FINANCIAL STATEMENTS

Clarendon Holdings, Inc.

as Borrower

and

Clarendon Holdings, Inc.

as Original Obligor

and

National Australia Bank Limited

as Arranger

and

National Australia Bank Limited

as Agent and Security Agent

US$106,500,000 Term Facility Agreement

Execution Text

Contents

1 Definitions and Interpretation			1
2 The Facility			20
3 Purpose			21
4 Conditions of Loans			22
5 Loans			22
6 Repayment			23
7 Illegality, Voluntary Prepayment and Cancellation			23
8 Mandatory Prepayment			24
9 Restrictions			28
10 Interest			29
11 Interest Periods			30
12 Changes To The Calculation Of Interest			30
13 Fees			31
14 Tax Gross Up And Indemnities			32
15 Increased Costs			35
16 Indemnities			36
17 Mitigation By The Lenders			37
18 Costs And Expenses			38
19 Representations			39
20 Information Undertakings			49
21 Financial Covenants			56
22 General Undertakings			58
23 Events Of Default			68
24 Changes To The Lenders			73
25 Changes to the Obligors			78
26 Role Of The Agent, The Arranger, The Security Agent And Others			79
27 Conduct Of Business By The Finance Parties			86
28 Sharing Among The Finance Parties			87
29 Payment Mechanics			88
30 Set-Off			91
31 Notices			91
32 Calculations And Certificates			94
33 Partial Invalidity			94
34 Remedies And Waivers			95
35 Amendments And Waivers			95
36 Counterparts			96

37 Governing Law			96
38 Enforcement			96
Schedule 1 The Original Parties			98
Schedule 2 Conditions Precedent			99
Schedule 3 Requests			107
Schedule 4 Mandatory Cost Formula			109
Schedule 5 Form of Transfer Certificate			112
Schedule 6 Form of Assignment Agreement			116
Schedule 7 Form of Accession Letter			118
Schedule 8 Form of Compliance Certificate			119
Schedule 9 LMA Form of Confidentiality Undertaking			121
Schedule 10 Timetables			125
Schedule 11 Group Structure			126
Schedule 12 Security Agent			127

 ii

Term Facility Agreement

Dated 4 March 2011

Between:

(1)		Clarendon Holdings, Inc., a company incorporated under the laws of the State of Delaware, United States of America whose registered office is at c/o The Corporation Trust Company, Corporate Trust Center, 1209 Orange Street, Wilmington, DE 19801 with company number ###-###-#### (the Borrower);
(2)		The members of the Group listed in Part 1 of Schedule 1 (The Original Parties) as Original Obligors (the Original Obligors);
(3)		National Australia Bank Limited as mandated lead arranger (the Arranger);
(4)		The Financial Institutions listed in Part 2 and Part 3 of Schedule 1 (The Original Parties) as lenders (the Original Lenders);
(5)		National Australia Bank Limited as agent of the other Finance Parties (the Agent); and
(6)		National Australia Bank Limited as Security Agent for the Secured Parties.

It is agreed:

1		Definitions and Interpretation
1.1		In this Agreement:
		Acceptable Bank means a bank or financial institution which has a rating for its long-term unsecured and non-credit-enhanced debt obligations of A+ or higher by Standard & Poor’s Rating Services or Fitch Ratings Ltd or A1 or higher by Moody’s Investor Services Limited or a comparable rating from an internationally recognised credit rating agency or any other bank or financial institution approved by the Agent.
		Accession Letter means a document substantially in the form set out in Schedule 7 (Form of Accession Letter).
		Accounting Principles means:

	(a)		in the case of the Annual Financial Statements and Quarterly Financial Statements for a Regulated Insurance Entity, SAP;
	(b)		in the case of the Annual Financial Statements for a non Regulated Insurance Entity, GAAP; and
	(c)		in the case of Quarterly Financial Statements of the Borrower, GAAP.

		Acquisition means the acquisition by the Borrower of the Target Shares on the terms of the Acquisition Documents.
		Acquisition Agreement means the stock purchase agreement (including all documents and agreements attached to the Acquisition Agreement or otherwise referred to therein, copies of which have been provided to the Agent) relating to the sale and purchase of the Target Shares dated 21 December 2010 entered into and made between, among others, the Borrower and the Vendor as amended from time to time by amendments reasonably acceptable to the Agent.

Acquisition Costs means all fees, costs and expenses, stamp, registration and other Taxes incurred (or required to be paid) by the Borrower or any other member of the Group in connection with the Acquisition or the Transaction Documents.

Acquisition Documents means the Acquisition Agreement, the Disclosure Letters and any other document designated as an Acquisition Document by the Agent and the Borrower.

Additional Cost Rate has the meaning given to it in Schedule 4 (Mandatory Cost Formula).

Additional Obligor means a company which becomes an Obligor in accordance with Clause 25 (Changes to the Obligors).

Additional Security Agent has the meaning given to it in Schedule 12 (Security Agent).

Affiliate means, in relation to any person, a Subsidiary or a Holding Company of that person or any other Subsidiary of that Holding Company.

Agent’s Spot Rate of Exchange means the Agent’s spot rate of exchange for the purchase of the relevant currency with the Base Currency in the London foreign exchange market at or about 11:00 a.m. on a particular day.

Assignment Agreement means an agreement substantially in the form set out in Schedule 6 (Form of Assignment Agreement) or any other form agreed between the relevant assignor and assignee.

Auditors means one of PricewaterhouseCoopers, Ernst & Young, KPMG or Deloitte & Touche or such other firm approved in advance by the Majority Lenders (such approval not to be unreasonably withheld or delayed).

Authorisation means an authorisation, consent, approval, resolution, licence, exemption, filing, notarisation or registration.

Authority means the New Jersey State Insurance Department and any other insurance department or other Governmental Authority in any relevant jurisdiction.

Availability Period means the period from and including the date of this Agreement to and including 1 August 2011.

Available Commitment means a Lender’s Commitment minus:

	(a)		the amount of its participation in any outstanding Loans; and
	(b)		in relation to any proposed Loan, the amount of its participation in any Loans that are due to be made on or before the proposed Utilisation Date.

Available Facility means the aggregate for the time being of each Lender’s Available Commitment.

Base Currency means US Dollars.

Base Currency Equivalent means, the amount of the relevant currency required to purchase the relevant amount of US Dollars at the Agent’s Spot Rate of Exchange.

Break Costs means the amount (if any) by which:

(a)

the interest, excluding the Margin, which a Lender should have received for the period from the date of receipt of all or any part of its participation in a Loan or Unpaid Sum to the last day of the current Interest Period in respect of that Loan or Unpaid Sum, had the principal amount or Unpaid Sum received been paid on the last day of that Interest Period;

exceeds:

(b)

the amount which that Lender would be able to obtain by placing an amount equal to the principal amount or Unpaid Sum received by it on deposit with a leading bank in the London interbank market for a period starting on the Business Day following receipt or recovery and ending on the last day of the current Interest Period.

Business Day means a day (other than a Saturday or Sunday) on which banks are open for general business in London and New York.

Cash Equivalent Investments means at any time:

	(a)		certificates of deposit maturing within one year after the relevant date of calculation and issued by an Acceptable Bank;
	(b)		any investment in marketable debt obligations issued or guaranteed by the government of the United States of America, the United Kingdom, any member state of the European Economic Area or any Participating Member State or by an instrumentality or agency of any of them having an equivalent credit rating, maturing within one year after the relevant date of calculation and not convertible or exchangeable to any other security;
	(c)		commercial paper not convertible or exchangeable to any other security:

	(i)		for which a recognised trading market exists;
	(ii)		issued by an issuer incorporated in the United States of America, the United Kingdom, any member state of the European Economic Area or any Participating Member State;
	(iii)		which matures within one year after the relevant date of calculation; and
	(iv)		which has a credit rating of either A-1 or higher by Standard & Poor’s Rating Services or F1 or higher by Fitch Ratings Ltd or P-1 or higher by Moody’s Investor Services Limited, or, if no rating is available in respect of the commercial paper, the issuer of which has, in respect of its long-term unsecured and non-credit enhanced debt obligations, an equivalent rating;

	(d)		Sterling bills of exchange eligible for rediscount at the Bank of England and accepted by an Acceptable Bank (or their dematerialised equivalent);
	(e)		any investment accessible within 30 days in money market funds which have a credit rating of either A-1 or higher by Standard & Poor’s Rating Services or F1 or higher by Fitch Rating Ltd or P-1 or higher by Moody’s Investor Services Limited and which invest substantially all their assets in securities of the types described in sub-paragraphs (a) to (d) above; or
	(f)		any other debt security approved by the Majority Lenders,

in each case, to which any member of the Group is alone (or together with other members of the Group) beneficially entitled at that time and which is not issued or guaranteed by any member of the Group or subject to any Security (other than Security arising under the Transaction Security Documents).

Change of Control means:

(a)

the Shareholder ceases to have the power (whether by way of ownership of shares, proxy, contract, agency or otherwise) to:

	(i)		cast, or control the casting of, 100% of the maximum number of votes that might be cast at a general meeting of the Borrower;
	(ii)		appoint or remove all of the directors or other equivalent officers of the Borrower; or
	(iii)		give directions with respect to the operating and financial policies of the Borrower with which the directors or other equivalent officers of the Borrower are obliged to comply;

	(b)		the cessation of full beneficial ownership by the Shareholder of all of the issued share capital of the Borrower;
	(c)		Enstar ceases to have Control of the Borrower;
	(d)		the cessation of full beneficial ownership by Enstar of all of the issued share capital of the Borrower;
	(e)		the cessation of full beneficial ownership by the Borrower of all of the issued share capital of the Target or a member of the Target Group;
	(f)		any entity, person (within the meaning of Section 14(d) of the Securities Exchange Act of 1934, as amended (Exchange Act)) or group of persons (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) that before such event was beneficial owner (as defined in Rule 13d-3 under the Exchange Act) of less than 20 per cent. of a member of the Group’s Voting Stock shall have acquired beneficial ownership (within the meaning of Rule 13d-3 of the SEC under the Exchange Act), directly or indirectly, of Voting Stock of that member of the Group (or other securities convertible into such Voting Stock) representing 20 per cent. or more of the combined voting power of all Voting Stock of the applicable member of the Group.

Charged Property means the Target Shares, the shares of the Borrower and all of the assets of the Borrower which from time to time are, or are expressed to be, the subject of the Transaction Security.

Chief Financial Officer means the finance director of the relevant company or group from time to time (or any director of the relevant company or group acting as such officer’s deputy in that capacity or performing those functions).

Closing Date means the date on which Completion occurs.

Code means, at any date, the US Internal Revenue Code of 1986, as amended, and the regulations promulgated and the judicial and administrative decisions rendered under it, all as the same may be in effect at such date.

Commitment means:

	(a)		in relation to an Original Lender, the amount in the Base Currency set opposite its name under the heading “Commitment” in Part 2 or Part 3 of Schedule 1 (The Original Parties) and the amount of any other Commitment transferred to it under this Agreement; and
	(b)		in relation to any other Lender, the amount in the Base Currency of any Commitment transferred to it under this Agreement,

to the extent not cancelled, reduced or transferred by it under this Agreement.

Completion means the completion of the Acquisition in accordance with Article II of the Acquisition Agreement.

Compliance Certificate means a certificate substantially in the form set out in Schedule 8 (Form of Compliance Certificate).

Confidentiality Undertaking means a confidentiality undertaking substantially in a recommended form of the LMA as set out in Schedule 9 (LMA Form of Confidentiality Undertaking) or in any other form agreed between the Borrower and the Agent.

Consolidated Net Surplus means as such term is defined in Clause 21.1 (Financial definitions).

Constitutional Documents means the certificate of incorporation and by-laws.

Control means

(a)

the power (whether by way of ownership of shares, proxy, contract, agency or otherwise) to:

	(i)		cast, or control the casting of, more than 50% of the maximum number of votes that might be cast at a general meeting of the Borrower;
	(ii)		appoint or remove all, or the majority, of the directors or other equivalent officers of the Borrower; or
	(iii)		give directions with respect to the operating and financial policies of the Borrower with which the directors or other equivalent officers of the Borrower are obliged to comply; or

(b)

the holding beneficially of more than 50% of the issued share capital of the Borrower (excluding any part of that issued share capital that carries no right to participate beyond a specified amount in a distribution of either profits or capital).

Default means an Event of Default or any event or circumstance specified in Clause 23 (Events of Default) which would (with the expiry of a grace period, the giving of notice, the making of any determination under the Finance Documents or any combination of any of the foregoing) be an Event of Default.

Delegate means any delegate, agent, attorney or co-trustee appointed by the Security Agent.

Disclosure Letters means the Seller Parent’s Disclosure Letter and the Seller’s Disclosure Letter as such terms are defined in the Acquisition Agreement.

Disruption Event means either or both of:

	(a)		a material disruption to those payment or communications systems or to those financial markets which are, in each case, required to operate in order for payments to be made in connection with the Facility (or otherwise in order for the transactions contemplated by the Finance Documents to be carried out) which disruption is not caused by, and is beyond the control of, any of the Parties; or
	(b)		the occurrence of any other event which results in a disruption (of a technical or systems-related nature) to the treasury or payments operations of a Party preventing that, or any other Party:

	(i)		from performing its payment obligations under the Finance Documents; or
	(ii)		from communicating with other Parties in accordance with the terms of the Finance Documents,

and which (in either such case) is not caused by, and is beyond the control of, the Party whose operations are disrupted.

Employee Plan means an employee pension benefit plan (other than a Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section 412 of the Code or Section 302 of ERISA, and in respect of which a member of the Group or any ERISA Affiliate is (or, if such plan were terminated, would under Section 4069 of ERISA be deemed to be) an employer as defined in Section 3(5) of ERISA.

Enstar means Enstar Group Limited, a company incorporated under the laws of Bermuda with registered number EC30916.

ERISA means the United States Employee Retirement Income Security Act of 1974, as amended, and any successor statute of similar import, and the regulations promulgated and rulings issued under it.

ERISA Affiliate means any person that for purposes of Title I and Title IV of ERISA and Sections 412 and 430 of the Code would be deemed at any relevant time to be a single employer with a member of the Group, pursuant to Section 414(b), (c), (m) or (o) of the Code or Section 4001(b)(i) of ERISA.

ERISA Event means:

	(a)		any reportable event, as defined in Section 4043 of ERISA, with respect to an Employee Plan, as to which PBGC has not by regulation waived the requirement of Section 4043(a) of ERISA that it be notified of such event;
	(b)		(i) the filing of a notice of intent to terminate any Employee Plan, if such termination would require material additional contributions in order to be considered a standard termination within the meaning of Section 4041(b) of ERISA, (ii) the filing under Section 4041(c) of ERISA of a notice of intent to terminate any Employee Plan as a distress termination, or (iii) the termination of any Employee Plan under Section 4041(c) of ERISA as a distress termination;
	(c)		the institution of proceedings under Section 4042 of ERISA by the PBGC for the termination of, or the appointment of a trustee to administer, any Employee Plan;

	(d)		the failure to make a required contribution to any Employee Plan that would result in the imposition of an encumbrance under Section 430(k) of the Code or Section 303(k) of ERISA or the filing of any request for a minimum funding waiver under Section 412(c) of the Code with respect to any Employee Plan or Multiemployer Plan;
	(e)		an engagement in a non-exempt prohibited transaction within the meaning of Section 4975(c) of the Code or Section 406 of ERISA;
	(f)		the complete or partial withdrawal of any member of the Group or any ERISA Affiliate from a Multiemployer Plan; and
	(g)		an Obligor or an ERISA Affiliate incurring any liability under Title IV of ERISA with respect to any Employee Plan (other than premiums due and not delinquent under Section 4007 of ERISA).

Event of Default means any event or circumstance specified as such in Clause 23 (Events of Default).

Facility means the term loan facility made available under this Agreement as described in Clause 2.1 (The Facility).

Facility Office means

	(a)		in respect of a Lender, the office or offices notified by that Lender to the Agent in writing on or before the date it becomes a Lender (or, following that date, by not less than five Business Days’ written notice) as the office or offices through which it will perform its obligations under this Agreement; or
	(b)		in respect of any other Finance Party, the office in the jurisdiction in which it is resident for tax purposes.

Fee Letter means

	(a)		any letter or letters dated on or about the date of this Agreement between National Australia Bank Limited in its capacity as Arranger and the Borrower (or the Agent and the Borrower or the Security Agent and the Borrower) setting out any of the fees referred to in Clause 13 (Fees); and
	(b)		any agreement setting out fees payable to a Finance Party under any Finance Document.

Finance Document means this Agreement, any Accession Letter, any Compliance Certificate, any Fee Letter, the Subordination Deed, any Selection Notice, any Transaction Security Document, any Utilisation Request and any other document designated as a Finance Document by the Agent and the Borrower.

Finance Party means the Agent, the Arranger, the Security Agent or a Lender.

Financial Indebtedness means any indebtedness for or in respect of:

	(a)		moneys borrowed and debit balances at banks or other financial institutions;
	(b)		any amount raised by acceptance under any acceptance credit facility or dematerialised equivalent;
	(c)		any amount raised pursuant to any note purchase facility or the issue of bonds, notes, debentures, loan stock or any similar instrument;

	(d)		the amount of any liability in respect of any lease or hire purchase contract which would, in accordance with the Accounting Principles, be treated as a finance or capital lease;
	(e)		receivables sold or discounted (other than any receivables to the extent they are sold on a non-recourse basis);
	(f)		any Treasury Transaction (and, when calculating the value of that Treasury Transaction, only the marked to market value as at the relevant date on which Financial Indebtedness is calculated (or, if any actual amount is due as a result of the termination or close-out of that Treasury Transaction, that amount) shall be taken into account);
	(g)		any counter-indemnity obligation in respect of a guarantee, bond, standby or documentary letter of credit or any other instrument issued by a bank or financial institution;
	(h)		any amount of any liability under an advance or deferred purchase agreement if (1) one of the primary reasons behind entering into the agreement is to raise finance or (2) the agreement is in respect of the supply of assets or services and payment is due more than 90 days after the date of supply. For the avoidance of doubt, this shall not include amounts payable pursuant to section 2.2 of the Acquisition Agreement;
	(i)		any amount raised under any other transaction (including any forward sale or purchase, sale and sale back or sale and leaseback agreement) having the commercial effect of a borrowing; and
	(j)		the amount of any liability in respect of any guarantee for any of the items referred to in paragraphs (a) to (i) above.

Financial Quarter has the meaning given to that term in Clause 21.1 (Financial definitions).

Financial Year has the meaning given to that term in Clause 21.1 (Financial definitions).

First Utilisation Date means the first Utilisation Date.

Forecast Cash Flows means the forecast of cash flows in agreed form relating to the Group prepared by Enstar.

FSA means the UK Financial Services Authority.

GAAP means generally accepted accounting principles set forth from time to time in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board (or agencies with similar functions of comparable stature and authority within the US accounting profession), which are applicable to the circumstances as of the date of determination.

Governmental Authority means any nation or government, any state or other political sub-division thereof, and any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government.

Group means the Borrower and each of its Subsidiaries for the time being.

Group Structure Chart means the group structure chart in Schedule 11 (Group Structure).

Holding Account means the account in the name of the Borrower held with the Agent at 88 Wood Street, London EC2V 7QQ, Sort Code: 16-55-90 and Account number: 3505-301566-501 (as the same may be redesignated, substituted or replaced from time to time).

Holding Company means, in relation to a company or corporation, any other company or corporation in respect of which it is a Subsidiary.

Information Memorandum means the document concerning the Obligors and the Target Group which, at the request of the Borrower and on its behalf, is to be prepared in relation to this transaction, approved by the Borrower and distributed by an Arranger prior to the Syndication Date in connection with the syndication of the Facility.

Information Package means the Forecast Cash Flows and the Report.

Insolvency Representative means any liquidator, administrator, receiver, receiver and manager, administrative receiver, custodian, trustee or similar officer in any jurisdiction.

Insurance Code means the insurance laws, regulations and pronouncements applicable to each Regulated Insurance Entity or any person in connection with each Regulated Insurance Entity, including, without limitation, the laws and regulations of each Regulated Insurance Entity’s state of domicile and any successor statute, regulation or pronouncement of similar import, as amended or otherwise modified and in effect from time to time including, without limitation, the Florida and New Jersey Insurance Code.

Insurance Regulator means the Government Authority charged with supervision of insurance companies in the jurisdiction of domicile of the applicable entity.

Intellectual Property means

	(a)		any patents, trade marks, service marks, designs, business names, copyrights, design rights, moral rights, inventions, confidential information, knowhow and other intellectual property rights and interests, whether registered or unregistered; and
	(b)		the benefit of all applications and rights to use such assets of each member of the Group.

Interest Period means, in relation to a Loan, each period determined in accordance with Clause 11 (Interest Periods) and, in relation to an Unpaid Sum, each period determined in accordance with Clause 10.3 (Default Interest).

IRS means the United States Internal Revenue Service or any successor.

Joint Venture means any joint venture entity, whether a company, unincorporated firm, undertaking, association, joint venture or partnership or any other similar entity.

Legal Opinion means any legal opinion delivered to the Agent under Clause 4.1 (Initial conditions precedent) or Clause 25 (Changes to the Obligors).

Legal Reservations means:

	(a)		the principle that equitable remedies may be granted or refused at the discretion of a court and the limitation of enforcement by laws relating to insolvency, reorganisation and other laws generally affecting the rights of creditors;
	(b)		the time barring of claims under the Limitation Acts, the possibility that an undertaking to assume liability for or indemnify a person against non-payment of UK stamp duty may be void and defences of set-off or counterclaim;
	(c)		similar principles, rights and defences under the laws of any Relevant Jurisdiction; and
	(d)		any other matters which are set out as qualifications or reservations as to matters of law of general application in the Legal Opinions.

Lender means

	(a)		any Original Lender; and
	(b)		any bank, financial institution, trust, fund or other entity which has become a Party in accordance with Clause 24 (Changes to the Lenders),

which in each case has not ceased to be a Party in accordance with the terms of this Agreement.

LIBOR means, in relation to any Loan:

	(a)		the applicable Screen Rate; or
	(b)		(if no Screen Rate is available for the currency or Interest Period of that Loan) the arithmetic mean of the rates (rounded upwards to four decimal places) as supplied to the Agent at its request quoted by the Reference Banks to leading banks in the London interbank market,

as of the Specified Time on the Quotation Day for the offering of deposits in US Dollars and for a period comparable to the Interest Period for that Loan.

LMA means the Loan Market Association.

Loan means a loan made or to be made under the Facility or the principal amount outstanding for the time being of that loan.

Majority Lenders means a Lender or Lenders whose Commitments aggregate more than 66²/₃ per cent of the Total Commitments (or, if the Total Commitments have been reduced to zero, aggregated more than 66 ²/₃ per cent. of the Total Commitments immediately prior to that reduction).

Mandatory Cost means the percentage rate per annum calculated by the Agent in accordance with Schedule 4 (Mandatory Cost Formula).

Mandatory Prepayment Account means the interest-bearing account in the name of the Borrower held with the Agent at 88 Wood Street, London EC2V 7QQ, Sort Code: 16-55-90 and Account number: 3505-301566-500 (as the same may be redesignated, substituted or replaced from time to time).

Margin means 2.75 (two point seven five) per cent. per annum.

Margin Stock means margin stock or margin security within the meaning of Regulations T, U and X.

Material Adverse Effect means a material adverse effect on:

	(a)		the business, operations, property, condition (financial or otherwise) or prospects of the Group taken as a whole; or
	(b)		the ability of an Obligor to perform its payment obligations under the Finance Documents and/or its obligations under Clause 21.2 (Financial condition); or
	(c)		the validity or enforceability of, or the effectiveness or ranking of any Security granted or purporting to be granted pursuant to any of, the Finance Documents or the rights or remedies of any Finance Party under any of the Finance Documents.

Month means a period starting on one day in a calendar month and ending on the numerically corresponding day in the next calendar month, except that:

	(a)		(subject to paragraph (c) below) if the numerically corresponding day is not a Business Day, that period shall end on the next Business Day in that calendar month in which that period is to end if there is one, or if there is not, on the immediately preceding Business Day;
	(b)		if there is no numerically corresponding day in the calendar month in which that period is to end, that period shall end on the last Business Day in that calendar month; and
	(c)		if an Interest Period begins on the last Business Day of a calendar month, that Interest Period shall end on the last Business Day in the calendar month in which that Interest Period is to end.

The above rules will only apply to the last Month of any period. Monthly shall be construed accordingly.

Multiemployer Plan means a multiemployer plan (as defined in Section (3)(37) of ERISA) contributed to for any employees of a member of the Group or any ERISA Affiliate.

Obligor means an Original Obligor or an Additional Obligor.

Obligors’ Agent means the Borrower, appointed to act on behalf of each Obligor in relation to the Finance Documents pursuant to Clause 2.3 (Obligors’ Agent).

Original Financial Statements means:

	(a)		in relation to the Borrower, its opening balance sheet; and
	(b)		in relation to any member of the group other than the Borrower, its unaudited statutory annual statement and, if available on the date the Original Financial Statements are provided, its audited statutory financial statement, in each case for its Financial Year ended 31 December 2010.

NAIC means the National Association of Insurance Commissioners or any successor thereto, or in the absence of the National Association of Insurance Commissioners or such successor, any other association, agency or organisation performing advisory, coordination or other similar functions among insurance departments, insurance commissioners and similar Governmental Authorities of the various states of the United States with the goal of promoting uniformity in the practices of such Governmental Authorities.

Participating Member State means any member state of the European Communities that adopts or has adopted the euro as its lawful currency in accordance with legislation of the European Community relating to Economic and Monetary Union.

Party means a party to this Agreement.

PBGC means the US Pension Benefit Guaranty Corporation, or any entity succeeding to all or any of its functions under ERISA.

Permitted Disposal means any sale, lease, licence, transfer or other disposal permitted by Clause 22.27 (Intra-Group transactions) or which is not an intra-Group transaction and is on arm’s length terms:

	(a)		of cash made by any member of the Group in the ordinary course of trading of the disposing entity;
	(b)		of Cash Equivalent Investments for cash or in exchange for other Cash Equivalent Investments; and
	(c)		arising as a result of any Permitted Security.

Permitted Distribution means

	(a)		a Target Distribution;
	(b)		the payment of a dividend, the making of a loan or the movement of cash by way of a share buyback by the Borrower, in each case, declared as a result of the receipt of a Target Distribution into the Holding Account provided the following conditions are satisfied:

	(i)		the Borrower’s obligations under Clause 8.2 (Disposal, Insurance, Acquisition Proceeds and Target Distributions) have been complied with in full;
	(ii)		no Default is continuing at the time such dividend is to be paid or would occur if such dividend is paid;
	(iii)		at the time the relevant dividend is to be paid no circumstances exist such that (in the opinion of the Agent) on the publication of any accounts by reference to which Net Surplus Cover in Clause 21.2 (Financial condition) is calculated, there would be a breach of that financial covenant on its next following test date if the dividend was paid;
	(iv)		the Borrower has given the Agent not less than 5 Business Days’ written notice of the Borrower’s intention to pay the proposed dividend and has at the same time delivered to the Agent a certificate signed by a director of the Borrower certifying that (1) he is not aware of any Default which is continuing or of any Default which is likely to occur on or prior to the anticipated date of payment and (2) containing calculations to show that the Net Surplus Cover financial covenant in Clause 21.2 (Financial condition) will be complied with following the payment of the proposed dividend on the next following test date; and
	(v)		the Agent shall not have (1) objected to the payment of such dividend before the expiry of the 5 Business Day notice period referred to in paragraph (iv) above because any of the conditions

for payment under this paragraph (b) has not been met or (2) requested reasonable further information to establish whether the conditions established by this definition are met. If the Agent objects, it shall state which conditions of this paragraph (b) it does not consider to have been satisfied, in which case the Borrower shall not pay the proposed dividend unless (in the case of a breach of the Net Surplus Cover financial covenant) it obtains a certificate from the Auditors confirming to the Agent that in their opinion the financial conditions necessary to allow the payment of the relevant dividend have been satisfied, or in the case of any other Default the Agent becomes satisfied that the conditions for payment under this paragraph (b) have been met; and

(c)

the payment of a dividend to the Target or its wholly-owned Subsidiaries,

provided that no such Target Distribution, payment, distribution or other action detailed in paragraphs (a) or (b) above will be permitted at any time after the occurrence of a Default which is continuing.

Permitted Financial Indebtedness means Financial Indebtedness arising under:

	(a)		a Permitted Loan;
	(b)		a Permitted Guarantee;
	(c)		any Finance Document; or
	(d)		any letters of credit secured on the assets of the Target Group that match liabilities held on the balance sheet of the Target Group in favour of the cedant (who is also the beneficiary of such letter of credit).

Permitted Guarantee means

	(a)		any guarantee of Permitted Financial Indebtedness which is referred to in the definition of, or otherwise constitutes, Permitted Financial Indebtedness provided that Clause 22.27 (Intra-Group transactions) is complied with; or
	(b)		any guarantee given in respect of the netting or set-off arrangements permitted pursuant to paragraph (a) of the definition of Permitted Security,

provided that no new guarantee will be permitted at any time after the occurrence of a Default which is continuing.

Permitted Loan means

	(a)		Financial Indebtedness which is referred to in the definition of, or otherwise constitutes, Permitted Financial Indebtedness provided Clause 22.27 (Intra-Group transactions) is complied with; or
	(b)		any loan permitted by Clause 22.27 (Intra-Group transactions); or
	(c)		any loan invested pursuant to Clause 21.4 (Equity cure- Regulatory Cover) or Clause 21.5 (Equity cure- Net Surplus Cover).

Permitted Payment means a payment of fees on arms’ length terms by any member of the Group to any Subsidiary of Enstar that is not a member of the Group for management services up to a maximum aggregate amount of all such payments not exceeding:

(a)

in 2011, US$20,441,000;

	(b)		in 2012, US$12,559,000;
	(c)		in 2013, US$10,106,000;
	(d)		in 2014, US$8,880,000;
	(e)		in 2015, US$7,820,000,

provided that no such payment will be permitted at any time after the occurrence of a Default which is continuing.

Permitted Security means

	(a)		any netting or set-off arrangement entered into by any member of the Group in the ordinary course of its banking arrangements for the purpose of netting debit and credit balances of members of the Group but only so long as (1) such arrangement does not permit credit balances of Obligors to be netted or set-off against debit balances of members of the Group which are not Obligors and (2) such arrangement does not give rise to other Security over the assets of Obligors in support of liabilities of members of the Group which are not Obligors;
	(b)		any Quasi Security arising as a result of a disposal which is a Permitted Disposal;
	(c)		any Transaction Security;
	(d)		any lien arising by operation of law and in the ordinary course of trading and not as a result of any default or omission by any member of the Group;
	(e)		any Security or Quasi-Security over or affecting any asset acquired by a member of the Group after the date of this Agreement if:

	(i)		the Security or Quasi-Security was not created in contemplation of the acquisition of that asset by a member of the Group;
	(ii)		the principal amount secured has not been increased in contemplation of or since the acquisition of that asset by a member of the Group; and
	(iii)		the Security or Quasi-Security is removed or discharged within 3 months of the date of acquisition of such asset;

(f)

any Security or Quasi-Security over or affecting any asset of any company which becomes a member of the Group after the date of this Agreement, where the Security or Quasi-Security is created prior to the date on which that company becomes a member of the Group if:

	(i)		the Security or Quasi-Security was not created in contemplation of the acquisition of that company;
	(ii)		the principal amount secured has not increased in contemplation of or since the acquisition of that company; and
	(iii)		the Security or Quasi—Security is removed or discharged within 3 months of that company being a member of the Group; and

(g)

any Security or Quasi-Security arising under any retention of title, hire purchase or conditional sale arrangement or arrangements having similar effect in respect of goods supplied to a member of the Group in the ordinary

course of trading and on the supplier’s standard or usual terms and not arising as a result of any default or omission by any member of the Group.

Permitted Share Issue means an issue of shares:

	(a)		by a member of the Group (other than the Borrower) which is a Subsidiary to its immediate Holding Company to the extent permitted by Clause 22.27 (Intra-Group Transactions) and where (if the existing shares of the Subsidiary are the subject of the Transaction Security) the newly-issued shares also become subject to the Transaction Security on the same terms provided that no such issue of shares will be permitted at any time after the occurrence of a Default which is continuing; or
	(b)		by the Borrower to the Shareholder where the proceeds of such share issue are applied to remedy a breach of the Regulatory Cover or the Net Surplus Cover financial covenant in Clause 21.2 (Financial condition) pursuant to Clause 21.4 (Equity cure- Regulatory Cover) or Clause 21.5 (Equity cure- Net Surplus Cover).

Permitted Transaction means

	(a)		any disposal required, Financial Indebtedness incurred, guarantee, indemnity or Security or Quasi-Security given, or other transaction arising, under the Finance Documents; or
	(b)		transactions (other than (i) any sale, lease, licence, transfer or other disposal; and (ii) the granting or creation of Security, the incurring or permitting to subsist of Financial Indebtedness or the disposal of the shares of any member of the Group), conducted in the ordinary course of trading on arm’s length terms,

provided that no such disposal, transaction or other action detailed in paragraphs (a) or (b) above that is not already existing will be permitted at any time after the occurrence of a Default which is continuing.

Quarter Date has the meaning given to that term in Clause 21.1 (Financial definitions).

Quarterly Financial Statement has the meaning given to that term in Clause 20 (Information Undertakings).

Quasi-Security has the meaning given to that term in Clause 22.12 (Negative pledge).

Quotation Day means, in relation to any period for which an interest rate is to be determined, two Business Days before the first day of that period, unless market practice differs in the London interbank market for a currency, in which case the Quotation Day for that currency will be determined by the Agent in accordance with market practice in the London interbank market (and if quotations would normally be given by leading banks in the London interbank market on more than one day, the Quotation Day will be the last of those days).

Rating Agency means Standard & Poor’s Rating Services or other equivalent internationally recognised statistical rating organisation.

Receiver means a receiver or receiver and manager or administrative receiver of the whole or any part of the Charged Property.

Reference Banks means National Australia Bank Limited and such other banks as may be appointed by the Agent in consultation with the Borrower.

Regulated Insurance Entity means any member of the Target Group which:

	(a)		operates in the insurance industry; and
	(b)		is regulated by the relevant supervisory or regulatory body in the insurance market(s) in which it operates.

Regulations T, U and X means, respectively, Regulations T, U and X of the Board of Governors of the Federal Reserve System of the United States (or any successor) as now and from time to time in effect from the date of this Agreement.

Regulatory Cover has the meaning given to it in Clause 21.1 (Financial definitions).

Related Fund in relation to a fund (first fund), means a fund which is managed or advised by the same investment manager or adviser as the first fund or, if it is managed by a different investment manager or adviser, a fund whose investment manager or adviser is an Affiliate of the investment manager or adviser of the first fund.

Relevant Jurisdiction means, in relation to an Obligor:

	(a)		its jurisdiction of incorporation;
	(b)		any jurisdiction where any asset subject to or intended to be subject to the Transaction Security to be created by it is situated;
	(c)		any jurisdiction where it conducts its business; and
	(d)		the jurisdiction whose laws govern the perfection of any of the Transaction Security Documents entered into by it.

Relevant Period has the meaning given to that term in Clause 21.1 (Financial definitions).

Repeating Representations means each of the representations set out in Clauses 19.2 (Status) to Clause 19.7 (Governing law and enforcement), Clause 19.11 (No default), paragraph 19.12.6 of Clause 19.12 (No misleading information), Clause 19.13 (Original Financial Statements), Clause 19.18 (Ranking) to Clause 19.20 (Legal and beneficial ownership) and Clause 19.32 (Pensions).

Report means the InsurMath report titled “Actuarial Comments on Clarendon” in form and substance satisfactory to the Agent and capable of being relied upon by National Australia Bank Limited and the other Secured Parties.

SAP means, as to the Target Group, the statutory accounting practices prescribed or permitted by its Insurance Regulator.

Screen Rate means the British Bankers’ Association Interest Settlement Rate for US Dollars and the relevant period displayed on the appropriate page of the Reuters screen. If the agreed page is replaced or service ceases to be available, the Agent may specify another page or service displaying the appropriate rate after consultation with the Borrower and the Lenders.

SEC means the United States Securities and Exchange Commission or any successor thereto.

Secured Parties means each Finance Party from time to time party to this Agreement, any Receiver or Delegate.

Security means a mortgage, charge, pledge, lien or other security interest securing any obligation of any person or any other agreement or arrangement having a similar effect.

Security Agent means National Australia Bank Limited in its capacity as security agent and trustee for the other Finance Parties under this Agreement and the Transaction Security Documents and any Additional Security Agent or Delegate appointed by it in accordance with the terms of this Agreement.

Selection Notice means a notice substantially in the form set out in Part 2 of Schedule 3 (Requests) given in accordance with Clause 11 (Interest periods).

Shareholder means Enstar Investments Inc. and its, or any subsequent successors, assigns or transferees.

Specified Time means a time determined in accordance with Schedule 10 (Timetables).

Sterling and £ means the lawful currency of the UK.

Subordination Deed means the subordination deed dated on or about the date of this Agreement between, inter alia, the Shareholder, the Original Obligors and the Agent.

Subsidiary means an entity of which a person:

	(a)		has direct or indirect Control; or
	(b)		owns directly or indirectly more than fifty per cent. (50%) of the share capital or similar right of ownership; or
	(c)		is entitled to receive more than fifty per cent. (50%) of the dividends or distributions,

and any entity (whether or not so controlled) treated as a subsidiary in the latest financial statements of that person from time to time.

Syndication Date means any day on which an Arranger confirms that the primary syndication of the Facility has been completed.

Target means Clarendon National Insurance Company, a company incorporated under the laws of the State of New Jersey.

Target Distribution means:

	(a)		the payment of a dividend, the making of a loan or the movement of cash by way of a share buyback by a member of the Target Group to the Target; and/or
	(b)		the payment (or subsequent payment) of a dividend, the making of a loan or the movement of cash by way of a share buyback by the Target to the Borrower,

where, in each case it is deposited in the Holding Account and the amount has been notified to the Agent in advance.

Target Group means the Target and its Subsidiaries.

Target Shares means all of the issued shares of the Target.

Tax means any tax, levy, impost, duty or other charge or withholding of a similar nature (including any penalty or interest payable in connection with any failure to pay or any delay in paying any of the same).

Termination Date means the date falling four years from the First Utilisation Date.

Total Commitments means the aggregate of the Commitments, being US$106,500,000 at the date of this Agreement.

Transaction Documents means the Finance Documents, the Acquisition Documents and the Constitutional Documents of the Borrower.

Transaction Security means the Security created or expressed to be created in favour of the Security Agent pursuant to the Transaction Security Documents.

Transaction Security Documents means each of the documents listed under paragraph 2.3 of part 1A of Schedule 2 (Conditions Precedent) and any original documents of title to be provided under the Transaction Security Documents and required to be delivered to the Agent under Schedule 2 (Conditions Precedent) together with any other document entered into by any Obligor creating or expressed to create any Security over all or any part of its assets in respect of the obligations of any of the Obligors under any of the Finance Documents.

Transfer Certificate means a certificate substantially in the form set out in Schedule 5 (Form of Transfer Certificate) or any other form agreed between the Agent and the Borrower.

Transfer Date means, in relation to an assignment or transfer, the later of:

	(a)		the proposed Transfer Date specified in the relevant Assignment Agreement or Transfer Certificate; and
	(b)		the date on which the Agent executes the relevant Assignment Agreement or Transfer Certificate.

Treasury Transactions means any derivative transaction entered into in connection with protection against or benefit from fluctuation in any rate or price.

UK means the United Kingdom of Great Britain and Northern Ireland.

Unfunded Pension Liability means the excess of an Employee Plan’s benefit liabilities under Section 4001(a)(16) of ERISA, over the current value of that plan’s assets, determined in accordance with the assumptions used for funding the Employee Plan pursuant to Section 430 of the Code for the applicable plan year.

Unpaid Sum means any sum due and payable but unpaid by an Obligor under the Finance Documents.

US and United States means the United States of America, its territories, possessions and other areas subject to the jurisdiction of the United States of America.

US Dollars or US$ means the lawful currency of the United States of America.

US Tax means any federal, state, local income, gross receipts, license, premium, windfall profits, customs duties, capital stock, franchise, profits, withholding, social security (or similar), real property, personal property, sales, use, registration, value added, alternative or add-on minimum, estimated or other tax of any kind

whatsoever, imposed by the US including any interest, penalty or addition thereto, whether disputed or not.

Utilisation Date means the date on which a Loan is made.

Utilisation Request means a notice substantially in the relevant form set out in Schedule 3 (Requests).

VAT means value added tax as provided for in the Value Added Tax Act 1994 and any other tax of a similar nature payable in the United States or any other jurisdiction.

Vendor means the seller under the Acquisition Agreement.

Voting Stock means capital stock issued by a corporation, or equivalent interests in any other person, the holders of which are ordinarily, in the absence of contingencies, entitled to vote for the election of directors (or persons performing similar functions) of such person, even if the right so to vote has been suspended by the happening of such a contingency.

1.2		Construction
1.2.1		Unless a contrary indication appears, a reference in this Agreement to:

	(a)		the Agent, any Arranger, any Finance Party, any Lender, any Obligor, any Party, any Secured Party, the Security Agent or any other person shall be construed so as to include its successors in title, permitted assigns and permitted transferees and, in the case of the Security Agent, any person for the time being appointed as Security Agent or Security Agents in accordance with this Agreement;
	(b)		a document in agreed form is a document which is previously agreed in writing by or on behalf of the Borrower and the Agent or, if not so agreed, is in the form specified by the Agent;
	(c)		assets includes present and future properties, revenues and rights of every description;
	(d)		a Finance Document or a Transaction Document or any other agreement or instrument is a reference to that Finance Document or Transaction Document or other agreement or instrument as amended, novated, supplemented, extended or restated (in any case, however fundamentally);
	(e)		guarantee means any guarantee, letter of credit, bond, indemnity or similar assurance against loss, or any obligation, direct or indirect, actual or contingent, to purchase or assume any indebtedness of any person or to make an investment in or loan to any person or to purchase assets of any person where, in each case, such obligation is assumed in order to maintain or assist the ability of such person to meet its indebtedness;
	(f)		wholly owned subsidiary means a company or corporation that has no members except for:

	(i)		another company or corporation and that other company’s or corporation’s wholly-owned subsidiaries; or
	(ii)		persons acting on behalf of that other company or corporation and that other company’s or corporation’s wholly-owned subsidiaries.

	(g)		including and in particular shall not be construed restrictively but shall mean including without prejudice to the generality of the foregoing and in particular, but without limitation;
	(h)		indebtedness includes any obligation (whether incurred as principal or as surety) for the payment or repayment of money, whether present or future, actual or contingent;
	(i)		a person includes any individual, firm, company, corporation, government, state or agency of a state or any association, joint venture, trust or partnership (whether or not having separate legal personality) of two or more of the foregoing;
	(j)		a regulation includes any regulation, rule, official directive, request, or guideline (whether or not having the force of law) of any governmental, intergovernmental or supranational body, agency, department or regulatory, self-regulatory or other authority or organisation;
	(k)		a provision of law is a reference to that provision as amended or re-enacted and any subordinate legislation made under it; and
	(l)		a time of day is a reference to London time.

1.3		Section, Clause and Schedule headings are for ease of reference only.
1.4		Unless a contrary indication appears, a term used in any other Finance Document or in any notice given under or in connection with any Finance Document has the same meaning in that Finance Document or notice as in this Agreement.
1.5		A Default (other than an Event of Default) is continuing if it has not been remedied or waived and an Event of Default is continuing if it has not been waived.
1.6		Any consent, waiver or approval required from a Finance Party under a Finance Document must be in writing and will be of no effect if not in writing.
1.7		Reference to a monetary sum specified in Sterling in Clause 19 (Representations), Clause 20 (Information Undertakings), Clause 21 (Financial Covenants), Clause 22 (General Undertakings) and/or Clause 23 (Events of Default) shall be deemed to include reference to the Base Currency Equivalent of such sum.
1.8		Third Party Rights
1.8.1		Unless expressly provided to the contrary in a Finance Document a person who is not a Party has no right under the Contracts (Rights of Third Parties) Act 1999 (Third Parties Act) to enforce or enjoy the benefit of any term of this Agreement.
1.8.2		Notwithstanding any term of any Finance Document, the consent of any person who is not a Party is not required to rescind or vary this Agreement at any time.
2		The Facility
2.1		The Facility
		The Lenders make available to the Borrower a term loan facility in an aggregate amount equal to the Total Commitments.
2.2		Finance Parties’ rights and obligations
2.2.1		The obligations of each Finance Party under the Finance Documents are several. Failure by a Finance Party to perform its obligations under the Finance Documents

does not affect the obligations of any other Party under the Finance Documents. No Finance Party is responsible for the obligations of any other Finance Party under the Finance Documents.

2.2.2		The rights of each Finance Party under or in connection with the Finance Documents are separate and independent rights and any debt arising under the Finance Documents to a Finance Party from an Obligor shall be a separate and independent debt.
2.2.3		A Finance Party may, except as otherwise stated in the Finance Documents, separately enforce its rights under the Finance Documents.
2.3		Obligors’ Agent
2.3.1		Each Obligor (other than the Borrower) by its execution of this Agreement or an Accession Letter irrevocably appoints the Borrower to act on its behalf as its agent in relation to the Finance Documents and irrevocably authorises:

	(a)		the Borrower on its behalf to supply all information concerning itself contemplated by the Finance Documents to the Finance Parties and to give all notices and instructions, to execute on its behalf any Accession Letter, to make such agreements and to effect the relevant amendments, supplements and variations capable of being given, made or effected by any Obligor notwithstanding that they may affect the Obligor, without further reference to or the consent of that Obligor; and
	(b)		each Finance Party to give any notice, demand or other communication to that Obligor pursuant to the Finance Documents to the Borrower,

and in each case the Obligor shall be bound as though the Obligor itself had given the notices and instructions or executed or made the agreements or effected the amendments, supplements or variations, or received the relevant notice, demand or other communication.

2.3.2		Every act, omission, agreement, undertaking, settlement, waiver, amendment, supplement, variation, notice or other communication given or made by the Obligors’ Agent or given to the Obligors’ Agent under any Finance Document on behalf of another Obligor or in connection with any Finance Document (whether or not known to any other Obligor and whether occurring before or after such other Obligor became an Obligor under any Finance Document) shall be binding for all purposes on that Obligor as if that Obligor had expressly made, given or concurred with it. In the event of any conflict between any notices or other communications of the Obligors’ Agent and any other Obligor, those of the Obligors’ Agent shall prevail.
3		Purpose
3.1		Purpose
		The Borrower shall apply all amounts borrowed by it under the Facility towards:
3.1.1		paying to the Vendor an amount from the Facility not exceeding US$106,500,000 to purchase the Target Shares under the Acquisition Agreement provided that such amount equates to no more than 50% of the purchase price of the Target Shares (excluding fees and other expenses) as at the First Utilisation Date; and
3.1.2		paying the arrangement fee payable pursuant to Clause 13.2 (Arrangement fee).

3.2		Monitoring
		No Finance Party is bound to monitor or verify the application of any amount borrowed pursuant to this Agreement.
4		Conditions of Loans
4.1		Initial conditions precedent
		The Lenders will only be obliged to comply with Clause 5.4 (Lenders’ participation) in relation to any Loan if, on or before the Utilisation Date for that Loan, the Agent has received all of the documents and other evidence listed in Part 1 of Schedule 2 (Conditions Precedent) in form and substance satisfactory to the Agent. The Agent shall notify the Obligors’ Agent and the Lenders in writing promptly upon being so satisfied.
4.2		Further conditions precedent
		Subject to Clause 4.1 (Initial conditions precedent), the Lenders will only be obliged to comply with Clause 5.4 (Lenders’ participation) if on the date of the Utilisation Request and on the proposed Utilisation Date:

	(a)		in relation to any Loan on the First Utilisation Date, all the representations and warranties in Clause 19 (Representations) (other than Clause 19.12 (No misleading information) which are made on the date of this Agreement only) or, in relation to any other Loan, the Repeating Representations to be made by each Obligor are true; and
	(b)		none of the events described in Clause 12.2 (Market disruption) has occurred which has resulted in any Lender being unable to fund its participation in the proposed Loan.

4.3		Maximum number of Loans
4.3.1		The Borrower may not deliver a Utilisation Request if as a result of the proposed Loan more than two Loans would be outstanding.
4.3.2		The Borrower may not request that a Loan be divided.
5		Loans
5.1		Delivery of a Utilisation Request
		The Borrower may utilise the Facility by delivery to the Agent of a duly completed Utilisation Request not later than the Specified Time.
5.2		Completion of a Utilisation Request for Loans
5.2.1		Each Utilisation Request for a Loan is irrevocable and will not be regarded as having been duly completed unless:

	(a)		the proposed Utilisation Date is a Business Day within the Availability Period;
	(b)		the currency and amount of the Loan comply with Clause 5.3 (Currency); and
	(c)		the proposed Interest Period complies with Clause 11 (Interest Periods).

5.2.2

Only one Loan may be requested in each Utilisation Request.

5.3		Currency
		The currency specified in a Utilisation Request must be US Dollars.
5.4		Lenders’ participation
5.4.1		If the conditions set out in this Agreement have been met, each Lender shall make its participation in each Loan available by the Utilisation Date through its Facility Office.
5.4.2		The amount of each Lender’s participation in each Loan will be equal to the proportion borne by its Available Commitment to the Available Facility immediately prior to making the Loan.
5.5		Cancellation of Commitment
		The Total Commitments which, at that time, are unutilised shall be immediately cancelled at the end of the Availability Period.
6		Repayment
		The Borrower shall repay the Loan in full on the Termination Date.
7		Illegality, Voluntary Prepayment and Cancellation
7.1		Illegality
		If it becomes unlawful in any applicable jurisdiction for a Lender to perform any of its obligations as contemplated by this Agreement or to fund, issue or maintain its participation in any Loan:

	(a)		that Lender, shall promptly notify the Agent upon becoming aware of that event;
	(b)		upon the Agent notifying the Obligors’ Agent, the Commitment of that Lender will be immediately cancelled; and
	(c)		the Borrower shall repay that Lender’s participation in the Loans made to the Borrower on the last day of the Interest Period for each Loan occurring after the Agent has notified the Obligors’ Agent or, if earlier, the date specified by the Lender in the notice delivered to the Agent (being no earlier than the last day of any applicable grace period permitted by law).

7.2		Voluntary cancellation
		Subject to Clause 7.3 (Voluntary prepayment of Loans) the Borrower may, if it gives the Agent not less than seven Business Days’ (or such shorter period as the Majority Lenders may agree) prior notice, cancel the whole or any part (being a minimum amount of US$5,000,000) of the Available Facility.
7.3		Voluntary prepayment of Loans
7.3.1		The Borrower may, if it gives the Agent not less than seven Business Days’ (or such shorter period as the Majority Lenders may agree) prior notice, prepay the whole or any part of a Loan as specified in the relevant notice (but, if in part, being an amount that reduces the amount of the Loan by a minimum amount of US$5,000,000 or its equivalent).
7.3.2		A Loan may only be prepaid after the last day of the Availability Period (or, if earlier, the day on which the applicable Available Facility is zero).

7.4		Right of cancellation and repayment in relation to a single Lender
7.4.1		If:

	(a)		any sum payable to any Lender by an Obligor is required to be increased under Clause 14.2 (Tax gross-up); or
	(b)		any Lender claims indemnification from the Obligors’ Agent or an Obligor under Clause 14.3 (Tax indemnity) or Clause 15.1 (Increased costs),

		the Obligors’ Agent may, whilst the circumstance giving rise to the requirement or indemnification continues, give the Agent notice of cancellation of the Commitment of that Lender and its intention to procure the repayment of that Lender’s participation in the Loans.
7.4.2		On receipt of a notice referred to in Clause 7.4.1 above in relation to a Lender, the Commitment of that Lender shall immediately be reduced to zero.
7.4.3		On the last day of each Interest Period which ends after the Obligors’ Agent has given notice under Clause 7.4.1 above in relation to a Lender (or, if earlier, the date specified by the Obligors’ Agent in that notice), the Borrower shall repay that Lender’s participation in that Loan together with all interest and other amounts accrued under the Finance Documents.
8		Mandatory Prepayment
8.1		Exit
8.1.1		For the purpose of this Clause 8.1:
		Flotation: means

	(a)		a successful application being made for the admission of any part of the share capital of any member of the Group (or Holding Company of any member of the Group other than Enstar) to the Official List of the UK Listing Authority or any equivalent in another country and the admission of any part of the share capital of any member of the Group (or Holding Company of any member of the Group other than Enstar or any of its Holding Companies) to trading on the London Stock Exchange plc or any equivalent in another country; or
	(b)		the grant of permission to deal in any part of the issued share capital of any member of the Group (or Holding Company of any member of the Group other than Enstar or any of its Holding Companies) on the Alternative Investment Market or the European Acquisition of Securities Dealers Automated Quotation System or on any recognised investment exchange (as that term is used in the Financial Services and Markets Act 2000) or in or on any exchange or market replacing the same or any other exchange or market in any country.

8.1.2

Upon the occurrence of:

	(a)		any Flotation;
	(b)		a Change of Control; or
	(c)		the total of all outstanding Loans falling below US$5,000,000 after the First Utilisation Date,

		the Facility will be cancelled and all outstanding Loans, together with accrued interest, and all other amounts accrued under the Finance Documents, shall become immediately due and payable.
8.2		Disposal, Insurance, Acquisition Proceeds and Target Distributions
8.2.1		For the purposes of Clauses 8.3 (Application of mandatory prepayments) and Clause 8.4 (Mandatory Prepayment Accounts and Holding Accounts):
		Acquisition Proceeds: means the proceeds of a claim against, or recovery or refund from (Recovery Claim) the Vendor or any of its Affiliates (or any employee, officer or adviser) in relation to the Acquisition Documents or against the provider of any Report (in its capacity as a provider of that Report) except for Excluded Acquisition Proceeds, and after deducting:

	(a)		any reasonable expenses which are incurred by any member of the Group to persons who are not members of the Group; and
	(b)		any Tax incurred and required to be paid by a member of the Group (as reasonably determined by the relevant member of the Group on the basis of existing rates and taking into account any available credit, deduction or allowance),

in each case in relation to that Recovery Claim.

Disposal: means a sale, lease, licence, transfer, loan or other disposal by a person of any asset, undertaking or business (whether by a voluntary or involuntary single transaction or series of transactions).

Disposal Proceeds: means the consideration receivable by any member of the Group (including any amount receivable in repayment of intercompany debt) for any Disposal made by any member of the Group except for Excluded Disposal Proceeds and after deducting:

	(a)		any reasonable expenses which are incurred by any member of the Group with respect to that Disposal to persons who are not members of the Group; and
	(b)		any Tax incurred and required to be paid by the seller in connection with that Disposal (as reasonably determined by the seller, on the basis of existing rates and taking account of any available credit, deduction or allowance).

Excluded Acquisition Proceeds: means any proceeds of a Recovery Claim which the Borrower notifies the Agent are, or are to be, applied:

	(a)		in payment of amounts payable to the Vendor pursuant to the Acquisition Agreement by way of adjustment to the purchase price in respect of the Acquisition (except to the extent relating to a working capital adjustment);
	(b)		to satisfy (or reimburse a member of the Group which has discharged) any liability, charge or claim upon a member of the Group by a person which is not a member of the Group; or
	(c)		in the replacement, reinstatement and/or repair of assets of members of the Group which have been lost, destroyed or damaged,

in each case as a result of the events or circumstances giving rise to that Recovery Claim, if those proceeds are so applied as soon as possible (but in any event within 180 days, or such longer period as the Majority Lenders may agree) after receipt.

Excluded Disposal Proceeds: means Disposal Proceeds which have been derived from a Disposal permitted by Clause 22.27 (Intra-Group transactions) or of a type described in paragraphs (a) or (b) or (c) (but only if and to the extent that such Disposal is in exchange for other Cash Equivalent Investments) of the definition of Permitted Disposal.

Excluded Insurance Proceeds: means any proceeds of an insurance claim which the Borrower notifies the Agent are, or are to be, applied:

	(a)		to meet a third party claim; or
	(b)		in amelioration of the loss in respect of which the relevant insurance claim was made,

in each case as soon as possible (but in any event within 180 days, or such longer period as the Majority Lenders may agree) after receipt.

Insurance Proceeds: means the proceeds of any insurance claim received by any member of the Group except for Excluded Insurance Proceeds and after deducting any reasonable expenses in relation to that claim which are incurred by any member of the Group to persons who are not members of the Group.

8.2.2

The Borrower shall prepay Loans in the following amounts at the times and in the order of application contemplated by Clause 8.3 (Application of mandatory prepayments):

	(a)		the amount of Acquisition Proceeds;
	(b)		the amount of Disposal Proceeds;
	(c)		the amount of Insurance Proceeds; and
	(d)		the amount of all Target Distributions in the amount equal to the percentage of Target Distribution as set out in the second column below when the Net Surplus Cover ratio in Clause 21.2 (Financial Condition) is as specified in the first column below (as demonstrated in writing by the Borrower to the satisfaction of the Agent).

		Percentage of Target Distribution
		proceeds to be applied in prepayment
Net Surplus Cover ratio		of the Facility
Less than or equal to 2.50:1			100	%
Greater than 2.50:1 but less than or equal to 3.00:1			75	%
Greater than 3.00:1			50	%

8.3		Application of mandatory prepayments
8.3.1		A prepayment made under Clause 8.2 (Disposal, Insurance, Acquisition Proceeds and Target Distributions) shall:

(a)

be applied in prepayment of Loans as contemplated in Clauses 8.3.1(b) to 8.3.3 inclusive below; and

(b)

unless the Obligors’ Agent makes an election under Clause 8.3.2 below, be applied in prepayment of the Loans within 5 Business Days of receipt of such proceeds or Target Distribution.

8.3.2		Subject to Clause 8.3.3 below, the Obligors’ Agent may elect that any prepayment under Clause 8.2 (Disposal, Insurance, Acquisition Proceeds and Target Distributions) be applied in prepayment of a Loan on the last day of the Interest Period relating to that Loan. If the Obligors’ Agent makes that election then a proportion of the Loan equal to the amount of the relevant prepayment will be due and payable on the last day of its Interest Period.
8.3.3		If the Obligors’ Agent has made an election under Clause 8.3.2 above but a Default has occurred and is continuing, that election shall no longer apply and a proportion of the Loan in respect of which the election was made equal to the amount of the relevant prepayment shall be immediately due and payable (unless the Majority Lenders otherwise agree in writing).
8.3.4		If the Borrower is not required to apply 100% of a Target Distribution in prepayment of the Facility under Clause 8.2.2 above then it may still apply up to 100% of such Target Distribution in prepayment of the Facility, and shall not be liable to pay a prepayment fee under Clause 9.3 (Prepayment Fee) in respect of such prepayment.
8.4		Mandatory Prepayment Accounts and Holding Accounts
8.4.1		The Obligors’ Agent shall ensure that:

	(a)		Disposal Proceeds, Insurance Proceeds, Acquisition Proceeds and any Target Distribution in respect of which the Obligors’ Agent has made an election under Clause 8.3 (Application of mandatory prepayments) are paid into a Mandatory Prepayment Account as soon as reasonably practicable after receipt by a member of the Group; and
	(b)		Excluded Disposal Proceeds to be applied in replacement of assets, Excluded Insurance Proceeds and Excluded Acquisition Proceeds are paid into a Holding Account as soon as reasonably practicable after receipt by a member of the Group.

8.4.2

The Borrower irrevocably authorises the Agent to apply:

	(a)		amounts credited to the Mandatory Prepayment Account; and
	(b)		amounts credited to the Holding Account which have not been duly applied as contemplated within 180 days of receipt of the relevant proceeds (or such longer time period as the Majority Lenders may agree),

to pay amounts due and payable under Clause 8.3 (Application of mandatory prepayments) and otherwise under the Finance Documents. The Borrower further irrevocably authorises the Agent to so apply amounts credited to the Holding Account in respect of Excluded Disposal Proceeds to be applied in replacement of assets, Excluded Insurance Proceeds and Excluded Acquisition Proceeds whether or not 180 days have elapsed since receipt of those proceeds if a Default has occurred and is continuing. The Borrower also irrevocably authorises the Agent to transfer any amounts credited to the Holding Account referred to in this Clause 8.4.2 to the Mandatory Prepayment Account pending payment of amounts due and payable under the Finance Documents (but if all such amounts have been paid any such amounts remaining credited to the Mandatory Prepayment Account may (unless a Default has occurred) be transferred back to the Holding Account).

8.4.3		A Lender, Security Agent or Agent with which a Mandatory Prepayment Account or Holding Account is held acknowledges and agrees that (1) interest shall accrue at normal commercial rates offered by such Lender, Security Agent or Agent in Europe on amounts credited to those accounts and that the account holder shall be entitled to receive such interest (which shall be paid in accordance with the mandate relating to such account) unless a Default is continuing, and (2) each such account is subject to the Transaction Security.
8.4.4		If the Borrower is not required to apply 100% of a Target Distribution in prepayment of the Facility under Clause 8.2.2 (Disposal, Insurance, Acquisition Proceeds and Target Distributions) and does not apply the money towards prepayment in accordance with Clause 8.3.4 (Application of mandatory prepayments) then the Borrower may withdraw such money from the Holding Account unless a Default has occurred and apply such monies at its discretion.
8.5		Excluded proceeds
		Where Excluded Acquisition Proceeds, Excluded Disposal Proceeds and Excluded Insurance Proceeds include amounts which are intended to be used for a specific purpose within a specified period (as set out in the relevant definition of Excluded Acquisition Proceeds, Excluded Disposal Proceeds or Excluded Insurance Proceeds), the Obligors’ Agent shall ensure that those amounts are used for that purpose and shall promptly deliver a certificate to the Agent at the time of such application and at the end of such period confirming the amount (if any) which has been so applied within the requisite time periods provided for in the relevant definition.
9		Restrictions
9.1		Notices of Cancellation or Prepayment
		Any notice of cancellation, prepayment, authorisation or other election given by any Party under Clause 7 (Illegality, Voluntary Prepayment and Cancellation), Clause 8.3 (Application of mandatory prepayments) or Clause 8.4 (Mandatory Prepayment Accounts and Holding Accounts) (subject to the terms of those Clauses) shall be irrevocable and, unless a contrary indication appears in this Agreement, any such notice shall specify the date or dates upon which the relevant cancellation or prepayment is to be made and the amount of that cancellation or prepayment.
9.2		Interest and other amounts
		Any prepayment under this Agreement shall be made together with accrued interest on the amount prepaid and, subject to any prepayment fee payable under Clause 9.3 (Prepayment Fee) and any Break Costs, without premium or penalty.
9.3		Prepayment Fee
		In the event that all of the Loans are prepaid as a result of a refinancing with a third party funder or sale of the Target on or before the first anniversary of the First Utilisation Date (other than under Clause 7.1 (Illegality), Clause 7.4 (Right of repayment and cancellation in relation to a single Lender), Clause 8.2 (Disposal, Insurance, Acquisition Proceeds and Target Distributions) or Clause 23 (Events of Default)), the Borrower shall pay to the Agent for the account of the Lenders a fee computed at the rate of one per cent. (1%) of the amount prepaid. Any such fee will be paid on the same date as the prepayment which causes the fee to be payable.

9.4		No Reborrowing of Facility
		The Borrower may not reborrow any part of the Facility which is repaid or prepaid.
9.5		Prepayment in accordance with Agreement
		No Borrower shall repay or prepay all or any part of the Loans or cancel all or any part of the Commitments except at the times and in the manner expressly provided for in this Agreement.
9.6		No reinstatement of Commitments
		No amount of the Total Commitments cancelled under this Agreement may be subsequently reinstated.
9.7		Agent’s receipt of Notices
		If the Agent receives a notice under Clause 7 (Illegality, Voluntary Prepayment and Cancellation) or an election under Clause 8.3 (Application of mandatory prepayments), it shall promptly forward a copy of that notice or election to either the Obligors’ Agent or the affected Lender, as appropriate.
10		Interest
10.1		Calculation of Interest
		The rate of interest on each Loan for each Interest Period is the percentage rate per annum which is the aggregate of the applicable:

	(a)		Margin;
	(b)		LIBOR; and
	(c)		Mandatory Cost, if any,

		(together the Interest).
10.2		Payment of Interest
		The Borrower shall pay accrued interest on each Loan on the last day of each Interest Period (and, if the Interest Period is longer than six Months, on the dates falling at six Monthly intervals after the first day of the Interest Period).
10.3		Default interest
10.3.1		If an Obligor fails to pay any amount payable by it under a Finance Document on its due date, interest shall accrue on the Unpaid Sum from the due date up to the date of actual payment (both before and after judgment) at a rate which, subject to Clause 10.3.2 below, is 1 per cent higher than the rate which would have been payable if the Unpaid Sum had, during the period of non-payment, constituted a Loan in the currency of the Unpaid Sum for successive Interest Periods, each of a duration selected by the Agent (acting reasonably). Any interest accruing under this Clause 10.3 shall be immediately payable by the Obligor on demand by the Agent.
10.3.2		If any overdue amount consists of all or part of a Loan which became due on a day which was not the last day of an Interest Period relating to that Loan:

(a)

the first Interest Period for that overdue amount shall have a duration equal to the unexpired portion of the current Interest Period relating to that Loan; and

(b)

the rate of interest applying to the overdue amount during that first Interest Period shall be 1 per cent higher than the rate which would have applied if the overdue amount had not become due.

10.3.3		Default interest (if unpaid) arising on an overdue amount will be compounded with the overdue amount at the end of each Interest Period applicable to that overdue amount but will remain immediately due and payable.
10.4		Notification of rates of interest
		The Agent shall promptly notify the Lenders and the Borrower of the determination of a rate of interest under this Agreement.
11		Interest Periods
11.1		Selection of Interest Periods and Terms
11.1.1		The Borrower may select an Interest Period for a Loan in the Utilisation Request for that Loan or (if the Loan has already been borrowed) in a Selection Notice.
11.1.2		Each Selection Notice for a Loan is irrevocable and must be delivered to the Agent by the Borrower not later than the Specified Time.
11.1.3		If the Borrower fails to deliver a Selection Notice to the Agent in accordance with Clause 11.1.2 above, the relevant Interest Period will be three Months.
11.1.4		Subject to this Clause 11, the Borrower may select an Interest Period of two, three or six Months or any other period agreed between the Borrower and the Agent (acting on the instructions of all the Lenders).
11.1.5		An Interest Period for a Loan shall not extend beyond the Termination Date.
11.1.6		Each Interest Period for a Loan shall start on the Utilisation Date or (if already made) on the last day of its preceding Interest Period.
11.2		Non-Business Days
		If an Interest Period would otherwise end on a day which is not a Business Day, that Interest Period will instead end on the next Business Day in that calendar month (if there is one) or the preceding Business Day (if there is not).
12		Changes To The Calculation Of Interest
12.1		Absence of quotations
		Subject to Clause 12.2 (Market disruption), if LIBOR is to be determined by reference to the Reference Banks but a Reference Bank does not supply a quotation by the Specified Time on the Quotation Day, the applicable LIBOR shall be determined on the basis of the quotations of the remaining Reference Banks.
12.2		Market disruption
12.2.1		If a Market Disruption Event occurs in relation to a Loan for any Interest Period, then the rate of interest on each Lender’s share of that Loan for the Interest Period shall be the percentage rate per annum which is the sum of:

	(a)		the applicable Margin;
	(b)		the rate notified to the Agent by that Lender as soon as practicable and in any event before interest is due to be paid in respect of that Interest Period,

to be that which expresses as a percentage rate per annum the cost to that Lender of funding its participation in that Loan from whatever source it may reasonably select; and

(c)

the Mandatory Cost, if any, applicable to that Lender’s participation in the Loan.

12.2.2

In this Agreement Market Disruption Event means:

	(a)		at or about noon on the Quotation Day for the relevant Interest Period the Screen Rate is not available and none or only one of the Reference Banks supplies a rate to the Agent to determine LIBOR for the relevant currency and Interest Period; or
	(b)		before close of business in London on the Quotation Day for the relevant Interest Period, the Agent receives notifications from a Lender or Lenders (whose participations in a Loan exceed 30 per cent of that Loan) that the cost to it of obtaining matching deposits in the London Interbank market would be in excess of LIBOR.

12.3		Alternative basis of interest or funding
12.3.1		If a Market Disruption Event occurs and the Agent or the Borrower so requires, the Agent and the Obligors’ Agent shall enter into negotiations (for a period of not more than 30 days) with a view to agreeing a substitute basis for determining the rate of interest.
12.3.2		Any alternative basis agreed pursuant to Clause 12.3.1 above shall, with the prior consent of all the Lenders and the Obligors’ Agent, be binding on all Parties.
12.4		Break Costs
12.4.1		The Borrower shall, within three Business Days of demand by a Finance Party, pay to that Finance Party its Break Costs attributable to all or any part of a Loan or Unpaid Sum being paid by the Borrower on a day other than the last day of an Interest Period for that Loan or Unpaid Sum.
12.4.2		Each Lender shall, as soon as reasonably practicable after a demand by the Agent, provide a certificate confirming the amount of its Break Costs for any Interest Period in which they accrue.
13		Fees
13.1		Commitment fee
13.1.1		The Borrower shall pay to the Agent (for the account of each Lender) a fee in the Base Currency computed at the rate of one per cent. (1.00%) per annum on the daily undrawn and uncancelled amount of the Facility during the Availability Period.
13.1.2		The accrued commitment fee is payable on the last day of each successive period of three Months which ends during the Availability Period, on the last day of the Availability Period and on the cancelled amount of the relevant Lender’s Commitment at the time the cancellation is effective.
13.2		Arrangement fee
		The Borrower shall pay to National Australia Bank Limited in its capacity as an Arranger an arrangement fee in the amount, manner and at the times agreed in a Fee Letter.

13.3		Agency fee
		The Borrower shall pay to the Agent (for its own account) an agency fee in the amount, manner and at the times agreed in a Fee Letter.
14		Tax Gross Up And Indemnities
14.1		Definitions
14.1.1		In this Agreement:

	(a)		Excluded Taxes: means, with respect to any Finance Party or other recipient of a payment to be made by an Obligor, (a) any withholding tax imposed pursuant to U.S. Internal Revenue Code Sections 1471-74, and (b) in the case of a non-US Lender, any withholding tax that is imposed on amounts payable to such non-US Lender at the time such non-US Lender becomes a party hereto (or designates a new Facility Office), except to the extent that such non-US Lender (or its assignor, if any) was entitled, at the time of designation of a new Facility Office (or assignment), to receive additional amounts from an Obligor with respect to such withholding tax pursuant to Clause 14.2 (Tax gross-up). In this regard, it is the agreement and understanding of the parties hereto that, under current law, the Borrower is not required to make any deduction for or on account of Tax from any payment it may make under any Finance Document to or for the benefit of any Original Lender, provided that such Original Lender provides a properly completed Internal Revenue Service Form W-8BEN with respect to its qualification for the benefit of the Australia-US tax treaty as a financial institution and, at such time as Internal Revenue Code Sections 1471-74 become effective and would otherwise impose a withholding tax notwithstanding the Australia-US tax treaty, complies with applicable requirements, if any, for avoiding the imposition of withholding tax thereunder.
	(b)		Protected Party: means a Finance Party which is or will be subject to any liability or required to make any payment for or on account of Tax in relation to a sum received or receivable (or any sum deemed for the purposes of Tax to be received or receivable) under a Finance Document.
	(c)		Tax Credit: means a credit against, relief or remission for, refund or repayment of, any Tax.
	(d)		Tax Deduction: means a deduction or withholding for or on account of Tax from a payment under a Finance Document.
	(e)		Tax Payment: means either the increase in a payment made by an Obligor to a Finance Party under Clause 14.2 (Tax gross-up) or a payment under Clause 14.3 (Tax indemnity).

14.1.2		Unless a contrary indication appears, in this Clause 14 a reference to determines or determined means a determination made in the absolute discretion of the person making the determination.
14.2		Tax gross-up
14.2.1		Each Obligor shall make all payments to be made by it under the Finance Documents without any Tax Deduction, other than a Tax Deduction for Excluded Taxes, unless a Tax Deduction is required by law.

14.2.2		The Borrower shall promptly upon becoming aware that an Obligor must make a Tax Deduction, other than a Tax Deduction for Excluded Taxes, (or that there is any change in the rate or the basis of a Tax Deduction that it must make) notify the Agent accordingly. Similarly, a Lender shall notify the Agent on becoming so aware in respect of a payment payable to that Lender. If the Agent receives such notification from a Lender it shall notify the Borrower and that Obligor.
14.2.3		If a Tax Deduction other than a Tax Deduction for Excluded Taxes is required by law to be made by an Obligor from any payment due from it under the Finance Documents, the amount of the payment due from that Obligor shall be increased to an amount which (after making any Tax Deduction) leaves an amount equal to the payment which would have been due if no Tax Deduction had been required.
14.2.4		If an Obligor is required to make a Tax Deduction, that Obligor shall make that Tax Deduction and any payment required in connection with that Tax Deduction within the time allowed and in the minimum amount required by law.
14.2.5		Within 30 days of making either a Tax Deduction or any payment required in connection with that Tax Deduction, the Obligor making that Tax Deduction shall deliver to the Agent for the Finance Party entitled to the payment evidence reasonably satisfactory to that Finance Party that the Tax Deduction has been made or (as applicable) any appropriate payment paid to the relevant taxing authority.
14.3		Tax indemnity
14.3.1		The Borrower shall (within three Business Days of demand by the Agent) pay to a Protected Party an amount equal to the loss, liability or cost which that Protected Party determines will be or has been (directly or indirectly) suffered for or on account of Tax by that Protected Party in respect of a Finance Document.
14.3.2		Clause 14.3.1 above shall not apply:

(a)

with respect to any Finance Party or any other recipient of a payment to be made by or on account of any obligation of an Obligor hereunder, to:

	(i)		taxes imposed on or measured by its overall net income (however denominated), and franchise taxes imposed on it, by the jurisdiction (or any political subdivision thereof) under the laws of which such recipient is organized or in which its principal office is located or, in the case of any Lender, in which its applicable lending office is located; or
	(ii)		any branch profits taxes imposed by the United States or any similar tax imposed by any other jurisdiction in which that Finance Party’s Facility Office is located; or

(b)

to the extent a loss, liability or cost:

	(i)		is compensated for by an increased payment under Clause 14.2 (Tax gross-up); or
	(ii)		A Protected Party making, or intending to make a claim under Clause 14.3.1 above, shall promptly notify the Agent of the event which will give, or has given, rise to the claim, following which the Agent shall notify the Borrower.

(iii)

A Protected Party shall, on receiving a payment from an Obligor under Clauses 14.3.1 to 14.3.2, notify the Agent.

14.4		Tax Credit
14.4.1		If an Obligor makes a Tax Payment and the relevant Finance Party determines that:

	(a)		a Tax Credit is attributable either to an increased payment of which that Tax Payment forms part or to that Tax Payment; and
	(b)		that Finance Party has obtained, utilised and retained that Tax Credit, the Finance Party shall pay an amount to the Obligor which that Finance Party determines will leave it (after that payment) in the same after-Tax position as it would have been in had the Tax Payment not been required to be made by the Obligor.

14.5		Stamp taxes
		The Borrower shall pay and, within three Business Days of demand, indemnify each Secured Party and the Arranger against any cost, loss or liability such Secured Party or such Arranger incurs in relation to all stamp duty, registration, excise and other similar Taxes payable in respect of any Finance Document.
14.6		Value added tax
14.6.1		All consideration expressed to be payable under a Finance Document by any Party to a Finance Party shall be deemed to be exclusive of any VAT. Subject to Clause 14.6.2 below, if VAT is chargeable on any supply made by any Finance Party to any Party in connection with a Finance Document, that Party shall pay to the Finance Party (in addition to and at the same time as paying the consideration) an amount equal to the amount of the VAT (and such Finance party shall promptly provide an appropriate VAT invoice to such Party).
14.6.2		If VAT is chargeable on any supply made by any Finance Party (Supplier) to any other Finance Party (Recipient) in connection with a Finance Document, and any Party is required by the terms of any Finance Document to pay an amount equal to the consideration for such supply to the Supplier, such Party shall also pay to the Supplier (in addition to and at the same time as paying such amount) an amount equal to the amount of such VAT.
14.6.3		Where a Finance Document requires any Party to reimburse a Finance Party for any costs or expenses, that Party shall also at the same time pay and indemnify the Finance Party against all VAT incurred by the Finance Party in respect of the costs or expenses to the extent that the Finance Party reasonably determines that it is not entitled to credit or repayment from the relevant tax authority in respect of the VAT.
14.7		Survival of Obligations
		Without prejudice to the survival of any other section of this Agreement, the agreements and obligations of each Obligor and each Finance Party contained in this Clause 14 shall survive the payment in full by the Obligors of all principal and interest here this Agreement until six (6) months after the expiry of the applicable statute of limitation with respect to the relevant Taxes and obligations related to them.

14.8		Tax Shelter
		Notwithstanding anything to the contrary, it is hereby agreed that from the commencement of discussions with respect to transactions contemplated by this Agreement (Transactions), any party to this Agreement (and any employee, representative or other agent of any party to this Agreement) may disclose to any and all persons, without limitation of any kind, the tax treatment and tax structure of the Transactions and all materials of any kind (including opinions or other tax analyses) that are provided to it relating to such tax treatment and tax structure.
15		Increased Costs
15.1		Increased costs
15.1.1		Subject to Clause 15.3 (Exceptions) the Borrower shall, within three Business Days of a demand by the Agent, pay for the account of a Finance Party the amount of any Increased Costs incurred by that Finance Party or any of its Affiliates as a result of (i) the introduction of or any change in (or in the interpretation, administration or application of) any law or regulation or (ii) compliance with any law or regulation made after the date of this Agreement.
15.1.2		In this Agreement Increased Costs: means

	(a)		a reduction in the rate of return from the Facility or on a Finance Party’s (or its Affiliate’s) overall capital;
	(b)		an additional or increased cost; or
	(c)		a reduction of any amount due and payable under any Finance Document,

		which is incurred or suffered by a Finance Party or any of its Affiliates to the extent that it is attributable to that Finance Party having entered into its Commitment or funding or performing its obligations under any Finance Document.
15.2		Increased cost claims
15.2.1		A Finance Party intending to make a claim pursuant to Clause 15.1 (Increased costs) shall notify the Agent of the event giving rise to the claim, following which the Agent shall promptly notify the Borrower.
15.2.2		Each Finance Party shall, as soon as practicable after a demand by the Agent, provide a certificate confirming the amount of its Increased Costs.
15.3		Exceptions
15.3.1		Clause 15.1 (Increased costs) does not apply to the extent any Increased Cost is:

	(a)		attributable to a Tax Deduction required by law to be made by an Obligor;
	(b)		compensated for by Clause 14.3 (Tax indemnity) (or would have been compensated for under Clause 14.3 (Tax indemnity) but was not so compensated solely because any of the exclusions in Clause 14.3 (Tax indemnity) applied);
	(c)		compensated for by the payment of the Mandatory Cost; or
	(d)		attributable to the wilful breach by the relevant Finance Party or its Affiliates of any law or regulation.

15.3.2		In this Clause 15 reference to a Tax Deduction has the same meaning given to the term in Clause 14.1 (Definitions).
16		Indemnities
16.1		Currency indemnity
16.1.1		If any sum due from an Obligor under the Finance Documents (Sum), or any order, judgment or award given or made in relation to a Sum, has to be converted from the currency (First Currency) in which that Sum is payable into another currency (Second Currency) for the purpose of:

	(a)		making or filing a claim or proof against that Obligor; or
	(b)		obtaining or enforcing an order, judgment or award in relation to any litigation or arbitration proceedings,
	(c)		that Obligor shall as an independent obligation, within three Business Days of demand, indemnify the Arranger and each other Secured Party to whom that Sum is due against any cost, loss or liability arising out of or as a result of the conversion including any discrepancy between (1) the rate of exchange used to convert that Sum from the First Currency into the Second Currency and (2) the rate or rates of exchange available to that person at the time of its receipt of that Sum.

16.1.2		Each Obligor waives any right it may have in any jurisdiction to pay any amount under the Finance Documents in a currency or currency unit other than that in which it is expressed to be payable.
16.2		Other indemnities
16.2.1		The Borrower shall (or shall procure that an Obligor will), within three Business Days of demand, indemnify the Arranger and each other Secured Party against any cost, loss or liability incurred by it as a result of:

	(a)		the occurrence or continuance of any Default;
	(b)		a failure by an Obligor to pay any amount due under a Finance Document on its due date, including without limitation, any cost, loss or liability arising as a result of Clause 28 (Sharing among the Finance Parties);
	(c)		funding, or making arrangements to fund, its participation in a Loan requested by the Borrower in a Utilisation Request but not made by reason of the operation of any one or more of the provisions of this Agreement (other than by reason of default or negligence by that Finance Party alone); or
	(d)		a Loan (or part of a Loan) not being prepaid in accordance with a notice of prepayment given by the Borrower.

16.2.2

The Borrower shall promptly indemnify each Finance Party, each Affiliate of a Finance Party and each officer or employee of a Finance Party or its Affiliate, against any cost, loss or liability incurred by that Finance Party or its Affiliate (or officer or employee of that Finance Party or Affiliate) in connection with or arising out of the Acquisition (whether or not completed) or the funding of the Acquisition (including but not limited to those incurred in connection with any litigation, arbitration or administrative proceedings or regulatory enquiry concerning the Acquisition), unless such loss or liability is caused by the gross negligence or wilful misconduct of that Finance Party or its Affiliate (or employee or officer of that Finance Party or Affiliate). Any Affiliate or any officer or employee of a Finance

		Party or its Affiliate may rely on Clauses 16.2.1(c) to 16.2.1(d) subject to Clause 1.8 (Third party rights) and the provisions of the Third Parties Act.
16.3		Indemnity to the Agent
		The Borrower shall promptly indemnify the Agent against any cost, loss or liability incurred by the Agent (acting reasonably) as a result of:

	(a)		investigating any event which it reasonably believes is a Default; or
	(b)		acting or relying on any notice, request or instruction which it reasonably believes to be genuine, correct and appropriately authorised.

16.4		Indemnity to the Security Agent
16.4.1		Each Obligor shall promptly indemnify the Security Agent and every Receiver and Delegate against any cost, loss or liability incurred by any of them as a result of:

	(a)		the taking, holding, protection or enforcement of the Transaction Security;
	(b)		the exercise of any of the rights, powers, discretions and remedies vested in the Security Agent and each Receiver and Delegate by the Finance Documents or by law; and
	(c)		any default by any Obligor in the performance of any of the obligations expressed to be assumed by it in the Finance Documents.

16.4.2		The Security Agent may, in priority to any payment to the Secured Parties, indemnify itself out of the Charged Property in respect of, and pay and retain, all sums necessary to give effect to the indemnity in Clause 16.4.1 and shall have a lien on the Transaction Security and the proceeds of the enforcement of the Transaction Security for all moneys payable to it.
17		Mitigation By The Lenders
17.1		Mitigation
17.1.1		Each Finance Party shall, in consultation with the Borrower, take all reasonable steps to mitigate any circumstances which arise and which would result in any amount becoming payable under or pursuant to, or cancelled pursuant to, any of Clause 7.1 (Illegality), Clause 14 (Tax gross-up and indemnities) or Clause 15.1 (Increased costs) or paragraph 3 of Schedule 4 (Mandatory cost formula) including (but not limited to) transferring its rights and obligations under the Finance Documents to another Affiliate or Facility Office.
17.1.2		Clause 17.1 above does not in any way limit the obligations of any Obligor under the Finance Documents.
17.2		Limitation of liability
17.2.1		The Borrower shall indemnify each Finance Party for all costs and expenses reasonably incurred by that Finance Party as a result of steps taken by it under Clause 17.1 (Mitigation).
17.2.2		A Finance Party is not obliged to take any steps under Clause 17.1 (Mitigation) if, in the opinion of that Finance Party (acting reasonably), to do so might be prejudicial to it.

18		Costs And Expenses
18.1		Transaction expenses
		The Borrower shall promptly on demand pay the Agent, the Arranger and the Security Agent the amount of all costs and expenses (including legal fees and due diligence costs) reasonably incurred by any of them (and, in the case of the Security Agent, by any Receiver or Delegate) in connection with the negotiation, preparation, printing, execution, completion, syndication and perfection of:

	(a)		this Agreement and any other documents referred to in this Agreement and the Transaction Security; and
	(b)		any other Finance Documents executed after the date of this Agreement.

18.2		Amendment costs
		If (a) an Obligor requests an amendment, waiver or consent or (b) an amendment is required pursuant to Clause 29.12 (Change of currency), the Borrower shall, within three Business Days of demand, reimburse each of the Agent and the Security Agent for the amount of all costs and expenses (including legal fees) reasonably incurred by the Agent and the Security Agent (and, in the case of the Security Agent, by any Receiver or Delegate) in responding to, evaluating, negotiating or complying with that request or requirement.
18.3		Security Agent’s ongoing costs
18.3.1		In the event of (1) a Default; (2) the Security Agent considering it necessary or expedient or (3) the Security Agent being requested by an Obligor or the Majority Lenders to undertake duties which the Security Agent and the Borrower agree to be of an exceptional nature and/or outside the scope of the normal duties of the Security Agent under the Finance Documents, the Borrower shall pay to the Security Agent any additional remuneration that may be agreed between them.
18.3.2		If the Security Agent and the Borrower fail to agree upon the nature of the duties or upon any additional remuneration, that dispute shall be determined by an investment bank (acting as an expert and not as an arbitrator) selected by the Security Agent and approved by the Borrower or, failing approval, nominated (on the application of the Security Agent) by the President for the time being of the Law Society of England and Wales (the costs of the nomination and of the investment bank being payable by the Borrower) and the determination of any investment bank shall be final and binding upon the parties to this Agreement.
18.4		Enforcement and preservation costs
		The Borrower shall, within three Business Days of demand, pay to the Arranger and each other Secured Party on a full indemnity basis the amount of all costs and expenses (including legal, valuation, accountancy and consulting fees and commission and out of pocket expenses) and any VAT thereon incurred by it in connection with the enforcement of or the preservation of or the release of any rights under any Finance Document or any of the documents referred to in such documents in any jurisdiction and any proceedings instituted by or against the Security Agent as a consequence of taking or holding the Transaction Security or enforcing these rights.

19		Representations
19.1		General
19.1.1		Each Obligor makes the representations and warranties set out in this Clause 19 to each Finance Party in accordance with Clause 19.37 (Times when representations made).
19.1.2		In relation to the representations and warranties made on the date of this Agreement and any other date on or before the Closing Date, it is assumed that Completion has occurred and the Borrower has the full knowledge of the senior management of the Target.
19.2		Status
19.2.1		It and each of its Subsidiaries is a corporation, duly incorporated, validly existing and (to the extent applicable) in good standing under the law of its jurisdiction of incorporation.
19.2.2		It and each of its Subsidiaries has the power to own its assets and carry on its business as it is being conducted.
19.3		Binding obligations
		Subject to the Legal Reservations:

	(a)		the obligations expressed to be assumed by it in each Transaction Document to which it is a party are legal, valid, binding and enforceable obligations; and
	(b)		(without limiting the generality of paragraph (a) above), each Transaction Security Document to which it is a party creates the security interests which that Transaction Security Document purports to create and those security interests are valid and effective.

19.4		Non-conflict with other obligations
		The entry into and performance by it of, and the transactions contemplated by, the Transaction Documents and the granting of the Transaction Security do not and will not conflict with:

	(a)		any law or regulation applicable to it;
	(b)		the constitutional documents of any member of the Group; or
	(c)		any agreement or instrument binding upon it or any member of the Group or any member of the Group’s assets or constitute a default or termination event (however described) under any such agreement or instrument or would result in any liability on the part of a Finance Party to any third party or require the creation of any security interest over any asset in favour of a third party.

19.5		Power and authority
19.5.1		It has the power to enter into, perform and deliver, and has taken all necessary action to authorise its entry into, performance and delivery of, the Transaction Documents to which it is or will be a party and the transactions contemplated by those Transaction Documents.
19.5.2		No limit on its powers will be exceeded as a result of the borrowing, grant of security or giving of guarantees or indemnities contemplated by the Transaction Documents to which it is a party.

19.6		Validity and admissibility in evidence
19.6.1		All Authorisations required:

	(a)		to enable it lawfully to enter into, exercise its rights and comply with its obligations in the Transaction Documents to which it is a party; and
	(b)		to make the Transaction Documents to which it is a party admissible in evidence in its Relevant Jurisdictions,

		have been obtained or effected and are in full force and effect except any Authorisation referred to in Clause 19.9 (No filing or stamp taxes), which Authorisations will be promptly obtained or effected as soon as practicable after the date of this Agreement.
19.6.2		All Authorisations necessary for the conduct of the business, trade and ordinary activities of members of the Group have been obtained or effected and are in full force and effect and are not likely to be revoked or materially adversely amended and no notice of an intention to terminate any such Authorisation has been received by any member of the Group.
19.7		Governing law and enforcement
19.7.1		The law expressed to be the governing law in each Finance Document will be recognised and enforced in the Relevant Jurisdictions of each Obligor executing that Finance Document.
19.7.2		Any judgment obtained in relation to a Finance Document in the jurisdiction of the governing law of that Finance Document will be recognised and enforced in its Relevant Jurisdictions.
19.8		Insolvency
		No:

	(a)		corporate action, legal proceeding or other procedure or step described in Clause 23.7.1 (Insolvency proceedings); or
	(b)		creditors’ process described in Clause 23.8 (Creditors’ process),

		has been taken or, to the knowledge of the Borrower, threatened in relation to a member of the Group; and none of the circumstances described in Clause 23.6 (Insolvency) applies to any member of the Group.
19.9		No filing or stamp taxes
		Under the laws of its Relevant Jurisdiction it is not necessary that any Finance Document be filed, recorded or enrolled with any court or other authority in that jurisdiction or that any stamp, registration, notarial or similar Taxes or fees be paid on or in relation to the Finance Documents or the transactions contemplated by the Finance Documents except any filing, recording or enrolling or any tax or fee payable in relation to any Transaction Security Documents which are referred to in any Legal Opinion and which will be made or paid promptly after the date of the relevant Finance Document.

19.10		[INTENTIONALLY LEFT BLANK]
19.11		No default
19.11.1		No Event of Default and, on the date of this Agreement and the First Utilisation Date, no Default is continuing or is reasonably likely to result from the making of any Loan or the entry into, the performance of, or any transaction contemplated by, any Transaction Document.
19.11.2		No other event or circumstance is outstanding which constitutes (or, with the expiry of a grace period, the giving of notice, the making of any determination or any combination of any of the foregoing would constitute) a default or termination event (however described) under any other agreement or instrument which is binding on it or any of its Subsidiaries or to which its (or any of its Subsidiaries’) assets are subject which has or is reasonably likely to have a Material Adverse Effect.
19.12		No misleading information
19.12.1		Any factual information contained in the Information Memorandum or the Information Package was true and accurate in all material respects as at the date of the relevant report or document containing the information or (as the case may be) as at the date the information is expressed to be given.
19.12.2		The Forecast Cash Flows has been prepared in accordance with the Accounting Principles as applied to the Original Financial Statements and on the basis of recent historical information, is fair and based on reasonable assumptions and has been approved by the board of directors of the Borrower.
19.12.3		Any financial projection or forecast contained in the Information Memorandum or the Information Package has been prepared on the basis of recent historical information and on the basis of reasonable assumptions and was fair (as at the date of the relevant report or document containing the projection or forecast) and arrived at after careful consideration.
19.12.4		The expressions of opinion or intention provided by or on behalf of an Obligor for the purposes of the Information Memorandum or the Information Package were made after careful consideration and (as at the date of the relevant report or document containing the expression of opinion or intention) were fair and based on reasonable grounds.
19.12.5		Except as disclosed in the Acquisition Agreement or the Disclosure Letters, no event or circumstance has occurred or arisen and no information has been omitted from the Information Memorandum or the Information Package and no information has been given or withheld that results in the information, opinions, intentions, forecasts or projections contained in the Information Memorandum or the Information Package being untrue or misleading in any material respect.
19.12.6		All material information provided to a Finance Party by or on behalf of Enstar or the Borrower in connection with the Acquisition and/or the Target Group on or before the date of this Agreement and not superseded before that date (whether or not contained in the Information Package) is accurate and not misleading in any material respect and all projections provided to any Finance Party on or before the date of this Agreement have been prepared in good faith on the basis of assumptions which were reasonable at the time at which they were prepared and supplied.
19.12.7		All other written information provided by any Obligor or any member of the Group (including its advisers) to a Finance Party or the provider of any Report was true,

complete and accurate in all material respects as at the date it was provided and is not misleading in any respect.

19.12.8		As at the date of this Agreement, there has been no reported insurance claim since the date of the most recent valuation of insurance liabilities report that would or, if adversely determined, is reasonably likely to, have a Material Adverse Effect.
19.12.9		As at the date of this Agreement, there are no negative marked-to-market outstandings under any existing Treasury Transactions entered into by or on behalf of any member of the Group that would have a Material Adverse Effect.
19.13		Original Financial Statements
19.13.1		Its Original Financial Statements were prepared in accordance with the Accounting Principles consistently applied unless expressly disclosed to the Agent in writing to the contrary.
19.13.2		Subject to the Acquisition Agreement and the Disclosure Letters, its Original Financial Statements prior to them having been audited fairly represent its financial condition and results of operations (consolidated in the case of Target) for the relevant period unless expressly disclosed to the Agent in writing to the contrary prior to the date of this Agreement.
19.13.3		Subject to the Acquisition Agreement and the Disclosure Letters, there has been no material adverse change in its assets, business or financial condition (or the assets, business or consolidated financial condition of the Group, in the case of the Borrower) since the date of the Original Financial Statements.
19.13.4		The Original Financial Statements of the Target and the Borrower do not consolidate the results, assets or liabilities of any person or business which does not form part of the Target Group.
19.13.5		Its most recent financial statements delivered pursuant to Clause 20.2 (Financial statements):

	(a)		have been prepared in accordance with the Accounting Principles as applied to the Original Financial Statements except as otherwise permitted in Clause 20.4 (Requirements as to Financial Statements); and
	(b)		give a true and fair view of (if audited) or fairly present (if unaudited) its consolidated financial condition as at the end of, and consolidated results of operations for, the period to which they relate.

19.13.6		The budgets and forecasts supplied under this Agreement were arrived at after careful consideration and have been prepared in good faith on the basis of recent historical information and on the basis of assumptions which were reasonable as at the date they were prepared.
19.13.7		Since the date of the most recent financial statements delivered pursuant to Clause 20.2 (Financial statements) there has been no material adverse change in the business, assets or financial condition of the Group.
19.14		No proceedings pending or threatened
		No litigation, arbitration or administrative proceedings or investigations of, or before, any court, arbitral body or agency which, if adversely determined, are reasonably likely to have a Material Adverse Effect, have (to the best of its knowledge and belief (having made due and careful enquiry)) been started or threatened against it or any of its Subsidiaries.

19.15		No breach of laws
19.15.1		It has not (and none of its Subsidiaries has) has breached any law or regulation which breach has or is reasonably likely to have a Material Adverse Effect.
19.15.2		No labour disputes are current or, to the best of its knowledge and belief (having made due and careful enquiry), threatened against any member of the Group which have or are reasonably likely to have a Material Adverse Effect.
19.16		Taxation
19.16.1		It is not (and none of its Subsidiaries is) materially overdue in the filing of any Tax returns and it is not (and none of its Subsidiaries is) overdue in the payment of any amount in respect of Tax of $200,000 (or its equivalent in any other currency) or more.
19.16.2		No claims or investigations are being or are reasonably likely to be made or conducted against it (or any of its Subsidiaries) with respect to Taxes such that a liability of, or claim against, any member of the Group of $200,000 (or its equivalent in any other currency) or more is reasonably likely to arise.
19.16.3		It is resident for Tax purposes only in the jurisdiction of its incorporation.
19.17		Security and Financial Indebtedness
19.17.1		No Security or Quasi-Security exists over all or any of the present or future assets of any member of the Group other than as permitted by this Agreement.
19.17.2		No member of the Group has any Financial Indebtedness outstanding other than as permitted by this Agreement.
19.18		Ranking
		The Transaction Security ranks or will rank prior to all other Security other than Permitted Security.
19.19		Good title to assets
		It and each of its Subsidiaries has a good, valid and marketable title to, or valid leases or licences of, and all appropriate Authorisations to use, the assets necessary to carry on its business as presently conducted.
19.20		Legal and beneficial ownership
19.20.1		It and each of its Subsidiaries is the sole legal and beneficial owner of the respective assets over which it purports to grant Security to the Security Agent.
19.20.2		On and from the Closing Date, all the Target Shares are legally and beneficially owned by the Borrower free from any claims, third party rights or competing interests.
19.21		Ownership
		Each of the Obligors and their Subsidiaries is a direct or indirect wholly-owned subsidiary of Enstar.
19.22		Shares
		The shares of any member of the Group which are subject to the Transaction Security are fully paid and not subject to any option to purchase or similar rights.

		The constitutional documents of companies whose shares are subject to the Transaction Security do not and could not restrict or inhibit any transfer of those shares on creation or enforcement of the Transaction Security. There are no agreements in force which provide for the issue or allotment of, or grant any person the right to call for the issue or allotment of, any share or loan capital of any member of the Group or member of the Target Group (including any option or right of pre-emption or conversion). There is no Security or other restrictions in existence that may attach to any dividends or other distributions that may be made in respect of any shares of any member of the Group except, in connection with a Regulated Insurance Entity, restrictions arising under N.J.S.A §§ 17:27A-4(c) and 17:27A-9.1 and Fla. Stat. §§ 628.371 and 628.391 or similar provisions under the Insurance Code.
19.23		Intellectual Property
		It and each of its Subsidiaries:

	(a)		is the sole legal and beneficial owner of or has licensed to it on normal commercial terms all the Intellectual Property which is material in the context of its business and which is required by it in order to carry on its business as it is being conducted;
	(b)		does not (nor does any of its Subsidiaries), in carrying on its businesses, infringe any Intellectual Property of any third party in any respect which has or is reasonably likely to have a Material Adverse Effect; and
	(c)		has taken all formal or procedural actions (including payment of fees) required to maintain any material Intellectual Property owned by it to the extent that failure to do so has or is reasonably likely to have a Material Adverse Effect.

19.24		Group Structure Chart
19.24.1		The Group Structure Chart is true, complete and accurate in all material respects and shows the following information:

	(a)		each member of the Group, including current name and (if applicable) company registration number, its jurisdiction of incorporation and/or establishment, a list of shareholders and indicating whether a company is not a company with limited liability;
	(b)		all minority interests in any member of the Group and any person in which any member of the Group holds shares in its issued share capital or equivalent ownership interest of such person; and
	(c)		all intra-Group loans of £1,000 or more.

19.24.2		All necessary intra-Group loans, transfers, share exchanges and other steps resulting in the final Group structure are set out in the Group Structure Chart and have been or will be taken in compliance with all relevant laws and regulations and all requirements of relevant regulatory authorities.
19.25		Financial Year end
		The end of the Financial Year for each member of the Group is 31 December.
19.26		Obligors
		Each member of the Group is or will be an Obligor on the First Utilisation Date.

19.27		Acquisition Documents, Disclosures and other Documents
19.27.1		The Acquisition Documents contain all the terms of the Acquisition.
19.27.2		There is no disclosure made in the Disclosure Letters or any other disclosure to the Acquisition Documents which has or may have a material adverse effect on any of the information, opinions, intentions, forecasts and projections contained or referred to in the Information Package.
19.27.3		To the best of its knowledge no representation or warranty (as qualified by the Disclosure Letters) given by any party to the Acquisition Documents is untrue or misleading in any material respect.
19.27.4		As at the date of delivery, the documents delivered to the Agent under any Finance Document by or on behalf of any Obligor (including pursuant to Clause 4.1 (Initial conditions precedent)) are genuine (or, in the case of copy documents, are true, complete and accurate copies of originals which are genuine), are up-to-date and in full force and effect (or if a copy, the original is up-to-date and in full force and effect) and have not been amended.
19.28		Insurance
		There has been no non-disclosure, misrepresentation or breach of any term of any material insurance policy (excluding those policies or contracts of insurance or reinsurance written or assumed in the ordinary course of business by any of the Subsidiaries of the Borrower) which would entitle any insurer to repudiate, rescind or cancel it or to treat it as avoided in whole or in part or otherwise decline any valid claim under it by or on behalf of any member of the Group.
19.29		Immunity
19.29.1		The execution by it of each Finance Document constitutes, and the exercise by it of its rights and performance of its obligations under each Finance Document will constitute private and commercial acts performed for private and commercial purposes.
19.29.2		It will not be entitled to claim immunity from suit, execution, attachment or other legal process in any proceedings taken in its Relevant Jurisdictions in relation to any Finance Document.
19.30		No adverse consequences
19.30.1		It is not necessary under the laws of its Relevant Jurisdictions:

	(a)		in order to enable any Finance Party to enforce its rights under any Finance Document; or
	(b)		subject to the Legal Reservations, by reason of the execution of any Finance Document or the performance by it of its obligations under any Finance Document,

		that any Finance Party should be licensed, qualified or otherwise entitled to carry on business in any of its Relevant Jurisdictions.
19.30.2		No Finance Party is or will be deemed to be resident, domiciled or carrying on business in its Relevant Jurisdictions by reason only of the execution, performance and/or enforcement of any Finance Document, provided that certain enforcement actions may require a Finance Party to qualify in applicable Relevant Jurisdictions.

19.31		Holding Company
		Except as may arise under the Transaction Documents and for Acquisition Costs and except as set forth on the opening balance sheet of the Borrower, before the date of this Agreement the Borrower has not traded or incurred any liabilities or commitments (actual or contingent, present or future).
19.32		Pensions
19.32.1		Each Employee Plan is in compliance in form and operation with ERISA and the Code and all other applicable laws and regulations save where any failure to comply would not reasonably be expected to have a Material Adverse Effect.
19.32.2		Each Employee Plan which is intended to be qualified under Section 401(a) of the Code has been determined by the IRS to be so qualified or is in the process of being submitted to the IRS for approval or will be so submitted during the applicable remedial amendment period, and, nothing has occurred since the date of such determination that would adversely affect such determination (or, in the case of an Employee Plan with no determination, nothing has occurred that would materially adversely affect such qualification).
19.32.3		There exists no Unfunded Pension Liability with respect to any Employee Plan, except as would not have a Material Adverse Effect.
19.32.4		Neither any member of the Group nor any ERISA Affiliate is making or accruing an obligation to make contributions or has within any of the five calendar years immediately preceding the date of this Agreement made or accrued an obligation to make contributions to any Multiemployer Plan.
19.32.5		There are no actions, suits or claims pending against or involving an Employee Plan (other than routine claims for benefits) or, to the knowledge of the Borrower, any member of the Group or any ERISA Affiliate, threatened, which would reasonably be expected to be asserted successfully against any Employee Plan and, if so asserted successfully, would reasonably be expected either singly or in the aggregate to have a Material Adverse Effect.
19.32.6		Each member of the Group and any ERISA Affiliate has made all contributions to or under each such Employee Plan required by law within the applicable time limits prescribed thereby, the terms of such Employee Plan, or any contract or agreement requiring contributions to an Employee Plan save where any failure to comply would not reasonably be expected to have a Material Adverse Effect.
19.32.7		Neither any member of the Group nor any ERISA Affiliate has ceased operations at a facility so as to become subject to the provisions of Section 4062(e) of ERISA, withdrawn as a substantial employer so as to become subject to the provisions of Section 4063 of ERISA, or ceased making contributions to any Employee Plan subject to Section 4064(a) of ERISA to which it made contributions.
19.32.8		Neither any member of the Group nor any ERISA Affiliate has incurred or reasonably expects to incur any liability to PBGC save for any liability for premiums due in the ordinary course or other liability which would not reasonably be expected to have a Material Adverse Effect.
19.32.9		No ERISA Event has occurred or is reasonably expected to occur. None of the assets of the Group or any ERISA Affiliates is subject to a lien under ERISA or Section 330 of the Code.

19.33		Net Surplus
		On the First Utilisation Date, the Consolidated Net Surplus is, or will be, not less than US$213,000,000.
19.34		Federal Reserve Obligations
19.34.1		No member of the Group is engaged nor will it engage principally, or as one of its important activities, in the business of owning or extending credit for the purpose of buying or carrying any Margin Stock.
19.34.2		None of the proceeds of the Loans or other extensions of credit under this Agreement will be used, directly or indirectly, for the purpose of buying or carrying any Margin Stock, for the purpose of reducing or retiring any Indebtedness that was originally incurred to buy or carry any Margin Stock or for any other purpose which might cause all or any Loans or other extensions of credit under this Agreement to be considered a purpose credit within the meaning of Regulation U or Regulation X.
19.34.3		No member of the Group nor any agent acting on its behalf has taken or will take any action which might cause the Finance Documents to violate any regulation of the Board of Governors of the Federal Reserve System of the United States.
19.35		Investment Companies
		No member of the Group is an investment company or an affiliated person of an investment company as such terms are defined in the Investment Company Act of 1940 of the United States (1940 Act) or otherwise subject to regulation under the 1940 Act or subject to regulation under the Public Utility Holding Company Act 2005, the Federal Power Act of 1935 of the United States or the 1940 Act or any United States federal or state statute or regulation restricting or limiting its ability to incur indebtedness excluding insurance regulations.
19.36		Anti-Terrorism Laws
19.36.1		No member of the Group or, to the knowledge of any of the Obligors, any of their Affiliates, is in violation of any laws relating to terrorism or money laundering (Anti-Terrorism Laws), including Executive Order No. 13224 on Terrorist Financing, effective September 24, 2001 (Executive Order), and the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Public Law 107-56.
19.36.2		No member of the Group or, to the knowledge of any of the Obligors, any of their Affiliates, or their respective brokers or other agents acting or benefiting in any capacity in connection with the Facility, is any of the following:

	(a)		a person or entity that is listed in the annex to, or is otherwise subject to the provisions of, the Executive Order;
	(b)		a person or entity owned or controlled by, or acting for or on behalf of, any person or entity that is listed in the annex to, or is otherwise subject to the provisions of, the Executive Order;
	(c)		a person or entity with which any Lender is prohibited from dealing or otherwise engaging in any transaction by any Anti-Terrorism law;
	(d)		a person or entity that commits, threatens or conspires to commit or supports terrorism as defined in the Executive Order; or

(e)

a person or entity that is named as a specially designated national and blocked person on the most current list published by the US Treasury Department Office of Foreign Asset Control at its official website or any replacement website or other replacement official publication of such list.

19.36.3		No member of the Group or, to the knowledge of any Obligor, any of its brokers or other agents acting in any capacity in connection with the Facility (i) conducts any business or engages in making or receiving any contribution of funds, goods or services to or for the benefit of any person described in paragraph (b) above, (ii) deals in, or otherwise engages in any transaction relating to, any property or interests in property blocked pursuant to the Executive Order, or (iii) engages in or conspires to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any of the prohibitions set forth in any Anti-Terrorism Law.
19.37		Times when representations made
19.37.1		All the representations and warranties in this Clause 19 are made by each Original Obligor on the date of this Agreement except for the representations and warranties set out in (a) Clause 19.12 (No misleading information) which are deemed to be made by each Obligor (i) with respect to the Information Memorandum on the date the Information Memorandum is approved by the Borrower and (ii) with respect to the Information Package, on the date of this Agreement, on the First Utilisation Date and on any later date on which the Information Package (or part of it) is released to an Arranger for distribution in connection with syndication and (b) Clause 19.21 (Ownership) to the extent that it relates to ownership of any member of the Target Group.
19.37.2		All the representations and warranties in this Clause 19 are deemed to be made by each Obligor on the First Utilisation Date other than Clauses 19.12.8 to 19.12.9 (No misleading information).
19.37.3		The representations and warranties in Clauses 19.12.1 to 19.12.7 (No misleading information) are also deemed to be made by each Obligor on the Syndication Date.
19.37.4		The Repeating Representations are deemed to be made by each Obligor on the date of each Utilisation Request, on each Utilisation Date and on the first day of each Interest Period (except that those contained in Clauses 19.13.1 to 19.13.4 (Original Financial Statements) will cease to be so made once subsequent financial statements have been delivered under this Agreement).
19.37.5		All the representations and warranties in this Clause 19 except Clause 19.12 (No misleading information), Clause 19.24 (Group Structure Chart), Clause 19.27 (Acquisition Documents, Disclosures and other Documents) and Clause 19.31 (Holding Company) are deemed to be made by each Additional Obligor on the day on which it becomes (or it is proposed that it becomes) an Additional Obligor.
19.37.6		Each representation or warranty deemed to be made after the date of this Agreement shall be deemed to be made by reference to the facts and circumstances existing at the date the representation or warranty is deemed to be made.
19.37.7		Notwithstanding anything to the contrary contained in this Agreement and any Finance Document, including without limitation Sections 19.4(a) (Non-conflict with other obligations), 19.5.1 (Power and Authority), 19.6.1(a) (Validity and admissibility in evidence), 19.9 (No filing or stamp taxes), 19.30.1 (No adverse consequences) and 22.1 (Authorisations), with respect to the performance by any

Obligor in connection with the exercise of certain rights and remedies under the Transaction Security Documents, notice, consents or approvals may be required under the Insurance Code.

20		Information Undertakings
20.1		General
		The undertakings in this Clause 20 remain in force from the date of this Agreement for so long as any amount is outstanding under the Finance Documents or any Commitment is in force.
		In this Clause 20:

	(a)		Annual Financial Statements: means the financial statements for a Financial Year delivered pursuant to Clause 20.2 (Financial statements).
	(b)		Quarterly Financial Statements: means the financial statements for a Financial Quarter delivered pursuant to Clause 20.2 (Financial statements).

20.2		Financial statements
20.2.1		The Borrower shall deliver to the Agent in sufficient copies for all the Lenders:

(a)

	(i)		as soon as they are available, but in any event within 150 days after the end of each of its Financial Years:
	(A)		the audited consolidated financial statements of the Borrower for that Financial Year: and
	(B)		the audited statutory financial statement of each Regulated Insurance Entity for that Financial Year; and
	(ii)		as soon as they are available, but in any event within 60 days after the end of the Financial Year, the unaudited statutory annual financial statement of each Regulated Insurance Entity for that Financial Year;

(b)

as soon as they are available, but in any event within 45 days after the end of each Financial Quarter of each of its Financial Years (excluding the quarter ended December 31, which shall be governed by Section 20.2.1(a) above), the unaudited consolidated Quarterly Financial Statement of the Borrower and the unaudited statutory Quarterly Financial Statement of each Regulated Insurance Entity for that Financial Quarter, to include:

	(i)		(in the case of the Borrower only) details of all Disposal Proceeds as defined in Clause 8.2 (Disposal, Insurance, Acquisition Proceeds and Target Distributions);
	(ii)		(in the case of the Borrower only) details of all surpluses in any fund or funds of each member of the Group which is an insurance company;
	(iii)		(in the case of the Borrower only) a summary of cash realisations of each of the Target Group;
	(iv)		(in the case of the Borrower only) details of the proceeds of the cash realisations of each of the Target Group;

(v)

a discussion of major incurred claims movements with appropriate narrative;

	(c)		as soon as it is available but in any event within 30 days after the start of each of its Financial Years, an updated forecast of cashflows for the Group for that Financial Year in the same form as the Forecast Cash Flows;
	(d)		as soon as they are available, but in any event within 45 days after the end of each Financial Quarter of each of its Financial Years:

	(i)		a written breakdown of all reinsurance and retrocession balances of the Group at the end of that Financial Quarter including details of the counterparty from whom such balances are owed, an ageing of such balances, and details of any movements in any receivables and recoveries made during such period; and
	(ii)		details of any bad debt or other provisions held by the Group at the end of that Financial Quarter including details of changes made in relation to such bad debts or other provisions together with the reasons for such provisions being made.

(e)

As soon as it is available but in any event within 30 days after the start of each of its Financial Years an actuarial review (including a study of actual reserves) conducted by a duly qualified actuarial company in respect of the Target Group.

20.3		Provision and contents of Compliance Certificate
20.3.1		The Borrower shall supply a Compliance Certificate to the Agent with each set of its audited consolidated Annual Financial Statements and each set of its consolidated Quarterly Financial Statements.
20.3.2		The Compliance Certificate shall, amongst other things, set out (in reasonable detail) computations as to compliance with Clause 21 (Financial Covenants) including confirmation that the Borrower is in compliance with Clause 21.2.1(c) (Requisite Rating).
20.3.3		Each Compliance Certificate shall be signed by two directors one of whom must be the Chief Financial Officer of the Group and, if required to be delivered with the consolidated Annual Financial Statements of the Borrower, shall be reported on by the Borrower’s Auditors in the form agreed by the Borrower and the Majority Lenders.
20.4		Requirements as to financial statements
20.4.1		The Borrower shall procure that each set of Annual Financial Statements and Quarterly Financial Statements includes a balance sheet, profit and loss account and cashflow statement as required by SAP in the case of each Regulated Insurance Entity and GAAP in the case of the Borrower. In addition the Borrower shall procure that:

	(a)		each set of Annual Financial Statements shall be audited by the Auditors;
	(b)		each set of Quarterly Financial Statements of the Borrower includes:

(i)

a cashflow forecast in respect of the Group relating to the twelve month period commencing at the end of the relevant Financial Quarter; and

(ii)

a statement by the directors of the Borrower commenting on the performance of the Group for the quarter to which the financial statements relate and the Financial Year to date and any material developments or material proposals affecting the Group or its business.

20.4.2

Each set of financial statements delivered pursuant to Clause 20.2 (Financial Statements):

	(a)		shall be certified by the Chief Financial Officer of the Borrower as giving a true and fair view of (in the case of Annual Financial Statements for any Financial Year), or fairly representing (in other cases), the financial condition and operations of the relevant person or persons covered by those financial statements as at the date as at which those financial statements were drawn up and, in the case of the Annual Financial Statements, shall be accompanied by any letter addressed to the management of the relevant company by the Auditors and accompanying those Annual Financial Statements;
	(b)		in the case of consolidated financial statements of the Borrower, shall be accompanied by a statement by the Chief Financial Officer of the Borrower comparing actual performance for the period to which the financial statements relate to the actual performance for the corresponding period in the preceding Financial Year of the Group; and
	(c)		shall be prepared using the Accounting Principles, accounting practices and financial reference periods consistent with those applied in the preparation of the Original Financial Statements of the Obligor or other member of the Group concerned, unless, in relation to any set of financial statements, the Borrower notifies the Agent that there has been a change in the Accounting Principles or the accounting practices and its Auditors (or, if appropriate, the Auditors of the Obligor) deliver to the Agent:

	(i)		a description of any change necessary for those financial statements to reflect the Accounting Principles or accounting practices upon which the Original Financial Statements of the Obligor or other member of the Group concerned were prepared; and
	(ii)		sufficient information, in form and substance as may be reasonably required by the Agent, to enable the Lenders to determine whether Clause 21 (Financial Covenants) has been complied with and to make an accurate comparison between the financial position indicated in those financial statements and the Original Financial Statements of the Obligor or other member of the Group concerned.

(d)

Any reference in this Agreement to any financial statements shall be construed as a reference to those financial statements as adjusted to reflect the basis upon which the Original Financial Statements were prepared.

20.4.3

If the Agent receives a report from the Borrower’s Auditors pursuant to Clause 20.4.2(c) above, the Majority Lenders (in consultation with the Borrower and the Auditors) may require such changes to the covenants set out in Clause 21 (Financial Covenants) as are necessary solely to reflect the changes notified to them.

20.4.4

If the Agent wishes to discuss the financial position of any member of the Group with the Auditors, the Agent may notify the Borrower, stating the questions or issues which the Agent wishes to discuss with the Auditors. In this event, the Borrower must ensure that the Auditors are authorised (at the expense of the Borrower):

	(a)		to discuss the financial position of each member of the Group with the Agent on request from the Agent;
	(b)		to verify any financial information required by the Finance Documents to be provided to the Agent;
	(c)		to disclose to the Agent for the Finance Parties any information which the Agent may reasonably request; and
	(d)		to verify any figures required to calculate the financial covenants in Clause 21 (Financial covenants) or the Margin.

20.5		Presentations
		Once in every Financial Year, or more frequently if requested to do so by the Agent if a Lender reasonably suspects a Default is continuing or may have occurred or may occur, at least two directors of the Borrower (one of whom shall be the Chief Financial Officer of the Borrower) must give a presentation to the Finance Parties in London about the on-going business and financial performance of the Group.
20.6		Year-end
20.6.1		The Borrower shall procure that the end of each Financial Year of each member of the Group falls on 31 December.
20.6.2		The Borrower shall procure that each quarterly accounting period and each Financial Quarter of each member of the Group ends on a Quarter Date.
20.7		Information: miscellaneous
		The Borrower shall supply to the Agent (in sufficient copies for all the Lenders, if the Agent so requests):

	(a)		within 30 days after submission to the relevant governmental on regulatory authority, all returns required to be prepared by any member of the Group in accordance with any applicable law, rule, regulation or direction of the Bermuda Monetary Authority, the SEC or any other Governmental Authority;
	(b)		at the same time as they are dispatched, copies of all documents dispatched by the Borrower to its shareholders generally (or any class of them) or dispatched by the Borrower or any Obligors to its creditors generally (or any class of them) (excluding documents provided to persons insured under policies or contracts of insurance or reinsurance written or assumed in the ordinary course of business by any of the Regulated Insurance Entities);
	(c)		promptly upon becoming aware of them, the details of any litigation, arbitration or administrative proceedings which are current, threatened or pending against any member of the Group (excluding those relating to policies or contracts of insurance or reinsurance written or assumed in the ordinary course of business by any of the Regulated Insurance Entities), and which, if adversely determined would involve a liability, or a potential or alleged liability, exceeding £100,000 (or its equivalent in other currencies);

	(d)		promptly upon becoming aware of the relevant claim, the details of any claim which is current, threatened or pending against the Vendor or any other person in respect of the Acquisition Documents and details of any disposal or insurance claim which will require a prepayment under Clause 8.2 (Disposal, Insurance, Acquisition Proceeds and Target Distributions);
	(e)		promptly, such information as the Security Agent may reasonably require about the Charged Property and compliance of the Obligors with the terms of any Transaction Security Documents; and
	(f)		promptly on request, such further information regarding the financial condition, assets and operations of the Group and/or any member of the Group (including any requested amplification or explanation of any item in the financial statements, budgets or other material provided by any Obligor under this Agreement and an up to date copy of its shareholders’ register (or equivalent in its jurisdiction of incorporation)) as any Finance Party through the Agent may reasonably request.

20.8		Notification of default
20.8.1		Each Obligor shall notify the Agent of any Default (and the steps, if any, being taken to remedy it) promptly upon becoming aware of its occurrence (unless that Obligor is aware that a notification has already been provided by another Obligor).
20.8.2		Promptly upon a request by the Agent, the Borrower shall supply to the Agent a certificate signed by two of its directors or senior officers on its behalf certifying that no Default is continuing (or if a Default is continuing, specifying the Default and the steps, if any, being taken to remedy it).
20.9		“Know your customer” checks
20.9.1		If:

	(a)		the introduction of or any change in (or in the interpretation, administration or application of) any law or regulation made after the date of this Agreement;
	(b)		any change in the status of an Obligor or the composition of the shareholders of an Obligor after the date of this Agreement; or
	(c)		a proposed assignment or transfer by a Lender of any of its rights and/or obligations under this Agreement to a party that is not a Lender prior to such assignment or transfer,
	(d)		obliges the Agent or any Lender (or, in the case of Clause 20.9.1(c) above, any prospective new Lender) to comply with “know your customer” or similar identification procedures in circumstances where the necessary information is not already available to it, each Obligor shall (and the Borrower shall ensure that each Obligor shall) promptly upon the request of the Agent or any Lender supply, or procure the supply of, such documentation and other evidence as is reasonably requested by the Agent (for itself or on behalf of any Lender) or any Lender (for itself or, in the case of the event described in Clause 20.9.1(c) above, on behalf of any prospective new Lender) in order for the Agent, such Lender or, in the case of the event described in Clause 20.9.1(c) above, any prospective new Lender to carry out and be satisfied with the results of all necessary “know your customer” or other checks in relation to any relevant person pursuant to the transactions contemplated in the Finance Documents.

20.9.2		Each Lender shall promptly upon the request of the Agent supply, or procure the supply of, such documentation and other evidence as is reasonably requested by the Agent (for itself) in order for the Agent to carry out and be satisfied with the results of all necessary “know your customer” or other checks on Lenders or prospective new Lenders pursuant to the transactions contemplated in the Finance Documents.
20.9.3		The Borrower shall, by not less than 10 Business Days’ prior written notice to the Agent, notify the Agent (which shall promptly notify the Lenders) of its intention to request that one of its Subsidiaries becomes an Additional Obligor pursuant to Clause 25 (Changes to the Obligors).
20.9.4		Following the giving of any notice pursuant to Clause 20.9.3 above, if the accession of such Additional Obligor obliges the Agent or any Lender to comply with “know your customer” or similar identification procedures in circumstances where the necessary information is not already available to it, the Borrower shall promptly upon the request of the Agent or any Lender supply, or procure the supply of, such documentation and other evidence as is reasonably requested by the Agent (for itself or on behalf of any Lender) or any Lender (for itself or on behalf of any prospective new Lender) in order for the Agent, or such Lender or any prospective new Lender to carry out and be satisfied it has complied with all necessary “know your customer” or other checks in relation to any relevant person pursuant to the accession of such Subsidiary to this Agreement as an Additional Obligor.
20.10		ERISA-Related Information
		The Borrower shall supply to the Agent (in sufficient copies for all the Lenders, if the Agent so requests):

	(a)		promptly and in any event within fifteen days after any member of the Group or any ERISA Affiliate files a Schedule B (or such other schedule as contains actuarial information) to IRS Form 5500 in respect of an Employee Plan with Unfunded Pension Liabilities, a copy of such IRS Form 5500 (including the Schedule B);
	(b)		promptly and in any event within thirty days after any member of the Group or any ERISA Affiliate knows or has reason to know that any ERISA Event has occurred, the written statement of the Chief Financial Officer of such member of the Group or ERISA Affiliate, as applicable, describing such ERISA Event and the action, if any, which it proposes to take with respect to such ERISA Event and a copy of any notice filed with the PBGC or the IRS pertaining to such ERISA Event; providing that, in the case of ERISA Events under paragraph (d) of its definition, the 30 (thirty) day period set forth above shall be a 10 (ten) day period, and, in the case of ERISA Events under paragraph (b) of its definition, in no event shall notice be given later than the occurrence of the ERISA Event; and
	(c)		promptly, and in any event within thirty days, after becoming aware that there has been (A) a material increase in Unfunded Pension Liabilities; (B) the existence of potential withdrawal liability under Section 4201 of ERISA, if the Borrower and its ERISA Affiliates were to completely or partially withdraw from all Multiemployer Plans; (C) the adoption of, or the commencement of contributions to, any Employee Plan subject to Section 412 of the Code by any member of the Group or any ERISA Affiliate; or (D) the adoption of any amendment to an Employee Plan subject to Section 412 of the Code which results in a material increase in contribution obligations of any Obligor, the

detailed written description of such Employee Plan from the Chief Financial Officer of each affected member of the Group or ERISA Affiliate, as applicable.

20.11		Tax Documentation
		Any non-US Lender that is entitled to an exemption from or reduction of withholding tax under United States law, or any treaty to which the United States is a party, with respect to payments hereunder or under any other Finance Document shall deliver to the Borrower (with a copy to the Agent), at the time or times reasonably requested by the Borrower or the Agent, such properly completed and executed documentation prescribed by applicable law as will permit such payments to be made without withholding or at a reduced rate of withholding. In addition, any Lender, if requested by the Borrower or the Agent, shall deliver such other documentation prescribed by applicable law or reasonably requested by the Borrower or the Agent as will enable the Borrower or the Agent to determine whether or not such Lender is subject to backup withholding or information reporting requirements.
		Without limiting the generality of the foregoing, any non-US Lender shall use its reasonable endeavours to deliver to the Borrower and the Agent (in such number of copies as shall be reasonably requested by the recipient) the following:

(a)

on or prior to the date on which such non-US Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Agent, but only if such non-US Lender is legally entitled to do so), whichever of the following is applicable:

	(i)		duly completed copies of Internal Revenue Service Form W-8BEN claiming eligibility for benefits of an income tax treaty to which the United States of America is a party;
	(ii)		duly completed copies of Internal Revenue Service Form W-8ECI;
	(iii)		in the case of a non-U.S. Lender claiming the benefits of the exemption for portfolio interest under section 881(c) of the Code, (x) a certificate to the effect that such non-US Lender is not (A) a “bank” within the meaning of section 881(c)(3)(A) of the Code, (B) a “10 percent shareholder” of the Borrower within the meaning of section 881(c)(3)(B) of the Code, or (C) a “controlled foreign corporation” described in section 881(c)(3)(C) of the Code and (y) duly completed copies of Internal Revenue Service Form W-8BEN; or
	(iv)		any other form prescribed by applicable law as a basis for claiming exemption from or a reduction in United States Federal withholding tax duly completed together with such supplementary documentation as may be prescribed by applicable law to permit the Borrower to determine the withholding or deduction required to be made; and

(b)

for payments made after 31 December 2012, by the later of (a) the date on which a non-U.S. Lender becomes a Lender hereunder or (b) 30 days prior to the date on which a payment after December 31, 2012 to such non-U.S. Lender is due, evidence of such non-US Lender’s agreement with the Secretary of the Treasury pursuant to Section 1471(b) of the Internal

Revenue Code, or, in the case of a non-US Lender that is a non-financial foreign entity under Section 1472 of the Internal Revenue Code, (a) a certification that such non-US Lender does not have any substantial United States owners or (b) the name, address and TIN of each substantial United States owner of the non-US Lender. For purposes of the preceding sentence, “substantial United States owners” shall have the meaning set forth in Section 1473(2) of the Internal Revenue Code.

21		Financial Covenants
21.1		Financial definitions
		In this Clause 21:

	(a)		Actual Statutory Surplus means, at any time, the surplus figure on Line 35 of Page 3 of the most recent financial statements of the relevant member of the Group delivered pursuant to Clause 20.2 (Financial statements) and determined in accordance with SAP. References to amounts on particular lines and pages of the financial statements are based on the format promulgated by the Authority for the Original Financial Statements. If such format is changed in future years so that different information is contained in such items or they no longer exist, it is understood that the reference is to information consistent with that reported in the referenced item in the Original Financial Statements of that entity.
	(b)		Consolidated Net Surplus means, at any time, the aggregate Actual Statutory Surplus of the relevant member of the Group based on the most recent Annual Financial Statements delivered pursuant to Clause 20.2 (Financial statements).
	(c)		Facility Debt: means on the last day of the Relevant Period, the aggregate of the Group’s consolidated Financial Indebtedness in respect of the Facility.
	(d)		Financial Quarter: means the period commencing on the day after one Quarter Date and ending on the next Quarter Date.
	(e)		Financial Year: means each period of twelve months ending on 31 December.
	(f)		Net Surplus Cover: means the ratio of Consolidated Net Surplus to Facility Debt.
	(g)		Quarter Date: means each of 31 March, 30 June, 30 September and 31 December.
	(h)		Regulatory Cover: means, with respect to any Regulated Insurance Entity, the ratio of Actual Statutory Surplus to the Authorised Control Level Risk Based Capital (as defined by the NAIC) of such Regulated Insurance Entity.
	(i)		Relevant Period: means each period of twelve months (or, if shorter, the period from the date of this Agreement) ending on each Quarter Date.

21.2		Financial condition
21.2.1		The Borrower shall ensure that:

(a)

Regulatory Cover: Regulatory Cover of the Target and each Regulated Insurance Entity shall at all times exceed 1.1:1;

	(b)		Minimum Net Surplus Cover: Net Surplus Cover shall not at any time be less than 2:1; and
	(c)		Requisite Rating:

(i)

the short term rating and/or long term rating of fixed income investments held by the Target Group:

	(a)		shall have a rating of not less than BBB- from the Rating Agency and no more than 20% of the total value of such investments shall have a rating of BBB or below from the Rating Agency;
	(b)		shall at all times have a minimum weighted average rating of at least AA from the Rating Agency;

	(ii)		the maximum duration in the cash and fixed income portfolios held by the Target Group shall be no greater than five years; and
	(iii)		no more than 12.5% of the total value of investments of the Target Group shall be held in investments that are not cash or fixed income investments.

21.3		Financial testing
21.3.1		The financial covenants set out in Clauses 21.2.1(a) (Regulatory cover) and 21.2.1(b) (Minimum Net Surplus Cover) shall be calculated in accordance with the Accounting Principles and tested first by reference to the Quarterly Financial Statements and where available, by reference to the Annual Financial Statements (each delivered in accordance with Clause 20.2 (Financial Statements) and each Compliance Certificate delivered pursuant to Clause 20.3 (Provision and contents of Compliance Certificate)).
21.3.2		No item shall be deducted or credited more than once in any calculation.
21.3.3		Where an amount in any financial statement or Compliance Certificate is not denominated in US Dollars, it shall be converted into US Dollars at the rate specified in the financial statements so long as such rate has been set in accordance with the Accounting Principles.
21.3.4		The financial covenants in Clauses 21.2.1(a) (Regulatory Cover) and 21.2.1(b) (Minimum Net Surplus Cover) of Clause 21.2 (Financial condition) shall apply on a continuing basis but shall be tested on each Quarter Date commencing with the 30 June 2011 Quarter Date.
21.4		Equity cure- Regulatory Cover
21.4.1		No Event of Default under Clause 23.2 (Financial Covenants and other obligations) in relation to Clauses 21.2.1(a) (Regulatory Cover) will occur if:

(a)

the proceeds of an additional contributed surplus or any Permitted Share Issue permitted by paragraph (b) of the definition of that term (which are designated in writing by the Borrower to the Agent as being provided for the purpose of this Clause 21.4 (Equity cure- Regulatory Cover)) and/or any debt (subordinated on terms approved by the Agent acting reasonably) (in each case the New Regulatory Investment) is invested in the relevant Regulated Insurance Entity within 5 Business Days of the date on which the Borrower becomes aware of a breach of Clause 21.2.1(a) (Regulatory Cover).

(b)

promptly following receipt by the relevant Regulated Insurance Entity of the proceeds of such New Regulatory Investment (and in any event prior to the expiry of such 5 Business Day period), a certificate signed by the finance director of the Borrower is delivered to the Agent confirming that on recalculating the Regulatory Cover financial covenant set out in Clause 21.2.1(a) (Regulatory Cover) would be complied with and attaching reasonable details of such calculations.

21.5		Equity cure- Net Surplus Cover
		No Event of Default under Clause 23.2 (Financial Covenants and other obligations) in relation to Clauses 21.2.1(b) (Minimum Net Surplus Cover) will occur if:

	(a)		the proceeds of an additional contributed surplus or any Permitted Share Issue permitted by paragraph (b) of the definition of that term (which are designated in writing by the Borrower to the Agent as being provided for the purpose of this Clause 21.5) and/or any debt (subordinated on terms approved by the Agent acting reasonably) (in each case the New Investment) is invested in the Borrower within 5 Business Days of the date on which the Borrower becomes aware of a breach of Clause 21.2.1(b) (Minimum Net Surplus Cover).
	(b)		promptly following receipt by the Borrower of the proceeds of such New Investment (and in any event prior to the expiry of such 5 Business Day period), a certificate signed by the finance director of the Borrower is delivered to the Agent confirming that on recalculating the financial covenant set out in Clause 21.2.1(b) (Minimum Net Surplus Cover) for the period (and for these purposes the amount of the New Investment shall be included in calculating Consolidated Net Surplus) in respect of which the breach arose, and on the basis that the New Investment is deemed to have been made immediately prior to the relevant Quarter Date, such financial covenant would be complied with (and such certificate shall attach reasonable details of such calculations).

		No more than two New Investments may be made until the Termination Date and no two New Investments may be made in consecutive Financial Quarters.
22		General Undertakings
		The undertakings in this Clause 22 remain in force from the date of this Agreement for so long as any amount is outstanding under the Finance Documents or any Commitment is in force.
22.1		Authorisations
		Each Obligor shall (and the Borrower shall ensure that each member of the Group will) promptly:

	(a)		obtain, comply with and do all that is necessary to maintain in full force and effect; and
	(b)		supply certified copies to the Agent of,

any Authorisation required under any law or regulation of a Relevant Jurisdiction to enable it to: (i) perform its obligations under the Finance Documents and the Acquisition Documents; (ii) ensure the legality, validity, enforceability or admissibility in evidence of any Finance Document or Acquisition Document; and (iii) carry on its business (including, without limitation, to transact insurance and

		reinsurance business) where failure to do so has or is reasonably likely to have a Material Adverse Effect.
22.2		Compliance with laws
		Each Obligor shall (and the Borrower shall ensure that each member of the Group will) comply in all respects with all federal and local laws, rules and regulations (including, without limitation, the establishment of all insurance reserves required to be established under SAP and applicable laws restricting the investments of each member of the Group) to which it may be subject, if failure so to comply has or is reasonably likely to have a Material Adverse Effect.
22.3		Taxation
22.3.1		Each Obligor shall (and the Borrower shall ensure that each member of the Group will) pay and discharge all Taxes imposed upon it or its assets within the time period allowed without incurring penalties unless and only to the extent that:

	(a)		such payment is being contested in good faith;
	(b)		adequate reserves are being maintained for those Taxes and the costs required to contest them have been disclosed in its latest financial statements delivered to the Agent under Clause 20.2.1(a) (Financial statements); and
	(c)		such payment can be lawfully withheld and failure to pay those Taxes does not have or is not reasonably likely to have a Material Adverse Effect.

22.3.2		No member of the Group may change its residence for Tax purposes in a way that would adversely affect the Tax treatment of such member’s payments to any Finance Party under this Agreement.
22.4		Merger
		Other than in the case of a Permitted Transaction which is referred to in paragraph (a) of the definition of that term, no Obligor shall (and the Borrower shall ensure that no other member of the Group will) enter into (or agree to enter into) any amalgamation, demerger, merger, consolidation or corporate reconstruction other than any solvent liquidation or reorganisation.
22.5		Change of business
		The Borrower shall procure that no substantial change is made to the general nature of the business of the Borrower or the Group taken as a whole from that carried on by the Target Group at the date of this Agreement.
22.6		Acquisitions
		Other than in the case of a Permitted Transaction, which is referred to in paragraph (a) or (c) of the definition of that term, or the Acquisition no Obligor shall (and the Borrower shall ensure that no other member of the Group will):

	(a)		acquire a company or any shares or securities or a business or undertaking (or, in each case, any interest in any of them); or
	(b)		incorporate a company.

22.7		Joint ventures
		No Obligor shall (and the Borrower shall ensure that no member of the Group will):

	(a)		enter into, invest in or acquire (or agree to acquire) any shares, stocks, securities or other interest in any Joint Venture; or
	(b)		transfer any assets or lend to or guarantee or give an indemnity for or give Security for the obligations of a Joint Venture or maintain the solvency of or provide working capital to any Joint Venture (or agree to do any of the foregoing).

22.8		Holding Companies
		The Borrower shall not trade, carry on any business, own any assets or incur any liabilities except for:

	(a)		the provision of administrative services (excluding treasury services) to other members of the Group of a type customarily provided by a holding company to its Subsidiaries;
	(b)		ownership of shares in its Subsidiaries, intra-Group debit balances, intra-Group credit balances and other credit balances in bank accounts, cash and Cash Equivalent Investments but only if those shares, credit balances, cash and Cash Equivalent Investments are subject to the Transaction Security; or
	(c)		any liabilities under the Transaction Documents to which it is a party and professional fees and administration costs in the ordinary course of business as a holding company,

		and this Clause 22.8 shall prevail if but for this Clause a transaction would otherwise be a Permitted Disposal, Permitted Financial Indebtedness, a Permitted Guarantee, a Permitted Loan, Permitted Security or a Permitted Transaction or be permitted by Clause 22.27 (Intra-Group Transactions).
22.9		Preservation of assets
		Each Obligor shall (and the Borrower shall ensure that each member of the Group will) maintain in good working order and condition (ordinary wear and tear excepted) all of its assets necessary or desirable in the conduct of its business if failure to do so has or is reasonably likely to have a Material Adverse Effect.
22.10		Pari passu ranking
		Each Obligor shall ensure that at all times any unsecured and unsubordinated claims of a Finance Party against it under the Finance Documents rank at least pari passu with the claims of all its other unsecured and unsubordinated creditors except those creditors whose claims are mandatorily preferred by laws of general application to companies.
22.11		Acquisition Documents
22.11.1		The Borrower shall promptly pay all amounts payable to the Vendor under the Acquisition Documents as and when they become due (except to the extent that any such amounts are being contested in good faith by a member of the Group and where adequate reserves are set aside for any such payment).
22.11.2		The Borrower shall (and will procure that each relevant member of the Group will), take all reasonable and practical steps to preserve and enforce its rights (or the rights of any other member of the Group) and pursue any claims and remedies arising under any Acquisition Documents.

22.11.3		No Obligor shall (and the Borrower shall procure that no relevant member of the Group will) amend, vary, novate, supplement, supercede, waive or terminate any term of an Acquisition Document without the prior written consent of the Agent (such consent not to be unreasonably withheld or delayed)
22.12		Negative pledge
22.12.1		Except as permitted under Clause 22.12.2 below:

	(a)		No Obligor shall (and the Borrower shall ensure that no other member of the Group will) create or permit to subsist any Security over any of its assets.
	(b)		No Obligor shall (and the Borrower shall ensure that no other member of the Group will) sell, transfer or otherwise dispose of any of its receivables.
	(c)		No Obligor shall (and the Borrower shall ensure that no other member of the Group will):

	(i)		sell, transfer or otherwise dispose of any of its assets on terms whereby they are or may be leased to or re-acquired by any other member of the Group;
	(ii)		enter into any arrangement under which money or the benefit of a bank or other account may be applied, set-off or made subject to a combination of accounts; or
	(iii)		enter into any other preferential arrangement having a similar effect,

in circumstances where the arrangement or transaction is entered into primarily as a method of raising Financial Indebtedness or of financing the acquisition of an asset. A transaction referred to in this paragraph (c) is termed Quasi-Security.

22.12.2

Clause 22.12.1 above does not apply to any Security or (as the case may be) Quasi-Security, which is:

	(i)		Permitted Security; or
	(ii)		given under the Finance Documents

22.13		Disposals
22.13.1		Except as permitted under Clause 22.13.2 below, no Obligor shall (and the Borrower shall ensure that no member of the Group will) enter into a single transaction or a series of transactions (whether related or not) and whether voluntary or involuntary to sell, lease, transfer, licence or otherwise dispose of any asset.
22.13.2		Clause 22.13.1 above does not apply to any sale, lease, transfer or other disposal which is:

	(a)		a Permitted Disposal; or
	(b)		a Permitted Transaction which is referred to in paragraph (a) of the definition of that term.

22.14		Arm’s length basis
22.14.1		Except as permitted by Clause 22.14.2 below, no Obligor shall (and the Borrower shall ensure no member of the Group will) enter into any transaction with any person except on bona fide arm’s length terms.
22.14.2		The following transactions shall not be a breach of Clause 22.14.1:

	(a)		intra-Group transactions permitted under Clause 22.27 (Intra-Group transactions);
	(b)		fees, costs and expenses payable under the Transaction Documents in the amounts set out in the Transaction Documents delivered to the Agent under Clause 4.1 (Initial conditions precedent) or agreed by the Agent; and
	(c)		the provision of administrative services by an Affiliate of the Borrower to any Obligor (at the date of this Agreement the Borrower contemplates the Affiliate will be Enstar (US), Inc.) provided that any payments under such transactions shall remain subject to the restrictions in Clause 22.17.1 (Dividends and share redemption).

22.15		Loans or credit
22.15.1		Except as permitted under Clause 22.15.2 below, no Obligor shall (and the Borrower shall ensure that no member of the Group will) be a creditor in respect of any Financial Indebtedness.
22.15.2		Clause 22.15.1 above does not apply to:

	(a)		a Permitted Loan (which is consistent with Clause 22.8 (Holding Companies)); or
	(b)		a Permitted Transaction which is referred to in paragraph (a) of the definition of that term; or
	(c)		a Permitted Distribution.

22.16		No Guarantees or indemnities
22.16.1		Except as permitted under Clause 22.16.2 below, no Obligor shall (and the Borrower shall ensure that no member of the Group will) incur or allow to remain outstanding any guarantee, bond or indemnity in respect of any obligation of any person.
22.16.2		Clause 22.16.1 above does not apply to a guarantee, bond or indemnity which is:

	(a)		a Permitted Guarantee (which is consistent with Clause 22.8 (Holding Companies);
	(b)		a Permitted Transaction which is referred to in paragraph (a) of the definition of that term; or
	(c)		a policy or contract of insurance or reinsurance written or assumed in the ordinary course of business by any of the Regulated Insurance Entities.

22.17		Dividends and share redemption
22.17.1		Except as permitted under 22.18.2 below, the Borrower shall not (and will ensure that no other member of the Group will):

	(a)		declare, make or pay any dividend, charge, fee or other distribution (or interest on any unpaid dividend, charge, fee or other distribution) (whether in cash or in kind) on or in respect of its share capital (or any class of its share capital) or any additional paid in capital;
	(b)		repay or distribute any dividend or share premium reserve;
	(c)		pay or allow any member of the Group to pay any management, advisory or other fee to or to the order of any of the shareholders of the Borrower; or
	(d)		redeem, repurchase, defease, retire, reduce, cancel or repay any of its share capital or resolve to do so.

22.17.2

Clause 22.17.1 above does not apply to:

	(a)		a Permitted Distribution;
	(b)		a Permitted Payment; or
	(c)		a Permitted Transaction which is referred to in paragraph (a) of the definition of that term.

22.18		Financial Indebtedness
22.18.1		Except as permitted under Clause 22.18.2 below, no Obligor shall (and the Borrower shall ensure that no member of the Group will) incur or allow to remain outstanding any Financial Indebtedness.
22.18.2		Clause 22.18.1 above does not apply to Financial Indebtedness which is:

	(a)		Permitted Financial Indebtedness; or
	(b)		contemplated by paragraph (a) of the definition of Permitted Transaction.

22.19		Share capital
		No Obligor shall (and the Borrower shall ensure no member of the Group will) issue any shares except pursuant to a Permitted Share Issue.
22.20		Compliance with ERISA
		No Obligor shall:

	(a)		allow, or permit any of its ERISA Affiliates to allow, (i) any Employee Plan with respect to which any member of the Group or any of its ERISA Affiliates may have any liability to terminate, (ii) any member of the Group or ERISA Affiliates to withdraw from any Employee Plan or Multiemployer Plan, (iii) any ERISA Event to occur with respect to any Employee Plan, or (iv) any failure to meet the minimum funding standard (within the meaning of Section 302 of ERISA and Section 412 of the Code), whether or not waived, with respect to any of its Employee Plans; to the extent that any of the events described in (i), (ii), (iii) or (iv), singly or in the aggregate, would be reasonably likely to have a Material Adverse Effect;
	(b)		allow, or permit any of its ERISA Affiliates to allow an Unfunded Pension Liability to the extent that such Unfunded Pension Liability would be reasonably expected to result in material liability; or
	(c)		fail, or permit any of its ERISA Affiliates to fail, to comply in any material respect with ERISA or the related provisions of the Code, if any such non-

compliance, singly or in the aggregate, would be reasonably likely to have a Material Adverse Effect.

22.21		Access
		Each Obligor shall, and the Borrower shall ensure that each member of the Group will (not more than once in every Financial Year unless the Agent reasonably suspects a Default is continuing or may occur), permit the Agent and/or the Security Agent and/or accountants or other professional advisers and contractors of the Agent or Security Agent free access at all reasonable times and on reasonable notice at the risk and cost of the Obligor to (a) the premises, assets, books, accounts and records of each member of the Group and (b) meet and discuss matters with Richard Harris and David Rocke.
22.22		Intellectual Property
22.22.1		Each Obligor shall and the Borrower shall procure that each member of the Group will:

	(a)		preserve and maintain the subsistence and validity of the Intellectual Property necessary for its business;
	(b)		use reasonable endeavours (including the institution of legal proceedings) to prevent any infringement in any material respect of the Intellectual Property;
	(c)		promptly notify the Agent if it becomes aware of any infringement or challenge to the validity, enforceability or ownership of any Intellectual Property and supply the Security Agent with all information relating to it which is reasonably requested by the Agent;
	(d)		make registrations and pay all registration fees and taxes necessary to maintain the Intellectual Property in full force and effect and record its interest in that Intellectual Property;
	(e)		not use or permit the Intellectual Property to be used in a way or take any step or omit to take any step in respect of that Intellectual Property which may materially and adversely affect the existence or value of that Intellectual Property or imperil the right of any member of the Group to use such property; and
	(f)		not discontinue the use of the Specified Intellectual Property (as defined in any Transaction Security Document),

		where failure to do so in the case of Clause 22.22.1(a) and 22.22.1(b) above, or, in the case of Clauses 22.22.1(d) and 22.22.1(e) above, such use, permission to use, omission or discontinuation is reasonably likely to have a Material Adverse Effect — wording to be discussed.
22.22.2		Failure to comply with any part of Clause 22.22.1 above shall not be a breach of Clause 22.22.1 to the extent that any dealing with Intellectual Property which would otherwise be a breach of Clause 22.22.1 is contemplated by paragraph (a) of the definition of Permitted Transaction.
22.23		Amendments
		No Obligor shall (and the Borrower shall ensure that no other Obligor or member of the Group will) amend, vary, novate, supplement, supersede, waive or terminate any term of a Transaction Document or any other document delivered to the Agent pursuant to Clause 4.1 (Initial conditions precedent) or Clause 25 (Changes to the

Obligors) or enter into any agreement with any shareholders of the Borrower except in writing:

	(a)		in accordance with the provisions of Clause 35 (Amendments and Waivers) or the Subordination Deed; or
	(b)		prior to the First Utilisation Date, with the prior written consent of the Original Lenders; or
	(c)		after the First Utilisation Date, in a way which:

	(i)		could not reasonably be expected to materially and adversely affect the interests of the Lenders or the ranking and/or subordination arrangements provided for in the Subordination Deed; and
	(ii)		would not change the date, amount or method of payment of the dividends on the Borrower’s shares.

		The Borrower shall promptly supply to the Agent a copy of any document relating to any of the matters referred to in paragraphs (a) to (c) above.
22.24		Financial assistance
		Each Obligor shall (and the Borrower shall procure each member of the Group will) comply in all respects with any legislation governing the granting of financial assistance in its jurisdiction of incorporation including in relation to the execution of the Transaction Security Documents and payment of amounts due under this Agreement.
22.25		Treasury Transactions
		No Obligor shall (and the Borrower shall procure that no members of the Group will) enter into any Treasury Transaction.
22.26		Further assurance
22.26.1		Each Obligor shall (and the Borrower shall procure that each member of the Group will) promptly do all such acts or execute all such documents (including assignments, transfers, mortgages, charges, notices and instructions) as the Security Agent may reasonably specify and in such form as the Security Agent may reasonably require (in favour of the Security Agent or its nominee(s)) in order to:

	(a)		perfect or protect the Security created or intended to be created under or evidenced by the Transaction Security Documents (which may include the execution of a mortgage, charge, assignment or other Security over all or any of the assets which are, or are intended to be, the subject of the Transaction Security) or for the exercise of any rights, powers and remedies of the Security Agent or the Finance Parties provided by or pursuant to the Finance Documents or by law;
	(b)		confer on the Security Agent or confer on the Finance Parties, Security over any property and assets of that Obligor located in any jurisdiction which is (to the extent permitted by local law) equivalent or similar to the Security intended to be conferred by or pursuant to the Transaction Security Documents; and/or
	(c)		facilitate the realisation of the assets which are, or are intended to be, the subject of the Transaction Security.

22.26.2		Each Obligor shall (and the Borrower shall procure that each member of the Group shall) take all such action as is available to it (including making all filings and registrations) as may be necessary for the purpose of the creation, perfection, protection or maintenance of any Security conferred or intended to be conferred on the Security Agent or the Finance Parties by or pursuant to the Finance Documents.
22.27		Intra-Group transactions
22.27.1		Without the prior consent of the Agent, no member of the Group may enter into any transaction (whether by way of disposal, investment, loan, borrowing, guarantee or otherwise) with, or in respect of the obligations of, any other member of the Group save and except where such transaction is a Permitted Transaction and is not unlawful under any law or regulation in any relevant jurisdiction including under any applicable financial assistance legislation.
22.27.2		Without the prior consent of the Agent, no member of the Group may enter into any transaction (whether by way of disposal, investment, loan, borrowing, guarantee or otherwise) with, or in respect of the obligations of, Enstar or any of its Subsidiaries (excluding other members of the Group) where the value of such transaction exceeds US$100,000 save and except where such transaction is conducted in the ordinary course of trading on arm’s length terms or is a Permitted Transaction.
22.27.3		If the relevant intra-Group transaction contemplated by Clause 22.27.1 above:

	(a)		is a disposal of assets from one Obligor to another and if Transaction Security had been granted by the Obligor disposing of such asset then the asset must be either transferred subject to such Security or the acquiring Obligor must grant equivalent Security over that asset in favour of the Security Agent; or
	(b)		results in Financial Indebtedness being owed by an Obligor to another Obligor then the creditor of such Financial Indebtedness shall grant Security over its rights in respect of such Financial Indebtedness in favour of the Lenders on terms acceptable to the Agent (acting on the instructions of the Majority Lenders).

22.28		Cash Management
22.28.1		Subject to Clause 22.28.2 below, no Obligor shall and each Obligor will procure that none of its Subsidiaries will, at any time hold cash or Cash Equivalent Investments greater than required for its projected cashflow requirements (the amount being the Cash Balance) and such Cash Balance shall only be lent by such member of the Group by way of a Permitted Distribution.
22.28.2		No Obligor shall be obliged at any time to procure that a Subsidiary transfer any Cash Balance under Clause 22.28.1 above:

	(a)		at a time when to do so would cause the Obligor or the Subsidiary (despite that person using all reasonable effects to avoid the relevant Tax liability) to incur a materially greater Tax liability in respect of the Cash Balance than it would otherwise incur if the transfer were made at a later date;
	(b)		if (despite using all reasonable efforts to avoid the breach or the result) to do so would breach any applicable law, regulatory requirement or result in personal liability for the Obligor or the Subsidiary or any such person’s directors or management; or

(c)

which would leave an amount which is less than US$50,000 in that Subsidiary.

22.29		Obligors
22.29.1		The Borrower shall ensure that at all times after the date falling 10 days after the First Utilisation Date, each member of the Group is an Obligor.
22.29.2		The Borrower need only perform its obligations under Clause 22.29.1 above if it is not unlawful for the relevant person to become an Obligor and that person becoming an Obligor would not result in personal liability for that person’s directors or other management. Each Obligor must use, and must procure that the relevant person uses, all reasonable endeavours lawfully available to avoid any such unlawfulness or personal liability. This includes agreeing to a limit on the amount guaranteed. The Agent may (but shall not be obliged to) agree to such a limit if, in its opinion, to do so would avoid the relevant unlawfulness or personal liability.
22.30		Syndication
		The Borrower shall provide reasonable assistance to the Arranger in the preparation of the Information Memorandum and the primary syndication of the Facility (including, without limitation, by making senior management available for the purpose of making presentations to, or meeting, potential lending institutions) and will comply with all reasonable requests for information from potential syndicate members prior to completion of syndication.
22.31		Federal Reserve Regulations
		The Borrower will use the Facility without violating Regulations T, U and X.
22.32		Compliance with US Regulations
		No Obligor shall (and the Borrower shall ensure that no other member of the Group will) become an investment company, or an affiliated person of, or promoter or principal underwriter for, an investment company, as such terms are defined in the 1940 Act. Neither the making of any Loan, or the application of the proceeds or repayment of any Loan by any member of the Group nor the consummation of the other transactions contemplated by this agreement will violate any provision of such act or any rule, regulation or order of the SEC under the 1940 Act.
22.33		Anti-Terrorism Law
		No member of the Group shall (i) conduct any business or engage in making or receiving any contribution of funds, goods or services to or for the benefit of any person described in Clause 19.36 (Anti-Terrorism Laws) above, (ii) deal in, or otherwise engage in any transaction relating to, any property or interests in property blocked pursuant to the Executive Order or any other Anti-Terrorism Law, or (iii) engage in or conspire to engage in any transaction that evades or avoids, or has the purposes of evading or avoiding, or attempts to violate, any of the prohibitions set forth in any Anti-Terrorism Law (and the Borrower shall deliver to the Lenders any certificating or other evidence requested from time to time by any Lender or the Agent in its reasonable discretion, confirming such member of the Group’s compliance with this Clause 22.33.
22.34		Embargoed Person
		At all times through the term of the Facility, (a) none of the funds or assets of the Obligors that are used to repay the Facility shall constitute property of, or shall be

		beneficially owned directly or, to the knowledge of any Obligor, indirectly by, any person subject to sanctions or trade restrictions under United States law (Embargoed Person or Embargoed Persons) that is identified on (1) the List of Specially Designated Nationals and Blocked Persons maintained by the Office of Foreign Assets Control (OFAC) of the US Department of the Treasury, and/or to the knowledge of any Obligor, as at the date of this Agreement, based upon reasonable inquiry by such Obligor, on any other similar list maintained by OFAC pursuant to any authorising statute including, but not limited to, the International Emergency Economic Powers Act, 50 U.S.C. §§1701 et seq., The Trading with the Enemy Act, 50 USC App. 1 et seq., and any Executive Order or regulation promulgated thereunder, with the result that the investment in the Obligors (whether directly or indirectly), is prohibited by law, or the Facility made by the Lenders would be in violation of law, or (2) the Executive Order, any related enabling legislation or any other similar Executive Orders, and (b) no Embargoed Person shall have any direct interests, and to the knowledge of any Obligor, as at the date of this Agreement, based upon reasonable inquiry by any Obligor, indirect interest of any nature whatsoever in the Obligors, with the result that the investment in the Obligors (whether directly or indirectly), is prohibited by law or the Facility are in violation of law.
22.35		Anti-Money Laundering
		At all times throughout the term of the Facility, to the best knowledge of the Borrower (based upon reasonable inquiry by the Borrower), none of the funds of the Borrower that are used to repay the Facility shall be derived from any unlawful activity.
22.36		Conditions Subsequent
		The Borrower shall within 10 days of the First Utilisation Date, deliver to the Agent, in form and substance satisfactory to it, each document listed in Schedule 2 Part 1B (Conditions Subsequent).
22.37		Disclaimer of Affiliation
		If requested by the Agent the Borrower will use its reasonable endeavours to obtain, or to assist the Agent or the Security Agent in obtaining, a Disclaimer of Affiliation (or equivalent documentation) from the relevant Insurance Regulator of each Regulated Insurance Entity in connection with this Agreement and the Transaction Security Documents, in form and substance reasonably satisfactory to the Agent and Security Agent.
23		Events Of Default
		Each of the events or circumstances set out in this Clause 23 is an (Event of Default).
23.1		Non-payment
		An Obligor does not pay on the due date any amount payable pursuant to a Finance Document in the manner in which it is expressed to be payable unless:

(a)

its failure to pay is caused by:

	(i)		administrative or technical error by a bank in the transmission of funds; or
	(ii)		a Disruption Event; and

(b)

payment is made within 5 Business Days of its due date.