LETTER OF CREDIT REIMBURSEMENT AND PLEDGE AGREEMENT

Exhibit 10.1                

EXECUTION COPY
CUSIP NO. [            ]   

LETTER OF CREDIT
REIMBURSEMENT AND PLEDGE AGREEMENT

Dated as of November 15, 2005

among

MONTPELIER REINSURANCE LTD.,

JPMORGAN CHASE BANK, N.A.,
as Syndication Agent

BARCLAYS BANK PLC,
ING BANK N.V., LONDON BRANCH
THE BANK OF NEW YORK
and
KEY BANK, NATIONAL ASSOCIATION,
as Co-Documentation Agents

THE LENDERS PARTY HERETO

and

BANK OF AMERICA, N.A.,
as Administrative Agent for itself and the
other lending institutions party hereto

Banc of America Securities LLC
and
J.P.Morgan Securities, Inc.
as Joint Lead Arrangers and Book Managers

CONTENTS

CONTENTS

CONTENTS

Exhibits

Schedules

LETTER OF CREDIT
REIMBURSEMENT AND PLEDGE AGREEMENT

     This LETTER OF CREDIT REIMBURSEMENT AND PLEDGE AGREEMENT is made as of November 15, 2005, by and among Montpelier Reinsurance Ltd. (the “ Borrower ”), a limited liability company duly incorporated as an exempted company under the laws of Bermuda, having its registered office at 8 Par-La-Ville Road, Hamilton, HM 08, Bermuda, the lending institutions party hereto (the “ Lenders ”), Bank of America, N.A. a national banking association, as fronting bank, letter of credit administrator and as administrative agent for itself and such other lending institutions (the “ Administrative Agent ”).

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

     In consideration of the mutual agreements set forth herein, the parties hereto agree as follows:

1. DEFINITIONS AND RULES OF INTERPRETATION.

     1.1 Definitions .

     The following terms shall have the meanings set forth in this §1 or elsewhere in the provisions of this Reimbursement and Pledge Agreement referred to below:

      ABS . Any fixed-income instrument that entitles the holder of, or beneficial owner under, the instrument to the whole or any part of the rights or entitlements of a holder of a receivable or other asset and any other rights or entitlements in respect of a pool of receivables or other assets or any money payable by obligors under those receivables or other assets (whether or not the money is payable to the holder of, or beneficial owner under, the instrument on the same terms and conditions as under the receivables or other assets) in relation to receivables or other assets; provided however , such receivables or assets shall be limited to automobile loans, credit card receivables and home equity loans and such other ABS assets as may be acceptable to the Administrative Agent.

      Acceding Bank . See §2.1.2.

      Adjusted Fair Market Value . With respect to any Eligible Collateral, an amount equal to the product of the Fair Market Value of such Eligible Collateral and the applicable percentage with respect to such Eligible Collateral as set forth on Schedule 1.2 .

      Administrative Agent . Bank of America, acting as agent for the Lenders, and each other Person appointed as the successor Administrative Agent in accordance with §12.9.

      Administrative Agent’s Office . The Administrative Agent’s address and, as appropriate, account as set forth on Schedule 14.7 , or such other address as the Administrative Agent may from time to time notify the Borrower and the Lenders.

      Administrative Agent’s Special Counsel . Mayer, Brown, Rowe & Maw LLP or such other counsel as may be approved by the Administrative Agent.

      Administrative Questionnaire . An Administrative Questionnaire in a form supplied by the Administrative Agent.

      Affiliate . Any Person that would be considered to be an affiliate of any other Person under Rule 144(a) of the Rules and Regulations promulgated under the Securities Act of 1933, as amended, if such Person were issuing securities or any Person which, directly or indirectly, controls, is controlled by or is under common control with such Person. “Control” of a Person means the power, directly or indirectly, (a) to vote ten percent (10%) or more of the Capital Stock (on a fully diluted basis) of such Person having ordinary voting power for the election of directors, managing members or general partners (as applicable); or (b) to direct or cause the direction of the management and policies of such Person (whether by contract or otherwise).

      Agent for Service . See §14.15.

      Alternative Currency . Canadian Dollars.

      Alternative Currency Equivalent . At any time, with respect to any amount denominated in Dollars, the equivalent amount thereof in the applicable Alternative Currency as determined by the Administrative Agent or the Fronting Bank, as the case may be, at such time on the basis of the Spot Rate (determined in respect of the most recent Revaluation Date) for the purchase of such Alternative Currency with Dollars.

      A.M. Best Rating . The financial strength rating issued with respect to the Borrower by A.M. Best Company.

      Applicable Issuing Party . In the case of Fronted Letters of Credit, the Fronting Bank and in the case of Several Letters of Credit, the LC Administrator.

      Applicable Issuing Party’s Office . With respect to an Applicable Issuing Party, the address and, as appropriate, account set forth for such Applicable Issuing Party on Schedule 14.7 , or such other address as such Applicable Issuing Party may from time to time notify the Borrower and the Lenders.

      Approved Fund . 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.

      Arrangers . Banc of America Securities LLC and J.P.Morgan Securities Inc.

      Assignment and Assumption . An assignment and assumption entered into by a Lender and an Eligible Assignee (with the consent of any party whose consent is required by §13.2), and accepted by the Administrative Agent, in substantially the form of Exhibit A or any other form approved by the Administrative Agent.

      Balance Sheet Date . December 31, 2004.

      Bank of America . Bank of America, N.A. and its successors.

      Base Rate . 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 for such day as publicly announced from time to time by the Administrative Agent as its “prime rate.” The “prime rate” is a rate set by the Administrative Agent based upon various factors including the Administrative Agent’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 the Administrative Agent shall take effect at the opening of business on the day specified in the public announcement of such change.

      Borrower . As defined in the preamble hereto.

      Borrower Reinsurance Agreement . Any arrangement whereby the Borrower or any other Insurance Subsidiary, as reinsurer, agrees to indemnify any other insurance or reinsurance company against all or a portion of the insurance or reinsurance risks underwritten by such insurance or reinsurance company under any insurance or reinsurance policy.

      Business Day . Any day other than a Saturday, Sunday or other day on which commercial banks are authorized or permitted to close under the laws of, or are in fact closed in, Bermuda or the state where the Administrative Agent’s Office with respect to Obligations denominated in Dollars is located.

      Canadian Dollars or C$ . The lawful currency of Canada.

      Capital Lease Obligation. As to any Person, the obligations of such Person to pay rent or other amounts under any lease which is required to be classified and accounted for as a capital lease on a balance sheet of such Person in accordance with GAAP. For purposes of this Reimbursement and Pledge Agreement, the amount of such Capital Lease Obligation shall be the capitalized amount thereof determined in accordance with GAAP.

      Capital Stock . Any and all shares, interests, share capital, participations or other equivalents (however designated) of capital stock of a corporation or company, 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 . Dollars held by the Borrower in the Deposit Account.

      Cash Equivalents . At any time:

     (a) commercial paper, maturing not more than one year from the date of issue, which is issued by

          (i) a corporation (except an Affiliate of the Borrower) rated at least A-1 by S&P or P-1 by Moody’s or the equivalent rating from another nationally recognized agency, or

          (ii) any Lender (or its holding company); and

     (b) any money market fund, maturing not more than two years after the date of issue, which is issued by either

          (i) a financial institution which is rated at least AA- by S&P or Aa3 by Moody’s, or

          (ii) any Lender.

      Change in Control . Any of (a) any sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of all, or substantially all, of the assets of the Borrower occurs; (b) any “person” as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934 (the “Exchange Act”) other than the Parent or White Mountains Insurance Group Ltd., is or becomes, directly or indirectly, the “beneficial owner,” as defined in Rule 13d-3 under the Exchange Act, of securities of the Borrower that represent 51% or more of the combined voting power of the Borrower’s then outstanding securities; (c) during any period of two consecutive years, individuals who at the beginning of such period constituted the Board of Directors of the Borrower (together with any new or replacement directors whose election by the Board of Directors or whose nomination by the stockholders of the Borrower was approved by a vote of a majority of the Directors of the Borrower then still in office who are either directors or replacement directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the Borrower’s Board of Directors then in office; (d) the Parent ceases to (x) be the single largest shareholder of the Borrower or (y) be directly or indirectly, the “beneficial owner,” as defined in Rule 13d-3 under the Exchange Act, of securities of the Borrower that represent 10% or more of the combined voting power of the Borrower’s then outstanding securities; or (e) White Mountains Insurance Group Ltd. ceases to (x) be the single largest shareholder of the Parent or (y) be directly or indirectly, the “beneficial owner,” as defined in Rule 13d-3 under the Exchange Act, of securities of the Parent that represent 10% or more of the combined voting power of the Parent’s then outstanding securities.

      Code . The Internal Revenue Code of 1986, as amended from time to time, and regulations promulgated thereunder.

      Collateral Coverage Amount. On any date, an amount equal to the sum of the Adjusted Fair Market Value of all Eligible Collateral.

      Combined or combined . With reference to the accounts of the Parent and its Subsidiaries, combined in accordance with GAAP.

      Commitment . With respect to each Lender, the amount set forth on Schedule 1.1 hereto or in the Assignment and Assumption pursuant to which such Lender becomes a party hereto, as applicable, as the amount of such Lender’s commitment to participate in the issuance, extension and renewal of Letters of Credit for the account of the Borrower, as the same may be reduced from time to time; or if such commitment is terminated pursuant to the provisions hereof, zero.

      Commitment Fee . See §2.4.1.

      Commitment Increase Notice . See §2.1.2.

      Commitment Percentage . With respect to each Lender, the percentage (carried out to the ninth decimal place) of the Total Commitment represented by such Lender’s Commitment.

      Commitment Termination Date . The earliest of (a) November 14, 2006 , and (b) the occurrence of a Commitment Termination Event.

      Commitment Termination Event . The earliest to occur of (a) the date of termination of the Total Commitment pursuant to §2.1.3 and (b) the date of termination of the Commitment of each Lender pursuant to §11.1.

      Compliance Certificate . See §6.4(d).

      Consolidated Debt . The consolidated Debt (excluding Hedging Obligations) of the Parent and its Subsidiaries.

      Consolidated Net Worth . The Net Worth of the Parent and its Subsidiaries on a consolidated basis.

      Contingent Liability. Any agreement, undertaking or arrangement by which any Person (outside the ordinary course of business) guarantees, endorses, acts as surety for or otherwise becomes or is contingently liable for (by direct or indirect agreement, contingent or otherwise, to provide funds for payment by, to supply funds to, or otherwise to invest in, a debtor, or otherwise to assure a creditor against loss) the Debt, obligation or other liability of any other Person (other than by endorsements of instruments in the course of collection), or for the payment of dividends or other distribution upon the shares of any other Person or undertakes or agrees (contingently or otherwise) to purchase, repurchase, or otherwise acquire or become responsible for any Debt, obligation or liability or any security therefor, or to provide funds for the payment or discharge thereof (whether in the form of loans, advances, stock purchases, capital contributions or otherwise) or to maintain solvency, assets, level of income, or other financial condition of any other Person, or to make payment or transfer property to any other Person other than for fair value received; provided, however, that obligations of each of the Borrower and the Insurance Subsidiaries under Primary Policies or Borrower Reinsurance Agreements which are entered into in the ordinary course of business (including security posted by the Borrower and each of the Insurance Subsidiaries in the ordinary course of its business to secure obligations thereunder) shall not be deemed to be Contingent Liabilities of such Insurance Subsidiary or the Borrower for the purposes of this Reimbursement and Pledge Agreement. The amount of any Person’s obligation under any Contingent Liability shall (subject to any limitation set forth therein) be deemed to be the lesser of (i) the outstanding principal amount (or maximum permitted principal amount, if larger) of the Debt, obligation or other liability guaranteed or supported thereby or (ii) the maximum stated amount so guaranteed or supported.

      Control Agreement . That certain Control Agreement, dated as of November ___, 2005 among the Administrative Agent, the Borrower and the Custodian in the form attached hereto as Exhibit B .

      Consolidated or consolidated . With reference to the accounts of the Parent and its Subsidiaries, consolidated in accordance with GAAP.

      Corporate Securities. Publicly traded debt securities (other than preferred stock) issued by a corporation organized in the United States.

      Credit Extension . The issuance, extension, amendment or renewal of a Letter of Credit.

      Cure Contribution . Capital contributions or other equity infusions to the Parent made on or before the 30 ^th day after the date the Parent has failed to comply with the covenant set forth in §8.1, which cures such default.

      Custodial Lien and Set-off Rights . See §5.13.

      Custodian . The Bank of New York or any successor custodian approved by the Administrative Agent.

      Debt . With respect to any Person, at any date, without duplication, (a) all obligations of such Person for borrowed money or in respect of loans or advances; (b) all obligations of such Person evidenced by bonds, debentures, notes or other similar instruments; (c) all obligations in respect of letters of credit which have been drawn but not reimbursed by the Person for whose account such letter of credit was issued within the later of (x) three (3) Business Days and (y) the applicable cure period and bankers’ acceptances issued for the account of such Person; (d) all Capital Lease Obligations of such Person; (e) all Hedging Obligations of such Person; (f) to the extent required to be included as liabilities in accordance with GAAP, all obligations of such Person to pay the deferred purchase price of property or services; (g) Debt of such Person secured by a Lien on property owned or being purchased by such Person (including Debt arising under conditional sales or other title retention agreements) whether or not such Debt is limited in recourse; (h) any Debt of another Person secured by a Lien on any assets of such first Person, whether or not such Debt is assumed by such first Person (it being understood that if such Person has not assumed or otherwise become personally liable for any such Debt, the amount of the Debt of such Person in connection therewith shall be limited to the lesser of the face amount of such Debt and the fair market value of all property of such Person securing such Debt); (i) any Debt of a partnership in which such Person is a general partner unless such debt is nonrecourse to such Person; and (j) all Contingent Liabilities of such Person in connection with the foregoing; provided that, notwithstanding anything to contrary contained herein, Debt shall not include (x) unsecured current liabilities incurred in the ordinary course of business and paid within ninety (90) days after the due date (unless contested diligently in good faith by appropriate proceedings and, if requested by the Administrative Agent, reserved against in conformity with GAAP) other than liabilities that are for money borrowed or are evidenced by bonds, debentures, notes or other similar instruments or (y) any obligations of such Person under any Borrower Reinsurance Agreement or any Primary Policy.

      Default . Any event which would, with the giving of notice or the lapse of time, constitute an Event of Default.

      Default Rate . (a) When used with respect to Obligations other than Letter of Credit Fees, an interest rate equal to (i) the Base Rate plus (ii) 2% per annum; and (b) when used with respect to Letter of Credit Fees, a rate equal to the applicable Letter of Credit Fee plus 2% per annum, in all cases to the fullest extent permitted by applicable laws.

      Delinquent Lender . See §12.5.3.

      Deposit Account . The Borrower’s demand deposit account no.        and any replacement or successor account maintained with the Custodian and subject to the terms of the Control Agreement.

      Dollars or $ . Dollars in lawful currency of the United States of America.

      Dollar Equivalent . At any time, (a) with respect to any amount denominated in Dollars, such amount, and (b) with respect to any amount denominated in any Alternative Currency, the equivalent amount thereof in Dollars as determined by the Administrative Agent or Fronting Bank, as the case may be, at such time on the basis of the Spot Rate (determined in respect of the most recent Revaluation Date) for the purchase of Dollars with such Alternative Currency.

      Effective Commitment Amount . See §2.1.2.

      Effective Date . The first date on which the conditions set forth in §10 have been satisfied.

      Eligible Assignee . Any of (a) a Lender, (b) an Affiliate of a Lender or (c) a financial institution having a senior unsecured debt rating of not less than “A”, or its equivalent, by S&P and (d) any other Person (other than a natural person) approved by (i) the Administrative Agent and the Fronting Bank and (ii) unless a Default or an Event of Default has occurred and is continuing, the Borrower (with each such approval not to be unreasonably withheld or delayed).

      Eligible Collateral . ABSs, Cash, Cash Equivalents, Corporate Securities, Federal Agency Debt, Government Debt, MBS Investments and Municipal Securities which (a) are denominated in Dollars, (b) except in the case of Cash and Cash Equivalents, have the required rating and/or maximum tenor as set forth on Schedule 1.2 , (c) are capable of being marked to market on a daily basis and (d) are held in the Deposit Account or the Securities Account.

      Event of Default . See §11.1.

      Fair Market Value . (a) With respect to any Government Debt, Federal Agency Debt, or other publicly-traded security (other than those set forth in clause (b)) the closing price for such security on Bloomberg, Inc. or, if Bloomberg, Inc. is not available, another quotation service reasonably acceptable to the Administrative Agent, (b) with respect to Cash and Cash Equivalents, the amounts thereof, and (c) with respect to any Eligible Collateral (other than those set forth in clauses (a), and (b)), the price for such Eligible Collateral on the date of calculation obtained from a generally recognized source approved by the Administrative Agent or the most recent bid quotation from such approved source (or, if no generally recognized source exists as to such Eligible Collateral, any other source specified by the Borrower to which the Administrative Agent does not reasonably object).

      Federal Agency . Any of the following agencies of the federal government of the United States: (a) Government National Mortgage Association; (b) the Export-Import Bank of the United States; (c) the Farmers Home Administration, an agency of the United States Department of Agriculture; (d) the United States General Services Administration; (e) the United States

Maritime Administration; (f) the United States Small Business Administration; (g) the Commodity Credit Corporation; (h) the Rural Electrification Administration; (i) the Rural Telephone Bank; (j) Washington Metropolitan Area Transit Authority; (k) the Federal Home Loan Mortgage Corporation; (l) the Federal National Mortgage Association; (m) the Federal Housing Finance Board; (n) the Federal Home Loan Bank; and (o) such other federal agencies as are reasonably acceptable to the Administrative Agent.

      Federal Agency Debt . Evidence of Freely Transferable Debt issued by a Federal Agency.

      Federal Funds Rate . 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 on such day on such transactions as determined by the Administrative Agent.

      Fee Letter . The fee letter dated as of October 13, 2005 among the Borrower, the Administrative Agent and Banc of America Securities LLC.

      Fees . The Letter of Credit Fee and the Commitment Fee.

      Financial Affiliate . A Subsidiary of the bank holding company controlling any Lender, which Subsidiary is engaging in any of the activities permitted by §4(e) of the Bank Holding Company Act of 1956 (12 U.S.C. §1843).

      Freely Transferable . Securities which are freely transferable and traded in established and recognized markets and as to which there are readily available price quotations.

      Fronted Letters of Credit . Any Letter of Credit which is issued by the Fronting Bank pursuant to §§ 2.1.1(a).

      Fronting Bank . Bank of America in its capacity as an issuer of (a) Fronted Letters of Credit and (b) Several Letters of Credit on behalf of each Participating Bank.

      Fund . Any Person (other than a natural person) that is (or will be) engaged in making, purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in the ordinary course of its business.

      GAAP or generally accepted accounting principles . (a) When used in §6, whether directly or indirectly through reference to a capitalized term used therein, means (i) principles that are consistent with the principles promulgated or adopted by the Financial Accounting Standards Board and its predecessors, in effect for the fiscal year ended on the Balance Sheet Date, and (ii) to the extent consistent with such principles, the accounting practice of the Parent reflected in its financial statements for the year ended on the Balance Sheet Date, and (b) when

used in general, other than as provided above, means principles that are (i) consistent with the principles promulgated or adopted by the Financial Accounting Standards Board and its predecessors, as in effect from time to time, and (ii) consistently applied with past financial statements of the Parent adopting the same principles, provided that in each case referred to in this definition of “ GAAP ” a certified public accountant would, insofar as the use of such accounting principles is pertinent, be in a position to deliver an unqualified opinion (other than a qualification regarding changes in GAAP) as to financial statements in which such principles have been properly applied.

      Governing Documents . With respect to any Person, its certificate or articles of incorporation, memorandum of association, certificate of formation, or, as the case may be, certificate of limited partnership, its by-laws, operating agreement or, as the case may be, partnership agreement or other constitutive documents and all shareholder agreements, voting trusts and similar arrangements applicable to any of its Capital Stock.

      Governmental Authority . Any foreign, federal, state, regional, local, municipal or other government, or any department, commission, board, bureau, agency, public authority or instrumentality thereof or any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government or any court or arbitrator.

      Government Debt . Freely Transferable Debt issued by the U.S. Treasury Department or backed by the full faith and credit of the United States.

      Hedging Obligations. With respect to any Person, the liability of such Person under any futures contract or options contract, interest rate swap agreements and interest rate collar agreements and all other agreements or arrangements (other than Retrocession Agreements), designed to protect such Person against fluctuations in interest rates or currency exchange rates. Debt under a Hedging Obligation shall be the amount of such Person’s net obligation, if any, under each hedging agreement (determined on the mark-to-market value for such agreement based upon a readily available quotation provided by a recognized dealer in such type of hedging agreement).

      Indemnified Persons . See §14.5(a)

      Indemnitee . See §14.4

      Individual Outstandings . As to any Lender, such Lender’s Commitment Percentage of the Total Outstandings as of such date.

      Ineligible Securities . Securities which may not be underwritten or dealt in by member banks of the Federal Reserve System under Section 16 of the Banking Act of 1933 (12 U.S.C. §24, Seventh), as amended.

      Insurance Subsidiary. The Borrower and any other Subsidiary of the Parent created after the Effective Date which is licensed by any Governmental Authority to engage in the insurance business.

      Issuer . With respect to any Letter of Credit, the Person or Persons who have issued such Letter of Credit. In the case of Fronted Letters, the Fronting Bank shall be the Issuer. In the case of Several Letters of Credit, each Lender who is shown on such Several Letter of Credit as having a “Commitment Share” shall be an Issuer.

      LC Administrator . Bank of America’s Letter of Credit Operations located at One Fleet Way, Scranton, PA 18507, together with any replacement LC Administrator arising under Section 12.9.

      Lender Affiliate . With respect to any Lender, (a) an Affiliate of such Lender or (b) any Approved Fund.

      Lender Increase Notice . See §2.1.2.

      Lenders . The lending institutions executing this Reimbursement and Pledge Agreement as a Lender and any other Person who becomes an assignee of any rights and obligations of a Lender pursuant to §13.

      Letters of Credit . See §2.1.1.

      Letter of Credit Application . An application and agreement for the issuance and amendment of a Letter of Credit in the form from time to time in use by the Applicable Issuing Party.

      Letter of Credit Fee . See §2.4.2.

      Letter of Credit Participation . See §2.2.3.

      Leverage Ratio . The ratio, expressed as a percentage, of (a) Consolidated Debt to (b) Consolidated Net Worth plus Consolidated Debt.

      Lien. When used with respect to any Person, any interest in any real or personal property, asset or other right held, owned or being purchased or acquired by such Person for its own use, consumption or enjoyment which secures payment or performance of any obligation and shall include any mortgage, lien, pledge, encumbrance, charge, retained title of a conditional vendor or lessor, or other security agreement, mortgage, deed of trust, chattel mortgage, assignment, pledge, retention of title, financing or similar statement or notice, or other encumbrance arising as a matter of law, judicial process or otherwise.

      Lloyd’s . Lloyd’s of London or members of its syndicate.

      Loan Documents . This Reimbursement and Pledge Agreement, the Letter of Credit Applications, the Letters of Credit, the Fee Letter and the Control Agreement.

      Material Adverse Effect . With respect to any event or occurrence of whatever nature (including any adverse determination in any litigation, arbitration or governmental investigation or proceeding) which results in:

     (a) a material adverse effect on the business, properties, condition (financial or otherwise), assets, operations or income of (i) the Borrower individually, (ii) the Borrower and its Subsidiaries, taken as a whole or (iii) the Parent and its Subsidiaries, taken as a whole;

     (b) a material adverse effect on the ability of the Borrower to perform any of its Obligations under any of the Loan Documents to which it is a party; or

     (c) any impairment of the validity, binding effect or enforceability of this Reimbursement and Pledge Agreement or any of the other Loan Documents (other than a Letter of Credit), any impairment of the rights, remedies or benefits available to the Administrative Agent or any Lender under any Loan Document or any impairment of the attachment, perfection or priority of any lien of the Administrative Agent under this Reimbursement and Pledge Agreement other than (i) liens arising by operation of law, so long as the aggregate obligations secured thereby do not exceed $1,000,000 and (ii) the Custodial Lien and Set-Off Rights.

     In determining whether any individual event has a Material Adverse Effect, notwithstanding that such event does not of itself have such effect, a Material Adverse Effect shall be deemed to have occurred if the cumulative effect of such event and all other then existing events results in a Material Adverse Effect.

      Material Party. Each of (a) the Borrower, (b) any Insurance Subsidiary of the Borrower, and (c) any Subsidiary of the Borrower which is not an Insurance Subsidiary whose (i) total assets are 15% or more of the total assets of the Borrower and its consolidated Subsidiaries (including such Subsidiary) in each case as set forth on the most recent fiscal year end balance sheet of such Subsidiary and the Borrower and its consolidated Subsidiaries, respectively, and computed in accordance with GAAP, and (ii) total revenues are 15% or more of the total revenues of the Borrower and its consolidated Subsidiaries (including such Subsidiary), in each case as set forth on the most recent fiscal year-end income statements of such Subsidiary and the Borrower and its consolidated Subsidiaries, respectively, and computed in accordance with GAAP.

      Maximum Drawing Amount . The maximum aggregate amount that the beneficiaries may at any time draw under outstanding Letters of Credit, as such aggregate amount may be reduced from time to time pursuant to the terms of the Letters of Credit.

      MBS (Agency Pass-Throughs) . Any instrument, issued by the Federal National Mortgage Association, the Government National Mortgage Association or the Federal Home Loan Mortgage Corporation, that entitles the holder of, or beneficial owner under, the instrument to the whole or any part of the rights or entitlements of a mortgagee and any other rights or entitlements in respect of a pool of mortgages or any money payable by mortgagors under those mortgages in relation to real estate mortgages, and the money payable to the holder of, or beneficiary owner under, the instrument is based on actual or scheduled payments on the underlying mortgages.

      MBS (Agency CMOs) . Collateralized mortgage obligations or real estate mortgage investment conduit pass through securities, in any case issued by the Federal National Mortgage

Association, the Government National Mortgage Association or the Federal Home Loan Mortgage Corporation.

      MBS Investments . MBS (Agency CMOs) which constitute TACs, PACs and Sequentials and shall not include Support Tranches and MBS (Agency Pass-Throughs). The maximum weighted average life of any single MBS Investment shall not exceed 10 years.

      Municipal Securities . Publicly traded debt securities issued by any state or municipality located in the United States.

      Net Worth . With respect to any Person, the consolidated net worth of such Person calculated in accordance with GAAP.

      Notice of Exclusive Control . A written notice, in the form attached to the Control Agreement as Exhibit B, given by the Administrative Agent to the Custodian upon an Event of Default that the Administrative Agent is exercising sole and exclusive control of the Securities Account and the Pledged Collateral credited thereto.

      Obligations . All indebtedness, obligations and liabilities of the Borrower to any of the Lenders, the LC Administrator, the Fronting Bank and the Administrative Agent, individually or collectively, existing on the date of this Reimbursement and Pledge Agreement or arising thereafter, direct or indirect, absolute or contingent, matured or unmatured, liquidated or unliquidated, secured or unsecured, arising or incurred under this Reimbursement and Pledge Agreement or any of the other Loan Documents or in respect of any Reimbursement Obligations incurred under any Letter of Credit or other instrument at any time evidencing any thereof and arising by contract, operation of law or otherwise.

      Participant . See §13.4.

      Participating Bank . From time to time with respect to Several Letters of Credit, each Lender for whose Commitment Percentage the Fronting Bank has agreed to be liable.

      Parent . Montpelier Re Holdings Ltd., a Bermuda holding company.

      Person . Any individual, corporation, limited liability company partnership, limited liability partnership, firm, trust, joint venture, joint stock company, other unincorporated association, or other legal entity, and any Governmental Authority, each whether acting in an individual, fiduciary or other capacity.

      Platform is defined in §6.4.

      Pledged Collateral . See §4.1.

      Pledged Collateral Certificate . See §6.4(e).

      Primary Policies. Any insurance policies issued by the Borrower or any other Insurance Subsidiary.

      Register . See §13.3.

      Release Amount . See §4.7.

      Reimbursement and Pledge Agreement . This Letter of Credit Reimbursement and Pledge Agreement.

      Reimbursement Obligation . The Borrower’s obligation to reimburse the Applicable Issuing Party and the Lenders on account of any drawing under any Letter of Credit as provided in §2.2.

      Related Parties . With respect to any specified Person, such Person’s Affiliates and the respective directors, officers, employees, agents and advisors of such Person and such Person’s Affiliates.

      Required Lenders . As of any date, the Lenders whose aggregate Commitments constitutes at least fifty-one percent (51%) of the Total Commitment or, if the Commitments have been terminated, the Lenders whose Individual Outstandings constitute at least fifty-one percent (51%) of the Total Outstandings, provided that the Commitment of, and the Individual Outstandings held or deemed held by, any Delinquent Lender shall be excluded for purposes of making a determination of Required Lenders.

      Responsible Officer . The president, chief executive officer, chief financial officer, chief operating officer, treasurer, controller or any vice-president of the Borrower.

      Retrocession Agreements. Any agreement, treaty, certificate or other arrangement whereby the Borrower or any other Insurance Subsidiary cedes to another insurer all or part of the Borrower’s or such Insurance Subsidiary’s liability under a policy or policies of insurance reinsured by the Borrower or such Insurance Subsidiary.

      Revaluation Date . With respect to any Letter of Credit, each of the following: (i) each date of issuance or extension or renewal of a Letter of Credit denominated in an Alternative Currency, (ii) each date of an amendment of any such Letter of Credit having the effect of increasing the amount thereof (solely with respect to the increased amount), (iii) each date of any payment by the Fronting Bank under any Letter of Credit denominated in an Alternative Currency, (iv) the last Business Day of each month and (v) such additional dates as the Administrative Agent or the Fronting Bank shall determine or the Required Lenders shall require.

      S&P . Standard & Poor’s Ratings Group.

      Same Day Funds . (a) With respect to disbursements and payments in Dollars, immediately available funds, and (b) with respect to disbursements and payments in an Alternative Currency, same day or other funds as may be determined by the Administrative Agent or the Fronting Bank, as the case may be, to be customary in the place of disbursement or payment for the settlement of international banking transactions in the relevant Alternative Currency.

      Securities Account . The Borrower’s custodial account fund no.        maintained with the Custodian and any replacement or successor account maintained with the Custodian and subject to the terms of the Control Agreement.

      Several Letters of Credit . Letters of Credit issued severally by the Lenders substantially in the form of Exhibit E with such changes therein as the LC Administrator determines is not adverse to the interests of the Lenders.

      Spot Rate . For a currency, the rate determined by the Administrative Agent or the Fronting Bank, as applicable, to be the rate quoted by the Person acting in such capacity as the spot rate for the purchase by such Person of such currency with another currency through its principal foreign exchange trading office at approximately 11:00 a.m. on the date two Business Days prior to the date as of which the foreign exchange computation is made; provided that the Administrative Agent or the Fronting Bank may obtain such spot rate from another financial institution designated by the Administrative Agent or the Fronting Bank if the Person acting in such capacity does not have as of the date of determination a spot buying rate for any such currency; and provided further that the Fronting Bank may use such spot rate quoted on the date as of which the foreign exchange computation is made in the case of any Letter of Credit denominated in an Alternative Currency.

      Subsidiary . Any corporation, association, trust, or other business entity of which the designated parent shall at any time own directly or indirectly through a Subsidiary or Subsidiaries at least a majority (by number of votes) of the outstanding Voting Stock.

      Total Commitment . The sum of the Commitments of the Lenders, as in effect from time to time.

      Total Outstandings . The sum of the Dollar Equivalent of the Maximum Drawing Amount plus the Dollar Equivalent of the total Unpaid Reimbursement Obligation with respect to Letters of Credit on such date after giving effect to any Credit Extensions pursuant to §2.1.1 and repayment of Reimbursement Obligations with respect to Letters of Credit on such date.

      Unpaid Reimbursement Obligation . Any Reimbursement Obligation for which the Borrower does not reimburse the Applicable Issuing Party and/or the Lenders, as applicable on the date specified in, and in accordance with, §2.2; provided however that solely for purposes of calculating the Total Outstandings and any component thereof, Reimbursement Obligations which have been paid by application of proceeds of Pledged Collateral by the Administrative Agent shall not constitute Unpaid Reimbursement Obligations.

      Voting Stock . Stock or similar interests, of any class or classes (however designated), the holders of which are at the time entitled, as such holders, to vote for the election of a majority of the directors (or persons performing similar functions) of the corporation, association, trust or other business entity involved, whether or not the right so to vote exists by reason of the happening of a contingency.

     1.2 Rules of Interpretation .

          (a) A reference to any document or agreement shall include such document or agreement as amended, modified or supplemented from time to time in accordance with its terms or the terms of this Reimbursement and Pledge Agreement.

          (b) The singular includes the plural and the plural includes the singular.

          (c) A reference to any law includes any amendment or modification to such law.

          (d) A reference to any Person includes its permitted successors and permitted assigns.

          (e) Accounting terms not otherwise defined herein have the meanings assigned to them by GAAP applied on a consistent basis by the accounting entity to which they refer.

          (f) The words “include”, “includes” and “including” are not limiting.

          (g) All terms not specifically defined herein or by GAAP, which terms are defined in the Uniform Commercial Code as in effect in the State of New York, have the meanings assigned to them therein, with the term “ instrument ” being that defined under Article 9 of the Uniform Commercial Code.

          (h) Reference to a particular “§” refers to that section of this Reimbursement and Pledge Agreement unless otherwise indicated.

          (i) The words “herein”, “hereof”, “hereunder” and words of like import shall refer to this Reimbursement and Pledge Agreement as a whole and not to any particular section or subdivision of this Reimbursement and Pledge Agreement.

          (j) Unless otherwise expressly indicated, in the computation of periods of time from a specified date to a later specified date, the word “from” means “from and including,” the words “to” and “until” each mean “to but excluding,” and the word “through” means “to and including.”

          (k) This Reimbursement and Pledge Agreement may use several different limitations, tests or measurements to regulate the same or similar matters. All such limitations, tests and measurements are, however, cumulative and are to be performed in accordance with the terms thereof.

          (l) This Reimbursement and Pledge Agreement is the result of negotiation among, and has been reviewed by counsel to, among others, the Administrative Agent and the Borrower and is the product of discussions and negotiations among all parties. Accordingly, this Reimbursement and Pledge Agreement is not intended to be construed against the Administrative Agent, the Borrower, the Fronting Bank, the LC Administrator or any of the Lenders merely on account of the Administrative Agent’s, the Borrower’s, the Fronting Bank’s, the LC Administrator’s or any Lender’s involvement in the preparation of such documents.

     1.3 Exchange Rates . The Administrative Agent or the Fronting Bank, as applicable, shall determine the Spot Rates as of each Revaluation Date to be used for calculating Dollar Equivalent amounts of Credit Extensions and Total Outstandings denominated in Alternative Currencies. Such Spot Rates shall become effective as of such Revaluation Date and shall be the Spot Rates employed in converting any amounts between the applicable currencies until the next Revaluation Date to occur. Except for purposes of financial statements delivered by the Borrower hereunder or calculating financial covenants hereunder or except as otherwise provided herein, the applicable amount of any currency (other than Dollars) for purposes of the Loan Documents shall be such Dollar Equivalent amount as so determined by the Administrative Agent or the Fronting Bank, as applicable.

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

2. COMMITMENTS, LETTERS OF CREDIT.

     2.1 Commitments of Lenders .

          2.1.1 Commitment . On and subject to the terms and conditions of this Reimbursement and Pledge Agreement, (a) the Fronting Bank agrees to issue, extend and renew for the account of the Borrower one or more standby letters of credit (a “ Letter of Credit ”) from time to time before the Commitment Termination Date, (b) each Lender hereby agrees to issue severally, and for itself alone, Several Letters of Credit at the request of and for the account of the Borrower from time to time before the Commitment Termination Date in such Lender’s Commitment Percentage of such aggregate stated amounts of Several Letters of Credit, (c) each Lender hereby agrees to purchase Letter of Credit Participations in the obligations of the Fronting Bank under Letters of Credit that are Fronted Letters of Credit as more fully set forth in §2.2, and (d) with respect to Several Letters of Credit, the Fronting Bank hereby agrees that it shall be severally (and not jointly) liable for an amount equal to its Commitment Percentage plus each Participating Bank’s Commitment Percentage and each Participating Bank hereby agrees to purchase Letter of Credit Participations in the obligations of the Fronting Bank under any such Several Letter of Credit in an amount equal to such Participating Bank’s Commitment Percentage; provided however, that after giving effect to any Credit Extension pursuant to this §2.1.1, (x) the sum of the Total Outstandings shall not exceed the Total Commitment and (y) the Total Outstandings shall not exceed the Collateral Coverage Amount.

          2.1.2 Increase to Total Commitment . At any time, the Borrower may request that the Total Commitment be increased, provided that, without the prior written consent of the Required Lenders, (i) the Total Commitment shall at no time exceed $1,100,000,000 and (ii) each such request shall be in a minimum amount of at least $1,000,000. Such request shall be made in a written notice given to the Administrative Agent and the Lenders by the Borrower not fewer than twenty (20) Business Days prior to the proposed effective date of such increase, which notice (a “ Commitment Increase Notice ”) shall specify the amount of the proposed increase in the Total Commitment and the proposed effective date of such increase. In the event of such a Commitment Increase Notice, each of the Lenders, shall be given the opportunity to participate in the requested increase ratably in proportion that its Commitment bears to the Total Commitment under this Reimbursement and Pledge Agreement. No Lender shall have any

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obligation to increase its Commitment pursuant to a Commitment Increase Notice. On or prior to a date that is ten (10) Business Days after receipt of the Commitment Increase Notice, each Lender shall submit to the Administrative Agent a notice indicating the maximum amount, if any, by which it is willing to increase its Commitment in connection with such Commitment Increase Notice (any such notice to the Administrative Agent being herein a “ Lender Increase Notice ”). Any Lender which does not submit a Lender Increase Notice to the Administrative Agent prior to the expiration of such ten (10) Business Day period shall be deemed to have denied any increase in its Commitment. In the event that the increases of Commitments set forth in the Lender Increase Notices exceed the amount requested by the Borrower in the Commitment Increase Notice, the Administrative Agent shall have the right, in consultation with the Borrower, to allocate the amount of increases necessary to meet the Borrower’s Commitment Increase Notice; provided that, no Lender shall be allocated an amount less than its pro rata share of such increase based upon the proportion its Commitment bears to the Total Commitment under this Reimbursement and Pledge Agreement. In the event that the Lender Increase Notices are less than the amount requested by the Borrower, no later than five (5) Business Days prior to the proposed effective date the Borrower may notify the Administrative Agent of any Eligible Assignee that shall have agreed to become a “Lender” party hereto (an “ Acceding Bank ”) in connection with the Commitment Increase Notice. If the Borrower shall not have arranged any Acceding Bank(s) to commit to the shortfall from the Lender Increase Notices, then the Borrower shall be deemed to have reduced the amount of its Commitment Increase Notice to the aggregate amount set forth in the Lender Increase Notices. Based upon the Lender Increase Notices, any allocations made in connection therewith and any notice regarding any Acceding Bank, if applicable, the Administrative Agent shall notify the Borrower and the Lenders on or before the Business Day immediately prior to the proposed effective date of the amount of each Bank’s and Acceding Bank’s Commitment (the “ Effective Commitment Amount ”) and the increased amount of the Total Commitment and the Total Commitment which amounts shall be effective on the following Business Day subject to the conditions set forth herein. Any increase in the Total Commitment under this Reimbursement and Pledge Agreement shall be subject to the following conditions precedent: (i) as of the date of the Commitment Increase Notice and as of the proposed effective date of the increase in the Total Commitment under this Reimbursement and Pledge Agreement, all representations and warranties shall be true and correct in all material respects as though made on such date (unless such representation and warranty is made as of a specific date, in which case, such representation and warranty shall be true and correct as of such date) and no event shall have occurred and then be continuing which constitutes a Default or Event of Default under this Reimbursement and Pledge Agreement; (ii) the Borrower, the Administrative Agent and each Acceding Bank which shall have agreed to provide a “Commitment” in support of such increase in the Total Commitment under this Reimbursement and Pledge Agreement, shall have executed and delivered an “Instrument of Accession” in a form reasonably acceptable to the Administrative Agent; (iii) to the extent reasonably required by the Administrative Agent, counsel for the Borrower shall have provided to the Administrative Agent a supplemental opinion in form and substance reasonably satisfactory to the Administrative Agent; (iv) the Acceding Bank(s) shall otherwise have executed and delivered such other instruments and documents as the Administrative Agent shall have reasonably requested in connection with such increase; (v) the Borrower shall have executed and delivered all corporate authority documents that the Administrative Agent shall have reasonably requested in connection with such increase; and (vi) if applicable, the LC

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Administrator shall have delivered to the respective beneficiaries of outstanding Several Letters of Credit amendments (or, in the case of any Several Letter of Credit issued individually by the Lenders, a replacement Several Letter of Credit in exchange for and the return or cancellation of the original Several Letter of Credit) which reflect any changes in the Lenders and/or the Commitment Percentages resulting from such increase. Upon satisfaction of the conditions precedent to any increase in the Total Commitment under this Reimbursement and Pledge Agreement, the Administrative Agent shall promptly advise the Borrower and each Lender of the effective date of such increase. Upon the effective date of any increase the Total Commitment under this Reimbursement and Pledge Agreement that is supported by an Acceding Bank, such Acceding Bank shall be a party to this Reimbursement and Pledge Agreement as a Lender and shall have the rights and obligations of a Lender hereunder. In addition, on the effective date, the Administrative Agent shall replace the existing Schedule 1.1 attached hereto with the revised Schedule 1.1 reflecting such new Total Commitment, and each Lender’s Commitment. Nothing contained herein shall constitute, or otherwise be deemed to be, a commitment on the part of any Lender to increase its Commitment hereunder. It is understood that any increase in the amount of the Commitments pursuant to this §2.1.2 shall not constitute an amendment of this Reimbursement and Pledge Agreement.

          2.1.3 Voluntary Commitment Reductions . The Borrower shall have the right at any time and from time to time upon three (3) Business Days prior written notice to the Administrative Agent to reduce by a minimum amount of $10,000,000 and in multiples of $1,000,000 in excess thereof, or to terminate entirely, the Total Commitment whereupon the Commitments of the Lenders shall be reduced pro rata in accordance with their respective Commitment Percentages of the amount specified in such notice or, terminated as the case may be provided that the Total Commitment may not be reduced to an amount below the Total Outstandings. Promptly after receiving any notice of the Borrower delivered pursuant to this §2.1.3, the Administrative Agent will notify the Lenders of the substance thereof. No reduction or termination of the Commitments may be reinstated.

     2.2 Procedures for Issuance and Amendment of Letters of Credit .

          2.2.1 Issuance Procedures . (a) Each Letter of Credit shall be issued or amended, as the case may be, upon the request of the Borrower delivered to (x) the Fronting Bank, in the case of Fronted Letters of Credit and (y) the LC Administrator, in the case of Several Letters of Credit (with a copy in each case to the Administrative Agent) by hard copy or electronically in the form of a Letter of Credit Application, appropriately completed and signed by a Responsible Officer of the Borrower. Such Letter of Credit Application must be received by the Applicable Issuing Party and the Administrative Agent (i) not later than 11:00 a.m. at least two Business Days prior to the proposed issuance date or date of amendment, as the case may be, of any Fronted Letter of Credit denominated in Dollars, (ii) not later than 11:00 a.m. at least three Business Days prior to the proposed issuance date or date of amendment, as the case may be, of any Several Letter of Credit denominated in Dollars, and (iii) not later than 11:00 a.m. at least four Business Days prior to the proposed issuance date or date of amendment, as the case may be, of any Letter of Credit denominated in an Alternative Currency; or in each case such earlier date and time as the Administrative Agent and the Applicable Issuing Party may agree in a particular instance in their sole discretion. In the case of a request for an initial issuance of a Letter of Credit, such Letter of Credit Application shall specify in form and detail satisfactory to

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the Applicable Issuing Party: (A) the proposed issuance date of the requested Letter of Credit (which shall be a Business Day); (B) the amount and currency thereof; (C) the expiry date thereof; (D) the name and address of the beneficiary thereof (which shall not be Lloyd’s); (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; (G) whether such Letter of Credit is to be issued as a Fronted Letter of Credit or a Several Letter of Credit (it being agreed that (x) all Letters of Credit denominated in Canadian Dollars will be Fronted Letters of Credit and (y) in the event a Lender advises the Administrative Agent and the LC Administrator that such Lender is unable (due to regulatory restrictions or other legal impediments) to issue a Several Letter of Credit because of its relationship to the beneficiary, such Lender shall be a Participating Bank in such Several Letter of Credit); and (H) such other matters as the Applicable Issuing Party may require. In the case of a request for an amendment of any outstanding Letter of Credit, such Letter of Credit Application shall specify in form and detail satisfactory to the Applicable Issuing Party (w) the Letter of Credit to be amended; (x) the proposed date of amendment thereof (which shall be a Business Day); (y) the nature of the proposed amendment; and (z) such other matters as the Applicable Issuing Party may require. Additionally, the Borrower shall furnish to the Applicable Issuing Party and the Administrative Agent such other documents and information pertaining to such requested Letter of Credit issuance or amendment as the Applicable Issuing Party or the Administrative Agent may require.

          (b) Promptly after receipt of any Letter of Credit Application, the Applicable Issuing Party will confirm with the Administrative Agent (by telephone or in writing) that the Administrative Agent has received a copy of such Letter of Credit Application from the Borrower and, if not, the Applicable Issuing Party will provide the Administrative Agent with a copy thereof. Unless the Applicable Issuing Party has received written notice from any Lender, the Fronting Bank, the Administrative Agent or the Borrower, 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 §10 shall not then be satisfied, then, subject to the terms and conditions hereof, the Applicable Issuing Party, 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 its usual and customary business practices.

          (c) The LC Administrator is hereby authorized to execute and deliver each Several Letter of Credit and each amendment to a Several Letter of Credit on behalf of each Lender provided that, upon request of the Borrower, such Several Letter of Credit or amendment will be executed by each Lender. The LC Administrator shall use the Commitment Percentage of each Lender as its “Commitment Share” under each Several Letter of Credit provided that the Fronting Bank shall be severally (and not jointly) liable for an amount equal to its Commitment Percentage plus the Commitment Percentage of each Participating Bank. The LC Administrator shall not amend any Several Letter of Credit to change the “Commitment Shares” of an Issuer or add or delete an Issuer liable thereunder unless such amendment is done in connection with an assignment, a change in the Lenders and/or the Commitment Percentages as a result of any increase in the Total Commitment pursuant to § 2.1.2 or any other addition or replacement of a Lender in accordance with the terms of this Reimbursement and Pledge Agreement. The status of a Lender as a Participating Bank at any time shall be determined solely by the Fronting Bank and such Lender. In the event a Lender becomes a Participating Bank or ceases to be a Participating Bank, the LC Administrator is authorized to amend each Several Letter of Credit to

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reflect such change in status and fees owed by the Borrower with respect to any Participating Bank to the Fronting Bank pursuant to the Fee Letter shall accrue only during such period as such Lender is a Participating Bank with respect to any such Several Letter of Credit. Each Lender hereby irrevocably constitutes and appoints the LC Administrator its true and lawful attorney-in-fact for and on behalf of such Lender with full power of substitution and revocation in its own name or in the name of the LC Administrator to issue, execute and deliver, as the case may be, each Several Letter of Credit and each amendment to a Several Letter of Credit and to carry out the purposes of this Reimbursement and Pledge Agreement with respect to Several Letters of Credit.

          (d) If the Borrower so requests in any applicable Letter of Credit Application, the Applicable Issuing Party may, in its sole and absolute discretion, agree to issue a Letter of Credit that has automatic extension provisions (each, an “ Auto-Extension Letter of Credit ”); provided that any such Auto-Extension Letter of Credit must permit the Applicable Issuing Party, to prevent any such extension at least once in each twelve-month period (commencing with the date of issuance of such Letter of Credit) by giving prior notice to the beneficiary thereof not later than a day (the “ Non-Extension Notice Date ”) in each such twelve-month period to be agreed upon at the time such Letter of Credit is issued. Unless otherwise directed by the Applicable Issuing Party, the Borrower shall not be required to make a specific request to the Applicable Issuing Party for any such extension. Once an Auto-Extension Letter of Credit has been issued, the Lenders shall be deemed to have authorized (but may not require) the Applicable Issuing Party to permit the extension of such Letter of Credit at any time to an expiry date not later than one year after the Commitment Termination Date; provided , however , that the Applicable Issuing Party shall not permit any such extension if (A) the Applicable Issuing Party has determined that it would not be permitted, or would have no obligation, at such time to issue such Letter of Credit in its revised form (as extended) under the terms hereof (by reason of the provisions of §2.2.2 or otherwise), or (B) it has received notice (which may be by telephone or in writing) on or before the day that is five Business Days before the Non-Extension Notice Date from the Administrative Agent, the Fronting Bank, any Lender or the Borrower that one or more of the applicable conditions specified in §10 is not then satisfied, and in each such case directing the Applicable Issuing Party not to permit such extension.

          (e) 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 Applicable Issuing Party will also deliver to the Borrower and the Administrative Agent a true and complete copy of such Letter of Credit or amendment

          2.2.2 Terms of Letters of Credit . (a) Each Letter of Credit issued, extended or renewed hereunder shall, among other things, (i) provide for the payment of sight drafts for honor thereunder when presented in accordance with the terms thereof and when accompanied by the documents described therein, and (ii) be issued in Dollars or Canadian Dollars and have an expiry date no later than the date which is one (1) year from the date of issuance of such Letter of Credit. Each Letter of Credit so issued, extended or renewed shall be subject to the Uniform Customs and Practice for Documentary Credits (1993 Revision), International Chamber of Commerce Publication No. 500 or any successor version thereto adopted by the Applicable Issuing Party in the ordinary course of its business as a letter of credit issuer and in effect at the time of issuance of such Letter of Credit (the “ Uniform Customs ”) or the International Standby

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Practices (ISP98), International Chamber of Commerce Publication No. 590, or any successor code of standby letter of credit practices among banks adopted by the Applicable Issuing Party in the ordinary course of its business as standby letter of credit issuers and in effect at the time of issuance of such Letter of Credit, in each case to the extent not inconsistent with New York law. Letters of Credit may be issued at any time prior to the Commitment Termination Date. In the event of any conflict between the terms of any Letter of Credit Application and this Reimbursement and Pledge Agreement, the terms of this Reimbursement and Pledge Agreement shall govern. Letters of Credit denominated in Alternative Currencies, shall be issued in a minimum Alternative Currency Equivalent of $100,000 and all Letters of Credit denominated in Dollars shall be issued in a minimum face amount of $1,000 .

          (b) An Issuer shall not be under any obligation to issue any Letter of Credit and no Lender shall have any obligation to participate in any Letter of Credit if:

          (i) any order, judgment or decree of any Governmental Authority or arbitrator shall by its terms purport to enjoin or restrain an Issuer from issuing such Letter of Credit, or any law applicable to such Issuer or any request or directive (whether or not having the force of law) from any Governmental Authority with jurisdiction over such Issuer shall prohibit, or request that such Issuer refrain from, the issuance of letters of credit generally or such Letter of Credit in particular or shall impose upon such Issuer with respect to such Letter of Credit any restriction, reserve or capital requirement (for which such Issuer is not otherwise compensated hereunder) not in effect on the Effective Date, or shall impose upon such Issuer any unreimbursed loss, cost or expense which was not applicable on the Effective Date and which such Issuer in good faith deems material to it;

          (ii) the issuance of such Letter of Credit would violate any laws or one or more policies of such Issuer;

          (iii) a default of any Lender’s obligations to fund under §2.2.6 exists or any Lender is at such time a Delinquent Lender hereunder, unless the Fronting Bank has entered into satisfactory arrangements with the Borrower or such Lender to eliminate the Fronting Bank’s risk with respect to such Lender.

          (c) An Issuer shall be under no obligation to amend any Letter of Credit if (i) such Issuer would have no obligation at such time to issue such Letter of Credit in its amended form under the terms hereof, or (ii) the beneficiary of such Letter of Credit does not accept the proposed amendment to such Letter of Credit.

          2.2.3 Reimbursement Obligations of Lenders . (a) Each Lender severally agrees that it shall be absolutely liable, without regard to the occurrence of any Default or Event of Default or any other condition precedent whatsoever, to the extent of such Lender’s Commitment Percentage to reimburse the Fronting Bank on demand for the amount of each draft paid by the Fronting Bank under each Fronted Letter of Credit, required to be funded by it, to the extent that such amount is not reimbursed by the Borrower pursuant to §2.2.5 (such agreement for a Lender being called herein the “ Letter of Credit Participation ” of such Lender).

     (b) Each Lender severally agrees that it shall be absolutely liable, without regard to the occurrence of any Default or Event of Default or any other condition precedent whatsoever, to the extent of such Lender’s Commitment Percentage to fund each Several Letter of Credit (or, in the case of a Participating Lender, its Letter of Credit Participation owed to the Fronting Bank) on demand for the amount of each draft received by the LC Administrator, to the extent that such amount is not reimbursed by the Borrower pursuant to §2.2.5.

          2.2.4 Participations of Lenders . Each such payment made by a Lender shall be treated as the purchase by such Lender of a participating interest in the Borrower’s Reimbursement Obligation under §2.2.5 in an amount equal to such payment. Each Lender shall share in accordance with its participating interest in any interest which accrues pursuant to §2.2.6.

          2.2.5 Reimbursement Obligation of the Borrower . In order to induce each of the Fronting Bank and the LC Administrator (on behalf of the Lenders) to issue, extend and renew each Letter of Credit and the Lenders to participate therein, the Borrower hereby agrees:

          (a) to reimburse or pay to the Applicable Issuing Party for the account of the Applicable Issuing Party or (as the case may be) the applicable Lenders, with respect to each Letter of Credit issued, extended or renewed by the Applicable Issuing Party hereunder, on each date that any draft presented under such Letter of Credit is honored by the Applicable Issuing Party, the Dollar Equivalent as of the date and for the amount paid by such Person under or with respect to such Letter of Credit, provided , that , the failure of the Borrower to immediately reimburse such Person for amounts due pursuant to this §2.2.5(a) shall be an Event of Default and upon the occurrence of such Event of Default, the Administrative Agent may issue a Notice of Exclusive Control and apply all or any portion of the Pledged Collateral towards the payment obligations described herein, and

          (b) that the Administrative Agent may, upon the acceleration of the Obligations in accordance with §11, exercise all rights and remedies in respect of the Pledged Collateral and any proceeds thereof, to collect an amount equal to the Dollar Equivalent of the then outstanding Obligations.

Each payment contemplated by §2.2.5(a) shall be made to the Applicable Issuing Party at such Applicable Issuing Party’s Office in immediately available funds. Interest on any and all amounts remaining unpaid by the Borrower under this §2.2.5 at any time from the date such amounts become due and payable (whether as stated in this §2.2.5, by acceleration or otherwise) until payment in full (whether before or after judgment) shall be payable to the Administrative Agent on demand at the rate specified in 2.2.6. Any Pledged Collateral or proceeds thereof collected by the Administrative Agent may be, at the Administrative Agent’s sole discretion, converted into the applicable Alternative Currency, with any such conversion costs being considered a collection expense and added to the Obligations. All payments of Fees, interest and Reimbursement Obligations to the Lenders shall be made in Dollars even if the underlying Letter of Credit is denominated in an Alternative Currency.

          2.2.6 Letter of Credit Payments . (a) If any draft shall be presented or other demand for payment shall be made under any Letter of Credit, the Applicable Issuing Party, shall

notify the Borrower of the date and amount of the draft presented or demand for payment and of the date and time when it expects to pay such draft or honor such demand for payment. If the Borrower fails to reimburse such Person as provided in §2.2.5 or if the Administrative Agent is unable to effect such reimbursement through the application of the Pledged Collateral, on the date that such draft is paid or other payment is made by the Applicable Issuing Party, the Applicable Issuing Party may at any time thereafter notify the Lenders of the amount of any such Unpaid Reimbursement Obligation. No later than 3:00 p.m. on the Business Day next following the receipt of such notice, each Lender shall make available to the Applicable Issuing Party, in Dollars, at the Administrative Agent’s Office, in immediately available funds, such Lender’s Commitment Percentage of such Unpaid Reimbursement Obligation. The responsibility of each Applicable Issuing Party to the Borrower and the Lenders shall be only to determine that the documents (including each draft) delivered under each Letter of Credit in connection with such presentment shall be in conformity in all material respects with such Letter of Credit.

          (b) Each Lender’s obligation to (x) reimburse the Fronting Bank, in the case of Fronted Letters of Credit or (y) provide the LC Administrator with funds in an amount equal to its several obligation, in the case of Several Letters of Credit, for amounts drawn under Letters of Credit as contemplated by this §2.2.6, shall be absolute and unconditional and shall not be affected by any circumstance, including (i) any set-off, counterclaim, recoupment, defense or other right which such Lender may have against the Fronting Bank, the LC Administrator, the Borrower, the Parent or any other Person for any reason whatsoever; (ii) the occurrence or continuance of a Default, or (iii) any other occurrence, event or condition, whether or not similar to any of the foregoing. No such payment by a Lender shall relieve or otherwise impair the obligation of the Borrower to reimburse the Applicable Issuing Party for the amount of any payment made by such Person under any Letter of Credit, together with interest as provided herein.

          (c) If any Lender fails to make available to the Administrative Agent for the account of the Applicable Issuing Party any amount required to be paid by such Lender pursuant to the foregoing provisions of this §2.2.6 by the time specified, the Applicable Issuing Party 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 such Person at a rate per annum equal to the applicable Federal Funds Rate from time to time in effect. A certificate of the Applicable Issuing Party submitted to any Lender (through the Administrative Agent) with respect to any amounts owing under this clause (c) shall be conclusive absent manifest error.

          (d) Repayment of Participations .

          (i) At any time after the Fronting Bank or the LC Administrator has made a payment under any Letter of Credit and has received from any Lender such Lender’s payment in accordance with §2.2.6(a), if the Administrative Agent receives for the account of the Applicable Issuing Party any payment in respect of the related Unpaid Reimbursement Obligation or interest thereon (whether directly from the Borrower or otherwise, including proceeds of Pledged Collateral applied thereto by the Administrative Agent), the Administrative Agent will distribute to such Lender its applicable percentage thereof (appropriately adjusted, in the case of interest payments, to reflect the period of

time such Lender’s payment was outstanding) in Dollars and in the same funds as those received by the Administrative Agent.

          (ii) If any payment received by the Administrative Agent for the account of the Fronting Bank or the LC Administrator is required to be returned under any of the circumstances described in §3.1.3 or otherwise (including pursuant to any settlement entered into by the Applicable Issuing Party in its discretion), each Lender shall pay to the Administrative Agent for the account of the Applicable Issuing Party its applicable 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 applicable Federal Funds Rate from time to time in effect.

     2.2.7 Obligations Absolute . (a) The Borrower’s obligations under this §2.2 shall be absolute and unconditional under any and all circumstances and irrespective of the occurrence of any Default or Event of Default or any condition precedent whatsoever or any set-off, counterclaim or defense to payment which the Borrower may have or have had against the Fronting Bank, the LC Administrator, the Administrative Agent, any Lender or any beneficiary of a Letter of Credit. The Borrower further agrees with the Fronting Bank, the LC Administrator and the Lenders that the Fronting Bank, the LC Administrator and the other Lenders shall not be responsible for, and the Borrower’s Reimbursement Obligations under §2.2.5 shall not be affected by, among other things, the validity or genuineness of documents or of any endorsements thereon, even if such documents should in fact prove to be in any or all respects invalid, fraudulent or forged, or any dispute between or among the Borrower, the beneficiary of any Letter of Credit or any financing institution or other party to which any Letter of Credit may be transferred or any claims or defenses whatsoever of the Borrower against the beneficiary of any Letter of Credit or any such transferee. The Fronting Bank, the LC Administrator and the Lenders shall not be liable for any error, omission, interruption or delay in transmission, dispatch or delivery of any message or advice, however transmitted, in connection with any Letter of Credit. The Borrower agrees that any action taken or omitted by the Fronting Bank, the LC Administrator or any Lender under or in connection with each Letter of Credit and the related drafts and documents, if done in good faith and in the absence of gross negligence and willful misconduct, shall be binding upon the Borrower and shall not result in any liability on the part of the Fronting Bank, the LC Administrator or any Lender to the Borrower.

     2.3 Reliance by Fronting Bank and LC Administrator . To the extent not inconsistent with §2.2.6, each of the Fronting Bank and the LC Administrator shall be entitled to rely, and shall be fully protected in relying upon, any Letter of Credit, draft, writing, resolution, notice, consent, certificate, affidavit, letter, cablegram, telegram, telecopy, telex or teletype message, statement, order or other document 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, independent accountants and other experts selected by such Person. Each of the Fronting Bank and the LC Administrator shall be fully justified in failing or refusing to take any action under this Reimbursement and Pledge Agreement unless it shall first have received such advice or concurrence of the Required Lenders as it reasonably deems appropriate or it shall first be indemnified to its reasonable 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. Each of the Fronting Bank and the LC Administrator shall in all cases be fully protected in

acting, or in refraining from acting, under this Reimbursement and Pledge Agreement in accordance with a request of the Required Lenders, and such request and any action taken or failure to act pursuant thereto shall be binding upon the Lenders and all future holders of a Letter of Credit Participation.

     2.4 Fees; Interest .

          2.4.1 Commitment Fees . The Borrower agrees to pay to the Administrative Agent for the accounts of the Lenders in accordance with their respective Commitment Percentages a commitment fee (the “ Commitment Fee ”) equal to 0.075% per annum times the actual daily amount by which the Total Commitment exceeds the Total Outstandings. The Commitment Fee shall accrue at all times from the Effective Date through the Commitment Termination Date, including at any time during which one or more of the conditions in §10 is not met, and shall be due and payable quarterly in arrears on the last business day of each March, June, September and December, commencing with the first such date to occur after the Effective Date, with a final payment Commitment Termination Date.

          2.4.2 Letter of Credit Fee . The Borrower agrees to pay to the Administrative Agent for the accounts of the Lenders in accordance with their respective Commitment Percentages a Letter of Credit Fee (the “ Letter of Credit Fee ”) calculated based on the face amount of each outstanding Letter of Credit at a rate equal to twenty-seven and one-half one hundredths of one percent (.275%) per annum, times the Dollar Equivalent of the actual daily maximum amount available to be drawn under such Letter of Credit. Letter of Credit Fee shall be (i) computed on a quarterly basis in arrears and (ii) due and payable on the last business day of each March, June, September and December, commencing with the first such date to occur after the Effective Date, on the Commitment Termination Date and thereafter on demand. The Borrower shall also pay to each LC Administrator, for its own account, the LC Administrator’s customary or scheduled costs of issuance and usual and customary costs of, amendment, negotiation or document examination with respect to the Letters of Credit and such other amount as may be set forth in the Fee Letter.

          2.4.3 Fees Payable Pursuant to the Fee Letter . The Borrower agree to pay to the Administrative Agent, the Fronting Bank and the Arranger the fees set forth in the Fee Letter.

          2.4.4 Interest . (a) (i) If any Reimbursement Obligation is not paid when due, such amount shall thereafter bear interest at a fluctuating interest rate per annum at all times equal to the Default Rate to the fullest extent permitted by applicable laws.

          (ii) If any amount (other than a Reimbursement Obligation) payable by the Borrower under any Loan Document is not paid when due (without regard to any applicable grace periods), whether at stated maturity, by acceleration or otherwise, then upon the request of the Required Lenders, such amount shall thereafter bear interest at a fluctuating interest rate per annum at all times equal to the Default Rate to the fullest extent permitted by applicable laws.

          (iii) Upon the request of the Required Lenders, while any Event of Default exists, (A) the Borrower shall pay interest on the principal amount of all Unpaid

Reimbursement Obligations hereunder at a fluctuating interest rate per annum at all times equal to the Default Rate to the fullest extent permitted by applicable laws and (B) the Letter of Credit Fees shall accrue at the Default Rate.

          (iv) Accrued and unpaid interest on past due amounts (including interest on past due interest) shall be due and payable upon demand.

          (b) Interest on Reimbursement Obligations shall be payable upon the date of repayment and upon demand.

          2.4.5 Computation of Interest and Fees . All computations of interest when the Base Rate is determined by the Administrative Agent’s “prime rate” shall be made on the basis of a year of 365 or 366 days, as the case may be, and actual days elapsed. All other computations of Fees and interest shall be made on the basis of a 360-day year and actual days elapsed (which results in more fees or interest, as applicable, being paid than if computed on the basis of a 365-day year). Interest shall accrue on each Unpaid Reimbursement Obligation for the day on which the Unpaid Reimbursement Obligation arises, and shall not accrue on an Unpaid Reimbursement Obligation, or any portion thereof, for the day on which the Unpaid Reimbursement Obligation or such portion is paid, provided that any Unpaid Reimbursement Obligation that is repaid on the same day on which it arises shall bear interest for one day.

3. CERTAIN GENERAL PROVISIONS.

     3.1 Payments .

          3.1.1 Payments Generally . (a) All payments to be made by the Borrower under any Loan Document shall be made without condition or deduction for any counterclaim, defense, recoupment or set-off. Except as otherwise expressly provided herein, all payments by the Borrower hereunder shall be made to the Administrative Agent, for the account of the respective Lenders to which such payment is owed, at the Administrative Agent’s Office in Dollars and in Same Day Funds not later than 2:00 p.m. on the date specified herein.

          (b) If any payment to be made by the Borrower shall come due on a day other than a Business Day, payment shall be made on the next following Business Day, and such extension of time shall be reflected in computing interest or fees, as the case may be.

          (c) 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 Same Day 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 Same Day 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 Same Day Funds at the applicable 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 Same Day 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 applicable Federal Funds Rate from time to time in effect. If such Lender does not pay such amount forthwith upon the Administrative Agent’s 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 Credit Extension. Nothing herein shall be deemed to relieve any Lender from its obligation to fulfill its 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 Borrower with respect to any amount owing under this subsection (c) shall be conclusive, absent manifest error.

          (d) The obligations of the Lenders hereunder to fund Several Letters of Credit and Letter of Credit Participations are several and not joint. The failure of any Lender to fund any such Several Letter of Credit or Letter of Credit Participation 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 fund a Several Letter of Credit or purchase its Letter of Credit Participation.

          (e) Nothing herein shall be deemed to obligate any Lender to obtain the funds for any Several Letter of Credit or Letter of Credit Participation in any particular place or manner or to constitute a representation by any Lender that it has obtained or will obtain the funds in any particular place or manner.

          3.1.2 Sharing of Payments . If, other than as expressly provided elsewhere herein, any Lender shall obtain on account of the Several Letters of Credit or the Letter of Credit Participation held by it, any payment (whether voluntary, involuntary, through the exercise of any right of set-off, or otherwise) in excess of its ratable share (or other share contemplated hereunder) thereof, such Lender shall immediately (a) notify the Administrative Agent of such fact, and (b) purchase from the other Lenders such participations in Letters of Credit Issued by them, and/or such subparticipations in the Letter of Credit Participations held by them, as the case may be, as shall be necessary to cause such purchasing Lender to share the excess payment in respect of such Several Letters of Credit or such Letter of Credit Participations, as the case may be, pro rata with each of them; provided, however, that if all or any portion of such excess payment is thereafter recovered from the purchasing Lender under any of the circumstances described in §3.1.3 (including pursuant to any settlement entered into by the purchasing Lender in its discretion), such purchase shall to that extent be rescinded and each other Lender shall

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repay to the purchasing Lender the purchase price paid therefor, together with an amount equal to such paying Lender’s ratable share (according to the proportion of (i) the amount of such paying Lender’s required repayment to (ii) the total amount so recovered from the purchasing Lender) of any interest or other amount paid or payable by the purchasing Lender in respect of the total amount so recovered, without further interest thereon. The Borrower agrees that any Lender so purchasing a participation from another Lender may, to the fullest extent permitted by law, exercise all its rights of payment (including the right of set-off, but subject to §14.2) with respect to such participation as fully as if such Lender were the direct creditor of the Borrower in the amount of such participation. The Administrative Agent will keep records (which shall be conclusive and binding in the absence of manifest error) of participations purchased under this Section and will in each case notify the Lenders following any such purchases or repayments. Each Lender that purchases a participation pursuant to this Section shall from and after such purchase have the right to give all notices, requests, demands, directions and other communications under this Reimbursement and Pledge Agreement with respect to the portion of the Obligations purchased to the same extent as though the purchasing Lender were the original owner of the Obligations purchased.

          3.1.3 Payments Set Aside . To the extent that any payment by or on behalf of the Borrower (including payments from the Pledged Collateral) is made to the Administrative Agent, the Fronting Bank, the LC Administrator or any Lender, or the Administrative Agent, the Fronting Bank, the LC Administrator or any Lender exercises its right of set-off, and such payment or the proceeds of such set-off or any part thereof is subsequently invalidated, declared to be fraudulent or preferential, set aside or required (including pursuant to any settlement entered into by the Administrative Agent, the Fronting Bank, the LC Administrator or such Lender in its discretion) to be repaid to a trustee, receiver or any other party, in connection with any proceeding under any insolvency, bankruptcy or receivership proceeding or otherwise, then (a) to the extent of such recovery, the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such set-off had not occurred, and (b) each Lender severally agrees to pay to the Administrative Agent, the Fronting Bank or the LC Administrator, as the case may be, upon demand its applicable share of any amount so recovered from or repaid by the Administrative Agent, the Fronting Bank or the LC Administrator, as the case may be, plus interest thereon from the date of such demand to the date such payment is made at a rate per annum equal to the applicable Federal Funds Rate from time to time in effect, in the applicable currency of such recovery or payment.

     3.2 Taxes, etc. All payments by the Borrower hereunder and under any of the other Loan Documents shall be made free and clear of and without deduction for any taxes, levies, imposts, duties, charges, fees, deductions, withholdings, compulsory loans, restrictions or conditions of any nature now or hereafter imposed or levied by any jurisdiction or any political subdivision thereof or taxing or other authority therein unless the Borrower is compelled by law to make such deduction or withholding. If any such obligation is imposed upon the Borrower with respect to any amount payable by it hereunder or under any of the other Loan Documents, the Borrower will pay to the Administrative Agent, for the account of the Lenders or the Administrative Agent, as the case may be, on the date on which such amount is due and payable hereunder or under such other Loan Document, such additional amount in Dollars as shall be necessary to enable the Lenders or the Administrative Agent to receive the same net amount

which the Lenders or the Administrative Agent would have received on such due date had no such obligation been imposed upon the Borrower. The Borrower will deliver promptly to the Administrative Agent certificates or other valid vouchers for all taxes or other charges deducted from or paid with respect to payments made by the Borrower hereunder or under such other Loan Document.

     3.3 Additional Costs, etc . If any introduction of, or change in or in the interpretation of any applicable law (which expression, as used herein, includes statutes, rules and regulations thereunder and interpretations thereof by any competent court or by any governmental or other regulatory body or official charged with the administration or the interpretation thereof and requests, directives, instructions and notices at any time or from time to time hereafter made upon or otherwise issued to any Lender, the Fronting Bank, the LC Administrator or the Administrative Agent by any central bank or other fiscal, monetary or other authority (whether or not having the force of law)), shall:

          (a) subject any Lender, the Fronting Bank, the LC Administrator or the Administrative Agent to any tax, levy, impost, duty, charge, fee, deduction or withholding of any nature with respect to this Reimbursement and Pledge Agreement, the other Loan Documents, or such Lender’s Commitment (other than taxes based upon or measured by the income or profits of such Lender, the Fronting Bank, the LC Administrator or the Administrative Agent and taxes covered by § 3.2), or

          (b) materially change the basis of taxation (except for changes in taxes on income or profits) of payments to any Lender, the Fronting Bank, the LC Administrator or the Administrative Agent of the fees or interest in respect of the Letters of Credit or any other amounts payable to any Lender, the Fronting Bank, the LC Administrator or the Administrative Agent under this Reimbursement and Pledge Agreement or any of the other Loan Documents, or

          (c) impose or increase or render applicable (other than to the extent specifically provided for elsewhere in this Reimbursement and Pledge Agreement) any special deposit, reserve, assessment, liquidity, capital adequacy or other similar requirements (whether or not having the force of law) against assets held by, or deposits in or for the account of, or loans by, or letters of credit issued by, or commitments of an office of any Lender, the Fronting Bank, the LC Administrator or the Administrative Agent, or

          (d) impose on any Lender, the Fronting Bank, the LC Administrator or the Administrative Agent any other conditions or requirements with respect to this Reimbursement and Pledge Agreement, the other Loan Documents, any Letters of Credit, such Lender’s Commitment, or any loans, letters of credit or commitments of which such Lender’s Commitment forms a part, and the result of any of the foregoing is

          (i) to increase the cost to any Lender of making, funding, issuing, renewing, extending or maintaining such Lender’s Commitment or any Letter of Credit, or

          (ii) to reduce the amount of interest, Reimbursement Obligation or other amount payable to such Lender, the Fronting Bank, the LC Administrator or the

Administrative Agent hereunder on account of such Lender’s Commitment or any Letter of Credit, or

          (iii) to require such Lender, the Fronting Bank, the LC Administrator or the Administrative Agent to make any payment or to forego any interest or principal or Reimbursement Obligation or other sum payable hereunder, the amount of which payment or foregone interest or Reimbursement Obligation or other sum is calculated by reference to the gross amount of any sum receivable or deemed received by such Lender, the Fronting Bank, the LC Administrator or the Administrative Agent from the Borrower hereunder,

then, and in each such case, the Borrower will, upon demand made by such Lender, the Fronting Bank, the LC Administrator or the Administrative Agent (as the case may be) at any time and from time to time and as often as the occasion therefor may arise, pay to such Lender, the LC Administrator or the Administrative Agent such additional amounts as will be sufficient to compensate such Lender, the Fronting Bank, the LC Administrator or the Administrative Agent for such additional cost, reduction, payment or foregone interest or Reimbursement Obligation or other sum, provided , that the Borrower shall not be obligated to pay any additional amounts which were incurred by any of the Lenders, the Fronting Bank, the LC Administrator or the Administrative Agent more than forty-five (45) days prior to the date on which such Lender, the Fronting Bank, the LC Administrator or the Administrative Agent, as the case may be, had knowledge of such additional amounts. The Lender, the Fronting Bank, the LC Administrator or the Administrative Agent shall present a certificate setting forth a reasonable calculation of the amount of such increased costs as per §3.5 hereof.

     3.4 Capital Adequacy . If after the date hereof any Lender, the Fronting Bank, the LC Administrator or the Administrative Agent determines that (a) the adoption of or change in any law, governmental rule, regulation, policy, guideline or directive (whether or not having the force of law) regarding capital requirements for bank holding companies or any change in the interpretation or application thereof by a Governmental Authority with appropriate jurisdiction, or (b) compliance by such Lender, the Fronting Bank, the LC Administrator or the Administrative Agent or any corporation controlling such Lender, the Fronting Bank, the LC Administrator or the Administrative Agent with any law, governmental rule, regulation, policy, guideline or directive (whether or not having the force of law) of any such entity regarding capital adequacy, has the effect of reducing the return on such Lender’s, the Fronting Bank’s, the LC Administrator’s or the Administrative Agent’s commitment with respect to any Reimbursement Obligations to a level below that which such Lender, the Fronting Bank, the or the Administrative Agent could have achieved but for such adoption, change or compliance (taking into consideration such Lender’s, the Fronting Bank’s, the LC Administrator’s or the Administrative Agent’s then existing policies with respect to capital adequacy and assuming full utilization of such entity’s capital) by any amount deemed by such Lender, the Fronting Bank, the LC Administrator or the Administrative Agent (as the case may be) to be material, then such Lender, LC Administrator or the Administrative Agent may notify the Borrower of such fact. The Borrower agrees to pay such Lender, the Fronting Bank, the LC Administrator or the Administrative Agent (as the case may be) for the amount of such reduction in the return on capital as and when such reduction is determined upon presentation by such Lender, the Fronting Bank, the LC Administrator or the Administrative Agent (as the case may be) of a certificate in

accordance with §3.5 hereof; provided , that the Borrower shall not be obligated to pay any additional amounts which were incurred by any of the Lenders, the Fronting Bank, the LC Administrator or the Administrative Agent more than forty-five (45) days prior to the date on which such Lender, the Fronting Bank, the LC Administrator or the Administrative Agent, as the case may be, had knowledge of such additional amounts. Each Lender shall allocate such cost increases among its customers in good faith and on an equitable basis.

     3.5 Certificate . A certificate setting forth any additional amounts payable pursuant to §§3.3 and 3.4 and a brief explanation of such amounts which are due, submitted by any Lender, the Fronting Bank, the LC Administrator or the Administrative Agent to the Borrower, shall be conclusive, absent manifest error, that such amounts are due and owing.

     3.6 Change of Location of Lending Office; Replacement of Lender . If the Borrower shall, as a result of the requirements of §§3.3 or 3.4, be required to pay any Lender the additional costs referred to in such Sections and the Borrower, in its reasonable discretion, shall deem such additional amounts to be material, the Borrower shall have the right to (a) request in writing to such Lender which has certified additional costs to the Borrower, with copy to the Administrative Agent, that such Lender change the location of its lending office in order to mitigate such additional costs and (b) if (i) such Lender does not change the location of its lending office within sixty (60) days of receipt of such request, or (ii) the Borrower determines, in its reasonable discretion, after such change in the location of such lending office that any remaining additional costs are still material, substitute another Lender who is an Eligible Assignee for such Lender which has certified the additional costs to the Borrower. Any such substitution shall take place in accordance with §13.2 and shall otherwise be on terms and conditions reasonably satisfactory to the Administrative Agent, and until such time as such substitution shall be consummated, the Borrower shall continue to pay such additional costs. Upon any such substitution, the Borrower shall pay or cause to be paid to the Lender that is being replaced all amounts properly demanded and unreimbursed and such Lender will be released from liability hereunder.

4. COLLATERAL SECURITY.

     4.1 Security of the Borrower . The Obligations shall be secured by a perfected first priority security interest (subject only to (i) liens arising by operation of law, so long as the aggregate obligations secured thereby do not exceed $1,000,000 and (ii) the Custodial Lien and Set-Off Rights) in the following: (a) the Securities Account and all property held therein or any replacement or successor account and/or any and all substitutions, additions and accessions thereto, which shall include, but not be limited to, cash, investment property, securities, security entitlements, securities accounts and any and all financial assets credited to and held in the Securities Account or any replacement or successor account, as such property may be released or substituted pursuant to the terms hereof; (b) the Deposit Account and all of the property from time to time held therein, and (c) to the extent not already included in clauses (a) or (b) above, dividends, distributions, income, interest and all proceeds of the foregoing, including, without limitation, the roll-over or reinvested proceeds of the foregoing, whether now existing or hereafter arising (collectively, the “ Pledged Collateral ”). Any delivery or transfer of any of the Pledged Collateral to the Custodian and credited to the Securities Account or the Deposit Account shall be deemed a delivery or transfer to the Administrative Agent.

     4.2 Deposit Account . The Borrower or any other person on behalf of the Borrower, including the Custodian, may from time to time deposit cash sums denominated in Dollars into the Deposit Account. Interest earned on the amounts held or credited to the Deposit Account shall remain in the Deposit Account. The Borrower may from time to time request, and the Administrative Agent agrees to, effect transfers of cash from the Deposit Account to the Securities Account for the sole purpose of allowing the Borrower to purchase Eligible Collateral to be held in or credited to the Securities Account; provided that (a) any such transfer request shall involve a minimum amount of $500,000 or integral multiples of $100,000 in excess thereof, (b) after giving effect to such transfer request, the Borrower remains in compliance with the covenant contained in §6.8 and (c) no Event of Default has occurred and is continuing hereunder.

     4.3 Security Interest . For and in consideration of the sum of ten Dollars ($10.00) and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, and for and in consideration of the Issuers’ agreement to issue the Letters of Credit and the Lenders’ agreement to purchase Letter of Credit Participations therein, the Borrower hereby pledges, hypothecates, and impresses the Pledged Collateral with a lien in favor of the Administrative Agent, on behalf of the Fronting Bank, the LC Administrator and the Lenders, and grants to the Administrative Agent a security interest in the Pledged Collateral, in each case to secure the punctual payment and performance of all the Obligations. The Borrower covenants and agrees that (i) with respect to the Pledged Collateral consisting of the Securities Account, the property held therein and any and all proceeds thereof, the Administrative Agent has control and, from and after the issuance of a Notice of Exclusive Control, which notice shall not be given unless an Event of Default has occurred and is continuing hereunder, the Administrative Agent shall have sole and exclusive control over such Pledged Collateral and that it shall take all such steps as may be necessary to cause the Administrative Agent to have sole and exclusive control over such Pledged Collateral; (ii) with respect to the Pledged Collateral consisting of the Deposit Account, the property held therein and any and all proceeds thereof, except as expressly permitted in §4.2 above, the Administrative Agent has sole and exclusive control over such Pledged Collateral and the Borrower shall take all such steps as may be necessary to cause the Administrative Agent to have sole and exclusive control over such Pledged Collateral and the Borrower shall have no rights to withdraw or direct the transfer of any or all credit balances at any time in the Deposit Account for so long as any Obligations remain outstanding under or in respect of the Loan Documents; (iii) it shall not sell, transfer, assign, or otherwise dispose of any of the Pledged Collateral without the prior written consent of the Administrative Agent except in connection with substitutions, roll-overs or reinvestments of Pledged Collateral permitted pursuant to §4.7(b) and provided that, after giving effect to such substitutions, the Borrower is in compliance with the covenant contained in §6.8; (iv) it shall do or cause to be done all things necessary to preserve and keep in full force and effect the perfected first priority security interest in the Pledged Collateral granted to the Administrative Agent hereunder (subject to laws affecting creditor’s rights, generally); (v) it shall not create or permit the existence of liens or security interests in the Pledged Collateral in favor of third parties other than (i) liens arising by operation of law, so long as the aggregate obligations secured thereby do not exceed $1,000,000 and (ii) the Custodial Lien and Set-Off Rights; (vi) it shall not take any action or omit to take any action that would result in the termination of the Control Agreement without the prior consent of the Administrative Agent and it shall otherwise comply in all respects with the provisions of the Control Agreement; and (vii) with respect to the Deposit Account and the Securities Account, it shall not give instructions or entitlement orders to the

Custodian that would require the Custodian to advance any margin or other credit to or for the benefit of the Borrower.

     4.4 Additional Obligations . The Borrower agrees that: (1) any distribution in kind received by the Borrower from any party for or on account of the Pledged Collateral, including distributions of stock as a dividend or split of any of the Pledged Collateral, shall be promptly delivered to the Administrative Agent, for the account of the Lenders, in the form received with any required endorsement; (2) additional collateral in form and kind satisfactory to the Administrative Agent will be deposited by the Borrower with the Administrative Agent, for the account of the Lenders, in accordance with §6.8; and (3) any note or other instrument executed and delivered to the Borrower by any party to evidence any obligation of such party with respect to the Pledged Collateral shall be promptly delivered with any required endorsement to the Administrative Agent. All such items shall be held by the Administrative Agent in accordance with the terms of this Reimbursement and Pledge Agreement.

     4.5 Certain Rights and Duties of Administrative Agent and Lenders . The Borrower acknowledges that the Administrative Agent and the Lenders have no duty of any type with respect to the Pledged Collateral except for the use of due care in safekeeping any of the Pledged Collateral actually in the physical custody of the Administrative Agent or the Lenders; prior to the occurrence of any Event of Default the Administrative Agent’s and the Lenders’ rights with respect to the Pledged Collateral shall be limited to the Administrative Agent’s and the Lenders’ rights as secured party and pledgee and the right to perfect their security interest, preserve, enforce and protect the lien granted hereunder and their interest in the Pledged Collateral. Prior to the occurrence and continuance of any Event of Default, the Borrower shall be entitled to vote any Pledged Collateral constituting securities or capital stock and to give consents, waivers and ratifications in respect thereof; provided, however, that no vote shall be cast or consent, waiver or ratification given by the Borrower if the effect thereof would impair any of the Pledged Collateral or be inconsistent with or result in any violation of any of the provisions of this Reimbursement and Pledge Agreement. All such rights of the Borrower to vote and give consents, waivers and ratifications with respect to the Pledged Collateral shall cease upon the occurrence and continuance of an Event of Default.

     4.6 Power of Attorney, Etc . The Borrower hereby irrevocably constitutes and appoints the Administrative Agent the true and lawful attorney-in-fact for and on behalf of the Borrower with full power of substitution and revocation in its own name or in the name of the Borrower to make, execute, deliver and record, as the case may be, any and all financing statements, continuation statements, notices of exclusive control, assignments, proofs of claim, powers of attorney, leases, discharges or other instruments or agreements which the Administrative Agent in its sole discretion may deem necessary or advisable to perfect, preserve, or protect (and, after the occurrence and during the continuance of an Event of Default, to enforce) the lien granted hereunder and the Administrative Agent’s, the Fronting Bank’s, the LC Administrator’s and the Lenders’ interest in the Pledged Collateral and to carry out the purposes of this Reimbursement and Pledge Agreement, including but without limiting the generality of the foregoing, any and all proofs of claim in bankruptcy or other insolvency proceedings of the Borrower, with the right, upon the occurrence and during the continuance of an Event of Default, to collect and apply to the Obligations all distributions and dividends made on account of the Pledged Collateral. The rights and powers conferred on the Administrative Agent by the

Borrower are expressly declared to be coupled with an interest and shall be irrevocable until all the Obligations are paid and performed in full. A carbon, photographic, or other reproduction of a security agreement (including this Reimbursement and Pledge Agreement) or a financing statement is sufficient as a financing statement to the extent permitted by applicable law.

     4.7 Release of Collateral . The Administrative Agent shall grant a release of its lien on the Pledged Collateral:

          (a) In the event that the Collateral Coverage Amount exceeds the Total Outstandings (such excess being referred to herein as the “ Release Amount ”) then, so long as no Event of Default has occurred and is continuing, the Administrative Agent shall, at the request and expense of the Borrower, release such portions of the Pledged Collateral designated by the Borrower with a fair market value equal to the Release Amount (or such smaller amount as may be requested by the Borrower); provided , that in no event shall the Administrative Agent be required to release any Pledged Collateral after the occurrence and during the continuance of an Event of Default or in an aggregate amount that is less than five hundred thousand dollars ($500,000). In connection with any such partial release of the Pledged Collateral, the Administrative Agent shall give such consents as may be necessary to permit the Custodian to allow the Borrower to withdraw the Release Amount from the Securities Account and/or the Deposit Account, as the case may be. The Borrower agrees to reimburse the Administrative Agent on demand for any and all out-of-pocket costs and expenses incurred by the Administrative Agent in connection with any such partial release of the Pledged Collateral, including, without limitation, reasonable attorney’s fees.