred securities issued
by a special purpose entity, the proceeds of which are used to purchase
subordinated debt securities of Parent or one of its Subsidiaries having terms
that substantially mirror those of such preferred securities issued by the
special purpose entity such that the debt securities constitute credit support
for obligations in respect of such preferred securities and such preferred
securities are reflected on a consolidated balance sheet of Parent and its
consolidated Subsidiaries in accordance with GAAP.

 

“Type” means, as to any Loan, its nature as a Base Rate Loan or
a Eurodollar Loan.

 

“Unreimbursed Amount” has the meaning specified in Section
3.3(a).

 

“White Mountains” means White Mountains Insurance Group, Ltd., a
company existing under the laws of Bermuda.

 

“White Mountains Administrative Agent” means Bank of America,
N.A., in its capacity as administrative agent under any of the White Mountains
Loan Documents, or any successor administrative agent appointed in accordance
with the terms contained in the White Mountains Credit Agreement.

 

“White Mountains Arrangers” means Banc of America Securities LLC
and Lehman Brothers Inc., in their respective capacities as joint lead
arrangers and joint book runners under the White Mountains Credit Agreement.

 

“White Mountains Credit Agreement” means that certain Credit
Agreement, dated as of the date hereof, among White Mountains, White Mountains
Re, the White Mountains Lenders, the White Mountains Administrative Agent, the
White Mountains Arrangers and the White Mountains Syndication Agent, as such
agreement may be amended, restated, extended, supplemented or otherwise
modified in writing from time to time.

 

“White Mountains Lenders” means the financial institutions from
time to time party to the White Mountains Credit Agreement.

 

“White Mountains Loan Documents” means the “Loan Documents” as
defined in the White Mountains Credit Agreement.

 

“White Mountains Re” means White Mountains Re Group, Ltd., a
company existing under the laws of Bermuda.

 

“White Mountains Syndication Agent” means Lehman Brothers Inc.,
and any other White Mountains Lender as may be designated from time to time by
White Mountains and White Mountains Re as a syndication agent under the White
Mountains Credit Agreement, with the consent of such White Mountains Lender and
the White Mountains Arrangers.

 

23

“Zenith Preferred Stock” means the $20,000,000 aggregate
liquidation preference amount of non-voting preferred stock issued by Fund
American Enterprises to Zenith Insurance Company pursuant to the Certificate of
Designation of Series A Preferred Stock of TACK Holding Corp. (n/k/a Fund
American Enterprises), as amended, supplemented or otherwise modified from time
to time.

 

1.2. Other
Definitional Provisions. Unless otherwise specified therein, all terms
defined in this Agreement shall have the defined meanings when used in the
other Loan Documents or any certificate or other document made or delivered
pursuant hereto or thereto.

 

(a)   As used herein and in the
other Loan Documents, and any certificate or other document made or delivered
pursuant hereto or thereto, accounting terms relating to the Loan Parties or
their Subsidiaries not defined in Section 1.1 and accounting terms
partly defined in Section 1.1, to the extent not defined, shall have the
respective meanings given to them under GAAP or SAP, as the case may be.

 

(b)   References herein to
particular pages, columns, lines or sections of any Person’s Annual Statement
shall be deemed, where appropriate, to be references to the corresponding page,
column, line or section of such Person’s Quarterly Statement, or if no such
corresponding page, column, line or section exists or if any report form
changes, then to the corresponding item referenced thereby.

 

(c)   The words “hereof”, “herein”
and “hereunder” and words of similar import when used in this Agreement shall
refer to this Agreement as a whole and not to any particular provision of this
Agreement, and Section, Schedule and Exhibit references are to this Agreement
unless otherwise specified.

 

(d)   The meanings given to terms
defined herein shall be equally applicable to both the singular and plural
forms of such terms.

 

(e)   The word “or” is not
exclusive and the words “include”, “includes” or “including” shall be deemed to
be followed by the phrase “without limitation”.

 

(f)    References to “preferred
stock” includes Capital Stock designated as preferred stock, preference shares,
preferred shares or any similar term.

 

1.3. Letter
of Credit Amounts. Unless otherwise specified herein, the amount of a
Letter of Credit at any time shall be deemed to be the stated amount of such
Letter of Credit in effect at such time; provided, however, that
with respect to any Letter of Credit that, by its terms or the terms of any
Issuer Document related thereto, provides for one or more automatic increases
in the stated amount thereof, other than with respect to the calculation of L/C
Fees, the amount of such Letter of Credit shall be deemed to be the maximum
stated amount of such Letter of Credit after giving effect to all such
increases, whether or not such maximum stated amount is in effect at such time.

 

1.4. Rounding.
Any financial ratios required to be maintained by the Borrower pursuant to this
Agreement shall be calculated by dividing the appropriate component by the

 

24

 

other
component, carrying the result to one place more than the number of places by
which such ratio is expressed herein and rounding the result up or down to the
nearest number (with a rounding-up if there is no nearest number).

 

1.5. Times
of Day. Unless otherwise specified, all references herein to times of day
shall be references to Eastern time (daylight or standard, as applicable).

 

2.                                      AMOUNT AND TERMS OF COMMITMENTS

 

2.1. Revolving
Credit Commitments. (a)  Subject to
the terms and conditions hereof, the Lenders severally agree to make revolving
credit loans (“Revolving Credit Loans”) to the Borrower from time to
time on any Business Day during the Revolving Credit Commitment Period in an
aggregate principal amount at any one time outstanding for each Lender which,
when added to such Lender’s Revolving Credit Percentage of the sum of (i) the
L/C Obligations then outstanding and (ii) the aggregate principal amount of the
Swing Line Loans then outstanding, does not exceed the amount of such Lender’s
Revolving Credit Commitment. During the Revolving Credit Commitment Period the
Borrower may use the Revolving Credit Commitments by borrowing, prepaying the
Revolving Credit Loans in whole or in part, and reborrowing, all in accordance
with the terms and conditions hereof. The Revolving Credit Loans may from time
to time be Eurodollar Loans or Base Rate Loans, as determined by the Borrower
and notified to the Administrative Agent in accordance with Sections 2.2
and 2.9, provided that no Revolving Credit Loan shall be made as a
Eurodollar Loan after the day that is one month prior to the Revolving Credit
Termination Date.

 

(b)   The Borrower shall repay to
the Lenders all outstanding Revolving Credit Loans made to the Borrower on the
Revolving Credit Termination Date.

 

2.2. Procedure
for Revolving Credit Borrowing. The Borrower may borrow under the Revolving
Credit Commitments on any Business Day during the Revolving Credit Commitment
Period, provided that the Borrower shall give the Administrative Agent a
borrowing request in the form of Exhibit B-1 hereto (hereinafter, a “Borrowing
Request”) (which Borrowing Request must be received by the Administrative
Agent prior to 11:00 A.M., New York City time, (a) three Business Days prior to
the requested Borrowing Date, in the case of Eurodollar Loans, or (b) on the
requested Borrowing Date, in the case of Base Rate Loans, provided that
requests for Base Rate Loans not received prior to 11:00 A.M., New York City
time on the requested Borrowing Date shall be deemed received on the following
Business Day), and must specify (i) the amount and Type of Revolving Credit
Loans to be borrowed, (ii) the requested Borrowing Date and (iii) in the case
of Eurodollar Loans, the length of the initial Interest Period therefor; provided,
however, that if the Borrower wishes to request Eurodollar Loans having
an Interest Period of nine or twelve months in duration as provided in the
definition of “Interest Period,” the applicable notice must be received by the
Administrative Agent not later than 11:00 A.M. New York City time, four
Business Days prior to the requested date of such borrowing, whereupon the
Administrative Agent shall give prompt notice to the Lenders of such request
and determine whether the requested Interest Period is unavailable to any of
them. Not later than 10:00 A.M. New York City time, three Business Days before
the requested date of such borrowing, the Administrative Agent shall notify the
Borrower (which

 

25

 

notice may be
by telephone) whether or not the requested Interest Period is unavailable to
any Lender. If the Borrower requests a borrowing of Eurodollar Loans in any
Borrowing Request, but fails to specify an Interest Period, it will be deemed
to have specified an Interest Period of one month. Each borrowing of Revolving
Credit Loans under the Revolving Credit Commitments shall be in an amount equal
to (x) in the case of Base Rate Loans, $500,000 or a whole multiple thereof
(or, if the then aggregate Available Revolving Credit Commitments are less than
$500,000, such lesser amount) and (y) in the case of Eurodollar Loans,
$1,000,000 or a whole multiple of $500,000 in excess thereof; provided, that
the Swing Line Lender may request, on behalf of the Borrower, borrowings of Base
Rate Loans under the Revolving Credit Commitments in other amounts pursuant to Section
2.4. Upon receipt of any such notice from the Borrower, the Administrative
Agent shall promptly notify each Lender thereof. Each Lender will make its
Revolving Credit Percentage of the amount of each borrowing of Revolving Credit
Loans available to the Administrative Agent for the account of the Borrower at
the Administrative Agent’s Office prior to 12:00 Noon, New York City time, on
the Borrowing Date requested by the Borrower in funds immediately available to
the Administrative Agent. Such borrowing will then be made available to the
Borrower by the Administrative Agent in like funds as received by the
Administrative Agent.

 

2.3. Swing
Line Commitment. (a) Subject to the terms and conditions hereof, the Swing
Line Lender agrees, in reliance on the agreements of the other Lenders set
forth in Section 2.4, that during the Revolving Credit Commitment
Period, it will make available to the Borrower in the form of swing line loans
(“Swing Line Loans”) a portion of the credit otherwise available to the
Borrower under the Revolving Credit Commitments; provided that (i) the
aggregate principal amount of Swing Line Loans outstanding at any time shall
not exceed the Swing Line Commitment then in effect (notwithstanding that the
Swing Line Loans outstanding at any time, when aggregated with the Swing Line
Lender’s other outstanding Revolving Credit Loans hereunder, may exceed the
Swing Line Commitment then in effect or such Swing Line Lender’s Revolving
Credit Commitment then in effect) and (ii) the Borrower shall not request, and
the Swing Line Lender shall not make, any Swing Line Loan if, after giving
effect to the making of such Swing Line Loan, the aggregate amount of the Available
Revolving Credit Commitments would be less than zero. During the Revolving
Credit Commitment Period, the Borrower may use the Swing Line Commitment by
borrowing, repaying and reborrowing, all in accordance with the terms and
conditions hereof. Swing Line Loans shall be Base Rate Loans only.

 

(b)   The Borrower shall repay all
outstanding Swing Line Loans on the Revolving Credit Termination Date. Each
payment in respect of Swing Line Loans shall be made to the Swing Line Lender.

 

2.4. Procedure
for Swing Line Borrowing; Refunding of Swing Line Loans. (a)  The Borrower may borrow under the Swing Line
Commitment on any Business Day during the Revolving Credit Commitment Period, provided,
the Borrower shall give the Swing Line Lender irrevocable telephonic notice
confirmed promptly in writing in the form of Exhibit B-2 (which
telephonic notice must be received by the Swing Line Lender not later than 1:00
P.M., New York City time, on the proposed Borrowing Date), specifying (i) the
amount to be borrowed and (ii) the requested Borrowing Date. Each borrowing
under the Swing Line Commitment shall be in an amount equal to $250,000 or a
whole multiple of $50,000 in excess thereof. Not later than 3:00 P.M., New York
City time, on the Borrowing Date specified in the borrowing notice in

 

26

 

respect of any
Swing Line Loan, the Swing Line Lender shall make available to the
Administrative Agent at the Administrative Agent’s Office an amount in
immediately available funds equal to the amount of such Swing Line Loan. The
Administrative Agent shall make the proceeds of such Swing Line Loan available
to the Borrower on such Borrowing Date in like funds as received by the
Administrative Agent.

 

(b)   The Swing Line Lender, not
less frequently than once each week shall, and at any other time, from time to
time, as the Swing Line Lender elects in its sole and absolute discretion, may,
on behalf of the Borrower (which hereby irrevocably directs the Swing Line
Lender to act on its behalf), on one Business Day’s notice given by the Swing
Line Lender no later than 12:00 Noon, New York City time, request each Lender
to make, and each Lender hereby agrees to make, a Revolving Credit Loan, in an
amount equal to such Lender’s Revolving Credit Percentage of the aggregate
amount of the Swing Line Loans (the “Refunded Swing Line Loans”)
outstanding on the date of such notice, to repay the Swing Line Lender. Each
Lender shall make the amount of such Revolving Credit Loan available to the
Administrative Agent at the Administrative Agent’s Office in immediately
available funds, not later than 10:00 A.M., New York City time, one Business
Day after the date of such notice. The proceeds of such Revolving Credit Loans
shall be made immediately available by the Administrative Agent to the Swing
Line Lender for application by the Swing Line Lender to the repayment of the
Refunded Swing Line Loans. Upon the written request of any Lender, the
Administrative Agent will, within three Business Days of such request, inform
such Lender of the aggregate amount of Swing Line Loans outstanding on the date
of such request.

 

(c)   If prior to the time a
Revolving Credit Loan would have otherwise been made pursuant to Section 2.4(b),
one of the events described in Section 8.1(c) shall have occurred and be
continuing with respect to either Loan Party, or if for any other reason, as
determined by the Swing Line Lender in its sole discretion, Revolving Credit
Loans may not be made as contemplated by Section 2.4(b), each Lender shall,
on the date such Revolving Credit Loan was to have been made pursuant to the
notice referred to in Section 2.4(b) (the “Refunding Date”),
purchase for cash an undivided participating interest in the then outstanding
Swing Line Loans by paying to the Swing Line Lender an amount (the “Swing
Line Participation Amount”) equal to (i) such Lender’s Revolving Credit
Percentage times (ii) the sum of the aggregate principal amount of Swing
Line Loans then outstanding which were to have been repaid with such Revolving
Credit Loans.

 

(d)   If any Lender fails to make
available to the Administrative Agent for the account of the Swing Line Lender
any amount required to be paid by such Lender pursuant to the foregoing
provisions of this Section 2.4(b) by the time specified in Section
2.4(b), the Swing Line Lender shall be entitled to recover from such Lender
(acting through the Administrative Agent), on demand, such amount with interest
thereon for the period from the date such payment is required to the date on
which such payment is immediately available to the Swing Line Lender at a rate
per annum equal to the greater of the Federal Funds Rate and a rate determined
by the Swing Line Lender in accordance with banking industry rules on interbank

 

27

 

compensation,
plus any administrative, processing or similar fees customarily charged by the
Swing Line Lender in connection with the foregoing. If such Lender pays such
amount (with interest and fees as aforesaid), the amount so paid shall
constitute such Lender’s Loan included in the relevant borrowing or funded
participation in the relevant Swing Line Loan, as the case may be. A
certificate of the Swing Line Lender submitted to any Lender (through the
Administrative Agent) with respect to any amounts owing under this paragraph
(d) shall be conclusive absent manifest error.

 

(e)   Each Lender’s obligation to
make the Loans referred to in Section 2.4(b) and to purchase
participating interests pursuant to Section 2.4(c) shall be absolute and
unconditional and shall not be affected by any circumstance, including, without
limitation, (i) any setoff, counterclaim, recoupment, defense or other right
which such Lender may have against the Swing Line Lender, any Loan Party or any
other Person for any reason whatsoever; (ii) the occurrence or continuance of a
Default or an Event of Default or the failure to satisfy any of the other
conditions specified in Section 4; (iii) any adverse change in the
condition (financial or otherwise) of any Loan Party; (iv) any breach of this
Agreement or any other Loan Document by any Loan Party or any Lender; or (v)
any other circumstance, happening or event whatsoever, whether or not similar
to any of the foregoing. No such funding of risk participations shall relieve
or otherwise impair the obligation of the Borrower to repay Swing Line Loans,
together with interest as provided herein.

 

(f)    Whenever, at any time after
the Swing Line Lender has received from any Lender such Lender’s Swing Line
Participation Amount, the Swing Line Lender receives any payment on account of
the Swing Line Loans, the Swing Line Lender will distribute to such Lender its
Swing Line Participation Amount (appropriately adjusted, in the case of
interest payments, to reflect the period of time during which such Lender’s
participating interest was outstanding and funded and, in the case of principal
and interest payments, to reflect such Lender’s pro  rata portion
of such payment if such payment is not sufficient to pay the principal of and
interest on all Swing Line Loans then due); provided, however,
that in the event that such payment received by the Swing Line Lender is
required to be returned, such Lender will return to the Swing Line Lender any
portion thereof previously distributed to it by the Swing Line Lender. The
obligation of the Lenders under this paragraph (f) shall survive the
payment in full of the Obligations and the termination of this Agreement.

 

(g)   The Swing Line Lender shall
be responsible for invoicing the Borrower for interest on the Swing Line Loans.
Until each Lender funds its Refunded Swing Line Loan or risk participation
pursuant to this Section 2.4 to refinance such Lender’s Revolving Credit
Percentage of any Swing Line Loan, interest in respect of such Revolving Credit
Percentage shall be solely for the account of the Swing Line Lender.

 

28

 

(h)   The Borrower shall make all
payments of principal and interest in respect of the Swing Line Loans directly
to the Administrative Agent for the account of the Swing Line Lender.

 

2.5. Repayment
of Loans; Evidence of Debt. (a)  The
Borrower hereby unconditionally promises to pay to the Administrative Agent for
the account of the appropriate Lender (i) the then unpaid principal amount on
the Revolving Credit Termination Date (or on such earlier date on which the
Loans become due and payable pursuant to Section 8.2) of each Revolving
Credit Loan of such Lender made to the Borrower and (ii) the then unpaid
principal amount on the Revolving Credit Termination Date (or on such earlier
date on which the Loans become due and payable pursuant to Section 8.2)
of each Swing Line Loan of such Swing Line Lender made to the Borrower. The
Borrower hereby further agrees to pay interest to the Administrative Agent for
the account of the appropriate Lender on the unpaid principal amount of the
Loans made to it from time to time outstanding from the date hereof until
payment in full thereof at the rates per annum, and on the dates, set forth in Section
2.11.

 

(b)   Each Lender shall maintain
in accordance with its usual practice an account or accounts evidencing
indebtedness of the Borrower to such Lender resulting from each Loan of such
Lender from time to time, including the amounts of principal and interest
payable and paid to such Lender from time to time under this Agreement.

 

(c)   The Administrative Agent, on
behalf of the Borrower, shall maintain the Register pursuant to Section
10.7(c), and a subaccount therein for each Lender, in which shall be recorded
(i) the amount of each Loan to the Borrower made hereunder and any Note
evidencing such Loan, the Type of such Loan and each Interest Period applicable
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)
both the amount of any sum received by the Administrative Agent hereunder from
or for the account of the Borrower and each Lender’s share thereof. In the
event of any conflict between the accounts and records maintained by any Lender
and the accounts and records of the Administrative Agent in respect of such
matters, the accounts and records of the Administrative Agent shall control in
the absence of manifest error.

 

(d)   The entries made in the
Register and the accounts of each Lender maintained pursuant to Section
2.5(b) shall, to the extent permitted by applicable Law, be prima  facie
evidence of the existence and amounts of the obligations of the Borrower
therein recorded; provided, however, that the failure of any
Lender or the Administrative Agent to maintain the Register or any such
account, or any error therein, shall not in any manner affect the obligation of
the Borrower to repay (with applicable interest) the Loans made to it by such
Lender in accordance with the terms of this Agreement.

 

(e)   The Borrower agrees that,
upon the request to the Administrative Agent by any Lender, it will execute and
deliver to such Lender a promissory note of the Borrower evidencing any
Revolving Credit Loans or Swing

 

29

 

Line Loans, as
the case may be, made by such Lender to the Borrower, substantially in the
forms of Exhibit C-1 or C-2, respectively, with appropriate
insertions as to date and principal amount. Each Lender may attach schedules to
its Note and endorse thereon the date, Type (if applicable), amount and
maturity of its Loans and payments with respect thereto.

 

(f)    In addition to the accounts
and records referred to herein above, each Lender and the Administrative Agent
shall maintain in accordance with its usual practice accounts or records
evidencing the purchases and sales by such Lender of participations in Letters
of Credit and Swing Line Loans. In the event of any conflict between the
accounts and records maintained by the Administrative Agent and the accounts
and records of any Lender in respect of such matters, the accounts and records
of the Administrative Agent shall control in the absence of manifest error.

 

2.6. Facility
Fee, etc. (a)  Parent agrees to pay
to the Administrative Agent for the account of each Lender in accordance with
its Revolving Credit Percentage a facility fee for the period from and
including the Closing Date to the last day of the Revolving Credit Commitment
Period, computed at the Facility Fee Rate on the average daily amount of the
Revolving Credit Commitment of such Lender during the period for which payment
is made. The facility fee shall accrue at all times during the Revolving Credit
Commitment Period, including at any time during which one or more of the
conditions in Section 4.2 is not met, and shall be payable quarterly in
arrears on the first Business Day of each of January, April, July and October
and on the last day of the Revolving Credit Commitment Period, commencing on
the first of such dates to occur after the Closing Date. The facility fee shall
be calculated quarterly in arrears, and if there is any change in the Facility
Fee Rate during any quarter, the actual daily amount shall be computed and
multiplied by the Facility Fee Rate separately for each period during such
quarter that the Facility Fee Rate was in effect.

 

(b)   The Borrower agrees to pay
to the Arrangers for their own respective accounts the fees in the amounts and
on the dates from time to time agreed to in the Arranger Fee Letter.

 

(c)   The Borrower agrees to pay
to the Administrative Agent the fees in the amounts and on the dates from time
to time agreed to in the Agent Fee Letter.

 

2.7. Termination
or Reduction of Revolving Credit Commitments. The Borrower shall have the
right, upon notice to the Administrative Agent, to terminate the Revolving
Credit Commitments or, from time to time, to reduce the aggregate amount of the
Revolving Credit Commitments; provided that (a) no such termination or
reduction of Revolving Credit Commitments shall be permitted if, after giving
effect thereto and to any prepayments of the Revolving Credit Loans and Swing
Line Loans made on the effective date thereof, the Total Revolving Extensions
of Credit would exceed the Total Revolving Credit Commitments, (b) any such
reduction shall be in an amount equal to $1,000,000, or a whole multiple
thereof (or the remaining amount of the Revolving Credit Commitments), (c) any
such notice shall be received by the Administrative Agent not later than 11:00
A.M. New York City time, three Business Days

 

30

 

prior to the
date of termination or reduction and (d) if, after giving effect to any
reduction of the Revolving Credit Commitments, the L/C Commitment or the Swing
Line Commitment exceeds the amount of the Revolving Credit Commitment, such
Commitment shall be automatically reduced by the amount of such excess; provided,
further, that a notice of termination of the Revolving Credit Commitments
delivered by the Borrower may state that such notice is conditioned upon the
effectiveness of other credit facilities, transactions or borrowings in
general, in which case such notice may be revoked the Borrower (by notice to
the Administrative Agent on or prior to the specified effective date) if such
condition is not satisfied. The Administrative Agent will promptly notify the
Lenders of any notice of termination or reduction of the Revolving Credit
Commitments. Any reduction of the Revolving Credit Commitments shall be applied
to the Revolving Credit Commitment of each Lender according to its Revolving
Credit Percentage. All fees accrued until the effective date of any termination
of the Revolving Credit Commitment shall be paid on the effective date of such
termination. Any reduction shall reduce permanently the Revolving Credit
Commitments then in effect.

 

2.8. Prepayments.
(a)  The Borrower may at any time and
from time to time prepay the Loans made to the Borrower, in whole or in part,
without premium or penalty, upon notice delivered to the Administrative Agent
at least three Business Days prior thereto in the case of Eurodollar Loans and
on the date of prepayment in the case of Base Rate Loans, which notice shall
specify the date and amount of prepayment and whether the prepayment is of
Eurodollar Loans or Base Rate Loans; provided, that (i) if a Eurodollar
Loan is prepaid on any day other than the last day of the Interest Period
applicable thereto, the Borrower shall also pay any amounts owing pursuant to Section
2.17 and (ii) no prior notice is required for the prepayment of Swing Line
Loans; provided,
further, that, if a notice of prepayment is given in connection with a
conditional notice of termination of the Revolving Credit Commitments as contemplated
by Section 2.7, then such notice of prepayment may be revoked if such
notice of termination is revoked in accordance with Section 2.7. Upon
receipt of any such notice the Administrative Agent shall promptly notify the
Lenders thereof. If any such notice is given, the amount specified in such
notice shall be due and payable on the date specified therein, together with
(except in the case of Base Rate Loans) accrued interest to such date on the
amount prepaid. Partial prepayments of Revolving Credit Loans shall be in an
aggregate principal amount of $500,000 or
a whole multiple thereof. Partial prepayments of Swing Line Loans shall be in
an aggregate principal amount of $50,000 or a whole multiple thereof.

 

(b)   If for any reason the Total
Revolving Extensions of Credit at any time exceed the Total Revolving Credit
Commitments then in effect, the Borrower shall immediately prepay the Loans
and/or Cash Collateralize the L/C Obligations in an aggregate amount equal to
such excess; provided, however, that the Borrower shall not be
required to Cash Collateralize the L/C Obligations pursuant to this Section
2.8(b) unless after the prepayment in full of the Loans the Total Revolving
Extensions of Credit exceed the Total Revolving Credit Commitments then in effect.

 

2.9. Conversion
and Continuation Options. (a)  The
Borrower may elect from time to time to convert Eurodollar Loans made to the
Borrower to Base Rate Loans by giving the Administrative Agent at least two
Business Days’ prior irrevocable notice (which may be telephonic) of such
election. The Borrower may elect from time to time to convert Base Rate

 

31

 

Loans made to
the Borrower to Eurodollar Loans by giving the Administrative Agent at least
three Business Days’ prior irrevocable notice (which may be telephonic) of such
election (which notice shall specify the length of the initial Interest Period
therefor); provided, however, that if the Borrower wishes to
request Eurodollar Loans having an Interest Period of nine or twelve months in
duration as provided in the definition of “Interest Period”, the applicable
notice must be received by the Administrative Agent not later than 11:00 A.M.
New York City time, four Business Days prior to the requested date of such
conversion or continuation, whereupon the Administrative Agent shall give
prompt notice to the Lenders of such request and determine whether the
requested Interest Period is unavailable to any of them. Not later than 10:00
A.M. New York City time, three Business Days before the requested date of such
conversion or continuation, the Administrative Agent shall notify the Borrower
(which notice may be by telephone) whether or not the requested Interest Period
is unavailable to any of the Lenders, provided, further that no
Base Rate Loan may be converted to a Eurodollar Loan (i) when any Event of
Default has occurred and is continuing and the Administrative Agent or the
Majority Lenders have determined in its or their sole discretion not to permit
such conversions or (ii) after the date that is one month prior to the
Revolving Credit Termination Date. Each telephonic notice by the Borrower
pursuant to this Section 2.9 must be confirmed promptly by delivery to
the Administrative Agent of a written Borrowing Request appropriately completed
and signed by a Responsible Officer of the Borrower. If the Borrower requests a
conversion to a Eurodollar Loan in any Borrowing Request, but fails to specify
an Interest Period, it will be deemed to have specified an Interest Period of
one month. Upon receipt of any such notice the Administrative Agent shall
promptly notify the Lenders thereof.

 

(b)   The Borrower may elect to
continue any Eurodollar Loan made to the Borrower as such upon the expiration
of the then current Interest Period with respect thereto by giving irrevocable
notice (which may be telephonic) to the Administrative Agent, in accordance
with the applicable provisions of the term “Interest Period” set forth in Section
1.1, of the length of the next Interest Period to be applicable to such
Loans, provided that no Eurodollar Loan may be continued as such (i)
when any Event of Default has occurred and is continuing and the Administrative
Agent or the Majority Lenders have, determined in its or their sole discretion
not to permit such continuations or (ii) after the date that is one month prior
to the Revolving Credit Termination Date, and provided, further,
that if the Borrower shall fail to give any required notice as described above
in this paragraph or if such continuation is not permitted pursuant to the
preceding proviso, such Loans shall be converted automatically to Base Rate
Loans on the last day of such then expiring Interest Period. Each telephonic
notice by the Borrower pursuant to this Section 2.9 must be confirmed
promptly by delivery to the Administrative Agent of a written Borrowing Request
appropriately completed and signed by a Responsible Officer of the Borrower. Upon
receipt of any such notice the Administrative Agent shall promptly notify the
Lenders thereof.

 

2.10. Maximum
Number of Eurodollar Loans. Notwithstanding anything to the contrary in
this Agreement, all borrowings, conversions, continuations and optional
prepayments of Eurodollar Loans and all selections of Interest Periods shall be
in such amounts and be made pursuant to such elections so that no more than ten
Eurodollar Loans shall be outstanding at any one time.

 

32

 

2.11. Interest
Rates and Payment Dates. (a)  Subject
to the provisions of paragraph (c) below, each Eurodollar Loan shall
bear interest on the outstanding principal amount thereof for each day during
each Interest Period with respect thereto at a rate per annum equal to the
Eurodollar Rate determined for such day plus the Applicable Margin.

 

(b)   Each Base Rate Loan,
including Swing Line Loans, shall bear interest on the outstanding principal
amount thereof from the applicable borrowing date at a rate per annum equal to
the Base Rate.

 

(c)   (i) If all or a portion of
the principal amount of any Loan or Reimbursement Obligation shall not be paid
when due (whether at the stated maturity, by acceleration or otherwise), such
overdue amount shall bear interest at a rate per annum that is equal to (x) in
the case of the Loans, the rate that would otherwise be applicable thereto
pursuant to the foregoing provisions of this Section 2.11  plus 2%
or (y) in the case of Reimbursement Obligations, the rate applicable to Base
Rate Loans plus 2%, and (ii) if all or a portion of any interest payable
on any Loan or Reimbursement Obligation or any facility fee or other amount
payable hereunder shall not be paid when due (whether at the stated maturity,
by acceleration or otherwise), such overdue amount shall bear interest at a
rate per annum equal to the rate then applicable to Base Rate Loans plus
2%, in each case, with respect to clauses  (i) and (ii)
above, from the date of such non-payment until such amount is paid in full
(each of the foregoing collectively, the “Default Rate”).

 

(d)   Interest shall be payable in
arrears on each Interest Payment Date, provided that interest accruing
pursuant to paragraph (c) of this Section 2.11 shall be payable
from time to time on demand (after as well as before judgment and before and
after the commencement of any proceeding under any Debtor Relief Law).

 

2.12. Computation
of Interest and Fees. (a)  Interest,
fees and commissions payable pursuant hereto shall be calculated on the basis
of a 365-day (or 366-day, as the case may be) year for the actual days elapsed,
except that, with respect to Eurodollar Loans, the interest thereon shall be
calculated on the basis of a 360-day year for the actual days elapsed. The
Administrative Agent shall as soon as practicable notify the Borrower and the
Lenders of each determination of a Eurodollar Rate. Any change in the interest
rate on a Loan resulting from a change in the Base Rate shall become effective
as of the opening of business on the day on which such change becomes effective.
The Administrative Agent shall as soon as practicable notify the Borrower and
the Lenders of the effective date and the amount of each such change in any
interest rate. Interest shall accrue on each Loan for the day on which the Loan
is made, and shall not accrue on a Loan, or any portion thereof, for the day on
which the Loan or such portion is paid, provided that any Loan that is
repaid on the same day on which it is made shall, subject to Section 2.14(d),
bear interest for one day.

 

(b)   Each determination of an
interest rate by the Administrative Agent pursuant to any provision of this
Agreement shall be conclusive and binding on the Borrower and the Lenders in
the absence of manifest error.

 

33

 

2.13. Inability
to Determine Interest Rate. If prior to the first day of any Interest
Period:

 

(a)           the Administrative
Agent shall have determined (which determination shall be conclusive and
binding upon the Borrower) that, by reason of circumstances affecting the
relevant market, adequate and reasonable means do not exist for ascertaining
the Eurodollar Rate for such Interest Period, or

 

(b)           the Administrative
Agent shall have received notice from the Majority Lenders that the Eurodollar
Rate determined or to be determined for such Interest Period will not adequately
and fairly reflect the cost to such Lenders (as conclusively certified by such
Lenders) of making or maintaining their affected Loans during such Interest
Period,

 

the
Administrative Agent shall give telecopy or telephonic notice thereof to the Borrower
and the relevant Lenders as soon as practicable thereafter. If such notice is
given (x) any Eurodollar Loans requested to be made on the first day of such
Interest Period shall be made as Base Rate Loans, (y) any Loans that were to
have been converted on the first day of such Interest Period to Eurodollar
Loans shall be continued as Base Rate Loans and (z) any outstanding Eurodollar
Loans shall be converted, on the last day of the then current Interest Period
with respect thereto, to Base Rate Loans. Until such notice has been withdrawn
by the Administrative Agent, no further Eurodollar Loans shall be made or
continued as such, nor shall the Borrower have the right to convert Loans to
Eurodollar Loans.

 

2.14. Pro
Rata Treatment and Payments. (a)  Each
borrowing, other than borrowings of Swing Line Loans, by the Borrower from the
Lenders hereunder, each payment by the Borrower on account of any facility fee
or Letter of Credit fee, and any reduction of the Revolving Credit Commitments
of the Lenders, shall be made pro rata according to the respective Revolving
Credit Percentages of the relevant Lenders.

 

(b)   Each payment (including each
prepayment) by the Borrower on account of principal of and interest on the
Revolving Credit Loans of the Borrower shall be made pro  rata
according to the respective outstanding principal amounts of the Revolving
Credit Loans of the Borrower then held by the Lenders. Each payment in respect
of Reimbursement Obligations in respect of any Letter of Credit shall be made
to the relevant Issuing Lender.

 

(c)   The application of any
payment of Loans shall be made, first, to Base Rate Loans and, second,
to Eurodollar Loans. Each payment of the Eurodollar Loans shall be accompanied
by accrued interest to the date of such payment on the amount paid.

 

(d)   All payments (including
prepayments) to be made by the Borrower hereunder, whether on account of
principal, interest, fees or otherwise, shall be made without condition or
deduction for any counterclaim, defense, recoupment or setoff and shall be made
prior to 12:00 Noon, New York City time, on the due date thereof to the
Administrative Agent, for the account of the relevant Lenders, at the

 

34

 

Administrative
Agent’s Office, in Dollars and in immediately available funds. Any payment made
by the Borrower after 12:00 Noon, New York City time, on any Business Day shall
be deemed to have been made on the next following Business Day. The
Administrative Agent shall distribute such payments to the Lenders promptly
upon receipt in like funds as received. If any payment hereunder (other than
payments on the Eurodollar Loans) becomes due and payable on a day other than a
Business Day, such payment shall be extended to the next succeeding Business Day.
If any payment on a Eurodollar Loan becomes due and payable on a day other than
a Business Day, the maturity thereof shall be extended to the next succeeding
Business Day unless the result of such extension would be to extend such
payment into another calendar month, in which event such payment shall be made
on the immediately preceding Business Day. In the case of any extension of any
payment of principal pursuant to the preceding two sentences, interest thereon
shall be payable at the then applicable rate during such extension.

 

(e)           Unless the Borrower or any Lender has
notified the Administrative Agent, prior to the date any payment is required to
be made by it to the Administrative Agent hereunder, that the Borrower or such
Lender, as the case may be, will not make such payment, the Administrative
Agent may assume that the Borrower or such Lender, as the case may be, has
timely made such payment and may (but shall not be so required to), in reliance
thereon, make available a corresponding amount to the Person entitled thereto. If
and to the extent that such payment was not in fact made to the Administrative
Agent in immediately available funds, then:

 

(i)    if the Borrower failed to
make such payment, each Lender shall forthwith on demand repay to the Administrative
Agent the portion of such assumed payment that was made available to such
Lender in immediately available funds, together with interest thereon in
respect of each day from and including the date such amount was made available
by the Administrative Agent to such Lender to the date such amount is repaid to
the Administrative Agent in immediately available funds at the Federal Funds
Rate from time to time in effect; and

 

(ii)   if any Lender failed to
make such payment, such Lender shall forthwith on demand pay to the
Administrative Agent the amount thereof in immediately available funds,
together with interest thereon for the period from the date such amount was
made available by the Administrative Agent to the Borrower to the date such
amount is recovered by the Administrative Agent (the “Compensation Period”)
at a rate per annum equal to the greater of the Federal Funds Rate and a rate
determined by the Administrative Agent in accordance with banking industry
rules on interbank compensation, plus any administrative, processing or similar
fees customarily charged by the Administrative Agent in connection with the
foregoing. If such Lender pays such amount to the Administrative Agent, then
such amount shall constitute such Lender’s Revolving Credit Percentage of the
Loan included in the applicable borrowing. If such Lender does not pay such
amount forthwith upon the Administrative Agent’s

 

35

 

demand
therefor, the Administrative Agent may make a demand therefor upon the
Borrower, and the Borrower shall pay such amount to the Administrative Agent,
together with interest thereon for the Compensation Period at a rate per annum
equal to the rate of interest applicable to the applicable borrowing. Nothing
herein shall be deemed to relieve any Lender from its obligation to fulfill its
Revolving Credit Commitment or to prejudice any rights which the Administrative
Agent or the Borrower may have against any Lender as a result of any default by
such Lender hereunder.

 

A notice of
the Administrative Agent to any Lender or the Borrower with respect to any
amount owing under this subsection (e) shall be conclusive, absent
manifest error.

 

(f)    The obligations of the
Lenders hereunder to make Loans, to fund participations in Letters of Credit
and Swing Line Loans and to make payments under Section 10.6 are several
and not joint. The failure of any Lender to make any Loan, to fund any such
participation or to make any payment under Section 10.6 on any date
required hereunder shall not relieve any other Lender of its corresponding
obligation to do so on such date, and no Lender shall be responsible for the
failure of any other Lender to so make its Loan, to purchase its participation
or make its payment under Section 10.6.

 

2.15. Requirements
of Law. (a)  If the adoption of or
any change in any Requirement of Law or in the interpretation or application
thereof or compliance by any Lender with any request or directive (whether or
not having the force of law) from any central bank or other Governmental
Authority made subsequent to the date hereof:

 

(i)            shall subject any
Lender to any tax of any kind whatsoever with respect to this Agreement, any
Letter of Credit, any Application or any Eurodollar Loan made by it, or change
the basis of taxation of payments to such Lender in respect thereof (except for
Non-Excluded Taxes or Other Taxes covered by Section 2.16 and the
imposition of, or any change in, the rate of any Excluded Tax payable by such
Lender);

 

(ii)           shall impose,
modify or hold applicable any reserve, special deposit, compulsory loan or
similar requirement against assets held by, deposits or other liabilities in or
for the account of, advances, loans or other extensions of credit by, or any
other acquisition of funds by, any office of such Lender that is not otherwise
included in the determination of the Eurodollar Rate hereunder; or

 

(iii) shall
impose on such Lender any other condition;

 

and the result
of any of the foregoing is to increase the cost to such Lender, by an amount
which such Lender deems to be material, of making, converting into, continuing
or maintaining Eurodollar Loans to the Borrower or issuing or participating in
Letters of Credit issued at the request of the Borrower, or to reduce any
amount receivable hereunder in respect thereof, then, in any such case, the
Borrower shall promptly pay such Lender, upon its demand, any additional
amounts necessary to compensate such Lender for such increased cost or reduced
amount

 

36

 

receivable. If
any Lender becomes entitled to claim any additional amounts pursuant to this Section
2.15, it shall promptly notify the Borrower (with a copy to the
Administrative Agent) of the event by reason of which it has become so entitled.

 

(b)   If any Lender shall have
determined that the adoption of or any change in any Requirement of Law
regarding capital adequacy or in the interpretation or application thereof or
compliance by such Lender or any corporation controlling such Lender with any
request or directive regarding capital adequacy (whether or not having the
force of law) from any Governmental Authority made subsequent to the date
hereof shall have the effect of reducing the rate of return on such Lender’s or
such corporation’s capital as a consequence of its obligations hereunder or
under or in respect of any Letter of Credit to a level below that which such
Lender or such corporation could have achieved but for such adoption, change or
compliance (taking into consideration such Lender’s or such corporation’s
policies with respect to capital adequacy) by an amount deemed by such Lender
to be material, then from time to time, after submission by such Lender to the
Borrower (with a copy to the Administrative Agent) of a written request
therefor, the Borrower shall pay to such Lender such additional amount or
amounts as will compensate such Lender or such corporation for such reduction.

 

(c)   In addition to, and without
duplication of, amounts which may become payable from time to time pursuant to paragraphs
(a) and (b) of this Section 2.15, the Borrower agrees to pay
to each Lender which requests compensation under this paragraph (c) by
notice to the Borrower, on the last day of each Interest Period with respect to
any Eurodollar Loan made by such Lender to the Borrower, at any time when such
Lender shall be required to maintain reserves against “Eurocurrency liabilities”
under Regulation D of the Board of Governors of the Federal Reserve System (or,
at any time when such Lender may be required by the Board of Governors of the
Federal Reserve System or by any other Governmental Authority, whether within
the United States or in another relevant jurisdiction, to maintain reserves
against any other category of liabilities which includes deposits by reference
to which the Eurodollar Rate is determined as provided in this Agreement or
against any category of extensions of credit or other assets of such Lender
which includes any such Eurodollar Loans), an additional amount (determined by
such Lender’s calculation or, if an accurate calculation is impracticable,
reasonable estimate using such reasonable means of allocation as such Lender
shall determine) equal to the actual costs, if any, incurred by such Lender
during such Interest Period as a result of the applicability of the foregoing
reserves to such Eurodollar Loans.

 

(d)   A certificate as to any
additional amounts payable pursuant to this Section 2.15 submitted by
any Lender to the Borrower (with a copy to the Administrative Agent) shall be
conclusive in the absence of manifest error. No Lender shall be entitled to
compensation under this Section 2.15 from the Borrower for any costs
incurred or reductions suffered more than 180 days prior to the date that such
Lender notifies the Borrower of the circumstances giving rise to such increased
costs or reductions and of such Lender’s intention to claim compensation
therefor; provided  that if a change of law giving rise to such
increased

 

37

 

costs or reductions
is retroactive, then the 180-day period referred to above shall be extended to
include the period of retroactive effect thereof. The obligations of the Borrower
pursuant to this Section 2.15 shall survive the termination of this
Agreement and the payment of the Loans and all other amounts payable hereunder.

 

2.16. Taxes.
(a)  Except as required by Law, all
payments made by the Borrower under this Agreement shall be made free and clear
of, and without deduction or withholding for or on account of, any present or
future income, stamp or other taxes, levies, imposts, duties, charges, fees,
deductions or withholdings, now or hereafter imposed, levied, collected,
withheld or assessed by any Governmental Authority, excluding net income taxes
and franchise and doing business taxes (imposed in lieu of net income taxes)
imposed on the Administrative Agent or any Lender as a result of a present or
former connection between the Administrative Agent or such Lender and the
jurisdiction of the Governmental Authority imposing such tax or any political
subdivision or taxing authority thereof or therein (other than any such
connection arising solely from the Administrative Agent’s or such Lender’s
having executed, delivered or performed its obligations or received a payment
under, or enforced, this Agreement or any other Loan Document) (such net income
taxes and franchise or doing business taxes imposed in lieu of net income taxes
being referred to hereinafter as “Excluded Taxes”). If any such taxes,
levies, imposts, duties, charges, fees, deductions or withholdings other than
Excluded Taxes (“Non-Excluded Taxes”) or any Other Taxes are required to
be withheld from any amounts payable to the Administrative Agent or any Lender
hereunder, the amounts so payable to the Administrative Agent or such Lender
shall be increased to the extent necessary to yield to the Administrative Agent
or such Lender (after payment of all Non-Excluded Taxes and Other Taxes)
interest or any such other amounts payable hereunder at the rates or in the
amounts specified in this Agreement; provided, however, that the
Borrower shall not be required to increase any such amounts payable to any
Lender with respect to any Non-Excluded Taxes (i) that are attributable to such
Lender’s failure to comply with the requirements of paragraph (d) or (e)
of this Section 2.16 or (ii) that are withholding taxes imposed on
amounts payable to such Lender at the time such Lender becomes a party to this
Agreement or designates a new lending office, except to the extent that such
Lender (or its assignor, if any) was entitled, at the time of designation of a
new lending office or assignment, to receive additional amounts from the
Borrower with respect to such Non-Excluded Taxes pursuant to this Section
2.16(a).

 

(b)   In addition, the Borrower
shall pay any Other Taxes to the relevant Governmental Authority in accordance
with applicable Law.

 

(c)   Whenever any Non-Excluded
Taxes or Other Taxes are payable by the Borrower, as soon as practicable
thereafter the Borrower shall send to the Administrative Agent for its own
account or for the account of the relevant Lender, as the case may be, a
certified copy of an official receipt received by the Borrower showing payment
thereof (or other evidence of such payment reasonably satisfactory to the
Administrative Agent). If the Borrower fails to pay any Non-Excluded Taxes or
Other Taxes when due to the appropriate taxing authority, such the Borrower
shall indemnify the Administrative Agent and the Lenders for any incremental
taxes, interest or penalties that may become payable by the Administrative
Agent or any Lender as a result of any such failure. The agreements

 

38

 

in this Section
2.16 shall survive the termination of this Agreement and the payment of the
Loans and all other amounts payable hereunder.

 

(d)   Each Lender (or Transferee)
that is not (i) a citizen or resident of the United States of America, (ii) a
corporation, partnership or other entity created or organized in or under the laws
of the United States of America (or any jurisdiction thereof), or (iii) an
estate or trust that is subject to U.S. federal income taxation regardless of
the source of its income (a “Non-U.S. Lender”) that may lawfully do so
shall deliver to the Borrower and the Administrative Agent (or, in the case of
a Participant, to the Lender from which the related participation shall have
been purchased) two copies of either U.S. Internal Revenue Service Form W-8BEN
or Form W-8ECI (or other applicable form), or, in the case of a Non-U.S. Lender
claiming exemption from U.S. federal withholding tax under Section 871(h) or
881(c) of the Code with respect to payments of “portfolio interest”, a
statement substantially in the form of Exhibit D and a Form W-8BEN (or
other applicable form), or to the extent such Lender may lawfully do so, it
shall deliver any subsequent versions thereof or successors thereto properly
completed and duly executed by such Non-U.S. Lender claiming complete exemption
from, or a reduced rate of, U.S. federal withholding tax on all payments by the
Borrower under this Agreement and the other Loan Documents. Such forms shall be
delivered by each Non-U.S. Lender on or before the date it becomes a party to
this Agreement (or, in the case of any Participant, on or before the date such
Participant purchases the related participation). In addition, to the extent it
may lawfully do so, each Non-U.S. Lender shall deliver such forms promptly upon
the obsolescence or invalidity of any form previously delivered by such
Non-U.S. Lender. Each Non-U.S. Lender shall, as soon as reasonably practicable,
notify the Borrower at any time it determines that it is no longer in a
position to provide any previously delivered certificate to the Borrower (or
any other form of certification adopted by the U.S. taxing authorities for such
purpose). Notwithstanding any other provision of this paragraph, a Non-U.S.
Lender shall not be required to deliver any form pursuant to this paragraph
that such Non-U.S. Lender is not legally able to deliver.

 

(e)   A Lender that is entitled to
an exemption from or reduction of non-U.S. withholding tax under the Law of the
jurisdiction in which the Borrower is located, or any treaty to which such
jurisdiction is a party, with respect to payments under this Agreement shall
deliver to the Borrower (with a copy to the Administrative Agent), at the time
or times prescribed by applicable Law or reasonably requested by the Borrower,
such properly completed and executed documentation prescribed by applicable Law
or reasonably requested by the Borrower as will permit such payments to be made
without withholding or at a reduced rate, provided that such Lender is
legally entitled to complete, execute and deliver such documentation.

 

2.17. Compensation
for Losses. The Borrower agrees to, upon demand of any Lender (with a copy
to the Administrative Agent) from time to time, to indemnify each Lender for,
and to hold each Lender harmless from, any loss or expense that such Lender
sustains or incurs as a consequence of (a) default by the Borrower in making a
borrowing of, conversion to or continuation of Eurodollar Loans after the
Borrower has given a notice requesting the same in

 

39

 

accordance
with the provisions of this Agreement, (b) default by the Borrower in making
any prepayment after the Borrower has given a notice thereof in accordance with
the provisions of this Agreement or (c) the making by the Borrower of a
prepayment or conversion of Eurodollar Loans on a day that is not the last day
of an Interest Period with respect thereto; provided that any request
for indemnification made by a Lender pursuant to this Section 2.17 shall
be made within six months of the incurrence of the loss or expense requested to
be indemnified. Such indemnification may include an amount equal to the excess,
if any, of (i) the amount of interest that would have accrued on the amount so
prepaid, or not so borrowed, converted or continued, for the period from the
date of such prepayment or of such failure to borrow, convert or continue to
the last day of such Interest Period (or, in the case of a failure to borrow,
convert or continue, the Interest Period that would have commenced on the date
of such failure) in each case at the applicable rate of interest for such Loans
provided for herein (excluding, however, the Applicable Margin included
therein, if any) over (ii) the amount of interest (as reasonably determined by
such Lender) that would have accrued to such Lender on such amount by placing
such amount on deposit for a comparable period with leading banks in the
interbank Eurodollar market. A certificate as to any amounts payable pursuant
to this Section 2.17 submitted to the Borrower by any Lender shall be
conclusive in the absence of manifest error. This covenant shall survive the
termination of this Agreement and the payment of the Loans and all other
amounts payable hereunder.

 

2.18. Illegality.
Notwithstanding any other provision herein, if the adoption of or any change in
any Requirement of Law or in the interpretation or application thereof shall
make it unlawful for any Lender to make or maintain Eurodollar Loans as
contemplated by this Agreement, (a) the commitment of such Lender hereunder to
make Eurodollar Loans, continue Eurodollar Loans as such and convert Base Rate
Loans to Eurodollar Loans shall forthwith be canceled and (b) such Lender’s
Loans then outstanding as Eurodollar Loans, if any, shall be converted
automatically to Base Rate Loans on the respective last days of the then
current Interest Periods with respect to such Loans or within such earlier
period as required by Law. If any such conversion of a Eurodollar Loan to a
Base Rate Loan occurs on a day which is not the last day of the then current
Interest Period with respect thereto, the Borrower shall pay to such Lender
such amounts, if any, as may be required pursuant to Section 2.17.

 

2.19. Change
of Office. Each Lender agrees that, upon the occurrence of any event that
it knows to give rise to the operation of Sections 2.15, 2.16(a)
or 2.18 with respect to such Lender, it will use all commercially
reasonable efforts (subject to overall policy considerations of such Lender) to
designate another lending office for any Loans affected by such event, or to
assign its rights and obligations hereunder with respect to such Loans to
another of its offices, branches or affiliates with the object of avoiding the
consequences of such event, provided, that such designation is made on
terms that, in the reasonable sole judgment of such Lender, cause such Lender
and its lending office(s) to suffer no economic, legal or regulatory
disadvantage, and provided, further, that nothing in this Section 2.19
shall affect or postpone any of the obligations of the Borrower or the rights
of any Lender pursuant to Sections 2.15, 2.16(a) or 2.18. The
Borrower hereby agrees to pay all reasonable out-of-pocket costs and expenses
incurred by any Lender in connection with any such designation or assignment.

 

2.20. Replacement
of Lenders under Certain Circumstances. The Borrower shall be permitted to
replace any Lender (a) that requests reimbursement for amounts owing pursuant

 

40

 

to Section
2.15, (b) with respect to which the Borrower is required to pay any amounts
under Sections 2.16 or 2.18, (c) that defaults in its obligation
to make Loans hereunder or (d) that fails to approve any amendment which,
pursuant to Section 10.1, requires the approval of each Lender, provided,
that such amendment is approved by at least the Majority Lenders, with a
replacement financial institution or other entity; provided that (i)
such replacement does not conflict with any Requirement of Law, (ii) with
respect to a condition described in clause (a) or (b) above,
prior to any such replacement, such replaced Lender shall have taken no action
under Section 2.19 so as to eliminate the continued need for payment of
amounts owing pursuant to Sections 2.15, 2.16, or 2.18
(iii) the replacement financial institution or other entity shall purchase, at
par, all Loans and other amounts owing to such replaced Lender on or prior to
the date of replacement, (iv) the Borrower shall be liable to such replaced
Lender under Section 2.17 (as though Section 2.17 were
applicable) if any Eurodollar Loan to the Borrower owing to such replaced
Lender shall be purchased other than on the last day of the Interest Period
relating thereto, (v) the replacement financial institution or other entity, if
not already a Lender, shall be reasonably satisfactory to the Administrative
Agent and otherwise an Eligible Assignee, (vi) the replaced Lender and
replacement Lender shall be obligated to make such replacement in accordance
with the provisions of Section 10.7 (including, without limitation,
obtaining the consents provided for therein) (provided that the Borrower shall
be obligated to pay the registration and processing fee referred to therein),
(vii) the Borrower shall pay all additional amounts (if any) required pursuant
to Section 2.15, 2.16 or 2.18, as the case may be, in
respect of any period prior to the date on which such replacement shall be
consummated, and (viii) any such replacement shall not be deemed to be a waiver
of any rights that the Borrower, the Administrative Agent or any other Lender
shall have against the replaced Lender.

 

2.21. Guaranty
of Payment and Performance.

 

(a)           Guaranty by Parent of the Borrower’s
Obligations. Parent (being referred to herein in its capacity as guarantor
as a “Guarantor”) hereby guarantees (such guaranty being hereinafter
referred to as the “Parent Guaranty”) to the Lenders and the
Administrative Agent the full and punctual payment when due (whether at stated
maturity, by required pre-payment, by acceleration or otherwise) of all of the
obligations of the Borrower hereunder and under the other Loan Documents
(including, but not limited to, the principal of the Loans advanced to the
Borrower, all Reimbursement Obligations of the Borrower in respect of Letters
of Credit, and all interest, fees, expenses, indemnities and other amounts
payable by the Borrower hereunder), including all such which would become due
but for the operation of the automatic stay pursuant to §362(a) of the Federal
Bankruptcy Code and the operation of §502(b) of the Federal Bankruptcy Code. The
Parent Guaranty is an absolute, unconditional and continuing guaranty of the
full and punctual payment and performance of all such obligations of the
Borrower hereunder and under the other Loan Documents, and not of their
collectibility only and is in no way conditioned upon any requirement that the
Administrative Agent or any Lender first attempt to collect any of the Borrower’s
obligations from the Borrower or resort to any other means of obtaining payment.
Should an Event of Default occur with respect to the payment or performance of
any such obligations of the Borrower, the obligations of Parent under the
Parent Guaranty with respect to such obligations in default shall, upon demand
by the Administrative Agent, become immediately due and payable to the Administrative
Agent, for the benefit of the Lenders and the Administrative Agent, without
demand or notice of any nature, all of which are expressly waived by Parent. Payments
by Parent in respect of the Parent Guaranty may be

 

41

 

required by
the Administrative Agent on any number of occasions. All payments by Parent in
respect of the Parent Guaranty shall be made to the Administrative Agent, in
the manner and at the place of payment specified hereunder, for the account of
the Lenders and the Administrative Agent.

 

(b)           Agreement to Pay Enforcement
Costs, etc. The Guarantor further agrees, as the principal obligor and not
as a guarantor only, to pay to the Administrative Agent, on demand, all costs
and expenses (including court costs and legal expenses) incurred or expended by
the Administrative Agent or any Lender in connection with the Parent Guaranty
and the enforcement thereof, together with interest on amounts recoverable
under this Section 2.21(b) from the time when such amounts become due
until payment, whether before or after judgment, at the rate of interest for
overdue principal set forth in this Agreement, provided  that if
such interest would exceed the Maximum Rate, then such interest shall be
reduced to such Maximum Rate.

 

(c)           Waivers by the Guarantor; Lenders’
Freedom to Act. To the fullest extent permitted by applicable law, the
Guarantor agrees that the obligations that it has guaranteed hereunder will be
paid and performed strictly in accordance with their respective terms,
regardless of any Law now or hereafter in effect in any jurisdiction affecting
any of such terms or the rights of the Administrative Agent or any Lender with
respect thereto. To the fullest extent permitted by applicable Law, the Guarantor
waives promptness, diligences, presentment, demand, protest, notice of
acceptance, notice of any obligations incurred and all other notices of any
kind, all defenses which may be available by virtue of any valuation, stay,
moratorium law or other similar Law now or hereafter in effect, any right to
require the marshalling of assets of the Borrower or any other entity or other
person primarily or secondarily liable with respect to any of the obligations,
and all suretyship defenses generally. Without limiting the generality of the
foregoing, the Guarantor agrees to the provisions of any instrument evidencing
or otherwise executed in connection with any obligation and agrees, to the
fullest extent permitted by applicable Law, that its obligations in respect of
the Parent Guaranty shall not be released or discharged, in whole or in part,
or otherwise affected by (i) the failure of the Administrative Agent or any
Lender to assert any claim or demand or to enforce any right or remedy against
the Borrower or any other entity or other person primarily or secondarily
liable with respect to any of the obligations; (ii) any extensions, compromise,
refinancing, consolidation or renewals of any obligation; (iii) any change in
the time, place or manner of payment of any of the obligations or any
rescissions, waivers, compromise, refinancing, consolidation or other
amendments or modifications of any of the terms or provisions of this Agreement
or the other Loan Documents or any other agreement evidencing or otherwise
executed in connection with any of the obligations, (iv) the addition,
substitution or release of any entity or other person primarily or secondarily
liable for any obligation; (v) the adequacy of any rights which the
Administrative Agent or any Lender may have against any means of obtaining
repayment of any of the obligations; or (vi) any other act or omission which
might in any manner or to any extent vary the risk of the Guarantor or
otherwise operate as a release or discharge of the Guarantor, all of which may
be done without notice to the Guarantor. To the fullest extent permitted by
Law, the Guarantor hereby expressly waives any and all rights or defenses
arising by reason of (A) any “one action” or “anti-deficiency” Law which would
otherwise prevent the Administrative Agent or any Lender from bringing any
action, including any claim for a deficiency, or exercising any other right or
remedy (including any right of set-off), against the Guarantor before or after
the

 

42

 

Administrative
Agent’s or such Lender’s commencement or completion of any foreclosure action,
whether judicially, by exercise of power of sale or otherwise, or (B) any other
Law which in any other way would otherwise require any election of remedies by
the Administrative Agent or any Lender.

 

(d)           Unenforceability of Obligations
Against the Borrower. If for any reason the Borrower has no legal existence
or is under no legal obligation to discharge any of its obligations under this
Agreement or under the other Loan Documents guaranteed by the Guarantor, or if
any of such obligations have become irrecoverable from the Borrower by reason
of the Borrower’s bankruptcy or reorganization or by other operation of Law or
for any other reason, the Guarantee shall, to the fullest extent permitted by
applicable Law, nevertheless be binding on the Guarantor to the same extent as
if the Guarantor at all times had been the principal obligor on all such
obligations. In the event that acceleration of the time for payment of any of
the guaranteed obligations of the Borrower under this Agreement or the other
Loan Documents is stayed upon the insolvency, bankruptcy or reorganization of
the Borrower, or for any other reason, all such obligations otherwise subject to
acceleration under the terms of this Agreement and the other Loan Documents or
any other agreement evidencing or otherwise executed in connection with any
such obligation shall be immediately due and payable by the Guarantor.

 

(e)           Subrogation. Until the final
payment and performance in full of all of the obligations of the Borrower under
this Agreement and the other Loan Documents, the Guarantor shall not exercise
any rights against the Borrower arising as a result of payment by the Guarantor
in respect of the Parent Guaranty, by way of subrogation, reimbursement,
restitution, contribution or otherwise, and will not prove any claim in
competition with the Administrative Agent or any Lender in respect of any
payment hereunder in any bankruptcy, insolvency or reorganization case or
proceedings of any nature and the Guarantor will not claim any setoff,
recoupment or counterclaim against the Borrower in respect of any liability of
the Guarantor to the Borrower.

 

(f)            Provisions Supplemental. The
provisions of this Section 2.21 shall be supplemental to and not in
derogation of any other rights and remedies of the Lenders and the
Administrative Agent under this Agreement, the other Loan Documents and any
separate subordination agreement which the Administrative Agent may at any time
and from time to time enter into with the Guarantor for the benefit of the
Lenders and the Administrative Agent.

 

(g)           Further Assurances. The
Guarantor agrees that it will from time to time, at the request of the
Administrative Agent, do all such things and execute all such documents as the
Administrative Agent may reasonably request to give full effect to the Parent
Guaranty and to preserve the rights and powers of the Lenders and the
Administrative Agent in respect of the Parent Guaranty. The Guarantor
acknowledges and confirms that it has established its own adequate means of
obtaining from the Borrower on a continuing basis all information desired by
the Guarantor concerning the financial condition of the Borrower and that the
Guarantor will look to the Borrower and not to the Administrative Agent or any
Lender in order for the Guarantor to keep adequately informed of changes in the
Borrower’s financial condition.

 

43

 

(h)           Successors and Assigns. The
Parent Guaranty shall be binding upon the Guarantor, its successors and
assigns, and shall inure to the benefit of the Administrative Agent and the
Lenders and their respective permitted transferees and permitted assigns. Without
limiting the generality of the foregoing sentence, each Lender may, to the
extent permitted by Section 10.7, assign or otherwise transfer this
Agreement, the other Loan Documents or any other agreement or Note held by it
evidencing or otherwise executed in connection with the guaranteed obligations,
or sell participations in any interest therein, to any other entity or other
person, and such other entity or other person shall, to the extent provided by Section
10.7, thereupon become vested, to the extent set forth in the agreement
evidencing such assignment, transfer or participation, with all the rights in
respect thereof granted to such Lender herein, all in accordance with Section
10.7 of this Agreement.

 

2.22. Increase
in Commitments.

 

(a)   Request for Increase.
Upon notice to the Administrative Agent (which shall promptly notify the
Lenders), the Borrower may from time to time, increase the Total Revolving
Credit Commitments by an amount not to exceed $25,000,000 less the aggregate
amount of all prior increases of the Total Revolving Credit Commitment pursuant
to this Section 2.22. Such increase in the Total Revolving Credit
Commitments may be provided by the Lenders or Eligible Assignees designated by
the Borrower to become Lenders (pursuant to an instrument of accession in the
form of Exhibit I hereto) that are willing to provide such increase; provided
that (i) any such increase shall be in a minimum amount of $5,000,000 and (ii)
the aggregate amount of the Total Revolving Credit Commitments after giving
effect to any such increase shall not at any time exceed $100,000,000. Nothing
contained herein shall constitute, or otherwise be deemed to be, a commitment
on the part of any Lender to increase its Revolving Credit Commitment
hereunder.

 

(b)   Effective Date and Allocations.
If the Total Revolving Credit Commitments are increased in accordance with this
Section 2.22, the Administrative Agent and the Borrower shall determine
the effective date (the “Increase Effective Date”) and the Borrower, in
consultation with the Administrative Agent, shall determine the final
allocation of such increase. The Administrative Agent shall promptly notify the
Lenders of the final allocation of such increase and the Increase Effective
Date.

 

(c)   Conditions to
Effectiveness of Increase. As a condition precedent to such increase, (i)
no Default shall exist, (ii) the Borrower shall (x) deliver to the
Administrative Agent (1) an Instrument of Accession executed by the Borrower
and the applicable Lender(s), and (2) a certificate dated as of the Increase
Effective Date (in sufficient copies for each Lender) signed by a Responsible
Officer of each Loan Party (A) certifying and attaching the resolutions adopted
by the Loan Parties approving or consenting to such increase, and (B)
certifying that, before and after giving effect to such increase no Default
exists and (iii pursuant to the terms of the Arranger Fee Letter, pay the fees
to the applicable Persons. The Borrower shall prepay any Revolving Credit Loans
outstanding on the Increase Effective Date (and pay any additional amounts
required pursuant to Section 2.15) to the extent necessary

 

44

 

to keep the
outstanding Revolving Credit Loans ratable with any revised Revolving Credit
Percentages arising from any nonratable increase in the Total Revolving Credit
Commitments under this Section 2.22.

 

(d)   Conflicting Provisions.
This Section 2.22 shall supersede any provisions in Section 2.14
or 10.1 to the contrary.

 

3.                                      LETTERS OF CREDIT

 

3.1. L/C Commitment. (a) 
Subject to the terms and conditions hereof, each Issuing Lender, in
reliance on the agreements of the other Lenders set forth in Section 3.3,
agrees to issue Letters of Credit for the account of the Borrower or any of its
Subsidiaries and to amend or extend Letters of Credit previously issued by it,
in accordance with Section 3.2(b), on any Business Day during the
Revolving Credit Commitment Period in such form as may be approved from time to
time by the Issuing Lender; provided, that the Issuing Lender shall not
issue any Letter of Credit if, after giving effect to such issuance, (i) the
L/C Obligations would exceed the L/C Commitment or (ii) the aggregate amount of
the Available Revolving Credit Commitments would be less than zero. Each Letter
of Credit shall (i) be denominated in Dollars and (ii) expire no later than the
earlier of (x) the first anniversary of its date of issuance and (y) the date
which is five Business Days prior to the Revolving Credit Termination Date, provided
that any Letter of Credit with a one-year term may provide for the renewal
thereof for additional one-year periods (which shall in no event extend beyond
the date referred to in clause (y) above). All Existing Letters of
Credit shall be deemed to have been issued pursuant hereto, and from and after
the Closing Date shall be subject to and governed by the terms and conditions
hereof.

 

(b)           No Issuing Lender
shall at any time be obligated to issue any Letter of Credit hereunder if (i)
such issuance would conflict with, or cause the Issuing Lender or any L/C
Participant to exceed any limits imposed by, any applicable Requirement of Law,
(ii) such issuance would violate one or more policies of the Issuing Lender
applicable to letters of credit generally or (iii) any order, judgment or
decree of any Governmental Authority or arbitrator shall by its terms purport
to enjoin or restrain the Issuing Lender from issuing such Letter of Credit, or
any Law applicable to the Issuing Lender or any request or directive (whether
or not having the force of Law) from any Governmental Authority with
jurisdiction over the Issuing Lender shall prohibit, or request that the
Issuing Lender refrain from, the issuance of letters of credit generally or
such Letter of Credit in particular.

 

3.2. Procedure
for Issuance and Amendment of Letter of Credit. (a) Each Letter of Credit
shall be issued or amended, as the case may be, upon the request of the
Borrower delivered to the Issuing Lender (with a copy to the Administrative
Agent) in the form of an Application, completed and signed by a Responsible
Officer of the Borrower. Such Application must be received by the Issuing
Lender and the Administrative Agent not later than 11:00 A.M., New York City
time, at least two Business Days (or such later date and time as the
Administrative Agent and the Issuing Lender may agree in a particular instance
in their sole discretion) prior to the proposed issuance date or date of
amendment, as the case may be. In the

 

45

 

case of a
request for an initial issuance of a Letter of Credit, such Application shall
specify in form and detail reasonably satisfactory to the Issuing Lender: (A)
the proposed issuance date of the requested Letter of Credit (which shall be a
Business Day); (B) the amount thereof; (C) the expiry date thereof; (D) the
name and address of the beneficiary thereof; (E) the documents to be presented
by such beneficiary in case of any drawing thereunder; (F) the full text of any
certificate to be presented by such beneficiary in case of any drawing
thereunder; and (G) such other matters as the Issuing Lender may reasonably
require. In the case of a request for an amendment of any outstanding Letter of
Credit, such Application shall specify in form and detail reasonably
satisfactory to the Issuing Lender (A) the Letter of Credit to be amended; (B)
the proposed date of amendment thereof (which shall be a Business Day); (C) the
nature of the proposed amendment; and (D) such other matters as the Issuing
Lender may reasonably require. Additionally, the Borrower shall furnish to the
Issuing Lender and the Administrative Agent such other documents and
information pertaining to such requested Letter of Credit issuance or
amendment, including any Issuer Documents, as the Issuing Lender or the
Administrative Agent may reasonably require.

 

(b)   Promptly after receipt of
any Application, the Issuing Lender will confirm with the Administrative Agent
(by telephone or in writing) that the Administrative Agent has received a copy
of such Application from the Borrower and, if not, the Issuing Lender will
provide the Administrative Agent with a copy thereof. Unless the Issuing Lender
has received written notice from any Lender or the Administrative Agent, at
least one Business Day prior to the requested date of issuance or amendment of
the applicable Letter of Credit, that one or more applicable conditions
contained in Section 4 shall not then be satisfied, then, subject to the
terms and conditions hereof, the Issuing Lender shall, on the requested date,
issue a Letter of Credit for the account of the Borrower or enter into the
applicable amendment, as the case may be, in each case in accordance with the
Issuing Lender’s usual and customary business practices. Immediately upon the
issuance of each Letter of Credit, each Lender shall be deemed to, and hereby
irrevocably and unconditionally agrees to, purchase from the Issuing Lender a
risk participation in such Letter of Credit in an amount equal to the product
of such Lender’s Revolving Credit Percentage times the amount of such
Letter of Credit.

 

(c)   Promptly after its delivery
of any Letter of Credit or any amendment to a Letter of Credit to an advising
bank with respect thereto or to the beneficiary thereof, the Issuing Lender
will also deliver to the Borrower and the Administrative Agent a true and
complete copy of such Letter of Credit or amendment.

 

3.3. Drawings
and Reimbursements; Funding of Participations. (a)  Upon receipt from the beneficiary of any
Letter of Credit of any notice of a drawing under such Letter of Credit, the
Issuing Lender shall notify the Borrower and the Administrative Agent thereof. The
Borrower shall reimburse the Issuing Lender, through the Administrative Agent,
for the amount of any drawing under a Letter of Credit not later than 1:00
P.M., New York City time, on the date that such drawing is made (if the
Borrower has received notice from the Issuing Lender of such drawing prior to
10:00 A.M., New York City time, on such date) or, if the Borrower has not
received notice of such drawing prior to such time on such date, then not later
than 1:00 P.M.,

 

46

 

New York City
time, on (i) the Business Day that the Borrower receives such notice, if such
notice is received prior to 10:00 A.M., New York City time, on the day of
receipt, or (ii) the Business Day immediately following the day that the
Borrower receives such notice, if such notice is not received prior to 10:00
A.M., New York City time, on the day of such receipt (the date on which such
reimbursement by the Borrower is due pursuant to this sentence being referred
to herein as the “Requested Reimbursement Date”). If the Borrower fails
to so reimburse the Issuing Lender by such time, the Administrative Agent shall
promptly notify each Lender of the Requested Reimbursement Date, the amount of
the unreimbursed drawing (the “Unreimbursed Amount”), and the amount of
such Lender’s Revolving Credit Percentage thereof. In such event, the Borrower
shall be deemed to have requested a borrowing of Base Rate Loans to be
disbursed on the Requested Reimbursement Date in an amount equal to the
Unreimbursed Amount, without regard to the minimum and multiples, and notice
periods, specified in Section 2.2 for the principal amount of Base Rate
Loans. Such Base Rate Loans may from time to time be converted to Eurodollar
Loans, as determined by the Borrower and notified to the Administrative Agent
in accordance with Section 2.9, provided that no Revolving Credit Loan
shall be made as a Eurodollar Loan after the day that is one month prior to the
Revolving Credit Termination Date. Any notice given by the Issuing Lender or
the Administrative Agent pursuant to this Section 3.3(a) may be given by
telephone if immediately confirmed in writing; provided that the lack of such
an immediate confirmation shall not affect the conclusiveness or binding effect
of such notice.

 

(b)   Each Lender (including the
Lender acting as Issuing Lender) shall upon any notice pursuant to Section
3.3(a) make funds available to the Administrative Agent for the account of
the Issuing Lender at the Administrative Agent’s Office in an amount equal to
its Revolving Credit Percentage of the Unreimbursed Amount not later than 1:00
P.M., New York City time, on the Business Day specified in such notice by the
Administrative Agent, whereupon, subject to the provisions of Section 3.3(a),
each Lender that so makes funds available shall be deemed to have made a Base
Rate Loan to the Borrower in such amount. The Administrative Agent shall remit
the funds so received to the Issuing Lender.

 

(c)   If any drawing is made under
a Letter of Credit and is not reimbursed or refinanced on the date such drawing
is made, for any reason, the Borrower shall be deemed to have incurred from the Issuing Lender an L/C Borrowing
in the amount of the Unreimbursed Amount that is not so reimbursed or
refinanced, which L/C Borrowing (i) shall bear interest at the rate applicable
to Base Rate Loans from and including the date that such drawing is paid by the
Issuing Bank to but excluding the earlier of the date that such Unreimbursed
Amount is so reimbursed or refinanced or the date that is the next Business Day
following the Requested Reimbursement Date and, if not so reimbursed or
refinanced on or prior to the date that is the next Business Day following the
Requested Reimbursement Date, then, from and after the date that is the next
Business Day following the Requested Reimbursement Date to but excluding the
date so reimbursed or refinanced, the rate applicable to Base Rate Loans plus
2% and (ii) shall, on and after the date that is the next Business Day
following the Requested Reimbursement Date, be due and payable on demand. In
such event, each Lender’s payment to the Administrative Agent for the account
of the Issuing Lender pursuant to Section 3.3(b) shall be

 

47

 

deemed payment
in respect of its participation in such L/C Borrowing and shall constitute an
L/C Advance from such Lender in satisfaction of its participation obligation
under this Section 3.3.

 

(d)   Until each Lender funds its
Loan or L/C Advance pursuant to this Section 3.3 to reimburse the
Issuing Lender for any amount drawn under any Letter of Credit, interest in
respect of such Lender’s Revolving Credit Percentage of such amount shall be
solely for the account of the Issuing Lender.

 

(e)   Each Lender’s obligation to
make Loans or L/C Advances to reimburse the Issuing Lender for amounts drawn
under Letters of Credit, as contemplated by this Section 3.3, shall be
absolute and unconditional and shall not be affected by any circumstance,
including (A) any set-off, counterclaim, recoupment, defense or other right
which such Lender may have against the Issuing Lender, any Loan Party or any
other Person for any reason whatsoever, (B) the occurrence or continuance of a
Default, or (C) any other occurrence, event or condition, whether or not
similar to any of the foregoing; provided, however, that each
Lender’s obligation to make Loans pursuant to this Section 3.3 is
subject to the conditions set forth in Section 4.2 (other than delivery
by the Borrower of a Loan Notice). No such making of an L/C Advance shall
relieve or otherwise impair the obligation of the Borrower to reimburse the
Issuing Lender for the amount of any payment made by the Issuing Lender under
any Letter of Credit, together with interest as provided herein.

 

(f)    If any Lender fails to make
available to the Administrative Agent for the account of the Issuing Lender any
amount required to be paid by such Lender pursuant to the foregoing provisions
of this Section 3.3 by the time specified in Section 3.3(b), the
Issuing Lender shall be entitled to recover from such Lender (acting through
the Administrative Agent), on demand, such amount with interest thereon for the
period from the date such payment is required to the date on which such payment
is immediately available to the Issuing Lender at a rate per annum equal to the
greater of the Federal Funds Rate and a rate determined by the Issuing Lender in
accordance with banking industry rules on interbank compensation, plus any
administrative, processing or similar fees customarily charged by the Issuing
Lender in connection with the foregoing. If such Lender pays such amount (with
interest and fees as aforesaid), the amount so paid shall constitute such
Lender’s Loan included in the relevant borrowing or L/C Advance in respect of
the relevant L/C Borrowing, as the case may be. A certificate of the Issuing
Lender submitted to any Lender (through the Administrative Agent) with respect
to any amounts owing under this paragraph (f) shall be conclusive absent
manifest error.

 

3.4. Repayment
of Participations. (a)  At any time
after the Issuing Lender has made a payment under any Letter of Credit and has
received from any Lender such Lender’s L/C Advance in respect of such payment
in accordance with Section 3.3(b), if the Administrative Agent receives
for the account of the Issuing Lender any payment in respect of the related
Unreimbursed Amount or interest thereon (whether directly from the Borrower or
otherwise, including proceeds of cash collateral applied thereto by the
Administrative Agent), the Administrative Agent will distribute to such Lender
its Revolving Credit Percentage thereof

 

48

 

(appropriately
adjusted, in the case of interest payments, to reflect the period of time
during which such Lender’s L/C Advance was outstanding) in the same funds as
those received by the Administrative Agent.

 

(b)   If any payment received by
the Administrative Agent for the account of the Issuing Lender pursuant to Section
3.3(b) is required to be returned under any of the circumstances described
in Section 10.8 (including pursuant to any settlement entered into by
the Issuing Lender in its discretion), each Lender shall pay to the
Administrative Agent for the account of the Issuing Lender its Revolving Credit
Percentage thereof on demand of the Administrative Agent, plus interest thereon
from the date of such demand to the date such amount is returned by such
Lender, at a rate per annum equal to the Federal Funds Rate from time to time
in effect.

 

3.5. Obligations
Absolute. The obligation of the Borrower to reimburse the Issuing Lender
for each drawing under each Letter of Credit and to repay each L/C Borrowing
shall be absolute, unconditional and irrevocable, and shall be paid strictly in
accordance with the terms of this Agreement under all circumstances, including
the following:

 

(i)            any lack of
validity or enforceability of such Letter of Credit, this Agreement, or any
other Loan Document;

 

(ii)           the existence of
any claim, counterclaim, set-off, defense or other right that the Borrower or
any of its Subsidiaries may have at any time against any beneficiary or any
transferee of such Letter of Credit (or any Person for whom any such
beneficiary or any such transferee may be acting), the Issuing Lender or any
other Person, whether in connection with this Agreement, the transactions
contemplated hereby or by such Letter of Credit or any agreement or instrument
relating thereto, or any unrelated transaction;

 

(iii)          any draft, demand,
certificate or other document presented under such Letter of Credit proving to
be forged, fraudulent, invalid or insufficient in any respect or any statement
therein being untrue or inaccurate in any respect; or any loss or delay in the
transmission or otherwise of any document required in order to make a drawing
under such Letter of Credit;

 

(iv)          any payment by the
Issuing Lender under such Letter of Credit against presentation of a draft or
certificate that does not strictly comply with the terms of such Letter of
Credit; or any payment made by the Issuing Lender under such Letter of Credit
to any Person purporting to be a trustee in bankruptcy, debtor-in-possession,
assignee for the benefit of creditors, liquidator, receiver or other
representative of or successor to any beneficiary or any transferee of such
Letter of Credit, including any arising in connection with any proceeding under
any Debtor Relief Law; or

 

(v)           any other
circumstance or happening whatsoever, whether or not similar to any of the
foregoing, including any other circumstance that might

 

49

 

otherwise
constitute a defense available to, or a discharge of, the Borrower or any of
its Subsidiaries.

 

3.6. Role
of Issuing Lender. Each Lender and the Borrower agrees that, in paying any
drawing under a Letter of Credit, the Issuing Lender shall not have any
responsibility to obtain any document (other than any sight draft, certificates
and documents expressly required by the Letter of Credit) or to ascertain or
inquire as to the validity or accuracy of any such document or the authority of
the Person executing or delivering any such document. None of the Issuing
Lender, any Agent-Related Person nor any of the respective correspondents,
participants or assignees of the Issuing Lender shall be liable to any Lender
for (a) any action taken or omitted in connection herewith at the request or
with the approval of the Lenders or the Majority Lenders, as applicable; (b)
any action taken or omitted in the absence of gross negligence or willful
misconduct; or (c) the due execution, effectiveness, validity or enforceability
of any document or instrument related to any Letter of Credit or Application. The
Borrower hereby assumes all risks of the acts or omissions of any beneficiary
or transferee with respect to its use of any Letter of Credit; provided,
however, that this assumption is not intended to, and shall not,
preclude the Borrower’s pursuing such rights and remedies as it may have
against the beneficiary or transferee at law or under any other agreement. None
of the Issuing Lender, any Agent-Related Person, nor any of the respective
correspondents, participants or assignees of the Issuing Lender, shall be
liable or responsible for any of the matters described in clauses (i)
through (v) of Section 3.5; provided, however, that
anything in such clauses (i) through (v) to the contrary
notwithstanding, the Borrower may have a claim against the Issuing Lender, and
the Issuing Lender 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 Issuing
Lender’s willful misconduct or gross negligence or the Issuing Lender’s willful
failure to pay under any Letter of Credit after the presentation to it by the
beneficiary of a sight draft and certificate(s) strictly complying with the
terms and conditions of a Letter of Credit. In furtherance and not in
limitation of the foregoing, the Issuing Lender may accept documents that
appear on their face to be in order, without responsibility for further
investigation, regardless of any notice or information to the contrary, and the
Issuing Lender shall not be responsible for 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.

 

3.7. Cash
Collateral. Upon the request of the Administrative Agent, if, as of the
Revolving Credit Termination Date, any Letter of Credit for any reason remains
outstanding and partially or wholly undrawn, the Borrower shall immediately
Cash Collateralize the then outstanding amount of all L/C Obligations (in an
amount equal to such outstanding amount determined as of the Revolving Credit
Termination Date). Sections 2.8 and 8.2 set forth certain
additional requirements to deliver Cash Collateral hereunder. To the extent
that the Borrower is required to Cash Collateralize L/C Obligations, the
Borrower hereby grants to the Administrative Agent, for the benefit of the
Issuing Lender and the Lenders, a security interest in all cash, deposit
accounts and all balances therein and all proceeds of the foregoing. Such cash
collateral shall be maintained in blocked, interest bearing deposit accounts
with the Administrative Agent.

 

50

 

3.8. Applicability of ISP98 and UCP. Unless otherwise expressly
agreed by the Issuing Lender and the Borrower when a Letter of Credit is issued
including any such agreement as applicable to an Existing Letter of Credit, (i) the
rules of the ISP shall apply to each standby Letter of Credit, and (ii) the
rules of the Uniform Customs and Practice for Documentary Credits, as
most recently published by the International Chamber of Commerce at the time of
issuance shall apply to each commercial Letter of Credit.

 

3.9. Fees and Other Charges. (a)  The Borrower will pay to
the Administrative Agent, for the account of the Lenders, a fee on the daily
amount available to be drawn under all outstanding Letters of Credit issued for
its account at a per annum rate equal to the Applicable Margin then in effect
with respect to Eurodollar Loans, to be shared ratably among the Lenders in
accordance with their respective Revolving Credit Percentages and payable
quarterly in arrears on each L/C Fee Payment Date after the issuance date. In
addition, the Borrower shall pay to the relevant Issuing Lender for its own
account a fronting fee on the daily amount available to be drawn under all
outstanding Letters of Credit issued by such Issuing Lender for the Borrower’s
account at a rate and at the times to be agreed upon by the Borrower and such
Issuing Lender. For purposes of computing the average daily amount available to
be drawn under the Letters of Credit, the amount of such Letters of Credit
shall be determined in accordance with Section 1.3.

 

(b)                                 In addition to the
foregoing fees, the Borrower shall pay or reimburse each Issuing Lender for
such normal and customary costs and expenses as are incurred or charged by such
Issuing Lender in issuing, negotiating, effecting payment under, amending or
otherwise administering any Letter of Credit issued for the account of the
Borrower.

 

3.10. Conflict with Issuer Documents. In the event of any
conflict between the terms hereof and the terms of any Issuer Document, the
terms hereof shall control.

 

4.                                      CONDITIONS PRECEDENT

 

4.1. Conditions to Closing. The occurrence of the Closing Date
is subject to the satisfaction on such date of the following conditions
precedent:

 

(a)                                  The Administrative
Agent’s receipt of the following, each of which shall be originals or
telecopies (followed promptly by originals) unless otherwise specified, each
properly executed by a Responsible Officer of the signing Loan Party, each
dated the Closing Date (or, in the case of certificates of governmental
officials, a recent date before the Closing Date) and each in form and
substance reasonably satisfactory to the Administrative Agent:

 

(i)                                     executed
counterparts of this Agreement, sufficient in number for distribution to the
Administrative Agent, each Lender party hereto on the date hereof, the Borrower
and the Parent;

 

(ii)                                  a Note executed by
the Borrower in favor of each Lender requesting a Note so long as such request
is made at least 3 Business Days prior to the Closing Date;

 

51

 

(iii)                               such certificates of
resolutions or other action, incumbency certificates and/or other certificates
of Responsible Officers of each Loan Party as the Administrative Agent may reasonably
require evidencing the identity, authority and capacity of each Responsible
Officer thereof authorized to act as a Responsible Officer in connection with
this Agreement and the other Loan Documents to which such Loan Party is a
party;

 

(iv)                              such documents and
certifications as the Administrative Agent may reasonably require to
evidence that each Loan Party is duly organized or formed, and that each Loan
Party is validly existing, in good standing and qualified to engage in business
in the jurisdiction where such Loan Party is organized;

 

(v)                                 a Closing Certificate
of each Loan Party with appropriate insertions and attachments, if any;

 

(vi)                              a certificate signed by a
Responsible Officer on behalf of each Loan Party either (A) attaching
copies of all consents, licenses and approvals required in connection with the
execution, delivery and performance by such Loan Party and the validity against
such Loan Party of the Loan Documents to which it is a party, and such
consents, licenses and approvals shall be in full force and effect, or (B) stating
that no such consents, licenses or approvals are so required;

 

(vii)                           a certificate signed by a
Responsible Officer on behalf of each Loan Party certifying (A) that the
conditions specified in Sections 4.2(a) and (b) have
been satisfied, and (B) that there has been no event or circumstance since
December 31, 2005 that has had or could be reasonably expected to have,
either individually or in the aggregate, a Material Adverse Effect.

 

(viii)                        a Borrowing Request
appropriately completed and signed by a Responsible Officer on behalf of the
Borrower, in respect of the initial borrowing of Loans;

 

(ix)                                copies certified by a
Responsible Officer on behalf of the Borrower of the White Mountains Loan
Documents duly executed by the parties thereto;

 

(b)                                 Fees. (i) 
The Administrative Agent and the Arrangers shall have received all fees
required to be paid by the Borrower on or prior to the Closing Date.

 

(ii)                                  The Borrower shall
have paid all fees, charges and disbursements of Bingham McCutchen LLP, as
counsel to the Administrative Agent (directly to such counsel if requested by
the Administrative Agent), to the extent required to be paid by the Borrower
and invoiced prior to the Closing Date.

 

(c)                                  Legal Opinions.
The Administrative Agent shall have received (i) the legal opinion of
Thomas Forsyth, Esquire, counsel to the Loan Parties,

 

52

 

substantially in the form of Exhibit F and (ii) the
legal opinion of Conyers Dill & Pearman, Bermuda counsel to the
Parent, substantially in the form of Exhibit G.

 

(d)                                 Termination of
Existing Credit Facility. The Administrative Agent shall have received
evidence (including, without limitation, payoff letters), reasonably
satisfactory to the Administrative Agent in its reasonable discretion, that the
Existing Credit Agreement has been or concurrently with the Closing Date is
being terminated.

 

(e)                                  Initial Public
Offering. Parent shall have consummated the IPO.

 

(f)                                    Closing Date.
The Closing Date shall occur on or before April 30, 2007.

 

(g)                                 Economic Defeasance
of Fund American Preferred Stock. Arrangements reasonably satisfactory to
the Administrative Agent shall have been made for the establishment of grantor
trusts to provide for the payment or redemption of the Fund American Preferred
Stock.

 

(h)                                 Material Adverse
Effect. Up to and including the Closing Date, since December 31, 2005
there has been no development or event that has had or could reasonably be
expected to have a Material Adverse Effect.

 

4.2. Conditions to Closing and Each Extension of Credit. The
occurrence of the Closing Date and the agreement of each Lender to make any
extension of credit requested to be made by it hereunder on any date
(including, without limitation, its initial extension of credit but excluding
conversions or continuations of Loans) is subject to the satisfaction of the
following conditions precedent:

 

(a)                                  Representations
and Warranties. Each of the representations and warranties made by the Loan
Parties in Section 5 (other than Section 5.5) or
pursuant to any of the other Loan Documents shall be true and correct in all
material respects on and as of such date as if made on and as of such date,
except to the extent that they expressly relate to an earlier date, in which
case they shall be true and correct in all material respects as of such earlier
date.

 

(b)                                 No Default. No
Default or Event of Default shall have occurred and be continuing on such date
or after giving effect to the extensions of credit requested to be made on such
date.

 

(c)                                  Borrowing Request.
Except as provided in Section 3.3, the Administrative Agent shall
have received a Borrowing Request or, as applicable, an Application.

 

Each borrowing
by and issuance of a Letter of Credit on behalf of the Borrower hereunder shall
constitute a representation and warranty by the Loan Parties as of the date of
such extension of credit that the conditions contained in this Section 4.2
(a) and (b) have been satisfied on and as of

 

53

 

the date of
the applicable extension of credit.

 

5.                                      REPRESENTATIONS AND WARRANTIES

 

To induce the Administrative Agent and the Lenders to enter into this
Agreement and to make the Loans and issue or participate in the Letters of
Credit, the Loan Parties hereby jointly and severally represent and warrant to
the Administrative Agent and each Lender that:

 

5.1. Financial Statements.

 

(a)                                  The audited
consolidated balance sheet of Parent and its consolidated Subsidiaries, as at December 31,
2005 and the related consolidated statements of income and of cash flows for
the fiscal year ended on such date, reported on and accompanied by unqualified
reports from PricewaterhouseCoopers LLP or another independent certified public
accounting firm of nationally recognized standing, present fairly in all
material respects the consolidated financial condition of Parent and its
consolidated Subsidiaries, as at such date, and the consolidated results of
their operations and their consolidated cash flows for such fiscal year then
ended in accordance with GAAP applied consistently throughout the periods
involved (except as approved by the aforementioned firm of accountants and
disclosed therein).

 

(b)                                 The unaudited
consolidated balance sheet of Parent and its consolidated Subsidiaries, as of
and for the fiscal quarters ended June 30, 2006 and September 30,
2006, and the related unaudited consolidated statements of income and cash
flows for such fiscal quarters ended on such dates, present fairly in all
material respects the consolidated financial condition of Parent and its consolidated
Subsidiaries as at such dates, and the consolidated results of their operations
and their consolidated cash flows for the fiscal quarters then ended in
accordance with GAAP applied consistently throughout the periods involved
(except (x) as approved by the aforementioned firms of accountants and
disclosed therein or (y) for normal year-end audit adjustments and the absence
of footnotes).

 

5.2. Corporate Existence; Compliance with Law. Each of the Loan
Parties and their Subsidiaries (a) is duly organized, validly existing and
in good standing under the Laws of the jurisdiction of its organization, except
to the extent that the failure of the Subsidiaries (other than the Borrower) to
be so organized, validly existing and in good standing could not, in the
aggregate, reasonably be expected to have a Material Adverse Effect, (b) has
the corporate or other power and authority, and the legal right, to own and
operate its Property, to lease the Property it operates as lessee and to
conduct the business in which it is currently engaged, except to the extent
that the failure to have such power, authority and legal right could not, in
the aggregate, reasonably be expected to have a Material Adverse Effect, (c) is
duly qualified as a foreign corporation and in good standing under the Laws of
each jurisdiction where its ownership, lease or operation of Property or the
conduct of its business requires such qualification, except to the extent
failure to so qualify or be in good standing could not, in the aggregate,
reasonably be expected to have a Material Adverse Effect, and (d) is in
compliance with all Requirements of Law, including, without limitation, with
respect to environmental laws,

 

54

 

except to the
extent that the failure to comply therewith could not, in the aggregate,
reasonably be expected to have a Material Adverse Effect.

 

5.3. Corporate Power; Authorization; Enforceable Obligations. Each
of the Loan Parties has the corporate or other power and authority, and the
legal right, to make, deliver and perform the Loan Documents to which it
is a party and, in the case of the Borrower, to borrow hereunder. Each of the
Loan Parties has taken all necessary corporate or other action to authorize the
execution, delivery and performance of the Loan Documents to which it is a
party and, in the case of the Borrower, to authorize the borrowings on the
terms and conditions of this Agreement. No consent or authorization of, filing
with, notice to or other act by or in respect of, any Governmental Authority or
any other Person is required in connection with the borrowings hereunder or the
execution, delivery, performance, validity or enforceability of this Agreement
or any of the other Loan Documents, except consents, authorizations, filings
and notices described in Schedule 5.3, which consents,
authorizations, filings and notices have been obtained or made and are in full
force and effect and except to the extent failure to obtain any consents,
authorizations, filings, and notices could not, in the aggregate, reasonably be
expected to have a Material Adverse Effect. Each Loan Document has been duly
executed and delivered on behalf of each Loan Party that is a party thereto. This
Agreement constitutes, and each other Loan Document upon execution will
constitute, a legal, valid and binding obligation of each Loan Party that is a
party thereto, enforceable against each such Loan Party in accordance with its
terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar Laws affecting the
enforcement of creditors’ rights generally and by general equitable principles
(whether enforcement is sought by proceedings in equity or at Law).

 

5.4. No Legal Bar. The execution, delivery and performance of
this Agreement and the other Loan Documents, the issuance of Letters of Credit,
the borrowings hereunder and the use of the proceeds thereof will not violate
any Requirement of Law or any Contractual Obligation of the Loan Parties or any
of their Subsidiaries and will not result in, or require, the creation or
imposition of any Lien on any of their respective properties or revenues
pursuant to any Requirement of Law or any such Contractual Obligation, except
to the extent such violation or Lien could not, in the aggregate, reasonably be
expected to have a Material Adverse Effect.

 

5.5. No Material Litigation. No litigation, investigation or
proceeding of or before any arbitrator or Governmental Authority is pending or,
to the knowledge of the Loan Parties, threatened by or against the Loan Parties
or any of their Subsidiaries or against any of their respective properties or
assets that (a) purport to affect or pertain to this Agreement or any
other Loan Document or any of the transactions contemplated hereby or thereby,
or (b) could reasonably be expected to have a Material Adverse Effect.

 

5.6. Ownership of Property; Liens. Each of the Loan Parties and
their Subsidiaries has title in fee simple to, or a valid leasehold interest
in, all its real property, and good title to, or a valid leasehold interest in,
all its other Property, and none of such Property is subject to any Lien except
as permitted by Section 7.3, except to the extent such defects in
title could not, in the aggregate, reasonably be expected to have a Material
Adverse Effect.

 

55

 

5.7. Intellectual Property. Each of the Loan Parties and each of
their Subsidiaries owns, or is licensed to use, all Intellectual Property
material to the conduct of its business as currently conducted. No material
claim has been asserted and is pending by any Person challenging or questioning
the use of any Intellectual Property or the validity or effectiveness of any
Intellectual Property, nor do the Loan Parties know of any valid basis for any
such claim, other than claims that could not, in the aggregate, reasonably be
expected to have a Material Adverse Effect. The use of Intellectual Property by
the Loan Parties and their Subsidiaries does not infringe on the rights of any
Person in any material respect, except for infringements that could not, in the
aggregate, reasonably be expected to have a Material Adverse Effect.

 

5.8. Taxes. Each of the Loan Parties and their Subsidiaries has
filed or caused to be filed all material Federal, state and other tax returns
that are required to be filed (taking into account any applicable extensions)
and has paid all taxes shown to be due and payable on said returns or on any
assessments made against it or any of its Property and all other material
taxes, fees or other charges imposed on it or any of its Property by any
Governmental Authority and, to the knowledge of the Loan Parties, no tax Lien
has been filed, and no claim is being asserted, with respect to any such tax,
fee or other charge, except (i) those in respect of which the amount or
validity are currently being contested in good faith by appropriate proceedings
and with respect to which reserves in conformity with SAP or GAAP, as
applicable, have been provided on the books of the Loan Parties or their
Subsidiaries, as the case may be, and (ii) any amount the failure of
which to pay could not reasonably be expected to result in a Material Adverse
Effect.

 

5.9. Federal Regulations. No part of the proceeds of any
Loans will be used for “purchasing” or “carrying” any “margin stock” within the
respective meanings of each of the quoted terms under Regulation U as now and
from time to time hereafter in effect or for any purpose that violates the
provisions of the Regulations of the Board. If requested by any Lender or the
Administrative Agent, the Borrower will furnish to the Administrative Agent and
each Lender a statement to the foregoing effect in conformity with the
requirements of FR Form G-3 or FR Form U-1 referred to in Regulation
U.

 

5.10. ERISA. Except as could not reasonably be expected to
result in a Material Adverse Effect, neither a Reportable Event nor an “accumulated
funding deficiency” (within the meaning of Section 412 of the Code or Section 302
of ERISA) has occurred during the five-year period prior to the date on which
this representation is made or deemed made with respect to any Plan, and each
Plan has complied in all material respects with the applicable provisions of
ERISA and the Code. No termination of a Single Employer Plan has occurred, and
no Lien in favor of the PBGC or a Plan has arisen, during such five-year period.
The present value of all accrued benefits under each Single Employer Plan
(based on those assumptions used to fund such Plans) did not, as of the last
annual valuation date prior to the date on which this representation is made or
deemed made, exceed the value of the assets of such Plan allocable to such
accrued benefits by an amount which could reasonably be expected to result in a
Material Adverse Effect. Neither the Loan Parties nor any Commonly Controlled
Entity has had a complete or partial withdrawal from any Multiemployer Plan
that has resulted or could reasonably be expected to result in a Material
Adverse Effect. Except as could not reasonably be expected to result in a
Material Adverse Effect, no such Multiemployer Plan is in Reorganization or
Insolvent.

 

56

 

5.11. Investment Company Act; Other Regulations. The Borrower is
not an “investment company” within the meaning of the Investment Company Act of
1940, as amended. The Borrower is not subject to regulation under any
Requirement of Law (other than Regulation X of the Board) which limits its
ability to incur Indebtedness hereunder.

 

5.12. Use of Proceeds. The proceeds of the Loans and the Letters
of Credit shall be used for working capital and general corporate purposes of
Parent and its Subsidiaries, including, without limitation, (a) acquisitions
and the issuance of Letters of Credit, (b) refinancings of outstanding
indebtedness, if any, of Parent and its Subsidiaries under the Existing Credit
Agreement (and the Existing Letters of Credit), (c) to provide for the
payment or redemption of obligations in respect of the Fund American Preferred
Stock, and (d) payment of fees and expenses incurred in connection with
this Agreement.

 

5.13. Accuracy of Information, etc. No statement or information
contained in any document, certificate or statement furnished to the Administrative
Agent or the Lenders or any of them, by or on behalf of either of the Loan
Parties for use in connection with the transactions contemplated by this
Agreement or the other Loan Documents, taken as a whole contained, as of the
date such statement, information, document or certificate was so furnished, any
untrue statement of a material fact or omitted to state a material fact
necessary in order to make the statements contained therein not materially
misleading in light of the circumstances under which such statement,
information, document or certificate was made or furnished. The projections and
pro forma financial information contained in the materials referenced above
were prepared in good faith based on assumptions believed by management of the
Loan Parties to be reasonable at the time made, it being recognized by the
Lenders that such financial information as it relates to future events is not
to be viewed as fact and that actual results during the period or periods
covered by such financial information may differ from the projected
results set forth therein by a material amount.

 

5.14. Insurance Regulatory Matters. No License of any Insurance
Subsidiary, the loss of which could reasonably be expected to have a Material
Adverse Effect, is the subject of a proceeding for suspension or revocation. To
the knowledge of the Loan Parties, there is no sustainable basis for such
suspension or revocation, and no such suspension or revocation has been
threatened by any Governmental Authority.

 

5.15. Indebtedness and Liens. As of the Closing Date, (i) no
Subsidiary (other than the Borrower) of either of the Loan Parties had
outstanding any Indebtedness that was created, incurred or assumed after September 30, 2006, except
Indebtedness that would have been permitted by Section 7.2 (without
giving effect to the Indebtedness permitted by Section 7.2(a)) if
created, incurred or assumed by such Subsidiary on the Closing Date and (ii) there
does not exist (a) any Lien that was created, incurred or assumed after September 30, 2006, upon any stock or Indebtedness of
any Subsidiary to secure any Debt of any Loan Party or any of their
Subsidiaries or any other Person (other than the obligations hereunder) or (b) any
Lien that was created, incurred or assumed after September 30, 2006, upon
any other Property, to secure any Debt of any Loan Party or any of their
Subsidiaries or any other Person (other than the obligations hereunder),
except, in the case of (a) or (b), Liens that would have been permitted by
Section 7.3 hereof (without giving effect to the Liens that would
have been permitted by Section 7.3(i)(x)) if so created, incurred
or assumed on the Closing Date.

 

57

 

5.16. Taxpayer Identification Number. As of the date hereof, each
Loan Party’s true and correct U.S. taxpayer identification number is set forth
on Schedule 10.02.

 

6.                                      AFFIRMATIVE COVENANTS

 

The Loan Parties hereby jointly and severally agree that, from and
after the Closing Date and so long as, the Commitments remain in effect, any
Letter of Credit remains outstanding, there exists any unpaid Reimbursement
Obligations or any principal or interest on any Loan or any fee payable
hereunder is owing to any Lender or the Administrative Agent hereunder, each of
the Loan Parties shall and shall cause each of their Subsidiaries to:

 

6.1. Financial Statements. Furnish to the Administrative Agent
(either electronically or with sufficient copies for distribution by the
Administrative Agent to each Lender):

 

(a)                                  (i) not later
than the date required to be filed pursuant to the Act of 1934 (after giving
effect to any extension permitted or granted by the SEC), but in any event not
later than 95 days after the end of each fiscal year of Parent ending
subsequent to the Closing Date, a copy of the audited consolidated balance
sheet of Parent and its consolidated Subsidiaries as at the end of such fiscal
year, and the related audited consolidated statements of income and of cash
flows for such fiscal year, setting forth in each case in comparative form the
figures as of the end of and for the previous fiscal year, accompanied by an
opinion by PricewaterhouseCoopers LLP, or other independent certified public
accounting firm of nationally recognized standing, which report shall be
prepared in accordance with generally accepted auditing standards and
applicable securities laws and shall not be subject to a “going concern” or
like qualification or exception, or qualification as to the scope of the audit
(for purposes hereof, delivery of Parent’s Annual Report on Form 10-K
(which shall be deemed delivered on the date when such document is posted on
the SEC’s website at www.sec.gov or any replacement website) will be sufficient
in lieu of delivery of such financial statements); and (ii) not later than
the date required to be filed pursuant to the Act of 1934 (after giving effect
to any extension permitted or granted by the SEC), but in any event not later
than 60 days after the end of each of the first three fiscal quarters of each
fiscal year of Parent ending subsequent to the Closing Date, a copy of the
unaudited consolidated balance sheet of Parent and its consolidated
Subsidiaries as at the end of such fiscal quarter and the related unaudited
consolidated statements of income and of cash flows for such fiscal quarter and
the portion of the fiscal year through the end of such fiscal quarter, setting
forth in each case in comparative form the figures as of the end of and
for the corresponding period in the previous year, certified by a Responsible
Officer on behalf of Parent as being fairly stated in all material respects in
accordance with GAAP (subject to normal year-end audit adjustments and the
absence of footnotes) (for purposes hereof, delivery of Parent’s Quarterly
Report on Form 10-Q (which shall be deemed delivered on the date when such
document is posted on the SEC’s website at www.sec.gov or any replacement
website) will be sufficient in lieu of delivery of such financial statements
and certifications); all such financial statements, together with notes to such
financial statements, to fairly present in all material

 

58

 

respects the financial condition and income and cash flows of the
subject thereof as at the dates and for the periods covered thereby in
accordance with GAAP applied consistently throughout the periods reflected
therein and with prior periods (except (x) as approved by such accountants or
officer, as the case may be, and disclosed therein or (y) in the case of
unaudited financial statements, subject to normal year-end adjustments and the
absence of footnotes);

 

(b)                                 not later than the
date required by Law to be prepared (or such later date as may be allowed
by the applicable Governmental Authority), but in any event not later than 95
days after the end of each fiscal year of (i) OneBeacon Insurance Group,
copies of the unaudited combined Annual Statement of OneBeacon Insurance Group,
certified by a Responsible Officer on behalf of Parent, and (ii) a
Material Insurance Subsidiary (as of the date of delivery pursuant hereto),
copies of the unaudited Annual Statement of such Material Insurance Subsidiary,
certified by a Responsible Officer on behalf of such Material Insurance
Subsidiary; all such statements to be prepared in accordance with SAP
consistently applied throughout the periods reflected therein and, if required
by the applicable Governmental Authority, audited and certified by independent
certified public accounting firm of recognized national standing (it being
understood that delivery of audited statements shall be made within 10 days
following the delivery of such statements to the applicable Governmental
Authority);

 

(c)                                  not later than the
date required by Law to be prepared (or such later date as may be allowed
by the applicable Governmental Authority), but in any event not later than 70
days after the end of each of the first three fiscal quarters of each fiscal
year of each Material Insurance Subsidiary (as of the date delivery of such
Quarterly Statements is required), copies of the Quarterly Statement of such
Material Insurance Subsidiary for such fiscal quarter, all such statements to
be prepared in accordance with SAP consistently applied throughout the period
reflected herein;

 

(d)                                 within 15 days after
being delivered to any Material Insurance Subsidiary subsequent to the Closing
Date, any final Report on Examination issued by the applicable Department or
the NAIC that results in material adjustments to the financial statements
referred to in paragraphs (b) or (c) above;

 

(e)                                  to the extent such a
statement is required by Law to be prepared, within 10 days following the
delivery to the applicable Department, a copy of each “Statement of Actuarial
Opinion” and “Management Discussion and Analysis” for a Material Insurance
Subsidiary which is provided to the applicable Department as to the adequacy of
loss reserves of such Material Insurance Subsidiary, such opinion to be in the
format prescribed by the insurance code of the state of domicile of such
Material Insurance Subsidiary; and

 

(f)                                    promptly after
Parent’s receipt thereof, subject to any restrictions imposed by such
independent accountants, copies of any management letters submitted to the
board of directors (or the audit committee of the board of

 

59

 

directors) of Parent by independent accountants in connection with the
annual audit of Parent or any of its Subsidiaries.

 

6.2. Certificates; Other Information. Furnish to the
Administrative Agent (either electronically or with sufficient copies for
distribution by the Administrative Agent to each Lender) or, in the case of clause
(d), to the relevant Lender:

 

(a)                                  concurrently with the
delivery of the audited financial statements referred to in Section 6.1(a)(i),
a certificate of the independent certified public accounting firm reporting on
such financial statements stating that in making the examination necessary
therefor no knowledge was obtained of any Default or Event of Default (it being
understood that (i) such certificate shall only be required if delivery by
such independent certified public accounting firm of such a certificate is not
prohibited by its policies and (ii) any such certificate may be
limited in scope and qualified in accordance with customary practices of the
accounting profession), except as specified in such certificate;

 

(b)                                 not later than the
deadline for the delivery of any financial statements pursuant to Section 6.1(a),
(i) a certificate of a Responsible Officer of Parent stating that such
Responsible Officer has obtained no knowledge of any continuing Default or
Event of Default except as specified in such certificate and (ii) a
Compliance Certificate containing all information and calculations necessary
for determining compliance by Parent with Section 7.1 as of the
last day of the fiscal quarter or fiscal year of Parent.

 

(c)                                  within 10 days after
the same are filed with the SEC (unless posted on the SEC’s website at
www.sec.gov or any replacement website), all reports and filings on Forms 10-K,
10-Q and 8-K that the Loan Parties may make to, or file with, the SEC,
including any request of an extension of time for the filing of any such
reports; and

 

(d)                                 promptly, such
additional financial and other information as the Administrative Agent or any Lender
may from time to time reasonably request.

 

(e)                                  The Loan Parties
hereby acknowledge that (a) unless otherwise directed by a Loan Party, the
Administrative Agent and/or the Arrangers will make available to the Lenders
and the Issuing Bank materials and/or information provided by or on behalf of
the Loan Parties hereunder (collectively, “Borrower Materials”) by
posting the Borrower Materials on IntraLinks or another similar electronic
system (the “Platform”), subject to confidentiality undertakings reasonably
acceptable to the Loan Parties and the Arrangers, and (b) certain of the
Lenders may be “public-side” Lenders (i.e., Lenders that do not wish to
receive material non-public information with respect to the Loan Parties or
their securities) (each, a “Public Lender”). Each of the Loan Parties
hereby agrees that (w) all Borrower Materials that are to be made available to
Public Lenders shall be clearly and conspicuously marked “PUBLIC” which, at a
minimum, shall mean that the word “PUBLIC” shall appear prominently on the
first page thereof; (x) by marking Borrower Materials “PUBLIC,” the Loan

 

60

 

Parties shall be deemed to have authorized the Administrative Agent,
the Arrangers, the Issuing Bank and the Lenders to treat such Borrower
Materials as either publicly available information or not material information
(although it may be sensitive and proprietary) with respect to the Loan
Parties or their securities for purposes of United States Federal and state securities
laws; (y) all Borrower Materials marked “PUBLIC” are permitted to be made
available through a portion of the Platform designated “Public Investor;”
and (z) the Administrative Agent and the Arrangers shall be entitled to treat
any Borrower Materials that are not marked “PUBLIC” as being suitable only for
posting on a portion of the Platform not designated “Public Investor.”  Notwithstanding any of the foregoing, if any
Loan Party also delivers any materials and/or information pursuant to this Section 6.2(e) in
paper format to the Administrative Agent, such paper materials shall be deemed
to be Borrower Materials for all purposes. Nothing in this Section 6.2(e) shall
limit the obligations of the Administrative Agent and the Lenders under Section 10.16.

 

6.3. Payment of Obligations. Pay, discharge or otherwise satisfy
at or before maturity or before they become delinquent, as the case may be,
all its material obligations of whatever nature (other than Indebtedness),
except where the amount or validity thereof is currently being contested in
good faith by appropriate proceedings and reserves in conformity with GAAP with
respect thereto have been provided on the books of the Loan Parties or their
Subsidiaries, as the case may be; provided, that the Loan Parties
may, in the ordinary course of business, extend payments on those payables if
beneficial to the operation of their businesses.

 

6.4. Conduct of Business and Maintenance of Existence, etc. (a)(i) With
respect to each Subsidiary of Parent, preserve, renew and keep in full force
and effect its corporate existence and (ii) with respect to Parent and
each of its Subsidiaries, take all reasonable action to maintain all licenses,
permits, rights, privileges and franchises necessary or desirable in the normal
conduct of its business, except, in each case, as otherwise would not be a
Fundamental Change and except, in the case of clause (i) above
and clause (ii) above, to the extent that failure to do so could
not reasonably be expected to have a Material Adverse Effect; and (b) comply
with all Contractual Obligations (other than in respect of Indebtedness) and
Requirements of Law, except to the extent that failure to comply therewith
could not, in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

6.5. Maintenance of Property; Insurance. (a)  Keep all
Property and systems useful and necessary in its business in good working order
and condition, ordinary wear and tear excepted and (b) maintain with
financially sound and reputable insurance companies (other than with Parent or
its Subsidiaries) insurance on all its Property in at least such amounts and
against at least such risks (but including in any event public liability,
product liability and business interruption) as are usually insured against in
the same general area by companies engaged in the same or a similar business
(it being understood that, to the extent consistent with prudent business
practices of Persons carrying on a similar business in a similar location, a
program of self-insurance for first and other loss layers may be
utilized).

 

6.6. Inspection of Property; Books and Records; Discussions. (a) 
Keep proper books of records and account in which full, true and correct
entries in conformity with GAAP (or SAP as applicable) and all Requirements of
Law shall be made of all material dealings and

 

61

 

transactions
in relation to its business and activities and (b) upon reasonable prior
notice, permit representatives of the Administrative Agent (who may be
accompanied by representatives of other Lenders) and, during the continuance of
an Event of Default, any Lender to (x) visit and inspect any of its properties,
(y) during the continuance of an Event of Default, conduct reasonable examinations
of (and, with the consent of the Loan Parties, such consent not to be
unreasonably withheld, make abstracts from) any of its books and records at any
reasonable time and as often as may reasonably be requested and (z)
discuss the business, operations, properties and financial and other condition
of the Loan Parties with officers and employees of the Loan Parties. It is
understood that (i) any information obtained by the Administrative Agent
or any Lender in any visit or inspection pursuant to this Section 6.6
shall be subject to the confidentiality requirements of Section 10.16,
(ii) the Loan Parties may impose, with respect to any Lender or any
Affiliate of any Lender reasonably deemed by the Loan Parties to be engaged
significantly in a business which is directly competitive with any material
business of the Loan Parties and their respective Subsidiaries, reasonable
restrictions on access to proprietary information of the Loan Parties and their
respective Subsidiaries and (iii) the Lenders will coordinate their visits
through the Administrative Agent with a view to preventing the visits provided
for by this Section 6.6 from becoming unreasonably burdensome to
the Loan Parties and their Subsidiaries.

 

6.7. Notices. Give notice to the Administrative Agent (it being
agreed that the Administrative Agent shall, upon receipt of such notice, notify
each Lender thereof) of the following within the time periods specified:

 

(a)                                  Promptly after any
Responsible Officer of the Borrower obtains knowledge thereof, the occurrence
of any Default or Event of Default;

 

(b)                                 Within five days after
any Responsible Officer of the Borrower obtains knowledge thereof, the
occurrence of:

 

(i)                                     any default or
event of default under any Contractual Obligation (other than in respect of
Indebtedness) of a Loan Party or any of its Subsidiaries or any litigation,
investigation or proceeding which may exist at any time between a Loan
Party or any of its Subsidiaries and any Governmental Authority, that in either
case, if not cured or if adversely determined, as the case may be, could
reasonably be expected to have a Material Adverse Effect; and

 

(ii)                                  (A) any
litigation or proceeding affecting a Loan Party or any of its Subsidiaries
(other than claims-related litigation involving an Insurance Subsidiary) in
which (x) the amount involved (and not covered by insurance) is $50,000,000 or
more or (y) in which injunctive or similar relief is sought that could
reasonably be expected to have a Material Adverse Effect and (B) any
claims-related litigation affecting any Insurance Subsidiary which could
reasonably be expected to have a Material Adverse Effect; and

 

(c)                                  As soon as possible
and, in any event, within 30 days after a Responsible Officer of the Borrower
obtains knowledge thereof:  (A) the occurrence
of any Reportable Event with respect to any Plan, a failure to make any
required

 

62

 

contribution to a Plan, the creation of any Lien in favor of the PBGC
or a Plan or any withdrawal from, or the termination, Reorganization or
Insolvency of, any Multiemployer Plan or (B) the institution of
proceedings or the taking of any other action by the PBGC or a Loan Party or
any Commonly Controlled Entity or any Multiemployer Plan with respect to the
withdrawal from, or the termination, Reorganization or Insolvency of, any Plan.

 

Each notice
pursuant to this Section 6.7 shall be accompanied by a statement of
a Responsible Officer on behalf of Parent setting forth details of the
occurrence or such default referred to therein and stating what action the Loan
Parties or the relevant Subsidiary proposes to take with respect thereto.

 

6.8. Taxes. Pay, discharge, or otherwise satisfy before the same
shall become overdue, all taxes, assessments and other governmental charges
imposed upon it and its real estate, sales and activities, or any part thereof,
or upon the income or profits therefrom, other than where failure to pay such
taxes could not reasonably be expected to result in a Material Adverse Effect; provided
that any such tax, assessment, charge, levy or claim need not be paid if the
validity or amount thereof shall currently be contested in good faith by
appropriate proceedings and reserves in conformity with SAP or GAAP, as
applicable, have been provided on the books of the Loan Parties and their
Subsidiaries, as the case may be.

 

6.9. Use of Proceeds. Use the proceeds of the Loans and the
Letters of Credit solely for the purposes set forth in Section 5.12.

 

6.10. Further Assurances. Each of the Loan Parties will, and
will cause each of their Subsidiaries to, cooperate with the Lenders and the
Administrative Agent and execute such further instruments and documents as the
Lenders or the Administrative Agent shall reasonably request to give effect to
the transactions contemplated by this Agreement and the other Loan Documents.

 

7.                                      NEGATIVE COVENANTS

 

The Loan Parties hereby jointly and severally agree that, from and
after the Closing Date and so long as the Commitments remain in effect, any
Letter of Credit remains outstanding, there exist any unpaid Reimbursement
Obligations or any principal or interest on any Loan or any fee payable
hereunder is owing to any Lender or the Administrative Agent hereunder:

 

7.1. Financial Condition Covenants.

 

(a)          Maintenance of Consolidated Net Worth.
Parent shall not permit its Consolidated Net Worth, as of the end of any fiscal
quarter, commencing with the first fiscal quarter ending after the Closing
Date, to be less than the sum of (i) sixty-five percent (65%) of the pro
forma Consolidated Net Worth of Parent as disclosed in the Form S-1
Registration Statement filed in connection with the IPO, plus (ii) fifty
percent (50%) of positive Consolidated Net Income for each fiscal quarter
ending after September 30, 2006.

 

63

 

(b)         Maintenance of Total Consolidated Debt to
Total Consolidated Capitalization Ratio. Parent shall not permit its Total
Consolidated Debt to Total Consolidated Capitalization Ratio, (i) as of
the end of any fiscal quarter ending after the Closing Date and prior to the
second anniversary of the Closing Date to be greater than thirty-seven and one
half of one percent (37.5%) and (ii) as of the end of any fiscal quarter
ending on or after the second anniversary of the Closing Date to be greater
than thirty-five percent (35%).

 

7.2. Limitation on Indebtedness and Issuance of Preferred Stock.
The Loan Parties will not permit any of their Subsidiaries (other than the
Borrower) to create, incur or assume or suffer to exist any Indebtedness or
issue any preferred stock, except:

 

(a)          Indebtedness and preferred stock outstanding
as of the Closing Date and any refinancings, refundings, renewals or extensions
thereof (without any increase in the principal amount thereof, other than by
the amount of any necessary pre-payment premiums, unpaid accrued interest and
other costs of refinancing, or any shortening of the final maturity of any
principal amount thereof to a date prior to the Revolving Credit Termination
Date);

 

(b)         Indebtedness or preferred stock of any
Insurance Subsidiary incurred or issued in the ordinary course of its business
or in securing insurance-related obligations (that do not constitute
Indebtedness) of such Insurance Subsidiary and letters of credit, bank guarantees,
surety bonds or similar instruments issued for the account of any Insurance
Subsidiary in the ordinary course of its business or in securing
insurance-related obligations (that do not constitute Indebtedness) of such
Insurance Subsidiary;

 

(c)          Indebtedness in respect of letters of credit,
bank guarantees, surety and appeal bonds, or performance bonds or other
obligations of a like nature arising in the ordinary course of business and not
for capital raising purposes and issued for the account of any Non-Regulated
Operating Subsidiary;

 

(d)         short-term Indebtedness (i.e. with a maturity
of less than one year when issued, provided that such Indebtedness may include
an option to extend for up to an additional one year period) of any Insurance
Subsidiary incurred to provide short-term liquidity to facilitate claims
payment in the event of catastrophe;

 

(e)          Indebtedness or preferred stock of a
Subsidiary acquired after the Closing Date or a corporation merged into or
consolidated with a Subsidiary after the Closing Date and Indebtedness assumed
in connection with the acquisition of assets, which Indebtedness, in each case,
exists at the time of such acquisition, merger or consolidation and is not
created in contemplation of such event, as well as any refinancings, refunds,
renewals or extensions of such Indebtedness (without increase in the principal
amount thereof other than by the amount of any necessary pre-payment premiums,
unpaid accrued interest and other costs of refinancing);

 

64

 

(f)            Indebtedness or preferred stock owing or
issued by a Subsidiary to any other Subsidiary or to any Loan Party;

 

(g)         Guarantee Obligations made by a Subsidiary in
respect of obligations of another Subsidiary (other than the Borrower);

 

(h)         Indebtedness under the Loan Documents;

 

(i)             other Indebtedness or preferred stock of
Persons, provided that at the time such Indebtedness or preferred stock
is incurred or issued, the aggregate principal amount or liquidation preference
of such Indebtedness or preferred stock when added to all other Indebtedness
and preferred stock incurred or issued pursuant to this clause (i) and
then outstanding, does not exceed 15% of the Consolidated Net Worth of Parent; provided
that, in calculating Indebtedness and preferred stock incurred pursuant to this
clause (i), the Indebtedness and preferred stock of the Borrower shall
be excluded.

 

7.3. Limitation on Liens. The Loan Parties will not, and will
not permit any of their Subsidiaries to, create, incur, assume or suffer to
exist (a) any Lien upon any stock or indebtedness of any Subsidiary,
whether owned on the date of this Agreement or hereafter acquired, to secure
any Debt of the Loan Parties or any of their Subsidiaries or any other person
(other than the obligations hereunder) or (b) any Lien upon any other
Property of the Loan Parties or their respective Subsidiaries, whether owned or
leased on the date of this Agreement, or thereafter acquired, to secure any
Debt of the Loan Parties or any of their Subsidiaries or any other person
(other than the obligations hereunder), except:

 

(i)                                     (x) any Lien
existing on the date of this Agreement or (y) any Lien upon stock or
Indebtedness or other Property of any Person existing at the time such Person
becomes a Subsidiary or existing upon stock or Indebtedness of a Subsidiary or
any other Property at the time of acquisition of such stock or Indebtedness or
other Property (provided that such Lien was not created in connection
with the acquisition of such Person or such Property), and any extension,
renewal or replacement (or successive extensions, renewals or replacements) in
whole or in part of any such Lien in clauses (x) or (y)
above; provided, however, that the principal amount of Debt
secured by such Lien shall not exceed the principal amount of Debt so secured
at the time of such extension, renewal or replacement; and provided, further,
that such Lien shall be limited to all or such part of the stock or
Indebtedness or other Property which secured the Lien so extended, renewed or
replaced;

 

(ii)                                  any Permitted Liens;
and

 

(iii)                               any Lien upon any
Property if the aggregate amount of all Debt then outstanding secured by such
Lien and all other Liens permitted pursuant to this clause (iii) does
not exceed 10% of the total consolidated stockholders’ equity (including
preferred stock) of Parent as shown on the audited consolidated balance sheet
contained in the latest annual report to stockholders of Parent;

 

65

 

provided that Debt secured by Liens permitted
by clauses (i) and (ii) shall not be included in the
amount of such secured Debt.

 

7.4. Limitation on Changes in Fiscal Periods. Neither of the
Loan Parties shall permit its fiscal year to end on a day other than December 31
or change its method of determining fiscal quarters.

 

7.5. Limitation on Lines of Business. Neither of the Loan
Parties shall engage to any extent that is material for such Loan Party and its
Subsidiaries, taken as a whole, in any business, either directly or through any
Subsidiary, other than a Principal Business.

 

8.                                      EVENTS OF DEFAULT

 

8.1. Events of Default. If any of the following events shall
occur and be continuing:

 

(a)                                  The Borrower shall
fail to pay any principal of any Loan made to the Borrower or Reimbursement
Obligation owing by the Borrower when due in accordance with the terms hereof;
or the Borrower shall fail to pay any interest on any Loan made to the Borrower
or Reimbursement Obligation owing to the Borrower, or any other amount payable
by the Borrower hereunder or under any other Loan Document, within three
Business Days after any such interest or other amount becomes due in accordance
with the terms hereof; or

 

(b)                                 Either of the Loan
Parties shall default in the observance or performance of any agreement
contained in Section 6.7(a) or Section 7; or

 

(c)                                  (i) The Loan
Parties or any of their Material Insurance Subsidiaries shall voluntarily
commence any case, proceeding or other action (A) under any Debtor Relief
Law, (B) seeking appointment of a receiver, trustee, custodian,
conservator or other similar official for it or for all or any substantial part of
its assets, or the Loan Parties or any of their Material Insurance Subsidiaries
shall make a general assignment for the benefit of its creditors; or (ii) there
shall be commenced against the Loan Parties or any of their Material Insurance
Subsidiaries any case, proceeding or other action under any Debtor Relief Law
that (A) results in the entry of an order for relief or any such
adjudication or appointment or (B) remains undismissed, undischarged or
unbonded for a period of 60 days; or (iii) the Loan Parties or any of
their Material Insurance Subsidiaries shall take any corporate action to
authorize or effect any of the acts set forth in clause (i), or (ii),
above; or (iv) the Loan Parties or any of their Material Insurance
Subsidiaries shall generally not, or shall be unable to, or shall admit in
writing its inability to, pay its debts as they become due; or

 

(d)                                 A Change of Control;
or

 

(e)                                  A Fundamental Change;
or

 

66

 

(f)                                    (i) White
Mountains shall (x) default in making any payment of any principal of any
Indebtedness (including, without limitation, any Guarantee Obligation) on the
scheduled or original due date with respect thereto (after giving effect to any
applicable grace periods); or (y) default in making any payment of any interest
on any such Indebtedness beyond the period of grace, if any, provided in the
instrument or agreement under which such Indebtedness was created; or (z)
default in the observance or performance of any other agreement or condition
relating to any such Indebtedness or contained in any instrument or agreement
evidencing, securing or relating thereto (after giving effect to any applicable
notice requirements and grace periods), and (ii) the effect of such
default by White Mountains (excluding the Loans and Reimbursement Obligations)
is to cause Indebtedness of the Borrower, or to permit the holder or
beneficiary (or a trustee or agent on behalf of such holder or beneficiary) of
Indebtedness of the Borrower (excluding the Loans and Reimbursement
Obligations) to cause such Indebtedness of the Borrower (in each case after
giving effect to any applicable notice requirements and grace periods in
respect of such Indebtedness of the Borrower), to become due prior to its
stated maturity or to become subject to a mandatory offer to purchase by the
obligor thereunder as a result of the occurrence of such default by White Mountains,
provided, that the events described in this paragraph (d) shall
not at any time constitute an Event of Default unless, at such time, the events
described in clause (ii) shall have occurred and be continuing with
respect to Indebtedness of the Borrower (excluding the Loans and Reimbursement
Obligations) the outstanding principal amount of which exceeds in the aggregate
$25,000,000;

 

(g)                                 Any representation or
warranty made or deemed made by either of the Loan Parties herein or in any
other Loan Document or that is contained in any certificate, document or
financial or other statement furnished by it at any time under or in connection
with this Agreement or any such other Loan Document shall prove to have been
inaccurate in any material respect on or as of the date made or deemed made or
furnished; or

 

(h)                                 Either of the Loan
Parties shall default in the observance or performance of any other agreement,
covenant, term or condition contained in this Agreement or any other Loan
Document (not specified in Sections 8.1(a), 8.1(b) or 8.1(g);
or

 

(i)                                     The Loan Parties
or any of their Subsidiaries shall (i) default in making any payment of
any principal of any Indebtedness (including, without limitation, any Guarantee
Obligation, but excluding the Loans and Reimbursement Obligations) on the
scheduled or original due date with respect thereto (after giving effect to any
applicable grace periods); or (ii) default in making any payment of any
interest on any such Indebtedness beyond the period of grace, if any, provided
in the instrument or agreement under which such Indebtedness was created; or (iii) default
in the observance or performance of any other agreement or condition relating
to any such Indebtedness or contained in any instrument or agreement
evidencing, securing or relating thereto, the effect of which default is to
cause, or to permit the holder or beneficiary of such Indebtedness (or a
trustee or agent on behalf of such holder or

 

67

 

beneficiary) to cause, with the giving of
notice if required, such Indebtedness to become due prior to its stated
maturity or to become subject to a mandatory offer to purchase by the obligor
thereunder as a result of the occurrence of such default thereunder or (in the
case of any such Indebtedness constituting a Guarantee Obligation) to become
payable; provided, that a default described in clause (i), (ii) or
(iii) of this paragraph (i) shall not at any time
constitute an Event of Default unless, at such time, one or more defaults of
the type described in clauses (i), (ii) and (iii) of
this paragraph (i) shall have occurred and be continuing with
respect to Indebtedness the outstanding principal amount of which exceeds in
the aggregate $25,000,000; or

 

(j)                                     (i) Any
person shall engage in any “prohibited transaction” (as defined in Section 406
of ERISA or Section 4975 of the Code) involving any Plan, (ii) any “accumulated
funding deficiency” (as defined in Section 302 of ERISA), whether or not
waived, shall exist with respect to any Plan or any Lien in favor of the PBGC
or a Plan shall arise on the assets of a Loan Party or any Commonly Controlled
Entity, (iii) a Reportable Event shall occur with respect to, or
proceedings shall commence to have a trustee appointed, or a trustee shall be
appointed, to administer or to terminate, any Single Employer Plan, which
Reportable Event or commencement of proceedings or appointment of a trustee is,
in the reasonable opinion of the Majority Lenders, likely to result in the
termination of such Plan for purposes of Title IV of ERISA, (iv) any
Single Employer Plan shall terminate for purposes of Title IV of ERISA or, (v) any
Loan Party or any Commonly Controlled Entity shall, or in the reasonable
opinion of the Majority Lenders is likely to, incur any liability in connection
with a withdrawal from, or the Insolvency or Reorganization of, a Multiemployer
Plan and in each case in clauses (i) through (v) above,
such event or condition, together with all other such events or conditions for
which liability to a Loan Party is reasonably expected to occur, if any, could,
in the reasonable judgment of the Majority Lenders, reasonably be expected to
have a Material Adverse Effect; or

 

(k)                                  One or more judgments
or decrees shall be entered against the Loan Parties or any of their
Subsidiaries involving for the Loan Parties and their Subsidiaries taken as a
whole a liability (to the extent not paid or fully covered by insurance above
applicable deductions) of $25,000,000 or more, and all such judgments or
decrees shall not have been vacated, discharged, stayed or bonded pending
appeal within 45 days from the entry thereof; or

 

(l)                                     The guarantee, set
forth in Section 2.21 herein, shall cease, for any reason (other
than as provided in Section 10.17) to be in full force and effect
or either of the Loan Parties or any Affiliate of either of the Loan Parties
shall so assert in writing; or

 

(m)                               Any License of any
Insurance Subsidiary (i) shall be revoked by the Governmental Authority
which issued such License, or any action (administrative or judicial) to revoke
such License shall have been commenced against such Insurance Subsidiary and
shall not have been dismissed within thirty days after the commencement
thereof, (ii) shall be suspended by such Governmental

 

68

 

Authority for a period in excess of thirty days or (iii) shall not
be reissued or renewed by such Governmental Authority upon the expiration
thereof following application for such reissuance or renewal of such Insurance
Subsidiary, which, in the case of each of clauses (i), (ii) and
(iii) above, could reasonably be expected to have a Material
Adverse Effect.

 

Notwithstanding
the foregoing, in the case of each of paragraphs (g) through (m) of this Section 8.1,
such event shall not constitute an Event of Default unless such event continues
unremedied for a period of 30 days after the Borrower shall have received
written notice of such event from the Administrative Agent.

 

8.2. Remedies Upon Event of Default. If any Event of Default
specified in Section 8.1 occurs and is continuing, then, and in any
such event, (a) if such event is an Event of Default specified in clause
(i) or (ii) of Section 8.1(c) above with
respect to the Borrower, automatically the commitment of each Lender to make
Loans and any obligation of the Issuing Lender to make L/C Credit Extensions
shall immediately terminate and the Loans hereunder (with accrued interest
thereon) and all other amounts owing under this Agreement and the other Loan
Documents (including, without limitation, all amounts of L/C Obligations,
whether or not the beneficiaries of the then outstanding Letters of Credit
shall have presented the documents required thereunder) shall immediately
become due and payable, and (b) if such event is any other Event of
Default specified in Section 8.1, either or both of the following
actions may be taken: (i) with the consent of the Majority Lenders,
the Administrative Agent may, or upon the request of the Majority Lenders, the
Administrative Agent shall, by notice to the Borrower declare the Revolving
Credit Commitments and the obligation of the Issuing Lender to issue Letters of
Credit to be terminated forthwith, whereupon the Revolving Credit Commitments
and the L/C Commitment shall immediately terminate; and (ii) with the
consent of the Majority Lenders, the Administrative Agent may, or upon the
request of the Majority Lenders, the Administrative Agent shall, by notice to
the Borrower, declare the Loans hereunder (with accrued interest thereon) and
all other amounts owing under this Agreement and the other Loan Documents
(including, without limitation, all amounts of L/C Obligations, whether or not
the beneficiaries of the then outstanding Letters of Credit shall have
presented the documents required thereunder) to be due and payable forthwith,
whereupon the same shall immediately become due and payable. In the case of any
Letter of Credit issued for the account of the Borrower with respect to which
presentment for honor shall not have occurred at the time of an acceleration
pursuant to this paragraph, the Borrower shall at such time Cash Collateralize
such L/C Obligations in an amount equal to the aggregate then undrawn and
unexpired amount of such Letters of Credit. Such cash collateral shall be applied
by the Administrative Agent to the payment of drafts drawn under such Letters
of Credit, and the unused portion thereof after all such Letters of Credit
shall have expired or been fully drawn upon, if any, shall be applied to repay
other obligations of the Loan Parties hereunder and under the other Loan
Documents. After (a) all such Letters of Credit shall have expired or been
fully drawn upon, all Reimbursement Obligations shall have been satisfied and
all other obligations of the Loan Parties hereunder and under the other Loan
Documents shall have been paid in full or (b) all Defaults and Events of
Default hereunder and under the other Loan Document shall have been cured or
waived, the balance, if any, in such cash collateral account shall be returned
to the applicable Loan Party (or such other Person as may be lawfully
entitled thereto).

 

69

 

9.                                      THE ADMINISTRATIVE AGENT

 

9.1. Appointment. (a)  Each Lender hereby irrevocably
appoints, designates and authorizes the Administrative Agent to take such
action on its behalf under the provisions of this Agreement and each other Loan
Document and to exercise such powers and perform such duties as are
expressly delegated to it by the terms of this Agreement or any other Loan
Document, together with such powers as are reasonably incidental thereto. Notwithstanding
any provision to the contrary contained elsewhere herein or in any other Loan
Document, the Administrative Agent shall not have any duties or responsibilities,
except those expressly set forth herein, nor shall the Administrative Agent
have or be deemed to have any fiduciary relationship with any Lender or
participant, and no implied covenants, functions, responsibilities, duties,
obligations or liabilities shall be read into this Agreement or any other Loan
Document or otherwise exist against the Administrative Agent. Without limiting
the generality of the foregoing sentence, the use of the term “agent” herein
and in the other Loan Documents with reference to the Administrative Agent is
not intended to connote any fiduciary or other implied (or express) obligations
arising under agency doctrine of any applicable Law. Instead, such term is used
merely as a matter of market custom, and is intended to create or reflect only
an administrative relationship between independent contracting parties.

 

(b)                                 The Issuing Lender
shall act on behalf of the Lenders with respect to any Letters of Credit issued
by it and the documents associated therewith, and the Issuing Lender shall have
all of the benefits and immunities (i) provided to the Administrative
Agent in this Section 9 with respect to any acts taken or omissions
suffered by the Issuing Lender in connection with Letters of Credit issued by
it or proposed to be issued by it and the Applications and agreements for
letters of credit pertaining to such Letters of Credit as fully as if the term “Administrative
Agent” as used in this Section 9 and in the definition of “Agent-Related
Person” included the Issuing Lender with respect to such acts or omissions, and
(ii) as additionally provided herein with respect to the Issuing Lender; provided
that nothing in this Agreement shall be construed to excuse the Issuing Lender
from any liability to the Borrower for damages caused by the gross negligence
or willful misconduct of the Issuing Lender or any Agent-Related Person.

 

9.2. Delegation of Duties. The Administrative Agent may execute
any of its duties under this Agreement or any other Loan Document by or through
agents, employees or attorneys-in-fact and shall be entitled to advice of
counsel and other consultants or experts concerning all matters pertaining to
such duties. The Administrative Agent shall not be responsible for the
negligence or misconduct of any agent or attorney-in-fact that it selects in
the absence of gross negligence or willful misconduct.

 

9.3. Liability of Administrative Agent. No Agent-Related Person
shall (a) be liable for any action taken or omitted to be taken by any of
them under or in connection with this Agreement or any other Loan Document or
the transactions contemplated hereby (except for its own gross negligence or
willful misconduct in connection with its duties expressly set forth herein),
or (b) be responsible in any manner to any Lender or participant for any
recital, statement, representation or warranty made by either of the Loan
Parties or any officer thereof, contained herein or in any other Loan Document,
or in any certificate, report, statement or other

 

70

 

document
referred to or provided for in, or received by the Administrative Agent under
or in connection with, this Agreement or any other Loan Document, or the
validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement
or any other Loan Document, or for any failure of either of the Loan Parties or
any other party to any Loan Document to perform its obligations hereunder
or thereunder. No Agent-Related Person shall be under any obligation to any
Lender or participant to ascertain or to inquire as to the observance or
performance of any of the agreements contained in, or conditions of, this
Agreement or any other Loan Document, or to inspect the properties, books or
records of the Loan Parties or any Affiliate thereof.

 

9.4. Reliance by Administrative Agent. (a)  The
Administrative Agent shall be entitled to rely, and shall be fully protected in
relying, upon any writing, communication, signature, resolution,
representation, notice, consent, certificate, affidavit, letter, telegram,
facsimile, telex or telephone message, electronic mail message, statement or
other document or conversation believed by it to be genuine and correct and to
have been signed, sent or made by the proper Person or Persons, and upon advice
and statements of legal counsel (including counsel to the Loan Parties),
independent accountants and other experts selected by the Administrative Agent.
The Administrative Agent may deem and treat the payee of any Note as the
owner thereof for all purposes unless such Note shall have been transferred in
accordance with Section 10.7 and all actions required by such Section 10.7
in connection with such transfer shall have been taken. The Administrative
Agent shall be fully justified in failing or refusing to take any action under
any Loan Document unless it shall first receive such advice or concurrence of
the Majority Lenders (or, if so specified by this Agreement, all Lenders) as it
deems appropriate and, if it so requests, it shall first be indemnified to its
satisfaction by the Lenders against any and all liability and expense which may be
incurred by it by reason of taking or continuing to take any such action. The
Administrative Agent shall in all cases be fully protected in acting, or in
refraining from acting, under this Agreement or any other Loan Document in
accordance with a request or consent of the Majority Lenders (or such greater
number of Lenders as may be expressly required hereby in any instance) and
such request and any action taken or failure to act pursuant thereto shall be
binding upon all the Lenders; provided that the Administrative Agent
shall not be required to take any action that, in its opinion or the opinion of
its counsel, may expose the Administrative Agent to liability or that is
contrary to any Loan Document or applicable Law.

 

(b)                                 For purposes of
determining compliance with the conditions specified in Section 4.1,
each Lender that has signed this Agreement shall be deemed to have consented
to, approved or accepted or to be satisfied with, each document or other matter
required thereunder to be consented to or approved by or acceptable or
satisfactory to a Lender unless the Administrative Agent shall have received
notice from such Lender prior to the proposed Closing Date specifying its
objection thereto.

 

9.5. Notice of Default. The Administrative Agent shall not be
deemed to have knowledge or notice of the occurrence of any Default unless the
Administrative Agent shall have received written notice from a Lender or a Loan
Party referring to this Agreement, describing such Default and stating that
such notice is a “notice of default.” The Administrative Agent will notify the
Lenders of its receipt of any such notice. The Administrative Agent shall take
such action with respect to such Default as may be directed by the
Majority Lenders in accordance with Section 8.2; provided, however,
that unless and until the Administrative Agent has received

 

71

 

any such
direction, the Administrative Agent may (but shall not be obligated to)
take such action, or refrain from taking such action, with respect to such
Default as it shall deem advisable or in the best interest of the Lenders.

 

9.6. Credit Decision; Disclosure of Information by Administrative Agent.
Each Lender acknowledges that no Agent-Related Person has made any
representation or warranty to it, and that no act by the Administrative Agent
hereafter taken, including any consent to and acceptance of any assignment or
review of the affairs of the Loan Parties or any Affiliate thereof, shall be
deemed to constitute any representation or warranty by any Agent-Related Person
to any Lender as to any matter, including whether Agent-Related Persons have
disclosed material information in their possession. Each Lender represents to
the Administrative Agent that it has, independently and without reliance upon
any Agent-Related Person and based on such documents and information as it has
deemed appropriate, made its own appraisal of and investigation into the
business, prospects, operations, property, financial and other condition and
creditworthiness of the Loan Parties and their Subsidiaries, and all applicable
bank or other regulatory Laws relating to the transactions contemplated hereby,
and made its own decision to enter into this Agreement and to extend credit to
the Borrower hereunder. Each Lender also represents that it will, independently
and without reliance upon any Agent-Related Person and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own credit analysis, appraisals and decisions in taking or not taking action
under this Agreement and the other Loan Documents, and to make such
investigations as it deems necessary to inform itself as to the business,
prospects, operations, property, financial and other condition and
creditworthiness of the Loan Parties. Except for notices, reports and other
documents expressly required to be furnished to the Lenders by the
Administrative Agent herein, the Administrative Agent shall not have any duty
or responsibility to provide any Lender with any credit or other information
concerning the business, prospects, operations, property, financial and other
condition or creditworthiness of any of the Loan Parties or any of their
Affiliates which may come into the possession of any Agent-Related Person.

 

9.7. Indemnification of Administrative Agent. Whether or not the
transactions contemplated hereby are consummated, the Lenders shall indemnify
upon demand each Agent-Related Person (to the extent not reimbursed by or on
behalf of the Borrower and without limiting the obligation of the Borrower),
pro rata, and hold harmless each Agent-Related Person from and against any and
all Indemnified Liabilities incurred by it; provided, however,
that no Lender shall be liable for the payment to any Agent-Related Person of
any portion of such Indemnified Liabilities to the extent determined in a
final, nonappealable judgment by a court of competent jurisdiction to have
resulted from such Agent-Related Person’s own gross negligence or willful
misconduct, provided, however, that no action taken in accordance
with the directions of the Majority Lenders (or such greater percentage of
Lenders as may be required hereunder) shall be deemed to constitute gross
negligence or willful misconduct for purposes of this Section 9.7. Without
limitation of the foregoing, each Lender shall reimburse the Administrative
Agent upon demand for its ratable share of any costs or out-of-pocket expenses
(including Attorney Costs) incurred by the Administrative Agent in connection
with the preparation, execution, delivery, administration, modification,
amendment or enforcement (whether through negotiations, legal proceedings or
otherwise) of, or legal advice in respect of rights or responsibilities under,
this Agreement, any other Loan Document, or any document contemplated by or
referred to herein, to the extent that the Administrative Agent is not

 

72

 

reimbursed for
such expenses by or on behalf of the Borrower. The undertaking in this Section 9.7
shall survive termination of the Total Revolving Credit Commitments, the
payment of all other obligations and the resignation of the Administrative
Agent.

 

9.8. Administrative Agent in its Individual Capacity. Bank of
America, N.A. and its Affiliates may make loans to, issue letters of
credit for the account of, accept deposits from, acquire equity interests in
and generally engage in any kind of banking, trust, financial advisory,
underwriting or other business with the Loan Parties and their respective
Affiliates as though Bank of America, N.A. were not the Administrative Agent or
the Issuing Lender hereunder and without notice to or consent of the Lenders. The
Lenders acknowledge that, pursuant to such activities, Bank of America, N.A. or
its Affiliates may receive information regarding the Loan Parties or their
Affiliates (including information that may be subject to confidentiality
obligations in favor of the Loan Parties or such Affiliate) and acknowledge
that the Administrative Agent shall be under no obligation to provide such
information to them. With respect to its Loans, Bank of America, N.A. shall
have the same rights and powers under this Agreement as any other Lender and may exercise
such rights and powers as though it were not the Administrative Agent or the
Issuing Lender, and the terms “Lender” and “Lenders” include Bank of America,
N.A. in its individual capacity.

 

9.9. Successor Administrative Agent. The Administrative Agent may resign
as Administrative Agent upon 30 days’ notice to the Lenders and the Borrower; provided
that any such resignation by Bank of America, N.A. shall also constitute its
resignation as Issuing Lender and Swing Line Lender, so long as a successor
Issuing Lender and a successor Swing Line Lender (each consented to by the
Borrower, such consent not to be unreasonably withheld or delayed) is appointed.
If the Administrative Agent resigns under this Agreement, the Majority Lenders
shall appoint from among the Lenders a successor administrative agent for the
Lenders, which successor administrative agent shall be consented to by the
Borrower at all times other than during the continuance of a Specified Event of
Default (which consent of the Borrower shall not be unreasonably withheld or
delayed). If no successor administrative agent is appointed prior to the
effective date of the resignation of the Administrative Agent, the
Administrative Agent may appoint, after consulting with the Lenders and
the Borrower, a successor administrative agent from among the Lenders. Upon the
acceptance of its appointment as successor administrative agent hereunder, the
Person acting as such successor administrative agent shall succeed to all of
the rights, powers and duties of the retiring Administrative Agent, Issuing
Lender and Swing Line Lender and the respective terms “Administrative Agent,” “Issuing
Lender” and “Swing Line Lender” shall mean such successor administrative agent,
Letter of Credit issuer and swing line lender, and the retiring Administrative
Agent’s appointment, powers and duties as Administrative Agent shall be
terminated and the retiring Issuing Lender’s and Swing Line Lender’s rights,
powers and duties as such shall be terminated, without any other or further act
or deed on the part of such retiring Issuing Lender or Swing Line Lender
or any other Lender, other than the obligation of the successor Issuing Lender
to issue letters of credit in substitution for the Letters of Credit, if any,
outstanding at the time of such succession or to make other arrangements
satisfactory to the retiring Issuing Lender to effectively assume the
obligations of the retiring Issuing Lender with respect to such Letters of
Credit. After any retiring Administrative Agent’s resignation hereunder as
Administrative Agent, the provisions of this Section 9 and Sections
10.5 and 10.6 shall inure to its benefit as to any actions taken or
omitted to be taken by it while it was Administrative Agent under this

 

73

 

Agreement. If
no successor administrative agent has accepted appointment as Administrative
Agent by the date which is 30 days following a retiring Administrative Agent’s
notice of resignation, the retiring Administrative Agent’s resignation shall
nevertheless thereupon become effective and the Lenders shall perform all
of the duties of the Administrative Agent hereunder until such time, if any, as
the Majority Lenders appoint a successor agent as provided for above.

 

9.10. Administrative Agent May File Proofs of Claim. In
case of the pendency of any receivership, insolvency, liquidation, bankruptcy,
reorganization, arrangement, adjustment, composition or other judicial
proceeding relative to either of the Loan Parties, the Administrative Agent
(irrespective of whether the principal of any Loan or L/C Obligation shall then
be due and payable as herein expressed or by declaration or otherwise and
irrespective of whether the Administrative Agent shall have made any demand on
either of the Loan Parties) shall be entitled and empowered, by intervention in
such proceeding or otherwise:

 

(a)                                  to file and prove a
claim for the whole amount of the principal and interest owing and unpaid in
respect of the Loans, L/C Obligations and all other obligations that are owing
and unpaid and to file such other documents as may be necessary or
advisable in order to have the claims of the Lenders and the Administrative
Agent (including any claim for the reasonable compensation, expenses, disbursements
and advances of the Lenders and the Administrative Agent and their respective
agents and counsel and all other amounts due the Lenders and the Administrative
Agent under Sections 2.5, 3.9 and 10.5) allowed in such
judicial proceeding; and

 

(b)                                 to collect and receive
any monies or other property payable or deliverable on any such claims and to
distribute the same;

 

and any custodian, receiver, assignee, trustee, liquidator,
sequestrator or other similar official in any such judicial proceeding is
hereby authorized by each Lender to make such payments to the Administrative
Agent and, in the event that the Administrative Agent shall consent to the
making of such payments directly to the Lenders, to pay to the Administrative
Agent any amount due for the reasonable compensation, expenses, disbursements
and advances of the Administrative Agent and its agents and counsel, and any
other amounts due the Administrative Agent under Sections 2.5, 3.9
and 10.5.

 

Nothing
contained herein shall be deemed to authorize the Administrative Agent to
authorize or consent to or accept or adopt on behalf of any Lender any plan of
reorganization, arrangement, adjustment or composition affecting the
obligations of the Loan Parties hereunder or under any of the other Loan Documents
or the rights of any Lender or to authorize the Administrative Agent to vote in
respect of the claim of any Lender in any such proceeding.

 

9.11. Guarantee and Collateral Matters. The Lenders irrevocably
authorize the Administrative Agent, at its option and in its discretion,

 

(a)                                  to release any Lien
on any property granted to or held by the Administrative Agent under any Loan
Document (i) upon termination of the Total Revolving Credit Commitments
and payment in full of all obligations of the Loan

 

74

Parties hereunder or under any of the other Loan Documents (other than
contingent indemnification obligations) and the expiration or termination of
all Letters of Credit, (ii) that is sold or to be sold as part of or
in connection with any sale permitted hereunder or under any other Loan
Document, or (iii) subject to Section 10.1, if approved,
authorized or ratified in writing by the Majority Lenders; and

 

(b)                                 to subordinate any
Lien on any property granted to or held by the Administrative Agent under any
Loan Document to the holder of any Lien on such property that is permitted by Section 7.3,
and

 

(c)                                  to effect any release
of Guarantee Obligations contemplated by Section 10.17.

 

9.12. Other Agents; Arrangers and Managers. None of the Lenders
or other Persons identified on the facing page or signature pages of
this Agreement as a “syndication agent,” “documentation agent,” “co-agent,” “book
manager,” “lead manager,” “arranger,” “lead arranger” or “co-arranger” shall
have any right, power, obligation, liability, responsibility or duty under this
Agreement other than, in the case of such Lenders, those applicable to all
Lenders as such. Without limiting the foregoing, none of the Lenders or other
Persons so identified shall have or be deemed to have any fiduciary
relationship with any Lender. Each Lender acknowledges that it has not relied,
and will not rely, on any of the Lenders or other Persons so identified in
deciding to enter into this Agreement or in taking or not taking action
hereunder.

 

10.                               MISCELLANEOUS

 

10.1. Amendments, Etc. No amendment or waiver of any provision
of this Agreement or any other Loan Document, and no consent to any departure
by the Loan Parties therefrom, shall be effective unless in writing signed by
the Majority Lenders and the Loan Parties, as applicable, and delivered to the
Administrative Agent, and each such waiver or consent shall be effective only
in the specific instance and for the specific purpose for which given; provided,
however, that no such amendment, waiver or consent shall:

 

(a)                                  extend the expiration
date of or increase the Revolving Credit Commitment of any Lender (or reinstate
any Revolving Credit Commitment terminated pursuant to Section 8.2)
without the written consent of such Lender;

 

(b)                                 postpone any date
fixed by this Agreement or any other Loan Document for any payment (excluding
mandatory prepayments) of principal, interest or fees payable hereunder or
under any other Loan Document without the written consent of each Lender
directly affected thereby;

 

(c)                                  reduce the principal
of, or the rate of interest specified herein on, any Loan or L/C Borrowing, or,
subject to clause (v) of the second proviso to this Section 10.1,
any fees or other amounts payable hereunder or under any other Loan Document
without the written consent of each Lender directly affected thereby; provided,
however, that only the consent of the Majority Lenders shall be
necessary to amend the definition of “Default Rate” or to waive any obligation
of the Borrower to pay interest or Letter of Credit Fees at the Default Rate;

 

75

(d)   change Section 2.14
in a manner that would alter the pro rata sharing of payments required thereby
without the written consent of each Lender directly affected thereby; or

 

(e)   change any provision of this
Section 10.1 or the percentage in the definition of “Majority Lenders”
or any other provision hereof specifying the number or percentage of Lenders
required to amend, waive or otherwise modify any rights hereunder or make any
determination or grant any consent hereunder, without the written consent of
each Lender;

 

(f)    amend, modify or waive any
provision of Section 2.3 or 2.4 without the written consent of
the Swing Line Lender;

 

(g)   amend, modify or waive any
provision of Section 3 without the consent of the Issuing Lender;

 

(h)   amend, modify or waive the
provisions of the definition of Interest Period regarding nine or twelve month
Interest Periods for Eurodollar Loans without the consent of each relevant
Lender;

 

(i)    consent to the assignment
or transfer by either of the Loan Parties of any of its rights and obligations
under this Agreement and the other Loan Documents; or

 

(j)    release the Parent from its
Guarantee Obligations under the Parent Guaranty except as provided in Section
10.17, without the consent of all Lenders;

 

and, provided
further, that (i) no amendment, waiver or consent shall, unless in
writing and signed by the Issuing Lender in addition to the Lenders required
above, modify the rights or duties of the Issuing Lender under this Agreement
or any Application relating to any Letter of Credit issued or to be issued by
it; (ii) no amendment, waiver or consent shall, unless in writing and signed by
the Swing Line Lender in addition to the Lenders required above, modify the
rights or duties of the Swing Line Lender under this Agreement; (iii) no
amendment, waiver or consent shall, unless in writing and signed by the
Administrative Agent in addition to the Lenders required above, modify the
rights or duties of the Administrative Agent under this Agreement or any other
Loan Document; and (iv) Section 10.7(h) may not be amended, waived or
otherwise modified without the consent of each Granting Lender all or any part
of whose Loans are being funded by an SPC at the time of such amendment, waiver
or other modification; and (v) the Fee Letters may be amended, or rights or
privileges thereunder waived, in a writing executed only by the parties thereto.
Notwithstanding anything to the contrary herein, no Defaulting Lender shall
have any right to approve or disapprove any amendment, waiver or consent hereunder,
except that the Revolving Credit Commitment of such Lender may not be increased
or extended without the consent of such Lender.

 

Any such
waiver and any such amendment, supplement or modification shall apply equally
to each of the Lenders and shall be binding upon the Loan Parties, the Lenders,
the Administrative Agent and all future holders of the Loans. In the case of
any waiver, the Loan

 

76

 

Parties, the
Lenders and the Administrative Agent shall be restored to their former position
and rights hereunder and under the other Loan Documents, and any Default or
Event of Default waived shall be deemed to be cured and not continuing; but no
such waiver shall extend to any subsequent or other Default or Event of
Default, or impair any right consequent thereon. Any such waiver, amendment,
supplement or modification shall be effected by a written instrument signed by
the parties required to sign pursuant to the foregoing provisions of this Section
10.1; provided, that delivery of an executed signature page of any
such instrument by facsimile transmission shall be effective as delivery of a
manually executed counterpart thereof.

 

For the
avoidance of doubt, this Agreement may be amended (or amended and restated)
with the written consent of the Majority Lenders, the Administrative Agent and
the Loan Parties party to each relevant Loan Document (x) to add one or more
additional credit facilities to this Agreement and to permit the extensions of
credit from time to time outstanding thereunder and the accrued interest and
fees in respect thereof to share ratably in the benefits of this Agreement and
the other Loan Documents with the Loans, the L/C Obligations and the accrued
interest and fees in respect thereof and (y) to include appropriately the
Lenders holding such credit facilities in any determination of the Majority
Lenders.

 

10.2. Notices;
Effectiveness; Electronic Communication.

 

(a)   Notices Generally. Except
in the case of notices and other communications expressly permitted to be given
by telephone (and except as provided in subsection (b) below), all
notices and other communications provided for herein shall be in writing and
shall be delivered by hand or overnight courier service, mailed by certified or
registered mail, sent by telecopier or by electronic mail as follows, and all
notices and other communications expressly permitted hereunder to be given by
telephone shall be made to the applicable telephone number, as follows:

 

(i)            if to either Loan
Party, the Administrative Agent, the Issuing Lender or the Swing Line Lender,
to the address, telecopier number, electronic mail address or telephone number
specified for such Person on Schedule 10.2; and

 

(ii)           if to any other
Lender, to the address, telecopier number, electronic mail address or telephone
number specified in its Administrative Questionnaire.

 

Notices sent
by hand or overnight courier service, or mailed by certified or registered
mail, shall be deemed to have been given when received; notices sent by
telecopier shall be deemed to have been given when sent (except that, if not
given during normal business hours for the recipient, shall be deemed to have
been given at the opening of business on the next business day for the
recipient). Notices delivered through electronic communications to the extent
provided in subsection (b) below, shall be effective as provided in such
subsection (b).

 

(b)   Electronic Communications.
Notices and other communications to the Lenders and the Issuing Lender hereunder
may be delivered or furnished by electronic communication (including e-mail and
Internet or intranet websites) pursuant to procedures approved by the
Administrative Agent, provided

 

77

 

that the
foregoing shall not apply to service of process or to notices to any Lender or
the Issuing Lender pursuant to Section 2. The Administrative Agent or
any Loan Party may, in its discretion, agree to accept notices and other
communications to it hereunder by electronic communications pursuant to
procedures approved by it, provided that approval of such procedures may
be limited to particular notices or communications.

 

Unless the
Administrative Agent otherwise prescribes, (i) notices and other communications
sent to an e-mail address shall be deemed received upon the sender’s receipt of
an acknowledgement from the intended recipient (such as by the “return receipt
requested” function, as available, return e-mail or other written
acknowledgement), provided that if such notice or other communication is
not sent during the normal business hours of the recipient, such notice or
communication shall be deemed to have been sent at the opening of business on
the next business day for the recipient, and (ii) notices or communications
posted to an Internet or intranet website shall be deemed received upon the
deemed receipt by the intended recipient at its e-mail address as described in
the foregoing clause (i) of notification that such notice or
communication is available and identifying the website address therefor.

 

(c)   The Platform. THE
PLATFORM IS PROVIDED “AS IS” AND “AS AVAILABLE.” THE AGENT-RELATED PERSONS DO
NOT WARRANT THE ACCURACY OR COMPLETENESS OF THE BORROWER MATERIALS OR THE
ADEQUACY OF THE PLATFORM, AND EXPRESSLY DISCLAIM LIABILITY FOR ERRORS IN OR
OMISSIONS FROM THE BORROWER MATERIALS. NO WARRANTY OF ANY KIND, EXPRESS,
IMPLIED OR STATUTORY, INCLUDING ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A
PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD PARTY RIGHTS OR FREEDOM FROM
VIRUSES OR OTHER CODE DEFECTS, IS MADE BY ANY AGENT-RELATED PERSONS OR LOAN
PARTY IN CONNECTION WITH THE BORROWER MATERIALS OR THE PLATFORM. In no event
shall the Agent-Related Persons or any Loan Party have any liability to any
Agent-Related Person, any Loan Party, any Lender, or the Issuing Lender for
losses, claims, damages, liabilities or expenses of any kind (whether in tort,
contract or otherwise) arising out of any Loan Party’s or the Administrative
Agent’s transmission of Borrower Materials through the Internet, except to the
extent that such losses, claims, damages, liabilities or expenses are
determined by a court of competent jurisdiction by a final and nonappealable
judgment to have resulted from the gross negligence or willful misconduct of such
Agent-Related Persons or Loan Party; provided, however, that in
no event shall any Agent-Related Persons or Loan Party have any liability to
any Agent-Related Person, any Loan Party, any Lender, or the Issuing Lender for
indirect, special, incidental, consequential or punitive damages (as opposed to
direct or actual damages). Each Lender agrees that the Loan Parties shall be
responsible only for the Borrower Materials and shall not have any liability
(unless otherwise agreed in writing by the Loan Parties) for any other
materials made available to the Lenders and shall not have any liability for
any errors or omissions other than errors or omissions in the materials
delivered to the Administrative Agent by any Loan Party. Nothing in this Section
10.2(c)

 

78

 

shall limit
the obligation of the Administrative Agent and the Lenders under Section
10.16.

 

(d)   Change of Address, Etc.
Each of the Loan Parties, the Administrative Agent, the Issuing Lender and the
Swing Line Lender may change its address, telecopier or telephone number for
notices and other communications hereunder by notice to the other parties
hereto. Each other Lender may change its address, telecopier or telephone
number for notices and other communications hereunder by notice to the Loan
Parties, the Administrative Agent, the Issuing Lender and the Swing Line Lender.
In addition, each Lender agrees to notify the Administrative Agent from time to
time to ensure that the Administrative Agent has on record (i) an effective
address, contact name, telephone number, telecopier number and electronic mail
address to which notices and other communications may be sent and (ii) accurate
wire instructions for such Lender.

 

(e)   Reliance by
Administrative Agent, Issuing Lender and Lenders. The Administrative Agent,
the Issuing Lender and the Lenders shall be entitled to rely and act upon any
notices (including telephonic and written Borrowing Requests and notices of
Swing Line Loans) purportedly given by or on behalf of the Borrower; provided
that the foregoing shall not apply to losses, costs, expenses and
liabilities caused by the gross negligence or willful misconduct of the
relevant Lender or any Agent-Related Person even if (i) such notices were not
made in a manner specified herein, were incomplete or were not preceded or
followed by any other form of notice specified herein, or (ii) the terms
thereof, as understood by the recipient, varied from any confirmation thereof. Each
of the Loan Parties shall indemnify the Administrative Agent, the Issuing
Lender, each Lender and the Agent-Related Persons from all losses, costs,
expenses and liabilities resulting from the reliance by such Person on each
notice purportedly given by or on behalf of the Borrower; provided  that
the foregoing shall not apply to losses, costs, expenses and liabilities caused
by the gross negligence or willful misconduct of the relevant Lender or any
Agent-Related Person. All telephonic notices to and other telephonic
communications with the Administrative Agent may be recorded by the
Administrative Agent, and each of the parties hereto hereby consents to such
recording.

 

(f)    Effectiveness of
Facsimile Documents and Signatures. Loan Documents may be transmitted
and/or signed by facsimile. The effectiveness of any such documents and
signatures shall, subject to applicable Law, have the same force and effect as
manually-signed originals and shall be binding on the Loan Parties, the
Administrative Agent and the Lenders. The Administrative Agent may also require
that any such documents and signatures be confirmed by a manually-signed
original thereof; provided, however, that the failure to request
or deliver the same shall not limit the effectiveness of any facsimile document
or signature.

 

10.3. No Waiver;
Cumulative Remedies. No failure to exercise and no delay in exercising, on
the part of the Administrative Agent or any Lender, any right, remedy, power or
privilege hereunder or under the other Loan Documents shall operate as a waiver
thereof; nor

 

79

 

shall any
single or partial exercise of any right, remedy, power or privilege hereunder
preclude any other or further exercise thereof or the exercise of any other
right, remedy, power or privilege. The rights, remedies, powers and privileges
herein provided are cumulative and not exclusive of any rights, remedies,
powers and privileges provided by Law.

 

10.4. Survival
of Representations and Warranties. All representations and warranties made
hereunder and in any other Loan Document or other document delivered pursuant
hereto or thereto or in connection herewith or therewith shall survive the
execution and delivery hereof and thereof. Such representations and warranties
have been or will be relied upon by the Administrative Agent and each Lender,
regardless of any investigation made by the Administrative Agent or any Lender
or on their behalf and notwithstanding that the Administrative Agent or any
Lender may have had notice or knowledge of any Default at the time of any
extension of credit, and shall continue in full force and effect as long as any
Loan or any other obligation hereunder shall remain unpaid or unsatisfied or
any Letter of Credit shall remain outstanding.

 

10.5. Attorney
Costs and Expenses. The Borrower agrees (a) to pay or reimburse the
Administrative Agent and the Arrangers for all reasonable out-of-pocket costs
and expenses incurred in connection with the development, preparation,
negotiation and execution of this Agreement and the other Loan Documents and
any amendment, waiver, consent or other modification of the provisions hereof
and thereof (whether or not the transactions contemplated hereby or thereby are
consummated), and the consummation and administration of the transactions
contemplated hereby and thereby, including all Attorney Costs, and (b) to pay
or reimburse the Administrative Agent and each Lender for all reasonable
out-of-pocket costs and expenses (which may include, to the extent reasonably
incurred, all search, filing, recording, title insurance and appraisal charges
and fees and taxes related thereto, and other out-of-pocket expenses incurred
by the Administrative Agent and the cost of independent public accountants and
other outside experts) incurred in connection with the enforcement, attempted
enforcement, or preservation of any rights or remedies under this Agreement or
the other Loan Documents (including all such costs and expenses incurred during
any “workout” or restructuring in respect of the obligations of the Loan Parties
hereunder or under any of the other Loan Documents and during any legal
proceeding, including any proceeding under any Debtor Relief Law), including
all Attorney Costs. All amounts due under this Section 10.5 shall be
payable not later than 30 days following written demand. The agreements in this
Section 10.5 shall survive the termination of the Total Revolving Credit
Commitments and repayment of all other obligations.

 

10.6. Indemnification.
(a) Whether or not the transactions contemplated hereby are consummated, the
Borrower shall indemnify and hold harmless each Agent-Related Person, each
Arranger, each Lender and their respective Affiliates, directors, officers,
employees, counsel, agents, shareholders and attorneys-in-fact (collectively
the “Indemnitees”) from and against any and all liabilities,
obligations, losses, damages, penalties, claims, demands, actions, judgments,
suits, settlement payments and causes of action of any kind or nature
whatsoever and reasonable related out-of-pocket costs and expenses which may at
any time be imposed on, incurred, suffered, sustained, required to be paid by
or asserted against any such Indemnitee in any way relating to or arising out
of or in connection with (a) the execution, delivery, enforcement, performance
or administration of any Loan Document or any other agreement, letter or
instrument delivered in connection with the transactions contemplated thereby
or the

 

80

 

consummation
of the transactions contemplated thereby, (b) any Revolving Credit Commitment,
Loan or Letter of Credit or the use or proposed use of the proceeds therefrom
(including any refusal by the Issuing Lender to honor a demand for payment
under a Letter of Credit if the documents presented in connection with such
demand do not strictly comply with the terms of such Letter of Credit), (c) any
actual or alleged presence or release of Hazardous Materials on or from any
property currently or formerly owned or operated by the Loan Parties or any Subsidiary,
or any Environmental Liability related in any way to the Loan Parties or any of
their Subsidiaries, or (d) any actual or prospective claim, litigation,
investigation or proceeding relating to any of the foregoing, whether based on
contract, tort or any other theory (including any investigation of, preparation
for, or defense of any pending or threatened claim, investigation, litigation
or proceeding) and regardless of whether any Indemnitee is a party thereto (all
the foregoing, collectively, the “Indemnified Liabilities”), in all
cases, whether or not caused by or arising, in whole or in part, out of the
negligence of the Indemnitee; provided that such indemnity shall not, as
to any Indemnitee, be available to the extent that such liabilities, obligations,
losses, damages, penalties, claims, demands, actions, judgments, suits,
settlement payments, causes of action or costs or expenses are determined by a
court of competent jurisdiction by final and nonappealable judgment to have
resulted from the gross negligence or willful misconduct of such Indemnitee. In
all such litigation, or the preparation therefor, the Indemnitees shall be
entitled to select counsel to the Indemnitees. To the extent reasonably
practicable and not disadvantageous to any Indemnitee (as reasonably determined
by the relevant Indemnitee), it is anticipated that a single counsel selected
by the affected Lenders will be used. No Indemnitee shall be liable to the Loan
Parties for any damages arising from the use by unintended recipients of any
information or other materials distributed to such unintended recipients by
such Indemnitee through telecommunications, electronic or other information
transmission systems in connection with this Agreement or the other Loan
Documents or the transactions contemplated hereby or thereby, and, to the
fullest extent permitted by applicable Law, each Loan Party shall not assert,
and hereby waives, any claim against any Indemnitee, on any theory of
liability, for special, indirect, consequential or punitive damages (as opposed
to direct or actual damages) arising out of, in connection with, or as a result
of, this Agreement, any other Loan Document or any agreement or instrument
contemplated hereby, the transactions contemplated hereby or thereby, any Loan
or Letter of Credit or the use of the proceeds thereof (whether before or after
the Closing Date); provided that this sentence shall not, as to any
Indemnitee, apply to the extent such Indemnitee is found by a final
non-appealable judgment of a court of competent jurisdiction to have acted with
willful misconduct or gross negligence. All amounts due under this Section
10.6 shall be payable not later than 30 days following written demand. The
agreements in this Section 10.6 shall survive the resignation of the
Administrative Agent, the replacement of any Lender, the termination of the
Total Revolving Credit Commitments and the repayment, satisfaction or discharge
of all the other obligations of the Loan Parties hereunder.

 

(b)   To the extent that the Borrower
for any reason fails to indefeasibly pay any amount required under Section
10.5 and Section 10.6(a) to be paid by them to the Administrative
Agent (or any sub-agent thereof), the Issuing Lender or any Agent-Related
Person of any of the foregoing, each Lender severally agrees to pay to the
Administrative Agent (or any such sub-agent), the Issuing Lender or such
Agent-Related Person, as the case may be, such Lender’s Revolving Credit
Percentage (determined as of the time that the applicable unreimbursed expense
or

 

81

 

indemnity
payment is sought) of such unpaid amount, provided that the unreimbursed
expense or indemnified loss, claim, damage, liability or related expense, as
the case may be, was incurred by or asserted against the Administrative Agent
(or any such sub-agent) or the Issuing Lender in its capacity as such, or
against any Agent-Related Person of any of the foregoing acting for the
Administrative Agent (or any such subagent) or Issuing Lender in connection
with such capacity. The obligations of the Lenders under this Section
10.6(b) are subject to the provisions of Section 2.14(f).

 

10.7. Successors
and Assigns.

 

(a)   Successors and Assigns
Generally. The provisions of this Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and
assigns permitted hereby, except that the Loan Parties may not assign or
otherwise transfer any of their rights or obligations hereunder without the
prior written consent of the Administrative Agent and each Lender and no Lender
may assign or otherwise transfer any of its rights or obligations hereunder
except (i) to an Eligible Assignee in accordance with the provisions of Section
10.7(b), (ii) by way of participation in accordance with the provisions of Section
10.7(d), (iii) by way of pledge or assignment of a security interest
subject to the restrictions of Section 10.7(f), or (iv) to an SPC in
accordance with the provisions of Section 10.7(h) (and any other
attempted assignment or transfer by any party hereto shall be null and void). Nothing
in this Agreement, expressed or implied, shall be construed to confer upon any
Person (other than the parties hereto, their respective successors and assigns
permitted hereby, Participants to the extent provided in Section 10.7(d)
and, to the extent expressly contemplated hereby, the Indemnitees) any legal or
equitable right, remedy or claim under or by reason of this Agreement.

 

(b)   Assignments by Lenders.
Any Lender may at any time assign to one or more Eligible Assignees all or a
portion of its rights and obligations under this Agreement (including all or a
portion of its Revolving Credit Commitment and the Loans (including for
purposes of this subsection (b), participations in L/C Obligations and
in Swing Line Loans) at the time owing to it); provided that any such
assignment shall be subject to the following conditions:

 

(i)            Minimum Amounts.

 

(A)          in the case of an
assignment of the entire remaining amount of the assigning Lender’s Revolving
Credit Commitment and the Loans at the time owing to it or in the case of an
assignment to a Lender, an Affiliate of a Lender or an Approved Fund, no
minimum amount need be assigned; and

 

(B)           in any case not
described in subsection (b)(i)(A) of this Section 10.7, the
aggregate amount of the Revolving Credit Commitment (which for this purpose
includes Loans outstanding thereunder) or, if the Revolving Credit Commitment
is not then in effect, the principal outstanding balance of the Loans of the
assigning Lender subject to each

 

82

 

such
assignment, determined as of the date the Assignment and Assumption with
respect to such assignment is delivered to the Administrative Agent or, if “Trade
Date” is specified in the Assignment and Assumption, as of the Trade Date,
shall not be less than $5,000,000 unless
each of the Administrative Agent and, so long as no Specified Event of Default
has occurred and is continuing, the Borrower otherwise consents (each such
consent not to be unreasonably withheld or delayed); provided, however,
that concurrent assignments to members of an Assignee Group and concurrent
assignments from members of an Assignee Group to a single assignee (or to an
assignee and members of its Assignee Group) will be treated as a single
assignment for purposes of determining whether such minimum amount has been
met.

 

(ii)           Proportionate
Amounts. Each partial assignment shall be made as an assignment of a
proportionate part of all the assigning Lender’s rights and obligations under
this Agreement with respect to the Loans or the Revolving Credit Commitment
assigned, except that this clause (ii) shall not apply to the Swing Line
Lender’s rights and obligations in respect of Swing Line Loans;

 

(iii)          Required
Consents. No consent shall be required for any assignment except to the
extent required by subsection (b)(i)(B) of this Section 10.7 and,
provided that:

 

(A)          the consent of the
Borrower (such consent not to be unreasonably withheld or delayed) shall be
required unless (1) a Specified Event of Default has occurred and is continuing
at the time of such assignment or (2) such assignment is to a Lender, an
Affiliate of a Lender or an Approved Fund;

 

(B)           the consent of the
Administrative Agent (such consent not to be unreasonably withheld or delayed)
shall be required if such assignment is to a Person that is not a Lender or an
Affiliate of the assigning Lender;

 

(C)           the consent of the
Issuing Lender (such consent not to be unreasonably withheld or delayed) shall
be required for any assignment that increases the obligation of the assignee to
participate in exposure under one or more Letters of Credit (whether or not
then outstanding); and

 

(D)          the consent of the
Swing Line Lender (such consent not to be unreasonably withheld or delayed)
shall be required for any assignment.

 

(iv)          Assignment and
Assumption. The parties to each assignment shall execute and deliver to the
Administrative Agent an Assignment and Assumption, together with a processing
and recordation fee in the amount of $3,500; provided, however,
that the Administrative Agent may, in its sole discretion, elect to waive

 

83

 

such
processing and recordation fee in the case of any assignment. The assignee, if
it is not a Lender, shall deliver to the Administrative Agent an Administrative
Questionnaire.

 

(v)           No Assignment to
Borrower. No such assignment shall be made to the Borrower or any
Affiliates or Subsidiaries of the Borrower.

 

(vi)          No Assignment to
Natural Persons. No such assignment shall be made to a natural person.

 

(vii)         No Assignment to
Approved Funds Prior to Specified Event of Default. No such assignment
shall be made to an Approved Fund prior to the occurrence of a Specified Event
of Default. After the occurrence and during the continuance of any Specified
Event of Default, an Approved Fund shall be an Eligible Assignee hereunder.

 

(viii)        Creditworthiness
of Affiliates and Approved Funds. Notwithstanding the foregoing, no such
assignment shall be made to an Affiliate of a Lender or to an Approved Fund
unless such Affiliate or Approved Fund shall be a financial institution having
a senior unsecured debt rating of not less than “A-”, or its equivalent, by
S&P.

 

Subject to
acceptance and recording thereof by the Administrative Agent pursuant to Section
10.7(c), from and after the effective date specified in each Assignment and
Assumption, the Eligible Assignee thereunder shall be a party to this Agreement
and, to the extent of the interest assigned by such Assignment and Assumption,
have the rights and obligations of a Lender under this Agreement, and the
assigning Lender thereunder shall, to the extent of the interest assigned by
such Assignment and Assumption, be released from its obligations under this
Agreement (and, in the case of an Assignment and Assumption covering all of the
assigning Lender’s rights and obligations under this Agreement, such Lender
shall cease to be a party hereto) but shall continue to be entitled to the
benefits of Sections 2.15, 2.16, 2.17, 2.18, 10.5
and 10.6 with respect to facts and circumstances occurring prior to the
effective date of such assignment. Upon request, the Borrower (at its expense)
shall execute and deliver a Note to the assignee Lender and a replacement Note,
as applicable, to the assigning Lender.

 

(c)   Register. The
Administrative Agent, acting solely for this purpose as an agent of the
Borrower, shall maintain at the Administrative Agent’s Office a copy of each
Assignment and Assumption delivered to it and a register for the recordation of
the names and addresses of the Lenders, and the Revolving Credit Commitments
of, and principal amounts of the Loans and L/C Obligations owing to, each
Lender pursuant to the terms hereof from time to time (the “Register”). The
entries in the Register shall be conclusive, in the absence of manifest error,
and the Borrower, the Administrative Agent and the Lenders may treat each
Person whose name is recorded in the Register pursuant to the terms hereof as a
Lender hereunder for all purposes of this Agreement, notwithstanding notice to
the contrary. The Register shall be available for inspection by the Borrower
and any Lender, at any reasonable time and from time to time upon reasonable
prior notice.

 

84

 

(d)   Participations. Any
Lender may at any time, without the consent of, or notice to, the Borrower or
the Administrative Agent, sell participations to any Person (other than a
natural person or the Borrower or any Affiliates or Subsidiaries of the
Borrower) (each, a “Participant”) in all or a portion of such Lender’s
rights and/or obligations under this Agreement (including all or a portion of
its Revolving Credit Commitment and/or the Loans (including such Lender’s participations
in L/C Obligations and/or Swing Line Loans) owing to it); provided that
(i) such Lender’s obligations under this Agreement shall remain unchanged, (ii)
such Lender shall remain solely responsible to the other parties hereto for the
performance of such obligations and (iii) the Borrower, the Administrative
Agent, the Lenders and the Issuing Lender shall continue to deal solely and
directly with such Lender in connection with such Lender’s rights and
obligations under this Agreement.

 

Any agreement
or instrument pursuant to which a Lender sells such a participation shall
provide that such Lender shall retain the sole right to enforce this Agreement
and to approve any amendment, modification or waiver of any provision of this
Agreement; provided that such agreement or instrument may provide that
such Lender will not, without the consent of the Participant, agree to any
amendment, waiver or other modification described in the first proviso to Section
10.1 that directly affects such Participant. Subject to Section 10.7(e),
the Borrower agrees that each Participant shall be entitled to the benefits of Sections
2.15, 2.16 or 2.17 to the same extent as if it were a Lender
and had acquired its interest by assignment pursuant to Section 10.7(b).
To the extent permitted by Law, each Participant also shall be entitled to the
benefits of Section 10.8 as
though it were a Lender, provided such Participant agrees to be subject
to Section 2.14 as though it were a Lender.

 

(e)   Limitations upon
Participant Rights. A Participant shall not be entitled to receive any
greater payment under Sections 2.15, 2.16 or 2.17 than the
applicable Lender would have been entitled to receive with respect to the
participation sold to such Participant, unless the sale of the participation to
such Participant is made with the Borrower’s prior written consent. A
Participant that would be a Non-U.S. Lender if it were a Lender shall not be
entitled to the benefits of Section 2.16 unless the Borrower is notified
of the participation sold to such Participant and such Participant agrees, for
the benefit of the Borrower, to comply with Section 2.16(d) and (e) as
though it were a Lender.

 

(f)    Certain Pledges. Notwithstanding
anything to the contrary contained herein, any Lender may, with notice to, but
without prior consent of the Borrower and the Administrative Agent, at any time
pledge or assign a security interest in all or any portion of its rights under
this Agreement (including under its Note, if any) to secure obligations of such
Lender, including any pledge or assignment to secure obligations to a Federal
Reserve Bank (provided that notice to the Borrower and the Administrative Agent
shall not be required in the case of a pledge or assignment to secure
obligations to a Federal Reserve Bank); provided further that no such
pledge or assignment shall release such Lender from any of its obligations
hereunder or substitute, or permit the substitution of, any such pledgee or
assignee for such Lender as a party hereto.

 

85

 

(g)   Electronic Execution of
Assignments. The words “execution,” “signed,” “signature,” and words of
like import in any Assignment and Assumption shall be deemed to include
electronic signatures or the keeping of records in electronic form, each of
which shall be of the same legal effect, validity or enforceability as a
manually executed signature or the use of a paper-based recordkeeping system,
as the case may be, to the extent and as provided for in any applicable Law,
including the Federal Electronic Signatures in Global and National Commerce
Act, the New York State Electronic Signatures and Records Act, or any other
similar state laws based on the Uniform Electronic Transactions Act.

 

(h)   Special Purpose Funding
Vehicles. Notwithstanding anything to the contrary contained herein, any
Lender (a “Granting Lender”) may, with notice to, but without prior
consent of the Borrower and the Administrative Agent grant to a special purpose
funding vehicle identified as such in writing from time to time by the Granting
Lender to the Administrative Agent and the Borrower (an “SPC”) the
option to provide all or any part of any Loan that such Granting Lender would
otherwise be obligated to make pursuant to this Agreement; provided that
(i) nothing herein shall constitute a commitment by any SPC to fund any Loan,
and (ii) if an SPC elects not to exercise such option or otherwise fails to
make all or any part of such Loan, the Granting Lender shall be obligated to
make such Loan pursuant to the terms hereof and, if it fails to do so, to make
such payment to the Administrative Agent as is required under Section 2.14(e)(ii).
Each party hereto hereby agrees that (i) neither the grant to any SPC nor the
exercise by any SPC of such option shall increase the costs or expenses or
otherwise increase or change the obligations of the Borrower under this
Agreement (including its obligations under Section 2.15), (ii) no SPC
shall be liable for any indemnity or similar payment obligation under this
Agreement for which a Lender would be liable, and (iii) the Granting Lender
shall for all purposes, including the approval of any amendment, waiver or
other modification of any provision of any Loan Document, remain the lender of
record hereunder. The making of a Loan by an SPC hereunder shall utilize the
Revolving Credit Commitment of the Granting Lender to the same extent, and as
if, such Loan were made by such Granting Lender. In furtherance of the
foregoing, each party hereto hereby agrees (which agreement shall survive the
termination of this Agreement) that, prior to the date that is one year and one
day after the payment in full of all outstanding commercial paper or other
senior debt of any SPC, it will not institute against, or join any other Person
in instituting against, such SPC any bankruptcy, reorganization, arrangement,
insolvency, or liquidation proceeding under any Debtor Relief Laws or any other
Laws. Notwithstanding anything to the contrary contained herein, any SPC may
(i) with notice to, but without prior consent of the Borrower and the
Administrative Agent and with the payment of a processing fee in the amount of
$3,500 (which processing fee may be waived by the Administrative Agent in its
sole discretion), assign all or any portion of its right to receive payment
with respect to any Loan to the Granting Lender and (ii) disclose on a
confidential basis any non-public information relating to its funding of Loans
to any rating agency, commercial paper dealer or provider of any surety or
guarantee or credit or liquidity enhancement to such SPC.

 

86

 

(i)    Resignation as Issuing
Lender or Swing Line Lender after Assignment. Notwithstanding anything to
the contrary contained herein, if at any time Bank of America, N.A. assigns all
of its Revolving Credit Commitment and Loans pursuant to Section 10.7(b),
Bank of America, N.A. may, (i) upon 30 days’ notice to the Borrower and the
Lenders, resign as Issuing Lender, so long as a successor Issuing Lender
(consented to by the Borrower, such consent not to be unreasonably withheld or
delayed) has been appointed and/or (ii) upon 30 days’ notice to the Borrower,
resign as Swing Line Lender, so long as a successor Swing Line Lender
(consented to by the Borrower, such consent not to be unreasonably withheld or
delayed) has been appointed. In the event of any such resignation as Issuing
Lender or Swing Line Lender, the Borrower shall be entitled to appoint from
among the Lenders a successor Issuing Lender or Swing Line Lender hereunder; provided,
however, that no failure by the Borrower to appoint any such successor
shall affect the resignation of Bank of America, N.A. as Issuing Lender or
Swing Line Lender, as the case may be. If Bank of America, N.A. resigns as
Issuing Lender, it shall retain all the rights and obligations of the Issuing
Lender hereunder with respect to all Letters of Credit outstanding as of the
effective date of its resignation as Issuing Lender and all L/C Obligations
with respect thereto (including the right to require the Lenders to make Base
Rate Loans or fund risk participations in Unreimbursed Amounts pursuant to Section
3.3). If Bank of America, N.A. resigns as Swing Line Lender, it shall
retain all the rights of the Swing Line Lender provided for hereunder with
respect to Swing Line Loans made by it and outstanding as of the effective date
of such resignation, including the right to require the Lenders to make Base
Rate Loans or fund risk participations in outstanding Swing Line Loans pursuant
to Section 2.4. Upon the appointment of a successor Issuing Lender
and/or Swing Line Lender, (a) such successor shall succeed to and become vested
with all of the rights and obligations of the retiring Issuing Lender or Swing
Line Lender, as the case may be, and (b) the successor Issuing Lender shall
issue letters of credit in substitution for the Letters of Credit, if any,
outstanding at the time of such succession or make other arrangements
satisfactory to Bank of America, N.A. to effectively assume the obligations of Bank
of America, N.A. with respect to such Letters of Credit.

 

10.8. Adjustments;
Set-off. (a) Except to the extent that this Agreement provides for a
payment to be allocated to a particular Lender, if any Lender (a “Benefitted
Lender”) shall at any time receive any payment of all or part of the
obligations under the Credit Agreement or the other Loan Documents, owing to
it, or receive any collateral in respect thereof (whether voluntarily or
involuntarily, by set-off, pursuant to events or proceedings of the nature
referred to in Section 8.1(c), or otherwise), in a greater proportion
than any such payment to or collateral received by any other Lender, if any, in
respect of such other Lender’s obligations under the Credit Agreement or the
other Loan Documents, such Benefitted Lender shall purchase for cash from the
other Lenders a participating interest in such portion of each such other
Lender’s obligations under the Credit Agreement or the other Loan Documents, or
shall provide such other Lenders with the benefits of any such collateral, as
shall be necessary to cause such Benefitted Lender to share the excess payment
or benefits of such collateral ratably with each of the Lenders; provided, however,
that if all or any portion of such excess payment or benefits is

 

87

 

thereafter
recovered from such Benefitted Lender, such purchase shall be rescinded, and
the purchase price and benefits returned, to the extent of such recovery, but
without interest.

 

(b)   In addition to any rights
and remedies of the Lenders provided by Law, each Lender shall have the right,
without prior notice to the Loan Parties, any such notice being expressly
waived by the Loan Parties to the extent permitted by applicable Law, upon any
amount becoming due and payable by a Loan Party hereunder (whether at the
stated maturity, by acceleration or otherwise), to set-off and appropriate and
apply against such amount any and all deposits (general or special, time or
demand, provisional or final), in any currency, and any other credits,
indebtedness or claims, in any currency, in each case whether direct or
indirect, absolute or contingent, matured or unmatured, at any time held or
owing by such Lender or any branch or agency thereof to or for the credit or
the account of such Loan Party. Each Lender agrees promptly to notify the Loan
Parties, as the case may be, and the Administrative Agent after any such
set-off and application made by such Lender, provided that the failure
to give such notice shall not affect the validity of such set-off and
application.

 

10.9. Counterparts.
This Agreement may be executed by one or more of the parties to this Agreement
on any number of separate counterparts, and all of said counterparts taken
together shall be deemed to constitute one and the same instrument. Delivery of
an executed signature page of this Agreement by facsimile transmission shall be
effective as delivery of a manually executed counterpart hereof. A set of the
copies of this Agreement signed by all the parties shall be lodged with the
Borrower and the Administrative Agent.

 

10.10. Severability.
Any provision of this Agreement that is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.

 

10.11. Integration.
This Agreement, the other Loan Documents and the Fee Letters represent the
entire agreement of the Loan Parties the Administrative Agent, the Arrangers,
the Syndication Agent and the Lenders with respect to the subject matter hereof
and thereof, and there are no promises, undertakings, representations or
warranties by the Arrangers, the Administrative Agent, the Syndication Agent or
any Lender relative to subject matter hereof not expressly set forth or
referred to herein, in the other Loan Documents or in the Fee Letters. The
Borrower agrees that its obligations under the Fee Letters shall survive the
execution and delivery of this Agreement.

 

10.12. GOVERNING
LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER
THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK (EXCLUDING THE LAWS
APPLICABLE TO CONFLICTS OR CHOICE OF LAW TO THE EXTENT THAT THE APPLICATION OF
THE LAW OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY).

 

88

 

10.13. SUBMISSION
TO JURISDICTION; WAIVERS. EACH OF THE LOAN PARTIES HEREBY IRREVOCABLY AND
UNCONDITIONALLY:

 

(a)   SUBMITS FOR ITSELF AND ITS
PROPERTY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT AND THE
OTHER LOAN DOCUMENTS TO WHICH IT IS A PARTY, OR FOR RECOGNITION AND ENFORCEMENT
OF ANY JUDGMENT IN RESPECT THEREOF, TO THE NON-EXCLUSIVE GENERAL JURISDICTION
OF THE COURTS OF THE STATE OF NEW YORK, THE COURTS OF THE UNITED STATES OF
AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK, AND APPELLATE COURTS FROM ANY
THEREOF;

 

(b)   CONSENTS THAT ANY SUCH
ACTION OR PROCEEDING MAY BE BROUGHT IN SUCH COURTS AND WAIVES ANY OBJECTION
THAT IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH ACTION OR PROCEEDING
IN ANY SUCH COURT OR THAT SUCH ACTION OR PROCEEDING WAS BROUGHT IN AN
INCONVENIENT COURT AND AGREES NOT TO PLEAD OR CLAIM THE SAME;

 

(c)   AGREES THAT SERVICE OF
PROCESS IN ANY SUCH ACTION OR PROCEEDING MAY BE EFFECTED BY MAILING A COPY
THEREOF BY REGISTERED OR CERTIFIED MAIL (OR ANY SUBSTANTIALLY SIMILAR FORM OF
MAIL), POSTAGE PREPAID, TO THE LOAN PARTIES, AS THE CASE MAY BE, AT ITS ADDRESS
SET FORTH IN SECTION 10.2 OR AT SUCH OTHER ADDRESS OF WHICH THE
ADMINISTRATIVE AGENT SHALL HAVE BEEN NOTIFIED PURSUANT THERETO;

 

(d)   AGREES THAT NOTHING HEREIN
SHALL AFFECT THE RIGHT TO EFFECT SERVICE OF PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW OR SHALL LIMIT THE RIGHT TO SUE IN ANY OTHER JURISDICTION; AND

 

(e)   WAIVES, TO THE MAXIMUM
EXTENT NOT PROHIBITED BY LAW, ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY
LEGAL ACTION OR PROCEEDING REFERRED TO IN THIS SECTION 10.13 ANY
SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES.

 

10.14. WAIVERS
OF JURY TRIAL. EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY WAIVES ANY RIGHT
TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER
ANY LOAN DOCUMENT OR IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE
DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO ANY LOAN
DOCUMENT, OR THE TRANSACTIONS RELATED THERETO, IN EACH CASE WHETHER NOW
EXISTING OR HEREAFTER ARISING, AND WHETHER FOUNDED IN CONTRACT OR TORT OR
OTHERWISE; AND EACH PARTY HEREBY AGREES AND

 

89

 

CONSENTS THAT
ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT
TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL
COUNTERPART OR A COPY OF THIS SECTION 10.14 WITH ANY COURT AS WRITTEN
EVIDENCE OF THE CONSENT OF THE SIGNATORIES HERETO TO THE WAIVER OF THEIR RIGHT
TO TRIAL BY JURY.

 

10.15. No
Advisory or Fiduciary Responsibility. In connection with this Agreement,
each of the Loan Parties acknowledges and agrees that: (a) the credit facility
provided for hereunder and any related arranging or other services in
connection therewith (including in connection with any amendment, waiver or
other modification hereof or of any other Loan Document) are an arm’s-length
commercial transaction between the Loan Parties and their respective Affiliates,
on the one hand, and the Administrative Agent and the Arrangers, on the other
hand, and each of the Loan Parties is capable of evaluating and understanding
and understands and accepts the terms, risks and conditions of the transactions
contemplated hereby and by the other Loan Documents (including any amendment,
waiver or other modification hereof or thereof); (b) in connection with the
process leading to such transaction, the Administrative Agent and the
Arrangers, each is and has been acting solely as a principal and is not the
financial advisor, agent or fiduciary, for the Loan Parties or any of their
respective Affiliates, stockholders, creditors or employees or any other
Person; (c) neither the Administrative Agent nor the Arrangers have assumed or will
assume an advisory, agency or fiduciary responsibility in favor of either Loan
Party with respect to this Agreement or the process leading thereto, including
with respect to any amendment, waiver or other modification hereof or of any
other Loan Document (irrespective of whether the Administrative Agent or the
Arrangers have advised or is currently advising the Loan Parties or any of
their respective Affiliates on other matters) and neither the Administrative
Agent nor the Arrangers have any obligation to the Loan Parties or any of their
respective Affiliates with respect to this Agreement except those obligations
expressly set forth herein and in the other Loan Documents; (d) the
Administrative Agent and the Arrangers and their respective Affiliates may be
engaged in a broad range of transactions that involve interests that differ
from those of the Loan Parties and their respective Affiliates, and neither the
Administrative Agent nor the Arrangers have any obligation to disclose any of
such interests by virtue of any advisory, agency or fiduciary relationship; and
(e) the Administrative Agent and the Arrangers have not provided and will not
provide any legal, accounting, regulatory or tax advice with respect to this
Agreement (including any amendment, waiver or other modification hereof or of
any other Loan Document) and each of the Loan Parties has consulted its own
legal, accounting, regulatory and tax advisors to the extent it has deemed
appropriate.

 

10.16. Confidentiality.
Each of the Administrative Agent and the Lenders agrees to maintain the
confidentiality of the Information (as defined below), except that Information
may be disclosed (a) to its Affiliates and to its and its Affiliates’
respective partners, directors, officers, employees, agents, advisors and
representatives (it being understood that the Persons to whom such disclosure
is made will be informed of the confidential nature of such Information and
instructed to keep such Information confidential), (b) to the extent requested
by any regulatory authority purporting to have jurisdiction over it (including
any self-regulatory authority, such as the NAIC), (c) to the extent required by
applicable Laws or by any subpoena or similar legal process, (d) to any other
party hereto, (e) in connection with the exercise of any remedies hereunder or
under any other Loan Document or any action or proceeding relating to

 

90

 

this Agreement
or any other Loan Document or the enforcement of rights hereunder or thereunder,
(f) subject to an agreement containing provisions substantially the same as
those of this Section 10.16, to (i) any assignee of or Participant in,
or any prospective assignee of or Participant in, any of its rights or
obligations under this Agreement or (ii) any actual or prospective counterparty
(or its advisors) to any swap or derivative transaction relating to the
Borrower and its obligations, (g) with the consent of the Loan Parties or (h)
to the extent such Information (x) becomes publicly available other than as a
result of a breach of this Section 10.16 or (y) becomes available to the
Administrative Agent or any Lender on a nonconfidential basis from a source
other than the Loan Parties. For purposes of this Section 10.16, “Information”
means all information received from either of the Loan Parties or any of its
Subsidiaries relating to either of the Loan Parties or any Subsidiary or any of
their respective businesses, other than any such information that is available
to the Administrative Agent or any Lender on a nonconfidential basis prior to
disclosure by a Loan Party or any Subsidiary, provided that, in the case
of information received from a Loan Party or any Subsidiary after the date
hereof, such information is clearly identified at the time of delivery as
confidential. Any Person required to maintain the confidentiality of
Information as provided in this Section 10.16 shall be considered to
have complied with its obligation to do so if such Person has exercised the
same degree of care to maintain the confidentiality of such Information as such
Person would accord to its own confidential information.

 

Each of the
Administrative Agent, the Lenders and the Issuing Lender acknowledges that (a)
the Information may include material non-public information concerning each
Loan Party or a Subsidiary thereof, as the case may be, (b) it has developed
compliance procedures regarding the use of material non-public information and
(c) it will handle such material non-public information in accordance with
applicable Law, including Federal and state securities Laws.

 

10.17. Release
of Guarantee Obligations. Notwithstanding anything to the contrary
contained herein or any other Loan Document, when all obligations of the
Borrower hereunder and under the other Loan Documents that are guaranteed under
the Parent Guaranty have been paid in full, all Revolving Credit Commitments
have terminated, there exist no unpaid Reimbursement Obligations and no Letter
of Credit issued for the account of the Borrower shall be outstanding, upon
request of the Loan Parties, the Administrative Agent shall (without notice to,
or vote or consent of, any Lender) take such actions as may be required to
release all Guarantee Obligations of the Parent under the Parent Guaranty. Any
such release of Guarantee Obligations under the Parent Guaranty shall be deemed
subject to the provision that such Guarantee Obligations under the Parent
Guaranty shall be reinstated if after such release any portion of any payment
in respect of the obligations guaranteed thereby shall be rescinded or must
otherwise be restored or returned upon the insolvency, bankruptcy, dissolution,
liquidation or reorganization of the Borrower or the Parent, or upon or as a
result of the appointment of a receiver, intervener or conservator of, or
trustee or similar officer for, the Borrower or the Parent or any substantial
part of its respective property, or otherwise, all as though such payment had
not been made.

 

10.18. Accounting
Changes. In the event that any “Accounting Change” (as defined below) shall
occur and such change results in a change in the method of calculation of
financial covenants, standards or terms in this Agreement, then the Loan
Parties and the Administrative Agent agree to enter into negotiations in order
to amend such provisions of this

 

91

 

Agreement so
as to equitably reflect such Accounting Changes with the desired result that
criteria for evaluating the Loan Parties’ financial condition shall be the same
after such Accounting Changes as if such Accounting Changes had not been made. Until
such time as such an amendment shall have been executed and delivered by the
Loan Parties, the Administrative Agent and the Majority Lenders, all financial
covenants, standards and terms in this Agreement shall continue to be
calculated or construed as if such Accounting Changes had not occurred. “Accounting
Changes” refers to changes in accounting principles required by the
promulgation of any rule, regulation, pronouncement or opinion by the Financial
Accounting Standards Board of the American Institute of Certified Public
Accountants, applicable Insurance Regulators, NAIC or, if applicable, the SEC.

 

10.19. USA
PATRIOT Act Notice. Each Lender that is subject to the Act hereinafter
defined) and the Administrative Agent (for itself and not on behalf of any
Lender) hereby notifies the Loan Parties that pursuant to the requirements of
the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26,
2001)) (the “Act”), it is required to obtain, verify and record
information that identifies the Loan Parties, which information includes name
and address of the Loan Parties and other information that will allow such
Lender or Administrative Agent, as applicable, to identify the Loan Parties in
accordance with the Act.

 

10.20. Interest
Rate Limitation.

 

(a)   Notwithstanding anything to
the contrary contained in Loan Document, if at any time the rate of interest
payable under any Loan Document (the “Stated Rate”) would exceed the
rate of interest permitted to be charged under any applicable Law (the “Maximum
Rate”), then for so long as the Maximum Rate would be so exceeded, the rate
of interest payable shall be equal to the Maximum Rate; provided that if
at any time thereafter, the Stated Rate is less than the Maximum Rate, the
Borrower shall, to the extent permitted by applicable Law, continue to pay interest
at the Maximum Rate until such time as the total interest received is equal to the
total interest which would have been received had the Stated Rate been (but for
the operation of this provision) the interest rate payable. Thereafter, the
interest rate payable shall be the Stated Rate unless and until the Stated Rate
again would exceed the Maximum Rate, in which event this provision shall again
apply.

 

(b)   In no event shall the total
interest received by a Lender exceed the amount which it could lawfully have
received had the interest been calculated the full term hereof at the Maximum
Rate.

 

[Remainder of Page Left Intentionally
Blank]

 

92

 

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

 

	
   

  	
  The Borrower:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  FUND AMERICAN COMPANIES, INC.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Parent:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  ONEBEACON INSURANCE GROUP, LTD.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  

 

 

	
   

  	
  BANK OF AMERICA, N.A., as

  	
   

  
	
   

  	
  Administrative
  Agent

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  BANK OF AMERICA, N.A., as

  	
   

  
	
   

  	
  a Lender,
  Issuing Lender and Swing Line Lender

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
					

 

2

 

	
   

  	
  LEHMAN BROTHERS BANK, FSB, as

  	
   

  
	
   

  	
  a Lender

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
				

 

3

 

SCHEDULE 10.02

 

ADMINISTRATIVE AGENT’S OFFICE;

CERTAIN ADDRESSES FOR NOTICES

 

LOAN
PARTIES:

OneBeacon
Insurance Company 

One Beacon Street 

Boston, MA  02108-3100 

Attention: Thomas Forsyth 

Telephone: 617-725-7169 

Telecopier: 617-725-7177

Electronic
Mail: tforsyth@onebeacon.com

U.S. Taxpayer
Identification Number (Fund American Companies, Inc.): 52-2272489 

U.S. Taxpayer Identification Number (OneBeacon Insurance Group, Ltd.):
98-0503315

 

with a copy
to:

 

Cravath,
Swaine and Moore LLP 

WorldWide Plaza 

825 Eighth Avenue 

New York, NY 10019-7475 

Attention: Paul Michalski 

Telecopier: 212-474-3700

 

ADMINISTRATIVE
AGENT:

 

Administrative Agent’s Office

(for payments and Requests for Credit Extensions):

Bank of
America, N.A. 

2001 Clayton Road 

Mail Code” CA4-702-02-25 

Concord, CA 94520 

Attention: Tina Obcena 

Telephone: 925-675-8768 

Telecopier: 888-969-9246

Electronic
Mail: tina.obcena@bankofamerica.com

Account No.: 3750836479 

Ref:  White Mountains Insurance Group 

ABA# 026009593

 

 

Other Notices as Administrative Agent:

Bank of
America, N.A. 

Agency Management 

1455 Market Street, 5th Floor 

Mail Code: CA5-701-05-19 

San Francisco, CA 94103 

Attention: Aamir Saleem 

Telephone: 415-436-2769 

Telecopier: 415-503-5089

Electronic
Mail:  aamir.saleem@bankofamerica.com

 

ISSUING
LENDER:

 

Bank of
America, N.A. 

Trade Operations 

1000 W. Temple Street 

Mail Code: CA9-705-07-05 

Los Angeles, CA 90012-1514 

Attention: Stella Rosales 

Telephone: 213-481-7828 

Telecopier: 213-580-8441

Electronic
Mail:  stella.rosales@bankofamerica.com

 

SWING
LINE LENDER:

 

Bank of
America, N.A. 

2001 Clayton Road 

Mail Code” CA4-702-02-25 

Concord, CA 94520 

Attention: Tina Obcena 

Telephone: 925-675-8768 

Telecopier: 888-969-9246

Electronic
Mail: tina.obcena@bankofamerica.com

Account No.: 3750836479 

Ref:  White Mountains Insurance Group 

ABA# 026009593

 

2

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