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Exhibit 10.7

        [CONFORMED AS EXECUTED]

CREDIT AGREEMENT

dated as of

September 12, 2003

among

ARCH CAPITAL GROUP LTD.,

The Lenders Party Hereto,

COMMERZBANK AG, NEW YORK BRANCH,

CREDIT SUISSE FIRST BOSTON,
ACTING THROUGH ITS CAYMAN ISLANDS BRANCH

and

WACHOVIA BANK, NATIONAL ASSOCIATION,
as Documentation Agents,

BANK OF AMERICA, N.A.,
as Syndication Agent

and

JPMORGAN CHASE BANK,
as Administrative Agent

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J.P. MORGAN SECURITIES INC.,

and

BANC OF AMERICA SECURITIES LLC,
as Joint Bookrunners and Joint Lead Arrangers

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Table of Contents

 
  Page

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ARTICLE I Definitions   1   Section 1.01. Defined Terms   1   Section 1.02.
Classification of Loans and Borrowings   19   Section 1.03. Terms Generally   19
  Section 1.04. Accounting Terms; GAAP   19 ARTICLE II The Credits   20  
Section 2.01. Commitments and Revolving Credit Term-Out   20   Section 2.02.
Loans and Borrowings   21   Section 2.03. Requests for Revolving Borrowings   22
  Section 2.04. Funding of Borrowings   22   Section 2.05. Interest Elections  
23   Section 2.06. Termination and Reduction of Commitments   24   Section 2.07.
Repayment of Loans; Evidence of Debt   25   Section 2.08. Prepayment of Loans  
26   Section 2.09. Fees   29   Section 2.10. Interest   29   Section 2.11.
Alternate Rate of Interest   30   Section 2.12. Increased Costs   31   Section
2.13. Break Funding Payments   32   Section 2.14. Taxes   32   Section 2.15.
Payments Generally; Pro Rata Treatment; Sharing of Set-offs   34   Section 2.16.
Mitigation Obligations; Replacement of Lenders   35 ARTICLE III Representations
and Warranties   36   Section 3.01. Corporate Status   36   Section 3.02.
Corporate Power and Authority   36   Section 3.03. No Contravention of Laws,
Agreements or Organizational Documents   37   Section 3.04. Litigation and
Contingent Liabilities   37   Section 3.05. Use of Proceeds; Margin Regulations
  37   Section 3.06. Approvals   37   Section 3.07. Investment Company Act   37
  Section 3.08. Public Utility Holding Company Act   37   Section 3.09. True and
Complete Disclosure; Projections and Assumptions   38   Section 3.10. Financial
Condition; Financial Statements   38   Section 3.11. Tax Returns and Payments  
39   Section 3.12. Compliance with ERISA   39   Section 3.13. Subsidiaries   39
  Section 3.14. Capitalization   40   Section 3.15. Indebtedness   40   Section
3.16. Compliance with Statutes, etc.   40   Section 3.17. Insurance Licenses  
41   Section 3.18. Insurance Business   41      

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ARTICLE IV Conditions   41   Section 4.01. Effective Date   41   Section 4.02.
Each Credit Event   43 ARTICLE V Affirmative Covenants   43   Section 5.01.
Information Covenants   44   Section 5.02. Books, Records and Inspections   46  
Section 5.03. Insurance   46   Section 5.04. Payment of Taxes   46   Section
5.05. Maintenance of Existence   46   Section 5.06. Compliance with Statutes,
etc.   47   Section 5.07. ERISA   47   Section 5.08. Maintenance of Property  
48   Section 5.09. Maintenance of Licenses and Permits   48   Section 5.10.
Claims Paying Ratings   48   Section 5.11. End of Fiscal Years; Fiscal Quarters
  48 ARTICLE VI Negative Covenants   48   Section 6.01. Changes in Business and
Investments   48   Section 6.02. Consolidations, Mergers, Sales of Assets and
Acquisitions   49   Section 6.03. Liens   50   Section 6.04. Indebtedness   52  
Section 6.05. Issuance of Stock   52   Section 6.06. Dissolution   52   Section
6.07. Restricted Payments   52   Section 6.08. Transactions with Affiliates   53
  Section 6.09. Maximum Leverage Ratio   53   Section 6.10. Minimum Consolidated
Tangible Net Worth   53   Section 6.11. Limitation on Certain Restrictions on
Subsidiaries   53   Section 6.12. Private Act   54 ARTICLE VII Events of Default
  54   Section 7.01. Payments   54   Section 7.02. Representations, etc.   54  
Section 7.03. Covenants   55   Section 7.04. Default under other Agreements   55
  Section 7.05. Bankruptcy, etc.   55   Section 7.06. ERISA   56   Section 7.07.
Judgments   56   Section 7.08. Insurance Licenses   56   Section 7.09. Change of
Control   57      

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ARTICLE VIII The Administrative Agent   57   Section 8.01. Appointment   57  
Section 8.02. Administrative Agent in its Individual Capacity   57   Section
8.03. Exculpatory Provisions   57   Section 8.04. Reliance   58   Section 8.05.
Delegation of Duties   58   Section 8.06. Resignation   58   Section 8.07.
Non-Reliance   59 ARTICLE IX Miscellaneous   59   Section 9.01. Notices   59  
Section 9.02. Waivers; Amendments   60   Section 9.03. Expenses; Indemnity;
Damage Waiver   61   Section 9.04. Successors and Assigns   62   Section 9.05.
Survival   65   Section 9.06. Counterparts; Integration; Effectiveness   66  
Section 9.07. Severability   66   Section 9.08. Right of Setoff   66   Section
9.09. Governing Law; Jurisdiction; Consent to Service of Process   66   Section
9.10. WAIVER OF JURY TRIAL   67   Section 9.11. Headings   67   Section 9.12.
Confidentiality   67   Section 9.13. Interest Rate Limitation   68   Section
9.14. Calculations   68   Section 9.15. Euro   69   Section 9.16. Judgment
Currency   69   Section 9.17. Special Provisions Relating to Currencies Other
Than Dollars   70   Section 9.18. Pro Rata Borrowings   70 SCHEDULES:    
Schedule 2.01—Commitments     Schedule 3.13—Subsidiaries    
Schedule 3.14—Capitalization     Schedule 3.15—Existing Indebteness    
Schedule 3.17—Insurance Licenses     Schedule 6.03—Liens    
Schedule 6.05—Preferred Stock     EXHIBITS:     Exhibit A—Form of Assignment and
Assumption     Exhibit B—Form of Borrowing Request    

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Exhibit C-1—Form of Opinion of Borrower's Special U.S.Counsel    
Exhibit C-2—Form of Opinion of Borrower's Special Bermuda Counsel    
Exhibit D—Form of Officers' Certificate    

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        CREDIT AGREEMENT dated as of September 12, 2003, among ARCH CAPITAL
GROUP LTD., the LENDERS party hereto, JPMORGAN CHASE BANK, as Administrative
Agent, BANK OF AMERICA, N.A., as Syndication Agent and COMMERZBANK AG, NEW YORK
BRANCH, CREDIT SUISSE FIRST BOSTON, ACTING THROUGH ITS CAYMAN ISLANDS BRANCH,
and WACHOVIA BANK, NATIONAL ASSOCIATION, as Documentation Agents.

        The parties hereto agree as follows:

ARTICLE I

Definitions

        Section 1.01.    Defined Terms.    As used in this Agreement, the
following terms have the meanings specified below:

        "ABR", when used in reference to any Loan or Borrowing, refers to
whether such Loan, or the Loans comprising such Borrowing, are bearing interest
at a rate determined by reference to the Alternate Base Rate.

        "Acquired Indebtedness" means Indebtedness of a Subsidiary of the
Borrower acquired pursuant to an acquisition not prohibited under this Agreement
(or Indebtedness assumed at the time of such acquisition of an asset securing
such Indebtedness), provided that such Indebtedness was not incurred in
connection with, or in anticipation or contemplation of, such acquisition.

        "Additional Costs" shall mean, with respect to any Lender lending from
an office in the United Kingdom or a Participating Member State, the amount
notified by such Lender to the Borrower and the Administrative Agent as its
reasonable determination of the proportion of the cost attributable to the
Alternate Currency Loans made by such Lender from that office of complying with
the fee and minimum reserve requirements of the Bank of England and the UK
Financial Services Authority or the European Central Bank in respect of loans
made from that office.

        "Adjusted LIBO Rate" means, with respect to any Eurocurrency Borrowing
for any Interest Period, an interest rate per annum (rounded upwards, if
necessary, to the next 1/16 of 1%) equal to (a) the LIBO Rate for such Interest
Period multiplied by (b) the Statutory Reserve Rate.

        "Administrative Agent" means JPMorgan Chase Bank, in its capacity as
administrative agent for the Lenders hereunder.

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

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        "Affected Loans" has the meaning provided in Section 2.08(i).

        "Affiliate" means, with respect to a specified Person, another Person
that directly, or indirectly through one or more intermediaries, Controls or is
Controlled by or is under common Control with the Person specified.

        "Agreement" means this Credit Agreement, as modified, supplemented,
amended, restated (including any amendment and restatement hereof), extended or
renewed from time to time.

        "Alternate Base Rate" means, for any day, a rate per annum equal to the
greater of (a) the Prime Rate in effect on such day and (b) the Federal Funds
Effective Rate in effect on such day plus 1/2 of 1%. Any change in the Alternate
Base Rate due to a change in the Prime Rate or the Federal Funds Effective Rate
shall be effective from and including the effective date of such change in the
Prime Rate or the Federal Funds Effective Rate, respectively.

        "Alternate Currency" means each of Euros and Pounds Sterling.

        "Alternate Currency Loan" means any Loan denominated in an Alternate
Currency.

        "Applicable Commitment Fee Rate" means 0.10%.

        "Applicable Insurance Regulatory Authority" means, when used with
respect to any Regulated Insurance Company, (x) the insurance department or
similar administrative authority or agency located in each state or jurisdiction
(foreign or domestic) in which such Regulated Insurance Company is domiciled or
(y) to the extent asserting regulatory jurisdiction over such Regulated
Insurance Company, the insurance department, authority or agency in each state
or jurisdiction (foreign or domestic) in which such Regulated Insurance Company
is licensed, and shall include any Federal or national insurance regulatory
department, authority or agency that may be created and that asserts regulatory
jurisdiction over such Regulated Insurance Company.

        "Applicable Percentage" means, with respect to any Lender, the
percentage of the total Commitments represented by the sum of such Lender's
Commitments. If the Commitments have terminated or expired, the Applicable
Percentages shall be determined based upon the Commitments most recently in
effect, giving effect to any assignments.

        "Applicable Rate" means, for any day, with respect to any Loan
maintained as ABR Loans or Eurocurrency Loans, for any Margin Adjustment Period,
from and after any Start Date to and including the corresponding End Date, the
respective percentage per annum set forth below opposite the respective Level
(i.e., Level 3, Level 2 or Level 1, as the case may be) indicated to have been
achieved on the applicable Test Date for such Start Date (as shown in the
respective officer's certificate delivered pursuant to Section 5.01(c)):

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Level

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  Leverage Ratio

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  Loans maintained as
Eurocurrency Loans

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  Loans maintained as
ABR Loans

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  3   Greater than 0.20 to 1.00   1.50 % 0.50 % 2   Greater than 0.10 to 1.00
but less than or equal to 0.20 to 1.00   1.25 % 0.25 % 1   Less than or equal to
0.10 to 1.0   1.00 % 0 %

; provided, however, that if the Borrower fails to deliver the financial
statements required to be delivered pursuant to Section 5.01(a) or
(b) (accompanied by the officer's certificate required to be delivered pursuant
to Section 5.01(c) showing the applicable Leverage Ratio on the relevant Test
Date) on or prior to the respective date required by such Sections, then Level 3
pricing shall apply until such time, if any, as the financial statements
required as set forth above and the accompanying officer's certificate have been
delivered showing the pricing for the respective Margin Adjustment Period is at
a Level below Level 3 (it being understood that, in the case of any late
delivery of the financial statements and officer's certificate as so required,
any reduction in the Applicable Rate shall apply only from and after the date of
the delivery of the complying financial statements and officer's certificate);
provided, further, that (i) except when clause (ii) below is applicable Level 2
pricing shall apply for the period from the Effective Date to the date of the
delivery of the Borrower's consolidated financial statements (and related
officer's certificate) in respect of its fiscal year ending December 31, 2004
and (ii) Level 3 pricing shall apply at all times when any Event of Default is
in existence.

        "Approved Currency" means each of Dollars and each Alternate Currency.

        "Approved Currency Commitment" means, with respect to each Approved
Currency Lender, the commitment of such Approved Currency Lender to make
Approved Currency Revolving Loans hereunder, expressed as an amount representing
the maximum aggregate Principal Amount of such Lender's Approved Currency
Revolving Credit Exposure hereunder, as such commitment may be (a) reduced from
time to time pursuant to Section 2.06 and (b) reduced or increased from time to
time pursuant to assignments by or to such Approved Currency Lender pursuant to
Section 9.04. The initial amount of each Approved Currency Lender's Approved
Currency Commitment is set forth on Schedule 2.01, or in the Assignment and
Assumption pursuant to which such Approved Currency Lender shall have assumed
its Approved Currency Commitment, as applicable. The initial aggregate amount of
the Approved Currency Lenders' Approved Currency Commitments is $100,000,000.

        "Approved Currency Lenders" means each person listed on Schedule 2.01
with an Approved Currency Commitment (or, after the Commitment Expiration Date,
each Lender with outstanding Approved Currency Term Loans) and any other Person
that shall have become a

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party as an Approved Currency Lender hereto pursuant to an Assignment and
Assumption, other than any such Person that ceases to be a party hereto pursuant
to an Assignment and Assumption.

        "Approved Currency Revolving Credit Exposure" means, with respect to any
Approved Currency Lender at any time, the sum of the outstanding Principal
Amount of such Approved Currency Lender's Approved Currency Revolving Loans at
such time.

        "Approved Currency Revolving Loan" has the meaning provided in
Section 2.01(b).

        "Approved Currency Scheduled Term Loan Repayment" has the meaning
provided in Section 2.08(h).

        "Approved Currency Term Loans" means each Approved Currency Revolving
Loan that is converted into a term loan on the Commitment Expiration Date
pursuant to Section 2.01(d).

        "Approved Fund" has the meaning assigned to such term in
Section 9.04(b).

        "Arch Shareholder Group" means Warburg Pincus (Bermuda) Private Equity
VIII, L.P., Warburg Pincus (Bermuda) International Partners, L.P., Warburg
Pincus Netherlands International Partners I, C.V., Warburg Pincus Netherlands
International Partners II, C.V., HFCP IV (Bermuda), L.P., H&F International
Partners IV-A (Bermuda), L.P., H&F International Partners IV-B (Bermuda), L.P.
and H&F Executive Fund IV (Bermuda), L.P.

        "Assignment and Assumption" means an assignment and assumption entered
into by a Lender and an assignee (with the consent of any party whose consent is
required by Section 9.04), and accepted by the Administrative Agent, in the form
of Exhibit A or any other form approved by the Administrative Agent.

        "Bankruptcy Code" has the meaning provided in Section 7.05.

        "Bermuda Companies Law" means the Companies Act 1981 of Bermuda and
other relevant Bermuda law.

        "Board" means the Board of Governors of the Federal Reserve System of
the United States of America.

        "Borrower" means Arch Capital Group Ltd., a company organized under the
laws of Bermuda.

        "Borrowing" means Loans of the same Class and Type, made, converted or
continued on the same date and, in the case of Eurocurrency Loans, as to which a
single Interest Period is in effect.

        "Borrowing Request" means a request by the Borrower for a Revolving
Borrowing in accordance with Section 2.03.

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        "Business Day" means (i) for all purposes other than as covered by
clauses (ii) and (iii) below, any day excluding Saturday, Sunday and any day
which shall be in the City of New York a legal holiday or a day on which banking
institutions are authorized by law or other governmental actions to close,
(ii) with respect to all notices and determinations in connection with, and
payments of principal and interest on, Eurocurrency Loans, any day which is a
Business Day described in clause (i) and which is also a day for trading by and
between banks in the London interbank market and, (iii) with respect to any
notices or determinations in respect of Loans denominated in Euros, any day
which is a Business Day described in clause (i) and which is also a day on which
the TARGET payment system is open for settlement of payment in Euros.

        "Capital Lease Obligations" of any Person means the obligations of such
Person to pay rent or other amounts under any lease of (or other arrangement
conveying the right to use) real or personal property, or a combination thereof,
which obligations are required to be classified and accounted for as capital
leases on a balance sheet of such Person under GAAP, and the amount of such
obligations shall be the capitalized amount thereof determined in accordance
with GAAP.

        "Change in Control" means (a) any Person or group of Persons (as used in
Sections 13 and 14 of the Securities Exchange Act of 1934 and the rules and
regulations thereunder), other than one or more Permitted Holders, shall have
become the beneficial owner (as defined in rules promulgated by the SEC) of more
than 35% of the voting securities of the Borrower or (b) occupation of a
majority of the seats (other than vacant seats) of the board of directors of the
Borrower by Persons who are neither (i) nominated by the board of directors of
the Borrower nor (ii) appointed by directors so nominated.

        "Change in Law" means (a) the adoption of any law, rule or regulation
after the date of this Agreement, (b) any change in any law, rule or regulation
or in the interpretation or application thereof by any Governmental Authority
after the date of this Agreement or (c) compliance by any Lender (or, for
purposes of Section 2.12(b), by any lending office of such Lender or by such
Lender's holding company, if any) with any request, guideline or directive
(whether or not having the force of law) of any Governmental Authority made or
issued after the date of this Agreement.

        "Charges" has the meaning provided in Section 9.13.

        "Class", when used in reference to (i) any Loan or Borrowing, refers to
whether such Loan, or the Loans comprising such Borrowing, are Dollar Revolving
Loans, Dollar Term Loans, Approved Currency Revolving Loans or Approved Currency
Term Loans and (ii) any Commitment, refers to whether such Commitments are
Dollar Commitments or Approved Currency Commitments.

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

        "Commitment" means each of the Dollar Commitments and the Approved
Currency Commitments.

        "Commitment Expiration Date" means September 10, 2004.

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        "Consolidated Indebtedness" means, as of any date of determination, all
Indebtedness of the Borrower and its Subsidiaries which at such time would
appear on the liability side of a balance sheet of such Persons prepared on a
consolidated basis in accordance with GAAP. For the avoidance of doubt,
"Consolidated Indebtedness" shall not include any Guarantees of any Person under
or in connection with letters of credit or similar facilities so long as no
drawings or payments have been made in respect thereof.

        "Consolidated Net Income" means, for any period, net income (or loss)
after income taxes of the Borrower and its Subsidiaries for such period,
determined on a consolidated basis in accordance with GAAP.

        "Consolidated Net Worth" means, as of any date of determination, the Net
Worth of the Borrower and its Subsidiaries determined on a consolidated basis in
accordance with GAAP after appropriate deduction for any minority interests in
Subsidiaries.

        "Consolidated Tangible Net Worth" means, as of the date of any
determination, Consolidated Net Worth of the Borrower and its Subsidiaries on
such date less the amount of all intangible items included therein, including,
without limitation, goodwill, franchises, licenses, patents, trademarks, trade
names, copyrights, service marks, brand names and write-ups of assets.

        "Consolidated Total Capital" means, as of any date of determination, the
sum of (i) Consolidated Indebtedness and (ii) Consolidated Net Worth at such
time.

        "Control" means the possession, directly or indirectly, of the power
(i) to vote 10% or more of the securities having ordinary voting power for the
election of directors of such corporation or (ii) to direct or cause the
direction of the management or policies of a Person, whether through the ability
to exercise voting power, by contract or otherwise. "Controlling" and
"Controlled" have meanings correlative thereto.

        "Credit Documents" means this Agreement and the promissory notes
delivered pursuant to Section 2.07(e).

        "Default" means any event or condition which constitutes an Event of
Default or which upon notice, lapse of time or both would, unless cured or
waived, become an Event of Default.

        "Designated Subsidiaries" means American Independent Insurance Company,
Personal Service Insurance Company and Western Diversified Casualty Insurance
Company.

        "Dividends" has the meaning provided in Section 6.07.

        "Dispositions" has the meaning provided in Section 6.02(b).

        "Documentation Agents" means each of Commerzbank AG, New York Branch,
Credit Suisse First Boston, acting through its Cayman Islands Branch and
Wachovia Bank, National Association, each in its capacity as a documentation
agent under this Agreement.

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        "Dollar Commitment" means, with respect to each Dollar Lender, the
commitment of such Dollar Lender to make Dollar Revolving Loans hereunder,
expressed as an amount representing the maximum aggregate amount of such Dollar
Lender's Dollar Revolving Credit Exposure hereunder, as such commitment may be
(a) reduced from time to time pursuant to Section 2.06 and (b) reduced or
increased from time to time pursuant to assignments by or to such Dollar Lender
pursuant to Section 9.04. The initial amount of each Dollar Lender's Dollar
Commitment is set forth on Schedule 2.01, or in the Assignment and Assumption
pursuant to which such Dollar Lender shall have assumed its Dollar Commitment,
as applicable. The initial aggregate amount of the Dollar Lenders' Dollar
Commitments is $200,000,000.

        "Dollar Equivalent" means, at any time for the determination thereof in
accordance with Section 9.14, the amount of Dollars which could be purchased
with the amount of the relevant Alternate Currency involved in such computation
at the spot exchange rate therefor as quoted by the Administrative Agent as of
11:00 a.m. (London Time) on the date three Business Days prior to the date of
any determination thereof for purchase on such date.

        "Dollar Lenders" means each Person listed on Schedule 2.01 with a Dollar
Commitment (or, after the Commitment Expiration Date, each Lender with
outstanding Dollar Term Loans) and any other Person that shall have become a
party as a Dollar Lender hereto pursuant to an Assignment and Assumption, other
than any such Person that ceases to be a party hereto pursuant to an Assignment
and Assumption.

        "Dollar Revolving Credit Exposure" means, with respect to any Dollar
Lender at any time, the sum of the outstanding Principal Amount of such Lender's
Dollar Revolving Loans at such time.

        "Dollar Revolving Loan" has the meaning provided in Section 2.01(a).

        "Dollar Scheduled Term Loan Repayment" has the meaning set forth in
Section 2.08(g).

        "Dollar Term Loans" means each Dollar Revolving Loan that is converted
into a term loan on the Commitment Expiration Date pursuant to Section 2.01(c).

        "Dollars" or "$" refers to lawful money of the United States of America.

        "Effective Date" means the date on which the conditions specified in
Section 4.01 are satisfied (or waived in accordance with Section 9.02).

        "EMU Legislation" means the legislative measures of the European Council
for the introduction of changeover to or operation of a single unified European
currency.

        "End Date" means, with respect to any Margin Adjustment Period, the last
day of such Margin Adjustment Period.

        "Environmental Law" means all laws, rules, regulations, codes,
ordinances, orders, decrees, judgments, injunctions, notices or binding
agreements issued, promulgated or entered into by any Governmental Authority,
relating in any way to the environment, preservation

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or reclamation of natural resources, the management, release or threatened
release of any Hazardous Material or to health and safety matters.

        "Environmental Liability" means any liability, contingent or otherwise
(including any liability for damages, costs of environmental remediation, fines,
penalties or indemnities), of the Borrower or any Subsidiary directly or
indirectly resulting from or based upon (a) violation of any Environmental Law,
(b) the generation, use, handling, transportation, storage, treatment or
disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials,
(d) the release or threatened release of any Hazardous Materials into the
environment or (e) any contract, agreement or other consensual arrangement
pursuant to which liability is assumed or imposed with respect to any of the
foregoing.

        "Equity Interests" means, with respect to any Person, shares of capital
stock of (or other ownership or profit interests in) such Person, warrants,
options or other rights for the purchase or other acquisition from such Person
of shares of capital stock of (or other ownership or profit interests in) such
Person, securities convertible into or exchangeable for shares of capital stock
of (or other ownership or profit interests in) such Person or warrants, rights
or options for the purchase or other acquisition from such Person of such shares
(or such other interests), and other ownership or profit interests in such
Person (including, without limitation, partnership, member or trust interests
therein), whether voting or nonvoting, and whether or not such shares, warrants,
options, rights or other interests are authorized or otherwise existing on any
date of determination.

        "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time and the regulations promulgated and rulings issued
thereunder. Section references to ERISA are to ERISA, as in effect at the date
of this Agreement and any subsequent provisions of ERISA, amendatory thereof,
supplemental thereto or substituted therefor.

        "ERISA Affiliate" means any corporation or trade or business which is a
member of the same controlled group of corporations (within the meaning of
Section 414(b) of the Code) as the Borrower or any of its Subsidiaries or is
under common control (within the meaning of Section 414(c) of the Code) with the
Borrower or any of its Subsidiaries.

        "Euro" means the lawful currency of each of the Participating Member
States.

        "Eurocurrency", when used in reference to any Loan or Borrowing, refers
to whether such Loan, or the Loans comprising such Borrowing, are bearing
interest at a rate determined by reference to the Adjusted LIBO Rate.

        "Event of Default" has the meaning assigned to such term in Article VII.

        "Excluded Taxes" means, with respect to the Administrative Agent, any
Lender, or any other recipient of any payment to be made by or on account of any
obligation of the Borrower hereunder, (a) income or franchise taxes imposed on
(or measured by) its net income or net profits by any jurisdiction 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, (b) any branch profits taxes imposed by the United States of America or
any similar

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tax imposed by any other jurisdiction in which the recipient is located and
(c) in the case of a Foreign Lender (other than an assignee pursuant to a
request by the Borrower under Section 2.16(b)), any withholding tax that is
imposed on amounts payable to such Foreign Lender at the time such Foreign
Lender becomes a party to this Agreement (or designates a new lending office) or
is attributable to such Foreign Lender's failure to comply with Section 2.14(e),
except to the extent that such Foreign Lender (or its assignor, if any) was
entitled, at the time of designation of a new lending office (or assignment), to
receive additional amounts from the Borrower with respect to such withholding
tax pursuant to Section 2.14(a).

        "Existing LC Facility" has the meaning provided in Section 3.13(b).

        "Federal Funds Effective Rate" means, for any day, the weighted average
(rounded upwards, if necessary, to the next 1/100 of 1%) of the rates on
overnight Federal funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers, as published on the next succeeding Business
Day by the Federal Reserve Bank of New York, or, if such rate is not so
published for any day that is a Business Day, the average (rounded upwards, if
necessary, to the next 1/100 of 1%) of the quotations for such day for such
transactions received by the Administrative Agent from three Federal funds
brokers of recognized standing selected by it.

        "Financial Officer" means the chief financial officer, principal
accounting officer, treasurer or controller of the Borrower.

        "Foreign Lender" means any Lender that is organized under the laws of a
jurisdiction other than that in which the Borrower is located. For purposes of
this definition, the United States of America, each State thereof and the
District of Columbia shall be deemed to constitute a single jurisdiction.

        "Foreign Pension Plan" means any plan, fund (including, without
limitation, any superannuation fund) or other similar program established or
maintained outside the United States of America by the Borrower or any one or
more of its Subsidiaries primarily for the benefit of employees of the Borrower
or such Subsidiaries residing outside the United States of America, which plan,
fund or other similar program provides, or results in, retirement income, a
deferral of income in contemplation of retirement or payments to be made upon
termination of employment, and which plan is not subject to ERISA or the Code.

        "GAAP" means generally accepted accounting principles in the United
States of America.

        "Governmental Authority" means the government of the United States of
America, any other nation or any political subdivision thereof, whether state or
local, and any agency, authority, instrumentality, regulatory body, court,
central bank or other entity exercising executive, legislative, judicial,
taxing, regulatory or administrative powers or functions of or pertaining to
government.

        "Guarantee" of or by any Person (the "guarantor") means any obligation
guaranteeing or intended to guarantee any Indebtedness, leases, dividends or
other obligations ("primary obligations") of any other Person (the "primary
obligor") in any manner, whether

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directly or indirectly, including, without limitation, any obligation of such
Person, whether or not contingent, (a) to purchase any such primary obligation
or any property constituting direct or indirect security therefor, (b) to
advance or supply funds (i) for the purchase or payment of any such primary
obligation or (ii) to maintain working capital or equity capital of the primary
obligor or otherwise to maintain the net worth or solvency of the primary
obligor, (c) to purchase property, securities or services primarily for the
purpose of assuring the owner of any such primary obligation of the ability of
the primary obligor to make payment of such primary obligation or (d) otherwise
to assure or hold harmless the owner of such primary obligation against loss in
respect thereof; provided, however, that the term Guarantee shall not include
(x) endorsements of instruments for deposit or collection in the ordinary course
of business or (y) obligations of any Regulated Insurance Company under
Insurance Contracts, Reinsurance Agreements or Retrocession Agreements. The
amount of any Guarantee shall be deemed to be an amount equal to the stated or
determinable amount of the primary obligation in respect of which such Guarantee
is made or, if not stated or determinable, the maximum reasonably anticipated
liability in respect thereof (assuming such Person is required to perform
thereunder) as determined by such Person in good faith.

        "Hazardous Materials" means all explosive or radioactive substances or
wastes and all hazardous or toxic substances, wastes or other pollutants,
including petroleum or petroleum distillates, asbestos or asbestos containing
materials, polychlorinated biphenyls, radon gas, infectious or medical wastes
and all other substances or wastes of any nature regulated pursuant to any
Environmental Law.

        "Hedging Agreements" means any foreign exchange contracts, currency swap
agreements, commodity price hedging arrangements or other similar arrangements,
or arrangements designed to protect against fluctuations in the currency values.

        "Indebtedness" of any Person means, without duplication, (a) all
obligations of such Person for borrowed money or with respect to deposits or
advances of any kind, (b) all obligations of such Person evidenced by bonds,
debentures, notes or similar instruments, (c) all obligations of such Person
under conditional sale or other title retention agreements relating to property
acquired by such Person, (d) all obligations of such Person in respect of the
deferred purchase price of property or services, (e) all Indebtedness of others
secured by (or for which the holder of such Indebtedness has an existing right,
contingent or otherwise, to be secured by) any Lien on property owned or
acquired by such Person, whether or not the Indebtedness secured thereby has
been assumed, provided that the amount of Indebtedness of such Person shall be
the lesser of (A) the fair market value of such property at such date of
determination (determined in good faith by the Borrower) and (B) the amount of
such Indebtedness of such other Person, (f) all Guarantees by such Person of
Indebtedness of others, (g) all Capital Lease Obligations of such Person,
(h) all obligations of such Person under Interest Rate Protection Agreements and
Hedging Agreements, and (i) all reimbursement obligations of such Person in
respect of letters of credit, letters of guaranty, bankers' acceptances and
similar credit transactions. The Indebtedness of any Person shall include the
Indebtedness of any other entity (including any partnership in which such Person
is a general partner) to the extent such Person is liable therefor as a result
of such Person's ownership interest in or other relationship with such entity,
except to the extent the terms of such Indebtedness provide that such Person is
not liable therefor. For the avoidance of doubt, Indebtedness shall not include
(v) trade payables (including payables under

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insurance contracts and reinsurance payables) and accrued expenses in each case
arising in the ordinary course of business, (w) obligations of Regulated
Insurance Companies with respect to Policies, (x) obligations arising under
deferred compensation plans of the Borrower and its Subsidiaries in effect on
the date hereof or which have been approved by the board of directors of the
Borrower, (y) obligations with respect to products underwritten by Regulated
Insurance Companies in the ordinary course of business, including insurance
policies, annuities, performance and surety bonds and any related contingent
obligations and (z) reinsurance agreements entered into by any Regulated
Insurance Company in the ordinary course of business.

        "Indemnitee" has the meaning provided in Section 9.03(b).

        "Indemnified Taxes" means Taxes other than Excluded Taxes.

        "Information" has the meaning provided in Section 9.12.

        "Initial Approved Currency Commitment Amount" means the initial
aggregate amount of all of the Approved Currency Commitments as in effect on the
Effective Date.

        "Insignificant Subsidiary" means any Subsidiary, other than Arch
Reinsurance Company, Arch Reinsurance Ltd., American Independent Company, Arch
Insurance Company, Arch Specialty Insurance Company and Arch Excess & Surplus
Insurance Company, which has assets, earnings or revenues which, if aggregated
with the assets, earnings or revenues, as the case may be, of all other
Subsidiaries of the Borrower with respect to which an event described under
Section 7.05 has occurred and is continuing, would have assets, earnings or
revenues, as the case may be, in an amount less than 10% of the consolidated
assets, earnings or revenues, as the case may be, of the Borrower and its
Subsidiaries as of the end of the most recent fiscal quarter of year of the
Borrower for which financial statements are available.

        "Insurance Business" means one or more aspects of the business of
selling, issuing or underwriting insurance or reinsurance.

        "Insurance Contract" means any insurance contract or policy issued by a
Regulated Insurance Company but shall not include any Reinsurance Agreement or
Retrocession Agreement.

        "Insurance Licenses" has the meaning provided in Section 3.17.

        "Interest Election Request" means a request by the Borrower to convert
or continue a Revolving Borrowing or a Term Borrowing in accordance with
Section 2.05.

        "Interest Payment Date" means (a) with respect to any ABR Loan, the last
day of each March, June, September and December and (b) with respect to any
Eurocurrency Loan, the last day of the Interest Period applicable to the
Borrowing of which such Loan is a part and, in the case of a Eurocurrency
Borrowing with an Interest Period of more than three months' duration, each day
that would have been an Interest Payment Date had successive Interest Periods of
three months duration been applicable to such Borrowing.

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        "Interest Period" means, with respect to any Eurocurrency Borrowing, the
period commencing on the date of such Borrowing and ending on the numerically
corresponding day in the calendar month that is one, two, three or six months
(or, with the consent of each Lender, nine or twelve months) thereafter, as the
Borrower may elect; provided, that (i) if any Interest Period would end on a day
other than a Business Day, such Interest Period shall be extended to the next
succeeding Business Day unless, in the case of a Eurocurrency Borrowing only,
such next succeeding Business Day would fall in the next calendar month, in
which case such Interest Period shall end on the next preceding Business Day and
(ii) any Interest Period pertaining to a Eurocurrency Borrowing that commences
on the last Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the last calendar month of such Interest
Period) shall end on the last Business Day of the last calendar month of such
Interest Period. For purposes hereof, the date of a Borrowing initially shall be
the date on which such Borrowing is made and, in the case of a Eurocurrency
Borrowing, thereafter shall be the effective date of the most recent conversion
or continuation of such Borrowing.

        "Interest Rate Protection Agreement" means any interest rate swap
agreement, interest rate cap agreement, interest rate collar agreement, interest
rate hedging agreement, interest rate floor agreement or other similar agreement
or arrangement.

        "Issuing Country" has the meaning specified in Section 9.15.

        "Judgment Currency" has the meaning provided in Section 9.16(a).

        "Judgment Currency Conversion Date" has the meaning provided in
Section 9.16(a).

        "Legal Requirements" means all applicable laws, rules and regulations
made by any governmental body or regulatory authority (including, without
limitation, any Applicable Insurance Regulatory Authority) having jurisdiction
over the Borrower or a Subsidiary of the Borrower.

        "Lenders" means, collectively, the Dollar Lenders and the Approved
Currency Lenders.

        "Leverage Ratio" means the ratio of (i) Consolidated Indebtedness to
(ii) Consolidated Total Capital.

        "LIBO Rate" means with respect to any Eurocurrency Borrowing for any
Interest Period, the rate appearing on Page 3750 (or other appropriate page if
the relevant currency does not appear on such page) of the Dow Jones Market
Service (or on any successor or substitute page or pages of such Service, or any
successor to or substitute for such Service, providing rate quotations
comparable to those currently provided on such page or pages of such Service, as
determined by the Administrative Agent from time to time for purposes of
providing quotations of interest rates applicable to deposits in the relevant
currency in the London interbank market) at approximately 11:00 a.m., London
time, two Business Days prior to the commencement of such Interest Period, as
the rate for deposits in the relevant currency with a maturity comparable to
such Interest Period. In the event that such rate is not available at such time
for any reason, then the "LIBO Rate" with respect to such Eurocurrency Borrowing
for such Interest Period shall

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be the rate at which deposits in the relevant currency of $5,000,000 (or Dollar
Equivalent thereof, as the case may be), and for a maturity comparable to such
Interest Period are offered by the Administrative Agent. Notwithstanding
anything to the contrary contained above, in the event the Administrative Agent
or the Required Lenders, as the case may be, have made any determination
pursuant to Section 2.11(a) or (b) in respect of any Eurocurrency Loans
denominated in an Alternate Currency, the LIBO Rate for such Eurocurrency Loans
determined pursuant to this definition shall instead be the rate determined by
the Administrative Agent as the all-in-cost of funds denominated in such
Alternate Currency with maturities comparable to the Interest Period applicable
thereto.

        "Lien" means, with respect to any asset, (a) any mortgage, deed of
trust, lien, pledge, hypothecation, encumbrance, charge or security interest in,
on or of such asset, (b) the interest of a vendor or a lessor under any
conditional sale agreement, capital lease or title retention agreement (or any
financing lease having substantially the same economic effect as any of the
foregoing) relating to such asset and (c) in the case of securities, any
purchase option, call or similar right of a third party with respect to such
securities.

        "Loans" means (i) prior to the Commitment Expiration Date, each
Revolving Loan and (ii) on or after the Commitment Expiration Date, each Term
Loan.

        "Margin Adjustment Period" means each period which shall commence on the
date upon which the respective officer's certificate is delivered pursuant to
Section 5.01(c) (together with the related financial statements pursuant to
Section 5.01(a) or (b), as the case may be) and which shall end on the date of
actual delivery of the next officer's certificate pursuant to Section 5.01(c)
(and related financial statements) or the latest date on which such next
officer's certificate (and related financial statements) is required to be so
delivered; it being understood that the first Margin Adjustment Period shall
commence with the delivery of the Borrower's financial statements (and related
officer's certificate) in respect of its fiscal year ending December 31, 2004.

        "Margin Stock" has the meaning provided in Regulation U.

        "Material Adverse Effect" means, (i) a material adverse effect on the
business, operations, property or financial condition of the Borrower and its
Subsidiaries taken as a whole or (ii) a material adverse effect on (x) the
rights and remedies of the Administrative Agent or the Lenders under the Credit
Documents, (y) the ability of the Borrower to perform its obligations under the
Credit Documents to which it is a party or (z) the legality, validity or
enforceability of any Credit Document.

        "Maturity Date" means September 11, 2006.

        "Maximum Rate" has the meaning provided in Section 9.13.

        "Multiemployer Plan" means any multiemployer plan as defined in
Section 4001(a)(3) of ERISA, which is maintained or contributed to by (or to
which there is an obligation to contribute of) the Borrower, any of its
Subsidiaries or any of its ERISA Affiliates, and each such plan for the five
year period immediately following the latest date on which the

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Borrower, such Subsidiary or such ERISA Affiliate contributed to or had an
obligation to contribute to such plan.

        "Net Cash Proceeds" means, for any issuance of debt or equity, the gross
cash proceeds (including any cash received by way of deferred payment pursuant
to a promissory note, receivable or otherwise, but only and when received)
received from such issuance, net of reasonable transaction costs (including, as
applicable, any underwriting, brokerage or other customary commissions and
reasonable legal, advisory and other fees and expenses associated therewith).

        "Net Worth" means, as to any Person, the sum of its capital stock
(including, without limitation, its preferred stock), capital in excess of par
or stated value of shares of its capital stock (including, without limitation,
its preferred stock), retained earnings and any other account which, in
accordance with GAAP, constitutes stockholders equity, but excluding (i) any
treasury stock and (ii) the effects of Financial Accounting Statement No. 115.

        "Obligation Currency" has the meaning provided in Section 9.16(a).

        "Other Taxes" means, any and all present or future stamp or documentary
taxes or any other similar excise or property taxes, charges or similar levies
arising from any payment made hereunder or from the execution, delivery or
enforcement of, or performance under, this Agreement.

        "Participant" has the meaning set forth in Section 9.04(c)

        "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 the legislation of the European Union relating to European
Monetary Union.

        "PBGC" means the Pension Benefit Guaranty Corporation referred to and
defined in ERISA and any successor entity performing similar functions.

        "Permitted Holders" means, (i) the Arch Shareholder Group and their
respective Subsidiaries and any other Person of which any member of the Arch
Shareholder Group is a direct or indirect Subsidiary, (ii) any investment fund
or vehicle managed by, or the general partner of, any of the Persons described
in preceding clause (i), (iii) each of the directors and executive officers of
the Borrower or any of its Subsidiaries on the Effective Date and (iv) with
respect to any of the foregoing who is an individual, any family member of such
Person, any trust or partnership for the benefit, or any corporation that is a
Subsidiary, of such Person or such Person's family members and any of such
individuals', heirs, executors, successors and legal representatives.

        "Permitted Subsidiary Indebtedness" means:

        (a)   Indebtedness of any Subsidiary of the Borrower existing on the
date hereof and listed on Schedule 3.15 and refinancings by such Subsidiary
thereof; provided that the aggregate principal amount of any such refinancing
Indebtedness is not greater than

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the aggregate principal amount of the Indebtedness being refinanced plus the
amount of any premiums required to be paid thereon and fees and expenses
associated therewith;

        (b)   Indebtedness of any Subsidiary of the Borrower under any Interest
Rate Protection Agreement or Hedging Agreement, in each case entered into to
protect any such Subsidiary against fluctuations in interest rates, currency
exchange rates or other rate fluctuations and not entered into for speculative
purposes;

        (c)   any Indebtedness owed by Subsidiaries of the Borrower to the
Borrower or any of its Subsidiaries;

        (d)   Indebtedness in respect of purchase money obligations and Capital
Lease Obligations of any Subsidiary of the Borrower, and refinancings thereof;
provided that the aggregate principal amount of all such Capital Lease
Obligations does not exceed at any time outstanding $20,000,000 at the time of
incurrence of any new Indebtedness under this clause (d);

        (e)   Indebtedness of any Subsidiary of the Borrower in respect of
letters of credit issued to reinsurance cedents, or to lessors of real property
in lieu of security deposits in connection with leases of any Subsidiary of the
Borrower, in each case in the ordinary course of business;

        (f)    Indebtedness of any Subsidiary of the Borrower incurred in the
ordinary course of business in connection with workers' compensation claims,
self-insurance obligations, unemployment insurance or other forms of
governmental insurance or benefits and pursuant to letters of credit or other
security arrangements entered into in connection with such insurance or benefit;

        (g)   Acquired Indebtedness of Subsidiaries of the Borrower;

        (h)   additional Indebtedness of Subsidiaries of the Borrower not
otherwise permitted under clauses (a) through (g) of this definition which, when
added to the aggregate amount of all outstanding obligations secured by liens
incurred by the Borrower pursuant to Section 6.03(r), shall not exceed at any
time outstanding 5% of Consolidated Net Worth at the time of incurrence of any
new Indebtedness under this clause (h); and

        (i)    Indebtedness arising from Guarantees made by any Subsidiary of
the Borrower of Indebtedness of the type described in clauses (a) through (h) of
this definition.

        "Person" means any natural person, corporation, limited liability
company, trust, joint venture, association, company, partnership, Governmental
Authority or other entity.

        "Plan" means any pension plan as defined in Section 3(2) of ERISA and
subject to Title IV of ERISA, which is maintained or contributed to by (or to
which there is an obligation to contribute of) the Borrower or any of its
Subsidiaries or any of its ERISA Affiliates, and each such plan for the five
year period immediately following the latest date on which the Borrower,

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any of its Subsidiaries or any of its ERISA Affiliates maintained, contributed
to or had an obligation to contribute to such plan.

        "Policies" means all insurance policies, annuity contracts, guaranteed
interest contracts and funding agreements (including riders to any such policies
or contracts, certificates issued with respect to group life insurance or
annuity contracts and any contracts issued in connection with retirement plans
or arrangements) and assumption certificates issued or to be issued (or filed
pending current review by applicable Governmental Authorities) by any Regulated
Insurance Company and any coinsurance agreements entered into or to be entered
into by any Regulated Insurance Company.

        "Pounds Sterling" means lawful money of the United Kingdom.

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

        "Principal Amount" means (i) outstanding principal amount of each Loan
denominated in Dollars, and/or (ii) the Dollar Equivalent of the outstanding
principal amount of each Approved Currency Loan, as the context may require.

        "Private Act" means separate legislation enacted in Bermuda with the
intention that such legislation apply specifically to the Borrower, in whole or
in part.

        "Register" has the meaning set forth in Section 9.04(b).

        "Regulated Insurance Company" means any Subsidiary of the Borrower,
whether now owned or hereafter acquired, that is authorized or admitted to carry
on or transact Insurance Business in any jurisdiction (foreign or domestic) and
is regulated by any Applicable Insurance Regulatory Authority.

        "Regulation D" means Regulation D of the Board as from time to time in
effect and any successor to all or a portion thereof establishing reserve
requirements.

        "Regulation T" means Regulation T of the Board as from time to time in
effect and any successor to all or a portion thereof establishing margin
requirements.

        "Regulation U" means Regulation U of the Board as from time to time in
effect and any successor to all or a portion thereof establishing margin
requirements.

        "Regulation X" means Regulation X of the Board as from time to time in
effect and any successor to all or a portion thereof establishing margin
requirements.

        "Reinsurance Agreement" means any agreement, contract, treaty,
certificate or other arrangement whereby any Regulated Insurance Company agrees
to transfer, cede or retrocede to another insurer or reinsurer all or part of
the liability assumed or assets held by such Regulated Insurance Company under a
policy or policies of insurance issued by such Regulated

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Insurance Company or under a reinsurance agreement assumed by such Regulated
Insurance Company.

        "Related Parties" means, with respect to any specified Person, such
Person's Affiliates and the respective directors, officers, employees, agents
and advisors of such Person and such Person's Affiliates.

        "Relevant Repayment Percentage" means, with respect to any mandatory
prepayment or repayment of any Class of Term Loans at any time, a fraction
(expressed as a percentage), the numerator of which is equal to the aggregate
Principal Amount of the Term Loans of such Class at such time and the
denominator of which is equal to the aggregate Principal Amount of all Classes
of Term Loans at such time.

        "Required Lenders" means, at any time, Lenders having Revolving Credit
Exposures and unused Commitments (or, after the Commitments have terminated,
Lenders having outstanding Principal Amount of Loans) representing more than
50.0% of the sum of the total Revolving Credit Exposures and unused Commitments
(or, after the Commitments have terminated, the Principal Amount of the
outstanding Loans) at such time.

        "Retrocession Agreement" means any agreement, contract, treaty or other
arrangement whereby one or more insurers or reinsurers, as retrocessionaires,
assume liabilities of reinsurers under a Reinsurance Agreement or other
retrocessionaires under another Retrocession Agreement.

        "Revolving Credit Exposure" means, with respect to any Lender at any
time, the sum of outstanding Principal Amount of such Lender's Revolving Loans
at such time.

        "Revolving Loans" means each Dollar Revolving Loan and each Approved
Currency Revolving Loan.

        "SAP" means, with respect to any Regulated Insurance Company, the
accounting procedures and practices prescribed or permitted by the Applicable
Insurance Regulatory Authority of the state in which such Regulated Insurance
Company is domiciled; it being understood and agreed that determinations in
accordance with SAP for purposes of Article VII, including defined terms as used
therein, are subject (to the extent provided therein) to Section 1.04.

        "Scheduled Term Loan Repayment" means each Dollar Scheduled Term Loan
Repayment and each Approved Currency Scheduled Term Loan Repayment.

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

        "Shareholders Agreement" means the Shareholders Agreement, dated as of
November 20, 2001, by and among the Borrower, each member of the Arch
Shareholder Group and each other party thereto, as amended through the Effective
Date.

        "Start Date" means, with respect to any Margin Adjustment Period, the
first day of such Margin Adjustment Period.

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        "Statutory Reserve Rate" means a fraction (expressed as a decimal), the
numerator of which is the number one and the denominator of which is the number
one minus the aggregate of the maximum reserve percentages (including any
marginal, special, emergency or supplemental reserves) expressed as a decimal
established by the Board to which the Administrative Agent is subject for
eurocurrency funding (currently referred to as "Eurocurrency Liabilities" in
Regulation D of the Board). Such reserve percentages shall include those imposed
pursuant to such Regulation D. Eurocurrency Loans shall be deemed to constitute
eurocurrency funding and to be subject to such reserve requirements without
benefit of or credit for proration, exemptions or offsets that may be available
from time to time to any Lender under such Regulation D or any comparable
regulation. The Statutory Reserve Rate shall be adjusted automatically on and as
of the effective date of any change in any reserve percentage.

        "Statutory Statements" means, with respect to any Regulated Insurance
Company for any fiscal year, the annual or quarterly financial statements of
such Regulated Insurance Company as required to be filed with the Insurance
Regulatory Authority of its jurisdiction of domicile and in accordance with the
laws of such jurisdiction, together with all exhibits, schedules, certificates
and actuarial opinions required to be filed or delivered therewith.

        "subsidiary" means, with respect to any Person (the "parent") at any
date, any corporation, limited liability company, partnership, association or
other entity the accounts of which would be consolidated with those of the
parent in the parent's consolidated financial statements if such financial
statements were prepared in accordance with GAAP as of such date, as well as any
other corporation, limited liability company, partnership, association or other
entity of which securities or other ownership interests representing more than
50% of the ordinary voting power or, in the case of a partnership, more than 50%
of the general partnership interests are, as of such date, owned, controlled or
held by the parent or one or more subsidiaries of the parent or by the parent
and one or more subsidiaries of the parent.

        "Subscription Agreement" means the Subscription Agreement, dated as of
October 24, 2001, as amended November 20, 2001 by and among the Borrower and the
Purchasers party thereto.

        "Subsidiary" means any subsidiary of the Borrower.

        "Syndication Agent" means Bank of America, N.A. in its capacity as
syndication agent under this Agreement.

        "Taxes" means any and all present or future taxes, levies, imposts,
duties, deductions, charges or withholdings imposed by any Governmental
Authority.

        "Term Loans" means each Dollar Term Loan and each Approved Currency Term
Loan.

        "Test Date" means, with respect to any Start Date, the last day of the
most recent fiscal quarter of the Borrower ended immediately prior to such Start
Date.

        "Test Period" means (x) at all times after the delivery of financial
statements pursuant to Section 5.01(a) in respect of the fiscal year ending
closest to December 31, 2003 and

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prior to the delivery of financial statements pursuant to Section 5.01(a) in
respect of the fiscal year ending closest to December 31, 2004, the period from
July 1, 2003 through December 31, 2003, and (y) at all times after the delivery
of financial statements pursuant to Section 5.01(a) in respect of the fiscal
year ending closest to December 31, 2004, the most recently ended fiscal year
for which financial statements have been delivered pursuant to Section 5.01(a).

        "Transactions" means the execution, delivery and performance by the
Borrower of this Agreement, the borrowing of Loans and the use of the proceeds
thereof.

        "Type", when used in reference to any Loan or Borrowing, refers to
whether the rate of interest on such Loan, or on the Loans comprising such
Borrowing, is determined by reference to the Adjusted LIBO Rate or the Alternate
Base Rate.

        "Wholly-Owned Subsidiary" of any Person means any Subsidiary of such
Person to the extent all of the capital stock or other ownership interests in
such Subsidiary, other than directors' or nominees' qualifying shares, is owned
directly or indirectly by such Person.

        Section 1.02.    Classification of Loans and Borrowings.    For purposes
of this Agreement, Loans may be classified and referred to by Class (e.g., a
"Dollar Revolving Loan") or by Type (e.g., a "Eurocurrency Loan") or by Class
and Type (e.g., a "Eurocurrency Revolving Loan"). Borrowings also may be
classified and referred to by Class (e.g., a "Revolving Borrowing") or by Type
(e.g., a "Eurocurrency Borrowing") or by Class and Type (e.g., a "Eurocurrency
Revolving Borrowing").

        Section 1.03.    Terms Generally.    The definitions of terms herein
shall apply equally to the singular and plural forms of the terms defined.
Whenever the context may require, any pronoun shall include the corresponding
masculine, feminine and neuter forms. The words "include", "includes" and
"including" shall be deemed to be followed by the phrase "without limitation".
The word "will" shall be construed to have the same meaning and effect as the
word "shall". Unless the context requires otherwise (a) any definition of or
reference to any agreement, instrument or other document herein shall be
construed as referring to such agreement, instrument or other document as from
time to time amended, supplemented or otherwise modified (subject to any
restrictions on such amendments, supplements or modifications set forth herein),
(b) any reference herein to any Person shall be construed to include such
Person's successors and assigns, (c) the words "herein", "hereof" and
"hereunder", and words of similar import, shall be construed to refer to this
Agreement in its entirety and not to any particular provision hereof, (d) all
references herein to Articles, Sections, Exhibits and Schedules shall be
construed to refer to Articles and Sections of, and Exhibits and Schedules to,
this Agreement and (e) the words "asset" and "property" shall be construed to
have the same meaning and effect and to refer to any and all tangible and
intangible assets and properties, including cash, securities, accounts and
contract rights.

        Section 1.04.    Accounting Terms; GAAP.    Except as otherwise
expressly provided herein, all terms of an accounting or financial nature shall
be construed in accordance with GAAP, as in effect from time to time; provided
that, if the Borrower notifies the Administrative Agent that the Borrower
requests an amendment to any provision hereof to eliminate the effect of any
change occurring after the date hereof in GAAP or in the application

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thereof on the operation of such provision (or if the Administrative Agent
notifies the Borrower that the Required Lenders request an amendment to any
provision hereof for such purpose), regardless of whether any such notice is
given before or after such change in GAAP or in the application thereof, then
such provision shall be interpreted on the basis of GAAP as in effect and
applied immediately before such change shall have become effective until such
notice shall have been withdrawn or such provision amended in accordance
herewith.

ARTICLE II

The Credits

        Section 2.01.    Commitments and Revolving Credit
Term-Out.    (a) Subject to the terms and conditions set forth herein, each
Dollar Lender agrees to make a loan or loans (the "Dollar Revolving Loans") to
the Borrower from time to time on or after the Effective Date and prior to the
Commitment Expiration Date in an aggregate Principal Amount that will not result
in (i) such Dollar Lender's Dollar Revolving Credit Exposure exceeding such
Lender's Dollar Commitment or (ii) the total Dollar Revolving Credit Exposures
exceeding the total Dollar Commitments. Each Dollar Revolving Loan shall be
denominated in Dollars. Within the foregoing limits and subject to the terms and
conditions set forth herein, the Borrower may borrow, prepay and reborrow Dollar
Revolving Loans.

        (b)   Subject to the terms and conditions set forth herein, each
Approved Currency Lender agrees to make a loan or loans (the "Approved Currency
Revolving Loans") to the Borrower from time to time on or after the Effective
Date and prior to the Commitment Expiration Date in an aggregate Principal
Amount that will not result in such Approved Currency Lender's Approved Currency
Revolving Credit Exposure exceeding such Lender's Approved Currency Commitment
or (ii) the total Approved Currency Revolving Credit Exposures exceeding the
total Approved Currency Commitments. Each Approved Currency Revolving Loan shall
be denominated in an Approved Currency as requested by the Borrower. Within the
foregoing limits and subject to the terms and conditions set forth herein, the
Borrower may borrow, prepay and reborrow Approved Currency Revolving Loans.

        (c)   Subject to the terms and conditions set forth herein, the Borrower
and each Dollar Lender which has Dollar Revolving Loans outstanding at such time
agree that at 9:00 a.m., New York City time, on the Commitment Expiration Date,
the aggregate principal amount of Dollar Revolving Loans owing to such Dollar
Lender and outstanding at such time shall (unless such Dollar Revolving Loans
have been declared (or have become) due and payable pursuant to this Agreement),
upon written notice (or telephonic notice promptly confirmed in writing) by the
Borrower to the Administrative Agent requesting such conversion, automatically
convert to and thereafter constitute Dollar Term Loans owing to such Dollar
Lender hereunder. The Dollar Term Loans of each Dollar Lender shall (i) be
maintained in Dollars and (ii) not exceed in initial Principal Amount for such
Dollar Lender an amount which equals the total Principal Amount of Dollar
Revolving Loans owed to such Dollar Lender and outstanding at 9:00 a.m., New
York City time, on the Commitment Expiration Date. Once repaid, Dollar Term
Loans may not be reborrowed.

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        (d)   Subject to the terms and conditions set forth herein, the Borrower
and each Approved Currency Lender which has Approved Currency Revolving Loans
outstanding at such time agree that at 9:00 a.m., New York City time, on the
Commitment Expiration Date, the aggregate principal amount of Approved Currency
Revolving Loans owing to such Approved Currency Lender and outstanding at such
time shall (unless such Approved Currency Revolving Loans have been declared (or
have become) due and payable pursuant to this Agreement), upon written notice
(or telephonic notice promptly confirmed in writing) by the Borrower to the
Administrative Agent requesting such conversion, automatically convert to and
thereafter constitute Approved Currency Term Loans owing to such Approved
Currency Lender hereunder. The Approved Currency Term Loans of each Approved
Currency Lender shall (i) be maintained in the same currencies in which the
related Approved Currency Revolving Loans were denominated on the Commitment
Expiration Date and (ii) not exceed in initial principal amount for such
Approved Currency Lender an amount which equals the total Principal Amount of
Approved Currency Revolving Loans owed to such Approved Currency Lender and
outstanding at 9:00 a.m., New York City time, on the Commitment Expiration Date.
Once repaid, Approved Currency Term Loans may not be reborrowed.

        Section 2.02.    Loans and Borrowings.    (a) Each Dollar Revolving Loan
shall be made as part of a Borrowing consisting of Dollar Revolving Loans made
by the Dollar Lenders ratably in accordance with their respective Dollar
Commitments. Each Approved Currency Revolving Loan shall be made as part of a
Borrowing consisting of Approved Currency Revolving Loans made by the Approved
Currency Lenders ratably in accordance with their respective Approved Currency
Commitments. The failure of any Lender to make any Revolving Loan required to be
made by it shall not relieve any other Lender of its obligations hereunder.

        (b)   Subject to Section 2.11, each Borrowing shall be comprised
entirely of ABR Loans or Eurocurrency Loans as the Borrower may request in
accordance herewith. Each Lender at its option may make any Eurocurrency Loan by
causing any domestic or foreign branch or Affiliate of such Lender to make such
Loan; provided that any exercise of such option shall not affect the obligation
of the Borrower to repay such Loan in accordance with the terms of this
Agreement.

        (c)   At the commencement of each Interest Period for any Eurocurrency
Borrowing, such Borrowing shall be in an aggregate Principal Amount of not less
than $5,000,000. At the time that each ABR Borrowing is made, such Borrowing
shall be in an aggregate amount that is an integral multiple of $1,000,000 and
not less than $5,000,000; provided that an ABR Revolving Borrowing or a
Eurocurrency Revolving Borrowing denominated in an Alternate Currency may be in
an aggregate amount that is equal to the entire unused balance of the total
Dollar Commitments or Approved Currency Commitments, as the case may be.
Borrowings of more than one Type may be outstanding at the same time; provided
that there shall not at any time be more than a total of ten Eurocurrency
Borrowings outstanding in the aggregate for all Classes.

        (d)   Notwithstanding any other provision of this Agreement, the
Borrower shall not be entitled to request, or to elect to convert or continue,
any Borrowing if the Interest Period requested with respect thereto would end
(i) in the case of Revolving Loans, after the Commitment Expiration Date and
(ii) in the case of Term Loans, after the Maturity Date.

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        Section 2.03.    Requests for Revolving Borrowings.    To request a
Revolving Borrowing, the Borrower shall notify the Administrative Agent of such
request by telephone (a) in the case of a Eurocurrency Borrowing denominated in
Dollars, not later than 10:00 a.m., New York City time, three Business Days
before the date of the proposed Borrowing, (b) in the case of a Eurocurrency
Borrowing denominated in an Alternate Currency, not later than 1:00 p.m., New
York time, four Business Days before the date of the proposed Borrowing or
(c) in the case of an ABR Borrowing, not later than 11:00 a.m., New York City
time, on the date of the proposed Borrowing. Each such telephonic Borrowing
Request shall be irrevocable and shall be confirmed promptly by hand delivery or
telecopy to the Administrative Agent of a written Borrowing Request in the form
of Exhibit B appropriately completed and signed by the Borrower. Each such
telephonic and written Borrowing Request shall specify the following information
in compliance with Section 2.02:

          (i)  the aggregate principal amount of the requested Borrowing;

         (ii)  the date of such Borrowing, which shall be a Business Day;

        (iii)  whether the Loans comprising such Borrowing are to be Dollar
Revolving Loans or Approved Currency Revolving Loans and, in the case of
Approved Currency Revolving Loans, the Approved Currency in which such Approved
Currency Revolving Loans shall be denominated;

        (iv)  whether such Borrowing is to be an ABR Borrowing or a Eurocurrency
Borrowing, provided that Alternate Currency Loans may not be incurred as
Alternate Base Rate Loans;

         (v)  in the case of a Eurocurrency Borrowing, the initial Interest
Period to be applicable thereto, which shall be a period contemplated by the
definition of the term "Interest Period"; and

        (vi)  the location and number of the Borrower's account to which funds
are to be disbursed.

        If no election as to the Type of Revolving Borrowing of Dollar Revolving
Loans is specified, then such Revolving Borrowing of Dollar Revolving Loans
shall be an ABR Borrowing. If no Interest Period is specified with respect to
any requested Eurocurrency Revolving Borrowing, then the Borrower shall be
deemed to have selected an Interest Period of one month's duration. Promptly
following receipt of a Borrowing Request in accordance with this Section, the
Administrative Agent shall advise each Lender which is required to make
Revolving Loans of the Class specified in the respective Borrowing Request of
the details thereof and of the amount of such Lender's Loan to be made as part
of the requested Borrowing.

        Section 2.04.    Funding of Borrowings.    (a) Each Lender shall make
each Loan to be made by it hereunder on the proposed date thereof by wire
transfer of immediately available funds by 12:00 noon, New York City time (or in
the case of an Alternate Currency Loan, 12:00 noon, London time), to the account
of the Administrative Agent most recently designated by it for such purpose by
notice to the Lenders. All such amounts shall be made available to the
Administrative Agent in the relevant Approved Currency. The Administrative Agent
will make

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such Loans available to the Borrower by wire transfer of immediately available
funds not later than 2:00 p.m. New York City time (or in the case of an
Alternate Currency Loan, 2:00 p.m., London time) to the account of the Borrower
designated by the Borrower in the applicable Borrowing Request.

        (b)   Unless the Administrative Agent shall have received notice from a
Lender prior to the proposed date of any Borrowing that such Lender will not
make available to the Administrative Agent such Lender's share of such
Borrowing, the Administrative Agent may assume that such Lender has made such
share available on such date in accordance with paragraph (a) of this Section
and may, in reliance upon such assumption, make available to the Borrower a
corresponding amount. In such event, if a Lender has not in fact made its share
of the applicable Borrowing available to the Administrative Agent, then the
applicable Lender and the Borrower severally agree to pay to the Administrative
Agent forthwith on demand such corresponding amount with interest thereon, for
each day from and including the date such amount is made available to the
Borrower to but excluding the date of payment to the Administrative Agent, at
(i) in the case of such Lender, the greater of the Federal Funds Effective Rate
and a rate determined by the Administrative Agent in accordance with banking
industry rules on interbank compensation or (ii) in the case of the Borrower,
the interest rate applicable to ABR Loans. If such Lender pays such amount to
the Administrative Agent, then such amount shall constitute such Lender's Loan
included in such Borrowing.

        Section 2.05.    Interest Elections.    (a) Each Borrowing initially
shall be of the Type and Class specified in the applicable Borrowing Request
and, in the case of a Eurocurrency Borrowing, shall have an initial Interest
Period as specified in such Borrowing Request. Thereafter, the Borrower may
elect to convert such Borrowing of the same Class and denominated in a single
Approved Currency to a different Type of such Class denominated in such Approved
Currency or to continue such Borrowing and, in the case of a Eurocurrency
Borrowing, may elect Interest Periods therefor, all as provided in this Section;
provided that Eurocurrency Borrowings denominated in an Alternate Currency may
not be converted into or maintained as ABR Borrowings. Subject to the other
provisions of this Section 2.05, the Borrower may elect different options with
respect to different portions of the affected Borrowing, in which case each such
portion shall be allocated ratably among the Lenders holding the Loans
comprising such Borrowing, and the Loans comprising each such portion shall be
considered a separate Borrowing.

        (b)   To make an election pursuant to this Section, the Borrower shall
notify the Administrative Agent of such election by telephone by the time that a
Borrowing Request would be required under Section 2.03 if the Borrower were
requesting a Revolving Borrowing of the Type and Class resulting from such
election to be made on the effective date of such election. Each such telephonic
Interest Election Request shall be irrevocable and shall be confirmed promptly
by hand delivery or telecopy to the Administrative Agent of a written Interest
Election Request in a form approved by the Administrative Agent and signed by
the Borrower.

        (c)   Each telephonic and written Interest Election Request shall
specify the following information in compliance with Section 2.02:

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          (i)  the Borrowing to which such Interest Election Request applies
and, if different options are being elected with respect to different portions
thereof, the portions thereof to be allocated to each resulting Borrowing (in
which case the information to be specified pursuant to clauses (iii) and
(iv) below shall be specified for each resulting Borrowing);

         (ii)  the effective date of the election made pursuant to such Interest
Election Request, which shall be a Business Day;

        (iii)  whether the resulting Borrowing is to be an ABR Borrowing or a
Eurocurrency Borrowing, provided that Alternate Currency Loans may not be
converted into or maintained as ABR Loans; and

        (iv)  if the resulting Borrowing is a Eurocurrency Borrowing, the
Interest Period to be applicable thereto after giving effect to such election,
which shall be a period contemplated by the definition of the term "Interest
Period".

        If any such Interest Election Request requests a Eurocurrency Borrowing
but does not specify an Interest Period, then the Borrower shall be deemed to
have selected an Interest Period of one month's duration.

        (d)   Promptly following receipt of an Interest Election Request, the
Administrative Agent shall advise each Lender of the details thereof and of such
Lender's portion of each resulting Borrowing.

        (e)   If the Borrower fails to deliver a timely Interest Election
Request with respect to a Eurocurrency Borrowing prior to the end of the
Interest Period applicable thereto, then, unless such Borrowing is repaid as
provided herein, at the end of such Interest Period such Borrowing shall be
converted to an ABR Borrowing; provided that if such Eurocurrency Borrowing is
denominated in an Alternate Currency, then such Eurocurrency Borrowing shall not
convert to an ABR Borrowing but shall instead be pre-paid by the Borrower on the
last day of such Interest Period. Notwithstanding any contrary provision hereof,
if an Event of Default has occurred and is continuing and the Administrative
Agent, at the request of the Required Lenders, so notifies the Borrower, then,
so long as an Event of Default is continuing (i) no outstanding Borrowing may be
converted to or continued as a Eurocurrency Borrowing and (ii) unless repaid,
each Eurocurrency Borrowing shall be converted to an ABR Borrowing at the end of
the Interest Period applicable thereto; provided that if such Eurocurrency
Borrowing is denominated in an Alternate Currency, then such Eurocurrency
Borrowing shall not convert to an ABR Borrowing but shall instead be pre-paid by
the Borrower on the last day of such Interest Period.

        Section 2.06.    Termination and Reduction of Commitments.    (a) Unless
previously terminated, the Commitments shall terminate on the Commitment
Expiration Date.

        (b)   In addition to any other Commitment reductions hereunder, the
Commitments shall be reduced on the dates and in the amounts specified in
Section 2.08.

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        (c)   The Borrower may at any time terminate, or from time to time
reduce, the Dollar Commitments; provided that (i) each reduction of the Dollar
Commitments shall be in an amount that is an integral multiple of $5,000,000 and
not less than $5,000,000 and (ii) the Borrower shall not terminate or reduce the
Dollar Commitments if, after giving effect to any concurrent prepayment of the
Dollar Loans in accordance with Section 2.08, the Dollar Revolving Credit
Exposures would exceed the total Dollar Commitments. Each such reduction shall
be applied to the Dollar Commitments of the Dollar Lenders on a pro rata basis
based on the amount of such Lenders' respective Dollar Commitments.

        (d)   The Borrower may at any time terminate, or from time to time
reduce, Approved Currency Commitments; provided that (i) each reduction of the
Approved Currency Commitments shall be in an amount that is an integral multiple
of $5,000,000 and not less than $5,000,000 and (ii) the Borrower shall not
terminate or reduce the Approved Currency Commitments if, after giving effect to
any concurrent prepayment of the Approved Currency Loans in accordance with
Section 2.08, the Approved Currency Revolving Credit Exposures would exceed the
total Approved Currency Commitments. Each such reduction shall be applied to the
Approved Currency Commitments of the Approved Currency Lenders on a pro rata
basis based on the amount of such Lenders' respective Approved Currency
Commitments.

        (e)   The Borrower shall notify the Administrative Agent of any election
to terminate or reduce the Commitments under paragraph (c) or (d) of this
Section at least three Business Days prior to the effective date of such
termination or reduction, specifying such election and the effective date
thereof. Promptly following receipt of any notice, the Administrative Agent
shall advise the Lenders of the contents thereof. Each notice delivered by the
Borrower pursuant to this Section shall be irrevocable; provided that a notice
of termination of Commitments delivered by the Borrower may state that such
notice is conditioned upon the effectiveness of other credit facilities, in
which case such notice may be revoked by the Borrower (by notice to the
Administrative Agent on or prior to the specified effective date) if such
condition is not satisfied. Any termination or reduction of any Commitments
shall be permanent. Each reduction of the respective Commitments shall be made
ratably among the Lenders in accordance with their respective Commitments.

        Section 2.07.    Repayment of Loans; Evidence of Debt.    (a) The
Borrower hereby unconditionally promises to pay (i) in the case of any Revolving
Loans which are not elected to be converted to Term Loans by the Borrower
pursuant to Section 2.01(c) or 2.01(d), to the Administrative Agent for the
account of each Lender with any such Revolving Loans outstanding the then unpaid
principal amount of all such Revolving Loans on the Commitment Expiration Date
and (ii) in the case of any Term Loans, to the Administrative Agent for the
account of each Lender with any outstanding Term Loans the then unpaid principal
amount of all such Term Loans on the Maturity Date.

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

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        (c)   The Administrative Agent shall maintain accounts in which it shall
record (i) the amount of each Loan made hereunder, the Class and Type thereof
and the Interest Period applicable thereto, (ii) the amount of any principal or
interest due and payable or to become due and payable from the Borrower to each
Lender hereunder and (iii) the amount of any sum received by the Administrative
Agent hereunder for the account of the Lenders and each Lender's share thereof.

        (d)   The entries made in the accounts maintained pursuant to
paragraph (b) or (c) of this Section shall be prima facie evidence of the
existence and amounts of the obligations recorded therein; provided that the
failure of any Lender or the Administrative Agent to maintain such accounts or
any error therein shall not in any manner affect the obligation of the Borrower
to repay the Loans in accordance with the terms of this Agreement.

        (e)   Any Lender may request that Loans made by it be evidenced by a
promissory note. In such event, the Borrower shall prepare, execute and deliver
to such Lender a promissory note payable to the order of such Lender (or, if
requested by such Lender, to such Lender and its registered assigns) and in a
form approved by the Administrative Agent. Thereafter, the Loans evidenced by
such promissory note and interest thereon shall at all times (including after
assignment pursuant to Section 9.04) be represented by one or more promissory
notes in such form payable to the order of the payee named therein (or, if such
promissory note is a registered note, to such payee and its registered assigns).

        Section 2.08.    Prepayment of Loans.    (a) The Borrower shall have the
right at any time and from time to time to prepay any Borrowing in whole or in
part, without premium or penalty, except as provided in Section 2.13, subject to
prior notice in accordance with paragraph (b) of this Section.

        (b)   The Borrower shall notify the Administrative Agent by telephone
(confirmed by telecopy) of any prepayment hereunder (i) in the case of
prepayment of a Eurocurrency Borrowing denominated in Dollars, not later than
11:00 a.m., New York City time, three Business Days before the date of
prepayment, (ii) in the case of any prepayment of a Eurocurrency Borrowing
denominated in an Alternate Currency, not later than 11:00 a.m. London time,
three Business Days before the date of prepayment, or (iii) in the case of
prepayment of an ABR Revolving Borrowing, not later than 11:00 a.m., New York
City time, one Business Day before the date of prepayment. Each such notice
shall be irrevocable and shall specify the prepayment date, the Borrowing or
Borrowings which are to be prepaid and the currency in which such Borrowing or
Borrowings are denominated and the principal amount of each Borrowing or portion
thereof to be prepaid; provided that, if a notice of prepayment is given in
connection with a conditional notice of termination of the Commitments as
contemplated by Section 2.06, then such notice of prepayment may be revoked if
such notice of termination is revoked in accordance with Section 2.06. Promptly
following receipt of any such notice relating to a Borrowing, the Administrative
Agent shall advise the Lenders of the contents thereof. Each partial prepayment
of any Borrowing shall be in an amount that would be permitted in the case of an
advance of a Revolving Borrowing of the same Type and Class as provided in
Section 2.02. Each prepayment of a Borrowing shall be applied ratably to the
Loans included in the prepaid Borrowing of the respective Class. Prepayments
shall be accompanied by accrued interest to the extent required by Section 2.10.
Each prepayment of Term Loans pursuant to

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Section 2.08(a) shall be applied to reduce the then remaining Scheduled Term
Loan Repayments in direct order of maturity.

        (c)   If on any date, the aggregate outstanding Principal Amount of
Dollar Revolving Loans exceeds the sum of the Dollar Commitments as then in
effect, the Borrower shall repay on such day the outstanding Dollar Revolving
Loans in an aggregate Principal Amount equal to such excess.

        (d)   If on any date (including, without limitation, any date on which
Dollar Equivalents are determined pursuant to Section 9.14), the aggregate
outstanding Principal Amount of Approved Currency Revolving Loans exceeds 105%
of the sum of the Approved Currency Commitments as then in effect, the Borrower
shall repay on such day the outstanding Approved Currency Revolving Loans in an
aggregate Principal Amount such that the aggregate Principal Amount of the
Approved Currency Revolving Loans does not exceed the total Approved Currency
Commitments at such time.

        (e)   If on any date (including, without limitation, any date on which
Dollar Equivalents are determined pursuant to Section 9.14) the aggregate
Principal Amount of Approved Currency Term Loans exceeds 105% of the Initial
Approved Currency Commitment Amount, then the Borrower shall repay Approved
Currency Term Loans in an aggregate amount equal to the amount by which the
aggregate Principal Amount of Approved Currency Term Loans exceeds the Initial
Approved Currency Commitment Amount.

        (f)    In addition to any other mandatory repayments or commitment
reductions provided herein, on each date on or after the Effective Date on which
the Borrower or any of its Subsidiaries receives any cash proceeds from any
issuance of public debt by the Borrower or any of its Subsidiaries in a capital
markets transaction, an amount equal to 50% of the Net Cash Proceeds of the
respective issuance of public debt shall be applied as a mandatory Commitment
reduction or repayment in accordance with the immediately succeeding sentence.
Each amount required to be applied pursuant to this Section 2.08(f) shall be
applied (i) if prior to the Commitment Expiration Date, as a reduction to the
Commitments in accordance with the immediately succeeding sentence and (ii) if
on or after the Commitment Expiration Date, as a mandatory repayment of
outstanding Term Loans in accordance with the second succeeding sentence. Any
such reduction to the Commitments pursuant to this Section 2.08(f) shall be
applied to the Dollar Revolving Commitments and the Approved Currency
Commitments as directed by the Borrower in writing to the Administrative Agent.
Any such prepayment of the Term Loans pursuant to this Section 2.08 (f) shall be
applied to the Dollar Term Loans and the Approved Currency Term Loans, with
(i) each such Class of Term Loans to receive its Relevant Repayment Percentage
of such prepayment, (ii) Approved Currency Term Loans denominated in a
particular currency to receive their portion of such prepayment based on the
relative Principal Amount of each denomination of Approved Currency Term Loans
and (iii) the Dollar Term Loans of the Dollar Lenders and the Approved Currency
Term Loans of the Approved Currency Lenders to be prepaid on a pro rata basis
based on such Lenders' respective Principal Amount of Dollar Term Loans and
various Principal Amounts of Approved Currency Term Loans denominated in the
relevant currencies, as the case may be. The amount of each principal repayment
of each outstanding Dollar Term Loan and Approved Currency Term Loan made as
required by this Section 2.08(f) shall be applied to reduce the then remaining
Scheduled Term

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Loan Repayments of such Class of Term Loans on a pro rata basis (based upon the
then remaining principal amounts of such Scheduled Term Loan Repayment after
giving effect to all prior reductions thereto).

        (g)   In addition to any other mandatory repayments and prepayments
hereunder, on each date set forth below, the Borrower shall be required to repay
that principal amount of Dollar Term Loans (applied to the Dollar Term Loans of
each Dollar Lender on a pro rata basis based on the amount of their respective
Dollar Term Loans then outstanding), to the extent then outstanding, equal to
the initial principal amount of the Dollar Revolving Loans converted to Dollar
Term Loans on the Commitment Expiration Date multiplied by the percentage set
forth opposite each such date below (each such repayment, as the same may be
reduced as provided in Sections 2.08 (b) and (f), a "Dollar Scheduled Term Loan
Repayment"):

Dollar Scheduled Repayment Date

--------------------------------------------------------------------------------

  Percentage

--------------------------------------------------------------------------------

  September 30, 2005   16.66 % March 31, 2006   16.67 % Maturity Date   66.67 %

        (h)   In addition to any other mandatory repayments and prepayments
hereunder, on each date set forth below, the Borrower shall be required to repay
that principal amount of Approved Currency Term Loans (with Approved Currency
Term Loans denominated in a particular currency to receive a ratable share of
such mandatory repayment based on the relative Principal Amount of each
denomination of Approved Currency Loans and the Approved Currency Term Loans of
the Approved Currency Lenders to receive their pro rata portion of such
mandatory repayment based on such Lenders' Principal Amounts of Approved
Currency Term Loans), to the extent then outstanding, equal to the initial
principal amount of the Approved Currency Revolving Loans converted to Approved
Currency Term Loans on the Commitment Expiration Date multiplied by the
percentage set forth opposite each such date below (each such repayment, as the
same may be reduced as provided in Sections 2.08 (b) and (f), an "Approved
Currency Scheduled Term Loan Repayment"):

Approved Currency Scheduled Repayment Date

--------------------------------------------------------------------------------

  Percentage

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  September 30, 2005   16.66 % March 31, 2006   16.67 % Maturity Date   66.67 %

        (i)    Notwithstanding the foregoing provisions of this Section 2.08
(other than Sections 2.08(a), (b), (g) and (h), which Sections shall not have
the benefits of this sentence), if at any time the mandatory repayment of Loans
pursuant to this Section 2.08 would result in the Borrower incurring breakage
costs under Section 2.13 as a result of Eurocurrency Loans being repaid other
than on the last day of an Interest Period applicable hereto (any such
Eurocurrency

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Loans, "Affected Loans"), the Borrower may elect, by written notice to the
Administrative Agent, to have the provisions of the following sentence be
applicable so long as no Default or Event of Default then exists. At the time
any Affected Loans are otherwise required to be prepaid, the Borrower may elect
to deposit 100% (or such lesser percentage elected by the Borrower as not being
repaid) of the principal amounts that otherwise would have been paid in respect
of the Affected Loans with the Administrative Agent to be held as security for
the obligations of the Borrower hereunder pursuant to a cash collateral
agreement to be entered into in form and substance satisfactory to the
Administrative Agent and shall provide for investments of such deposits as
directed by the Borrower and satisfactory to the Administrative Agent, with such
cash collateral to be released from such cash collateral account (and applied to
repay the principal amount of such Eurocurrency Loans) upon each occurrence
thereafter of the last day of an Interest Period applicable to such Eurocurrency
Loans (or such earlier date or dates as shall be requested by the Borrower, with
the amount to be so released and applied on the last day of each Interest Period
to be the amount of such Eurocurrency Loans to which such Interest Period
applies (or, if less, the amount remaining in such cash collateral account);
provided that (i) interest in respect of such Affected Loans shall continue to
accrue thereon at the rate provided hereunder until such Affected Loans have
been repaid in full and (ii) at any time while an Event of Default has occurred
and is continuing or upon written notice from the Required Lenders, the Required
Lenders may direct the Administrative Agent (in which case the Administrative
Agent shall, and is hereby authorized by the Borrower to, follow said
directions) to apply any or all proceeds then on deposit in such collateral
account to the payment of such Affected Loans. All risk of loss in respect of
investments made as contemplated in this Section 2.08(i) shall be on the
Borrower. Under no circumstances shall the Administrative Agent be liable or
accountable to the Borrower or any other Person for any decrease in the value of
the cash collateral account or for any loss resulting from the sale of any
investment so made.

        Section 2.09.    Fees.    (a) The Borrower agrees to pay to the
Administrative Agent for the account of each Lender a commitment fee, which
shall accrue at the Applicable Commitment Fee Rate on the daily amount of the
unutilized Commitment of such Lender during the period from and including the
Effective Date to but excluding the Commitment Expiration Date. Accrued
commitment fees shall be payable in arrears on the last day of March, June,
September and December of each year and on the Commitment Expiration Date
commencing on the first such date to occur after the date hereof. All commitment
fees shall be computed on the basis of a year of 360 days and shall be payable
for the actual number of days elapsed (including the first day but excluding the
last day).

        (b)   The Borrower agrees to pay to the Administrative Agent, for its
own account, fees payable in the amounts and at the times separately agreed upon
between the Borrower and the Administrative Agent.

        (c)   All fees payable hereunder shall be paid on the dates due, in
immediately available funds, to the Administrative Agent for distribution, in
the case of commitment fees to the Lenders. Fees paid shall not be refundable
under any circumstances.

        Section 2.10.    Interest.    (a) The Loans comprising each ABR
Borrowing shall bear interest at the Alternate Base Rate plus the Applicable
Rate.

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        (b)   The Loans comprising each Eurocurrency Borrowing shall bear
interest, at the Adjusted LIBO Rate for the Interest Period in effect for such
Borrowing plus the Applicable Rate.

        (c)   Notwithstanding the foregoing, if any principal of or interest on
any Loan or any fee or other amount payable by the Borrower hereunder is not
paid when due, whether at stated maturity, upon acceleration or otherwise, such
overdue amount shall bear interest, after as well as before judgment, at a rate
per annum equal to (i) in the case of overdue principal of any Loan, 2% plus the
rate otherwise applicable to such Loan as provided in the preceding paragraphs
of this Section or (ii) in the case of any other amount, 2% plus the rate
applicable to ABR Loans as provided in paragraph (a) of this Section.

        (d)   Accrued interest on each Loan shall be payable in arrears on each
Interest Payment Date for such Loan and, (x) in the case of Revolving Loans, on
the Commitment Expiration Date and (y) in the case of Term Loans, on the
Maturity Date; provided that (i) interest accrued pursuant to paragraph (c) of
this Section shall be payable on demand, (ii) in the event of any repayment or
prepayment of any Loan (other than a prepayment of an ABR Revolving Loan prior
to the Commitment Expiration Date), accrued interest on the principal amount
repaid or prepaid shall be payable on the date of such repayment or prepayment
and (iii) in the event of any conversion of any Eurocurrency Loan prior to the
end of the current Interest Period therefor, accrued interest on such Loan shall
be payable on the effective date of such conversion.

        (e)   All interest hereunder shall be computed on the basis of a year of
360 days, except that interest computed by reference to the Alternate Base Rate
at times when the Alternate Base Rate is based on the Prime Rate shall be
computed on the basis of a year of 365 days (or 366 days in a leap year), and in
each case shall be payable for the actual number of days elapsed (including the
first day but excluding the last day). The applicable Alternate Base Rate or
Adjusted LIBO Rate shall be determined by the Administrative Agent, and such
determination shall be conclusive absent manifest error.

        Section 2.11.    Alternate Rate of Interest.    If prior to the
commencement of any Interest Period for a Eurocurrency Borrowing:

        (a)   the Administrative Agent determines (which determination shall be
conclusive absent manifest error) that adequate and reasonable means do not
exist for ascertaining the Adjusted LIBO Rate for such Interest Period;

        (b)   the Administrative Agent is advised by the Required Lenders that
the Adjusted LIBO Rate for such Interest Period will not adequately and fairly
reflect the cost to such Lenders of making or maintaining their Loans included
in such Borrowing for such Interest Period; or

        (c)   the Administrative Agent determines (which determination shall be
conclusive absent manifest error) at any time that any Alternate Currency is not
available in sufficient amounts, as determined in good faith by the
Administrative Agent, to fund any Borrowing of Loans denominated in such
Alternate Currency;

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then the Administrative Agent shall give notice thereof to the Borrower and the
Lenders by telephone or telecopy as promptly as practicable thereafter and,
until the Administrative Agent notifies the Borrower and the Lenders that the
circumstances giving rise to such notice no longer exist, (A)(i) in the case of
clauses (a) and (b) above (I) any Interest Election Request that requests the
conversion of any Borrowing to, or continuation of any Borrowing as, a
Eurocurrency Borrowing denominated in Dollars shall be ineffective and (II) the
Adjusted LIBO Rate for any such Eurocurrency Borrowing denominated in an
Alternate Currency shall be determined in accordance with the last sentence of
the definition of LIBO Rate and (ii) if any Borrowing Request requests a
Eurocurrency Borrowing denominated in Dollars, such Borrowing shall be made as
an ABR Borrowing provided that if the circumstances giving rise to such notice
affect only one Type of Borrowings, then the other Type of Borrowings shall be
permitted and (B) in the case of clause (c) above, Loans in the affected
Alternate Currency shall no longer be available and any Borrowing request given
by the Borrower with respect to such Alternate Currency Loans which have not yet
been incurred shall be deemed rescinded by the Borrower.

        Section 2.12.    Increased Costs.    (a) If any Change in Law shall:

          (i)  impose, modify or deem applicable any reserve, special deposit or
similar requirement against assets of, deposits with or for the account of, or
credit extended by, any Lender (except any such reserve requirement reflected in
the Adjusted LIBO Rate); or

         (ii)  impose on any Lender or the London interbank market any other
condition affecting this Agreement or Eurocurrency Loans made by such Lender;

and the result of any of the foregoing shall be to increase the cost to such
Lender of making or maintaining any Eurocurrency Loan (or of maintaining its
obligation to make any such Loan) or to increase the cost to such Lender or to
reduce the amount of any sum received or receivable by such Lender hereunder
(whether of principal, interest or otherwise), then the Borrower will pay to
such Lender, as the case may be, such additional amount or amounts as will
compensate such Lender, as the case may be, for such additional costs incurred
or reduction suffered.

        (b)   If any Lender determines that any Change in Law regarding capital
requirements has or would have the effect of reducing the rate of return on such
Lender's capital or on the capital of such Lender's holding company, if any, as
a consequence of this Agreement or the Loans made by such Lender, to a level
below that which such Lender or such Lender's holding company could have
achieved but for such Change in Law (taking into consideration such Lender's
policies and the policies of such Lender's holding company with respect to
capital adequacy), then from time to time the Borrower will pay to such Lender
such additional amount or amounts as will compensate such Lender or such
Lender's holding company for any such reduction suffered.

        (c)   In the event that any Lender shall in good faith determine (which
determination shall, absent manifest error, be final and conclusive and binding
on all parties hereto) at any time that such Lender has incurred Additional
Costs in respect of any Loans then such Lender shall promptly notify the
Borrower and the Administrative Agent in writing specifying the additional
amounts required to indemnify such Lender against such Additional

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Costs (such written notice to provide in reasonable detail a computation of such
additional amounts) and the Borrower shall, and shall be obligated to, pay to
such Lender such specified amounts as additional interest at the time that the
Borrower is otherwise required to pay interest in respect of such Loan or, if
later, on written demand therefor by such Lender.

        (d)   A certificate of a Lender setting forth the amount or amounts
necessary to compensate such Lender or its holding company, as the case may be,
as specified in paragraph (a) or (b) of this Section shall be delivered to the
Borrower and shall be conclusive absent manifest error. The Borrower shall pay
such Lender the amount shown as due on any such certificate within 10 days after
receipt thereof.

        (e)   Failure or delay on the part of any Lender to demand compensation
pursuant to this Section shall not constitute a waiver of such Lender's right to
demand such compensation; provided that the Borrower shall not be required to
compensate a Lender pursuant to this Section for any increased costs or
reductions incurred more than 90 days prior to the date that such Lender
notifies the Borrower of the Change in Law giving rise to such increased costs
or reductions and of such Lender's intention to claim compensation therefor;
provided, further, that, if the Change in Law giving rise to such increased
costs or reductions is retroactive, then the 90-day period referred to above
shall be extended to include the period of retroactive effect thereof.

        Section 2.13.    Break Funding Payments.    In the event of (a) the
payment of any principal of any Eurocurrency Loan other than on the last day of
an Interest Period applicable thereto (including as a result of a mandatory
prepayment under Section 2.08 or an Event of Default), (b) the conversion of any
Eurocurrency Loan other than on the last day of the Interest Period applicable
thereto, (c) the failure to borrow, convert, continue or prepay any Eurocurrency
Loan on the date specified in any notice delivered pursuant hereto (regardless
of whether such notice may be revoked under Section 2.08(b) and is revoked in
accordance therewith), or (d) the assignment of any Eurocurrency Loan other than
on the last day of the Interest Period applicable thereto as a result of a
request by the Borrower pursuant to Section 2.16, then, in any such event, the
Borrower shall compensate each Lender for the loss, cost and expense
attributable to such event. In the case of a Eurocurrency Loan, such loss, cost
or expense to any Lender shall be deemed to include an amount determined by such
Lender to be the excess, if any, of (i) the amount of interest which would have
accrued on the principal amount of such Loan had such event not occurred, at the
Adjusted LIBO Rate that would have been applicable to such Loan, for the period
from the date of such event to the last day of the then current Interest Period
therefor (or, in the case of a failure to borrow, convert or continue, for the
period that would have been the Interest Period for such Loan), over (ii) the
amount of interest which would accrue on such principal amount for such period
at the interest rate which such Lender would bid were it to bid, at the
commencement of such period, for dollar deposits of a comparable amount and
period from other banks in the eurodollar market. A certificate of any Lender
setting forth any amount or amounts that such Lender is entitled to receive
pursuant to this Section shall be delivered to the Borrower and shall be
conclusive absent manifest error. The Borrower shall pay such Lender the amount
shown as due on any such certificate within 10 days after receipt thereof.

        Section 2.14.    Taxes.    (a) Any and all payments by or on account of
any obligation of the Borrower hereunder shall be made free and clear of and
without deduction for any Indemnified Taxes or Other Taxes; provided that if the
Borrower shall be required to deduct

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any Indemnified Taxes or Other Taxes from such payments, then (i) the sum
payable shall be increased as necessary so that after making all required
deductions (including deductions applicable to additional sums payable under
this Section) the Administrative Agent or Lender (as the case may be) receives
an amount equal to the sum it would have received had no such deductions been
made, (ii) the Borrower shall make such deductions and (iii) the Borrower shall
pay the full amount deducted to the relevant Governmental Authority in
accordance with applicable law.

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

        (c)   The Borrower shall indemnify the Administrative Agent and each
Lender within 10 days after written demand therefor, for the full amount of any
Indemnified Taxes or Other Taxes that the Borrower failed to deduct or withhold
and that were paid by the Administrative Agent or such Lender on or with respect
to any payment by or on account of any obligation of the Borrower hereunder
(including Indemnified Taxes or Other Taxes imposed or asserted on or
attributable to amounts payable under this Section) and any penalties, interest
and reasonable expenses arising therefrom or with respect thereto, whether or
not such Indemnified Taxes or Other Taxes were correctly or legally imposed or
asserted by the relevant Governmental Authority. A certificate as to the amount
of such payment or liability delivered to the Borrower by a Lender or by the
Administrative Agent on its own behalf or on behalf of a Lender, shall be
conclusive absent manifest error.

        (d)   As soon as practicable after any payment of Indemnified Taxes or
Other Taxes by the Borrower to a Governmental Authority, the Borrower shall
deliver to the Administrative Agent the original or a certified copy of a
receipt issued by such Governmental Authority evidencing such payment, a copy of
the return reporting such payment or other evidence of such payment reasonably
satisfactory to the Administrative Agent.

        (e)   Each Foreign Lender shall deliver to the Borrower (with a copy to
the Administrative Agent), at the time or times prescribed by applicable law,
such properly completed and executed documentation prescribed by applicable law
or reasonably requested by the Borrower (if any), or will comply with such other
requirements, if any, as is currently applicable, as will permit payments under
this Agreement to be made without withholding or at a reduced rate; provided,
however, that the Borrower shall have furnished to each such Lender in a
reasonably timely manner copies of such documentation and notice of such
requirements together with applicable instructions; provided, further, that no
such Lender shall have any obligation to provide such documentation or comply
with such requirements if it would result in a material economic, legal or
regulatory disadvantage to any such Lender.

        (f)    If the Administrative Agent or a Lender determines, in its sole
discretion, that it has received a refund of any Taxes or Other Taxes as to
which it has been indemnified by the Borrower or with respect to which the
Borrower has paid additional amounts pursuant to this Section 2.14, it shall pay
over such refund to the Borrower (but only to the extent of indemnity payments
made, or additional amounts paid, by the Borrower under this Section 2.14 with
respect to the Taxes or Other Taxes giving rise to such refund), net of all
out-of-pocket expenses of the Administrative Agent or such Lender and without
interest (other than any interest paid by

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the relevant Governmental Authority with respect to such refund); provided, that
the Borrower, upon the request of the Administrative Agent or such Lender,
agrees to repay the amount paid over to the Borrower (plus any penalties,
interest or other charges imposed by the relevant Governmental Authority) to the
Administrative Agent or such Lender in the event the Administrative Agent or
such Lender is required to repay such refund to such Governmental Authority.
This Section shall not be construed to require the Administrative Agent or any
Lender to make available its tax returns (or any other information relating to
its taxes which it deems confidential) to the Borrower or any other Person.

        (g)   Any Lender that is not a Lender as of the Effective Date shall not
be entitled to any greater payment under this Section 2.14 than such Lender's
assignor could have been entitled to absent such assignment except to the extent
that the entitlement to a greater payment resulted from a Change in Law.

        Section 2.15.    Payments Generally; Pro Rata Treatment; Sharing of
Set-offs.    (a) The Borrower shall make each payment required to be made by it
hereunder (whether of principal, interest, fees or of amounts payable under
Section 2.12, 2.13 or 2.14, or otherwise) prior to 12:00 noon, New York City
time, on the date when due, in immediately available funds, without set-off or
counterclaim in (x) Dollars, if such payment is made in respect of any
obligation of the Borrower under this Agreement except as otherwise provided in
the immediately succeeding clause (y) and (y) the appropriate Alternate
Currency, if such payment is made in respect of principal of or interest on
Alternate Currency Loans. Any amounts received after such time on any date may,
in the discretion of the Administrative Agent, be deemed to have been received
on the next succeeding Business Day for purposes of calculating interest
thereon. All such payments shall be made to the Administrative Agent (i) in the
case of clause (x) of the preceding sentence, at its offices at 270 Park Avenue,
New York, New York and (ii) in the case of clause (y) of the preceding sentence,
at its offices at J.P. Morgan Europe Limited, 125 London Wall, EC2Y 5AJ, except
that payments pursuant to Sections 2.12, 2.13, 2.14 and 9.03 shall be made
directly to the Persons entitled thereto. The Administrative Agent shall
distribute any such payments received by it for the account of any other Person
to the appropriate recipient promptly following receipt thereof. If any payment
hereunder shall be due on a day that is not a Business Day, the date for payment
shall be extended to the next succeeding Business Day, and, in the case of any
payment accruing interest, interest thereon shall be payable for the period of
such extension.

        (b)   If at any time insufficient funds are received by and available to
the Administrative Agent to pay fully all amounts of principal, interest and
fees then due hereunder, such funds shall be applied (i) first, towards payment
of interest and fees then due hereunder, ratably among the parties entitled
thereto in accordance with the amounts of interest and fees then due to such
parties, and (ii) second, towards payment of principal then due hereunder,
ratably among the parties entitled thereto in accordance with the amounts of
principal then due to such parties.

        (c)   If any Lender shall, by exercising any right of set-off or
counterclaim or otherwise, obtain payment in respect of any principal of or
interest on any of its Loans resulting in such Lender receiving payment of a
greater proportion of the aggregate Principal Amount of its Loans and accrued
interest thereon than the proportion received by any other Lender, then the

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Lender receiving such greater proportion shall purchase (for cash at face value)
participations in the Loans of other Lenders to the extent necessary so that the
benefit of all such payments shall be shared by the Lenders ratably in
accordance with the aggregate Principal Amount of and accrued interest on their
respective Loans; provided that (i) if any such participations are purchased and
all or any portion of the payment giving rise thereto is recovered, such
participations shall be rescinded and the purchase price restored to the extent
of such recovery, without interest, and (ii) the provisions of this paragraph
shall not be construed to apply to any payment made by the Borrower pursuant to
and in accordance with the express terms of this Agreement or any payment
obtained by a Lender as consideration for the assignment of or sale of a
participation in any of its Loans to any assignee or participant, other than to
the Borrower or any Subsidiary or Affiliate thereof (as to which the provisions
of this paragraph shall apply). The Borrower consents to the foregoing and
agrees, to the extent it may effectively do so under applicable law, that any
Lender acquiring a participation pursuant to the foregoing arrangements may
exercise against the Borrower rights of set-off and counterclaim with respect to
such participation as fully as if such Lender were a direct creditor of the
Borrower in the amount of such participation.

        (d)   Unless the Administrative Agent shall have received notice from
the Borrower prior to the date on which any payment is due to the Administrative
Agent for the account of the Lenders hereunder that the Borrower will not make
such payment, the Administrative Agent may assume that the Borrower has made
such payment on such date in accordance herewith and may, in reliance upon such
assumption, distribute to the Lenders the amount due. In such event, if the
Borrower has not in fact made such payment, then each of the Lenders severally
agrees to repay to the Administrative Agent forthwith on demand the amount so
distributed to such Lender with interest thereon, for each day from and
including the date such amount is distributed to it to but excluding the date of
payment to the Administrative Agent, at the greater of the Federal Funds
Effective Rate and a rate determined by the Administrative Agent in accordance
with banking industry rules on interbank compensation.

        (e)   If any Lender shall fail to make any payment required to be made
by it pursuant to Section 2.04(b) or 2.15(d), then the Administrative Agent may,
in its discretion (notwithstanding any contrary provision hereof), apply any
amounts thereafter received by the Administrative Agent for the account of such
Lender to satisfy such Lender's obligations under such Sections until all such
unsatisfied obligations are fully paid.

        Section 2.16.    Mitigation Obligations; Replacement of
Lenders.    (a) If any Lender requests compensation under Section 2.12, or if
the Borrower is required to pay any additional amount to any Lender or any
Governmental Authority for the account of any Lender pursuant to Section 2.14,
then such Lender shall use reasonable efforts to designate a different lending
office for funding or booking its Loans hereunder or to assign its rights and
obligations hereunder to another of its offices, branches or affiliates, if, in
the judgment of such Lender, such designation or assignment (i) would eliminate
or reduce amounts payable pursuant to Section 2.12 or 2.14, as the case may be,
in the future and (ii) would not subject such Lender to any unreimbursed cost or
expense and would not otherwise be disadvantageous to such Lender. The Borrower
hereby agrees to pay all reasonable costs and expenses incurred by any Lender in
connection with any such designation or assignment.

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        (b)   If any Lender requests compensation under Section 2.12, or if the
Borrower is required to pay any additional amount to any Lender or any
Governmental Authority for the account of any Lender pursuant to Section 2.14,
or if any Lender defaults in its obligation to fund Loans hereunder, then the
Borrower may, at its sole expense and effort, upon notice to such Lender and the
Administrative Agent, require such Lender to assign and delegate, without
recourse (in accordance with and subject to the restrictions contained in
Section 9.04), all its interests, rights and obligations under this Agreement to
an assignee that shall assume such obligations (which assignee may be another
Lender, if a Lender accepts such assignment); providedthat (i) the Borrower
shall have received the prior written consent of the Administrative Agent, which
consent shall not unreasonably be withheld, (ii) such Lender shall have received
payment of an amount equal to the outstanding principal of its Loans, accrued
interest thereon, accrued fees and all other amounts payable to it hereunder,
from the assignee (to the extent of such outstanding principal and accrued
interest and fees) or the Borrower (in the case of all other amounts) and
(iii) in the case of any such assignment resulting from a claim for compensation
under Section 2.12 or payments required to be made pursuant to Section 2.14,
such assignment will result in a reduction in such compensation or payments. A
Lender shall not be required to make any such assignment and delegation if,
prior thereto, as a result of a waiver by such Lender or otherwise, the
circumstances entitling the Borrower to require such assignment and delegation
cease to apply.

ARTICLE III

Representations and Warranties

        The Borrower represents and warrants to the Lenders that:

        Section 3.01.    Corporate Status.    Each of the Borrower and each of
its Subsidiaries (i) is a duly organized and validly existing corporation or
business trust or other entity in good standing under the laws of the
jurisdiction of its organization and has the corporate or other organizational
power and authority to own its property and assets and to transact the business
in which it is engaged and presently proposes to engage, and (ii) has been duly
qualified and is authorized to do business and is in good standing in all
jurisdictions where it is required to be so qualified, except, in the case of
this clause (ii), where the failure to be so qualified, authorized or in good
standing would not reasonably be expected to have, either individually or in the
aggregate, a Material Adverse Effect.

        Section 3.02.    Corporate Power and Authority.    The Borrower has the
corporate power and authority to execute, deliver and carry out the terms and
provisions of the Credit Documents and has taken all necessary corporate action
to authorize the execution, delivery and performance of the Credit Documents.
The Borrower has duly executed and delivered each Credit Document and each such
Credit Document constitutes the legal, valid and binding obligation of the
Borrower enforceable against the Borrower in accordance with its terms, except
to the extent that enforceability thereof may be limited by applicable
bankruptcy, insolvency, moratorium or similar laws affecting creditors' rights
generally and general principles of equity regardless of whether enforcement is
sought in a proceeding in equity or at law.

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        Section 3.03.    No Contravention of Laws, Agreements or Organizational
Documents.    Neither the execution, delivery and performance by the Borrower of
this Agreement or the other Credit Documents nor compliance with the terms and
provisions thereof, nor the consummation of the transactions contemplated
therein, (i) will contravene any applicable provision of any law, statute, rule,
regulation, order, writ, injunction or decree of any court or governmental
instrumentality, (ii) will conflict or be inconsistent with or result in any
breach of any of the terms, covenants, conditions or provisions of, or
constitute a default under, or result in the creation or imposition of (or the
obligation to create or impose) any Lien upon any of the property or assets of
the Borrower or any of its Subsidiaries pursuant to the terms of, any indenture,
mortgage, deed of trust, loan agreement, credit agreement or any other material
instrument to which the Borrower or any of its Subsidiaries is a party or by
which it or any of its property or assets are bound or to which it may be
subject or (iii) will violate any provision of the certificate of incorporation,
by-laws or other organizational documents of the Borrower or any of its
Subsidiaries.

        Section 3.04.    Litigation and Contingent Liabilities.    There are no
actions, suits or proceedings pending or threatened in writing involving the
Borrower or any of its Subsidiaries (including, without limitation, with respect
to this Agreement or any other Credit Document) that have had, or would
reasonably be expected to have, either individually or in the aggregate, a
Material Adverse Effect.

        Section 3.05.    Use of Proceeds; Margin Regulations.    (a) All
proceeds of the Loans shall be utilized for the general corporate and working
capital purposes of the Borrower and its Subsidiaries.

        (b)   Neither the making of any Loan hereunder, nor the use of the
proceeds thereof, will violate or be inconsistent with the provisions of
Regulation T, U or X and no part of the proceeds of any Loan will be used to
purchase or carry any Margin Stock or to extend credit for the purpose of
purchasing or carrying any Margin Stock.

        Section 3.06.    Approvals.    Any order, consent, approval, license,
authorization, or validation of, or filing, recording or registration with, or
exemption by, any foreign or domestic governmental or public body or authority,
or any subdivision thereof, which is required to authorize or is required in
connection with (i) the execution, delivery and performance of any Credit
Document or (ii) the legality, validity, binding effect or enforceability of any
Credit Document, has been obtained.

        Section 3.07.    Investment Company Act.    The Borrower is not an
"investment company" or a company "controlled" by an "investment company,"
within the meaning of the Investment Company Act of 1940, as amended.

        Section 3.08.    Public Utility Holding Company Act.    The Borrower is
not a "holding company," or a "subsidiary company" of a "holding company," or an
"affiliate" of a "holding company" or of a "subsidiary company" of a "holding
company," within the meaning of the Public Utility Holding Company Act of 1935,
as amended.

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        Section 3.09.    True and Complete Disclosure; Projections and
Assumptions.    All factual information (taken as a whole) heretofore or
contemporaneously furnished by the Borrower or any of its Subsidiaries to the
Administrative Agent or any Lender in writing (including, without limitation,
all information contained in the Credit Documents) for purposes of or in
connection with this Agreement or any transaction contemplated herein is, and
all other factual information (taken as a whole with all other such information
theretofore or contemporaneously furnished) hereafter furnished by any such
Persons in writing to the Administrative Agent will be, true and accurate in all
material respects on the date as of which such information is dated and not
incomplete by omitting to state any material fact necessary to make such
information (taken as a whole with all other such information theretofore or
contemporaneously furnished) not misleading at such time in light of the
circumstances under which such information was provided; provided that, with
respect to projections the Borrower represents only that the projections
contained in such materials are based on good faith estimates and assumptions
believed by the Borrower to be reasonable and attainable at the time made, it
being recognized by the Lenders that such projections as to future events are
not to be viewed as facts and are subject to significant uncertainties and
contingencies many of which are beyond the Borrower's control and that actual
results during the period or periods covered by any such projections may differ
from the projected results.

        Section 3.10.    Financial Condition; Financial Statements.    (a) The
consolidated balance sheet of the Borrower for the fiscal year ended
December 31, 2002 and the related consolidated statements of income,
shareholders' equity and cash flows, reported on by PricewaterhouseCoopers LLP,
copies of which have been delivered to each of the Lenders, and the unaudited
consolidated balance sheet of the Borrower for its fiscal quarter ended June 30,
2003 and the related consolidated statements of income, shareholders' equity and
cash flows, copies of which have been delivered to each of the Lenders, fairly
present in all material respects, in each case in conformity with GAAP,
consistently applied, the consolidated financial position of the Borrower and
its Subsidiaries as of such dates and their consolidated results of operations
and cash flows for such periods stated (subject, in the case of the
aforementioned quarterly financial statement to normal year-end audit
adjustments and the absence of full footnote disclosure).

        (b)   Since December 31, 2002, nothing has occurred which has had, or
would reasonably be expected to have, either individually or in the aggregate, a
Material Adverse Effect.

        (c)   Except (i) for the Loans and (ii) as set forth in the unaudited
consolidated balance sheet of the Borrower for its fiscal quarter ended June 30,
2003, on the Effective Date there are no material liabilities of the Borrower
and its Subsidiaries.

        (d)   On and as of the Effective Date, on a pro forma basis after giving
effect to the Transaction, (x) the fair valuation of all of the tangible and
intangible assets of the Borrower (on a consolidated basis) will exceed its
debts, (y) the Borrower will not have incurred or intended to incur debts beyond
its ability to pay such debts as such debts mature and (z) the Borrower will not
have unreasonably small capital with which to conduct its business as conducted
on the Effective Date. For purposes of this Section 3.10, "debt" means any
liability on a claim, and "claim" means any (i) right to payment whether or not
such a right is reduced to

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judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured,
disputed, undisputed, legal, equitable, secured or unsecured; or (ii) right to
an equitable remedy for breach of performance if such breach gives rise to a
payment, whether or not such right to an equitable remedy is reduced to
judgment, fixed, contingent, matured, unmatured, disputed, undisputed, secured
or unsecured.

        Section 3.11.    Tax Returns and Payments.    The Borrower and its
Subsidiaries (i) have timely filed or caused to be timely filed with the
appropriate taxing authority (taking into account any applicable extension
within which to file) all material income and other material tax returns
(including any statements, forms and reports), domestic and foreign, required to
be filed by the Borrower and its Subsidiaries, and (ii) have timely paid or
caused to have timely paid all material taxes payable by them which have become
due and assessments which have become due, except for those contested in good
faith and adequately disclosed and for which adequate reserves have been
established in accordance with GAAP. There is no action, suit, proceeding,
investigation, audit or claim now pending or, to the best knowledge of the
Borrower and its Subsidiaries, proposed or threatened by any authority regarding
any income taxes or any other material taxes relating to the Borrower or any of
its Subsidiaries. Neither the Borrower nor any of its Subsidiaries has entered
into an agreement or waiver or been requested to enter into an agreement or
waiver extending any statute of limitations relating to the payment or
collection of taxes of the Borrower or any of its Subsidiaries. No tax Liens
have been filed and no claims are pending or, to the best knowledge of the
Borrower or any of its Subsidiaries, proposed or threatened with respect to any
taxes, fees or other charges for any taxable period.

        Section 3.12.    Compliance with ERISA.    (a) Except as could not
reasonably be expected to result, individually or in the aggregate, in a
Material Adverse Effect, the Borrower and its Subsidiaries and ERISA Affiliates
(i) have fulfilled their respective obligations under the minimum funding
standards of ERISA and the Code with respect to each Plan and are in compliance
with the applicable provisions of ERISA and the Code, and (ii) have not incurred
any liability to the PBGC or any Plan or Multiemployer Plan (other than to make
contributions in the ordinary course of business).

        (b)   Except as could not reasonably be expected to result, individually
or in the aggregate, in a Material Adverse Effect, (i) each Foreign Pension Plan
has been maintained in compliance with its terms and with the requirements of
any and all applicable laws, statutes, rules, regulations and orders and has
been maintained, where required, in good standing with applicable regulatory
authorities, (ii) all contributions required to be made with respect to a
Foreign Pension Plan have been timely made, (iii) neither the Borrower nor any
of its Subsidiaries has incurred any obligation in connection with the
termination of, or withdrawal from, any Foreign Pension Plan and (iv) the
present value of the accrued benefit liabilities (whether or not vested) under
each Foreign Pension Plan that is required to be funded, determined as of the
end of the Borrower's most recently ended fiscal year on the basis of actuarial
assumptions, each of which is reasonable, did not exceed the current value of
the assets of such Foreign Pension Plan allocable to such benefit liabilities.

        Section 3.13.    Subsidiaries.    (a) Set forth on Schedule 3.13 is a
complete and correct list of all of the Subsidiaries of the Borrower as of the
Effective Date, together with, for each such Subsidiary, (i) the jurisdiction of
organization of such Subsidiary, (ii) each Person

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holding direct ownership interests in such Subsidiary and (iii) the percentage
of ownership of such Subsidiary represented by such ownership interests. Except
as disclosed on Schedule 3.13, each of the Borrower and its Subsidiaries owns,
free and clear of Liens, and has the unencumbered right to vote, all outstanding
ownership interests in each Person shown to be held by it on Schedule 3.13.

        (b)   As of the Effective Date, there are no restrictions on the
Borrower or any of its Subsidiaries which prohibit or otherwise restrict the
transfer of cash or other assets from any Subsidiary of the Borrower to the
Borrower, other than (i) prohibitions or restrictions existing under or by
reason of this Agreement or the other Credit Documents, (ii) prohibitions or
restrictions existing under or by reason of the credit documents relating to the
Amended and Restated Letter of Credit and Reimbursement Agreement, dated as of
August 12, 2003, by and among Arch Reinsurance Ltd., Arch Reinsurance Company,
Alternative Re Limited and Arch Insurance Company, the lenders from time to time
party thereto and Fleet National Bank, as agent and issuing lender, as amended
by Amendment No.1, dated as of August 20, 2003 (the "Existing LC Facility"),
(iii) prohibitions or restrictions existing under or by reason of Legal
Requirements, and (iv) other prohibitions or restrictions which, either
individually or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect.

        Section 3.14.    Capitalization.    As of the Effective Date, the
authorized capital stock of the Borrower consists of (i) 200,000,000 common
shares, $.01 par value per share, 28,034,809 of which shares are issued and
outstanding at June 30, 2003 and, (ii) 50,000,000 preference shares, $.01 par
value per share, of which 38,844,665 are issued and outstanding Series A
Convertible Preference Shares at June 30, 2003. As of the Effective Date, none
of the Borrower's Subsidiaries has outstanding any securities convertible into
or exchangeable for its capital stock or outstanding any rights to subscribe for
or to purchase, or any options for the purchase of, or any agreements providing
for the issuance (contingent or otherwise) of, or any calls, commitments or
claims of any character relating to, its capital stock except for options,
warrants and grants outstanding in the aggregate amounts set forth on
Schedule 3.14.

        Section 3.15.    Indebtedness.    The Borrower and its Subsidiaries do
not have any Indebtedness on the Effective Date other than (i) the Loans, and
(ii) the Indebtedness listed on Schedule 3.15.

        Section 3.16.    Compliance with Statutes, etc.    The Borrower and each
of its Subsidiaries is in compliance with all applicable statutes, regulations,
rules and orders of, and all applicable restrictions imposed by, and has filed
or otherwise provided all material reports, data, registrations, filings,
applications and other information required to be filed with or otherwise
provided to, all governmental bodies, domestic or foreign, in respect of the
conduct of its business and the ownership of its property (including compliance
with all applicable environmental laws), except where the failure to comply or
file or otherwise provide would not reasonably be expected to have, either
individually or in the aggregate, a Material Adverse Effect. All required
regulatory approvals are in full force and effect on the date hereof, except
where the failure of such approvals to be in full force and effect would not
reasonably be expected to have, either individually or in the aggregate, a
Material Adverse Effect.

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        Section 3.17.    Insurance Licenses.    Schedule 3.17 lists with respect
to each Regulated Insurance Company, as of the Effective Date, all of the
jurisdictions in which such Regulated Insurance Company holds licenses
(including, without limitation, licenses or certificates of authority from
Applicable Insurance Regulatory Authorities), permits or authorizations to
transact insurance and reinsurance business (collectively, the "Insurance
Licenses"), and indicates the type or types of insurance in which each such
Regulated Insurance Company is permitted to be engaged with respect to each
Insurance License therein listed. There is (i) no such Insurance License that is
the subject of a proceeding for suspension, revocation or limitation or any
similar proceedings, (ii) no sustainable basis for such a suspension, revocation
or limitation, and (iii) no such suspension, revocation or limitation threatened
by any Applicable Insurance Regulatory Authority, that, in each instance under
(i), (ii) and (iii) above, has had, or would reasonably be expected to have,
either individually or in the aggregate, a Material Adverse Effect. No Regulated
Insurance Company transacts any insurance business, directly or indirectly, in
any jurisdiction other than those listed on Schedule 3.17, where such business
requires any Insurance License of an Applicable Insurance Regulatory Authority
or such jurisdiction.

        Section 3.18.    Insurance Business.    All insurance policies issued by
any Regulated Insurance Company are, to the extent required under applicable
law, on forms approved by the insurance regulatory authorities of the
jurisdiction where issued or have been filed with and not objected to by such
authorities within the period provided for objection, except for those forms
with respect to which a failure to obtain such approval or make such a filing
without it being objected to, would not reasonably be expected to have, either
individually or in the aggregate, a Material Adverse Effect.

ARTICLE IV

Conditions

        Section 4.01.    Effective Date.    The obligations of the Lenders to
make Loans hereunder shall not become effective until the date (the "Effective
Date") on which each of the following conditions is satisfied (or waived in
accordance with Section 9.02):

        (a)   On the Effective Date, (i) each of the Borrower, the
Administrative Agent and each of the Lenders shall have signed a copy hereof
(whether the same or different copies) and shall have delivered the same to the
Administrative Agent in accordance with Section 9.01(a) or, in the case of the
Lenders, shall have given to the Administrative Agent telephonic (confirmed in
writing), written or facsimile transmission notice (actually received) in
accordance with Section 9.01(a) that the same has been signed and mailed to the
Administrative Agent; and (ii) there shall have been delivered to the
Administrative Agent for the account of each Lender that has requested the same
pursuant to Section 2.07(e) the appropriate promissory note or promissory notes,
executed by the Borrower, in each case, in the amount, maturity and as otherwise
provided herein.

        (b)   On the Effective Date, the Administrative Agent shall have
received (i) an opinion, in form and substance reasonably satisfactory to the
Administrative Agent,

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addressed to the Administrative Agent and each of the Lenders and dated the
Effective Date, from Cahill, Gordon & Reindel LLP, special U.S. counsel to the
Borrower, which opinion shall cover the matters contained in Exhibit C-1 hereto
and (ii) an opinion, in form and substance reasonably satisfactory to the
Administrative Agent, addressed to the Administrative Agent and each of the
Lenders and dated the Effective Date, from Conyers, Dill & Pearman, special
Bermuda counsel to the Borrower, which opinion shall cover the matters covered
in Exhibit C-2 hereto.

        (c)   (i) On the Effective Date, the Administrative Agent shall have
received, from the Borrower, a certificate, dated the Effective Date, signed by
the President or any Vice President of the Borrower, and attested to by the
Secretary or any Assistant Secretary of the Borrower, in the form of Exhibit D
hereto with appropriate insertions and deletions, together with (x) copies of
its certificate of incorporation, by-laws or other organizational documents and
(y) the resolutions relating to the Credit Documents which shall be satisfactory
to the Administrative Agent.

         (ii)  On or prior to the Effective Date, all corporate and legal
proceedings and all instruments and agreements in connection with the
transactions contemplated by this Agreement and the other Credit Documents shall
be reasonably satisfactory in form and substance to the Administrative Agent,
and the Administrative Agent shall have received all information and copies of
all certificates, documents and papers, including certificates of existence or
good standing certificates, as applicable, and any other records of corporate
proceedings and governmental approvals, if any, which the Administrative Agent
reasonably may have requested in connection therewith, such documents and papers
where appropriate to be certified by proper corporate or governmental
authorities.

        (d)   Since December 31, 2002, nothing shall have occurred or become
known to the Administrative Agent or the Required Lenders which has had, or
would reasonably be expected to have, either individually or in the aggregate, a
Material Adverse Effect.

        (e)   On the Effective Date, no actions, suits or proceedings by any
entity (private or governmental) shall be pending against the Borrower or any of
its Subsidiaries (i) with respect to this Agreement, any other Credit Document,
the Transaction or any of the transactions contemplated hereby or thereby or
(ii) which has had, or would reasonably be expected to have, either individually
or in the aggregate, a Material Adverse Effect.

        (f)    On the Effective Date, all governmental and third party
approvals, permits and licenses required to be obtained in connection with the
Transaction on or prior to the Effective Date shall have been obtained and
remain in full force and effect.

        (g)   On the Effective Date, the Borrower and its Subsidiaries shall
have no outstanding preferred stock or Indebtedness except (x) the Loans, and
(y) preferred stock or Indebtedness set forth on Schedule 3.15.

        (h)   On the Effective Date, there shall exist no Default or Event of
Default, and all representations and warranties made by the Borrower contained
herein or in any other

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Credit Document shall be true and correct in all material respects (it being
understood and agreed that any representation or warranty which by its terms is
made as of a specified date shall be required to be true and correct in all
material respects only as of such specified date).

        (i)    On the Effective Date, each Regulated Insurance Company (other
than the Designated Subsidiaries) shall have an A.M. Best financial strength
rating of at least "A-".

        (j)    On the Effective Date, the Borrower shall have paid the
Administrative Agent and the Lenders all fees, reasonable out-of-pocket expenses
(including, without limitation, reasonable legal fees and expenses of the
Administrative Agent) and other compensation contemplated by this Agreement and
the other Credit Documents, agreed upon by such parties to be paid on or prior
to the Effective Date.

        The Administrative Agent shall notify the Borrower and the Lenders of
the Effective Date, and such notice shall be conclusive and binding.
Notwithstanding the foregoing, the obligations of the Lenders to make Loans
hereunder shall not become effective unless each of the foregoing conditions is
satisfied (or waived pursuant to Section 9.02) at or prior to 5:00 p.m., New
York City time, on September 30, 2003 (and, in the event such conditions are not
so satisfied or waived, the Commitments shall terminate at such time).

        Section 4.02.    Each Credit Event.    The obligation of each Lender to
make each Loan is subject to the satisfaction of the following conditions:

        (a)   The Effective Date shall have occurred.

        (b)   (i) There shall exist no Default or Event of Default and (ii) all
representations and warranties contained herein or in the other Credit Documents
shall be true and correct in all material respects with the same effect as
though such representations and warranties had been made on the date of the
making of such Loan (it being understood and agreed that any representation or
warranty which by its terms is made as of a specified date shall be required to
be true and correct in all material respects only as of such specified date).

        (c)   The Administrative Agent shall have received a Borrowing Request
meeting the requirements of Section 2.03 with respect to each incurrence of
Loans.

        Each incurrence of a Loan shall be deemed to constitute a representation
and warranty by the Borrower on the date thereof as to the matters specified in
paragraphs (a) and (b) of this Section.

ARTICLE V

Affirmative Covenants

        Until the Commitments have expired or been terminated and the principal
of and interest on each Loan and all fees payable hereunder shall have been paid
in full, the Borrower

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covenants and agrees with the Lenders that:

        Section 5.01.    Information Covenants.    The Borrower will furnish to
the Administrative Agent (for distribution to each Lender):

        (a)   Annual Financial Statements. As soon as available and in any event
within 90 days after the close of each fiscal year of the Borrower, the
consolidated balance sheet of the Borrower and its Subsidiaries as at the end of
such fiscal year and the related consolidated statements of income, changes in
shareholders' equity and cash flows of the Borrower and its Subsidiaries for
such fiscal year, setting forth in comparative form the consolidated figures for
the previous fiscal year, all in reasonable detail and accompanied by a report
thereon of PricewaterhouseCoopers LLP or other independent public accountants of
recognized national standing selected by the Borrower, which report shall state
that such consolidated financial statements present fairly in all material
respects the consolidated financial position of the Borrower and its
Subsidiaries as at the dates indicated and their consolidated results of
operations and cash flows for the periods indicated in conformity with GAAP
applied on a basis consistent with prior years (except as otherwise specified in
such report; provided any exceptions or qualifications thereto must be
acceptable to the Required Lenders) and that the audit by such accountants in
connection with such consolidated financial statements has been made in
accordance with generally accepted auditing standards.

        (b)   Quarterly Financial Statements. As soon as available and in any
event within 60 days after the close of each of the first three quarterly
accounting periods in each fiscal year of the Borrower, consolidated balance
sheets of the Borrower and its Subsidiaries as at the end of such period and the
related consolidated statements of income, changes in shareholders' equity and
cash flows of the Borrower and its Subsidiaries for such period and (in the case
of the second and third quarterly periods) for the period from the beginning of
the current fiscal year to the end of such quarterly period, setting forth in
each case in comparative form the consolidated figures for the corresponding
periods of the previous fiscal year, all in reasonable detail and certified by
the chief financial officer of the Borrower as presenting fairly in all material
respects, in accordance with GAAP (except as specifically set forth therein;
provided any exceptions or qualifications thereto must be acceptable to the
Administrative Agent) on a basis consistent with such prior fiscal periods, the
information contained therein, subject to changes resulting from normal year-end
audit adjustments and the absence of full footnote disclosure.

        (c)   Officer's Certificates. At the time of the delivery of the
financial statements provided for in Sections 5.01(a) and 5.01(b), a certificate
of the chief financial officer of the Borrower to the effect that no Default or
Event of Default exists or, if any Default or Event of Default does exist,
specifying the nature and extent thereof, which certificate shall set forth the
calculations required to establish whether the Borrower and its Subsidiaries
were in compliance with the provisions of Sections 6.03, 6.09 and 6.10, as at
the end of such fiscal year or quarter, as the case may be.

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        (d)   Notice of Default or Litigation. (x) Within five Business Days
after the Borrower becomes aware of the occurrence of any Default and/or any
event or condition constituting, or which would reasonably be expected to have,
a Material Adverse Effect, a certificate of a Financial Officer of the Borrower
setting forth the details thereof and the actions which the Borrower is taking
or proposes to take with respect thereto and (y) promptly after the Borrower
knows of the commencement thereof, notice of any litigation, dispute or
proceeding involving a claim against the Borrower and/or any Subsidiary which
claim would reasonably be expected to have a Material Adverse Effect.

        (e)   Other Statements and Reports. Promptly upon the mailing thereof to
the security holders of the Borrower generally, copies of all financial
statements, reports and proxy statements so mailed.

        (f)    SEC Filings. Promptly upon the filing thereof, copies of (or, to
the extent same is publicly available via the SEC's "EDGAR" filing system,
written notification of the filing of) all registration statements (other than
the exhibits thereto and any registration statements on Form S-8 or its
equivalent) and annual, quarterly or monthly reports which the Borrower shall
have filed with the SEC or any national securities exchange.

        (g)   Insurance Reports and Filings. (i) Promptly after the filing
thereof, a copy of each Statutory Statement filed by each Regulated Insurance
Company.

         (ii)  Promptly following the delivery or receipt, as the case may be,
by any Regulated Insurance Company or any of their respective Subsidiaries,
copies of (a) each material registration, filing or submission made by or on
behalf of any Regulated Insurance Company with any Applicable Insurance
Regulatory Authority, except for policy form or rate filings, (b) each material
examination and/or audit report submitted to any Regulated Insurance Company by
any Applicable Insurance Regulatory Authority, (c) all material information
which the Lenders may from time to time request with respect to the nature or
status of any material deficiencies or violations reflected in any examination
report or other similar report, and (d) each material report, order, direction,
instruction, approval, authorization, license or other notice which the Borrower
or any Regulated Insurance Company may at any time receive from any Applicable
Insurance Regulatory Authority. For the purpose of this clause (ii) only,
determinations of "material" shall be made by the Borrower in good faith.

        (iii)  As soon as available and in any event within 120 days after the
end of each fiscal year of the Borrower, a report by an independent actuarial
consulting firm of recognized national standing reviewing the adequacy of loss
and loss adjustment expense reserves as at the end of the last fiscal year of
the Borrower and its Subsidiaries on a consolidated basis, determined in
accordance with SAP and stating that the Regulated Insurance Companies have
maintained adequate reserves, it being agreed that in each case such independent
firm will be provided access to or copies of all relevant valuations relating to
the insurance business of each such Regulated Insurance Company in the
possession of or available to the Borrower or its Subsidiaries.

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        (iv)  Promptly following notification thereof from a Governmental
Authority, notification of the suspension, limitation, termination or
non-renewal of, or the taking of any other materially adverse action in respect
of, any Insurance License.

        (h)   Other Information. With reasonable promptness, such other
information or existing documents (financial or otherwise) as the Administrative
Agent or any Lender may reasonably request from time to time.

        Section 5.02.    Books, Records and Inspections.    The Borrower will
(i) keep, and will cause each of its Subsidiaries to keep, proper books of
record and account in which full, true and correct entries in conformity with
GAAP or SAP, as applicable, shall be made of all dealings and transactions in
relation to its business and activities; and (ii) subject to binding contractual
confidentiality obligations of the Borrower and its Subsidiaries to third
parties and to Section 9.12, permit, and will cause each of its Subsidiaries to
permit, representatives of any Lender (at such Lender's expense prior to the
occurrence of an Event of Default and at the Borrower's expense after an Event
of Default has occurred and is continuing) to visit and inspect any of their
respective properties, to examine their respective books and records and to
discuss their respective affairs, finances and accounts with their respective
officers, employees and independent public accountants, in each case at such
reasonable times and as often as may reasonably be desired. The Borrower agrees
to cooperate and assist in such visits and inspections.

        Section 5.03.    Insurance.    The Borrower will maintain, and will
cause each of its Subsidiaries to maintain (either in the name of the Borrower
or in the Subsidiary's own name) with financially sound and reputable insurance
companies, insurance on all their property in at least such amounts and against
at least such risks as are usually insured against in the same general area by
companies of established repute engaged in the same or similar businesses.

        Section 5.04.    Payment of Taxes.    The Borrower will pay and
discharge, and will cause each of its Subsidiaries to pay and discharge, all
income taxes and all other material taxes, assessments and governmental charges
or levies imposed upon it or upon its income or profits, or upon any properties
belonging to it, in each case, on a timely basis prior to the date on which
penalties attach thereto, and all lawful claims which, if unpaid, might become a
Lien or charge upon any properties of the Borrower or any of its Subsidiaries;
provided that neither the Borrower nor any Subsidiary of the Borrower shall be
required to pay any such tax, assessment, charge, levy or claim which is being
contested in good faith and by proper proceedings if it has maintained adequate
reserves with respect thereto in accordance with GAAP.

        Section 5.05.    Maintenance of Existence.    The Borrower shall
maintain, and shall cause each of its Subsidiaries to maintain, its existence,
provided that the Borrower shall not be required to maintain the existence of
any of its Subsidiaries if the Borrower shall determine in good faith that the
preservation thereof is no longer desirable in the conduct of the business of
the Borrower and its Subsidiaries taken as a whole. The Borrower will qualify
and remain qualified, and cause each of its Subsidiaries to qualify and remain
qualified, as a foreign corporation in each jurisdiction where the Borrower or
such Subsidiary, as the case may be, is required to be qualified, except in
those jurisdictions in which the failure to receive or retain such

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qualifications would not reasonably be expected to have, either individually or
in the aggregate, a Material Adverse Effect.

        Section 5.06.    Compliance with Statutes, etc.    The Borrower will,
and will cause each Subsidiary to, comply with all applicable statutes,
regulations and orders of, and all applicable restrictions imposed by, all
governmental bodies, domestic or foreign, in respect of the conduct of its
business and the ownership of its property (including applicable statutes,
regulations, orders and restrictions relating to environmental standards and
controls) other than those the non-compliance with which would not reasonably be
expected to have, either individually or in the aggregate, a Material Adverse
Effect.

        Section 5.07.    ERISA.    Promptly after the Borrower, any of its
Subsidiaries or, in the case of clauses (i) through (v) below, any of its ERISA
Affiliates knows or has reason to know that any of the events or conditions
specified below with respect to any Plan or Multiemployer Plan or Foreign
Pension Plan has occurred or exist, a certificate of the chief financial officer
of the Borrower setting forth details respecting such event or condition and the
action if any, that the Borrower, such Subsidiary or such ERISA Affiliate
proposes to take with respect thereto (and a copy of any report or notice
required to be filed with or given to PBGC or an applicable foreign governmental
agency by the Borrower, such Subsidiary or such ERISA Affiliate with respect to
such event or condition):

          (i)  any reportable event, as defined in subsections (c)(1), (2),
(5) and (6), and subsection (d)(2) of Section 4043 of ERISA and the regulations
issued thereunder, with respect to a Plan;

         (ii)  the filing under Section 4041(c) of ERISA of a notice of intent
to terminate any Plan under a distress termination or the distress termination
of any Plan;

        (iii)  the institution by PBGC of proceedings under Section 4042 of
ERISA for the termination of, or the appointment of a trustee to administer, any
Plan, or the receipt by the Borrower, any of its Subsidiaries or any of its
ERISA Affiliates of a notice from a Multiemployer Plan that such action has been
taken by PBGC with respect to such Multiemployer Plan which could reasonably be
expected to result in a liability to the Borrower or any of its Subsidiaries in
excess of $5,000,000;

        (iv)  the receipt by the Borrower, any of its Subsidiaries or any of its
ERISA Affiliates of notice from a Multiemployer Plan that the Borrower, any of
its Subsidiaries or any of its ERISA Affiliates has incurred withdrawal
liability under Section 4201 of ERISA in excess of $5,000,000 or that such
Multiemployer Plan is in reorganization or insolvency pursuant to Section 4241
or 4245 of ERISA or that it intends to terminate or has terminated under
Section 4041A of ERISA whereby a deficiency or additional assessment is levied
or threatened to be levied in excess of $5,000,000 against the Borrower, any of
its Subsidiaries or any of its ERISA Affiliates;

         (v)  the institution of a proceeding by a fiduciary of any Plan or
Multiemployer Plan against the Borrower, any of its Subsidiaries or any of its
ERISA Affiliates to

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enforce Section 515 or 4219(c)(5) of ERISA asserting liability in excess of
$5,000,000, which proceeding is not dismissed within 30 days; and

        (vi)  that any material contribution required to be made with respect to
a Foreign Pension Plan has not been timely made, or that the Borrower or any
Subsidiary of the Borrower may incur any material liability pursuant to any
Foreign Pension Plan (other than to make contributions in the ordinary course of
business).

        Section 5.08.    Maintenance of Property.    The Borrower shall, and
will cause each of its Subsidiaries to, maintain all of their properties and
assets in good condition, repair and working order, ordinary wear and tear
excepted, except where failure to maintain the same would not reasonably be
expected to have, either individually or in the aggregate, a Material Adverse
Effect.

        Section 5.09.    Maintenance of Licenses and Permits.    The Borrower
will, and will cause each of its Subsidiaries to, maintain all permits, licenses
and consents as may be required for the conduct of its business by any state,
federal or local government agency or instrumentality, except where failure to
maintain the same would not reasonably be expected to have, either individually
or in the aggregate, a Material Adverse Effect.

        Section 5.10.    Claims Paying Ratings.    The Borrower shall cause each
Regulated Insurance Company (other than the Designated Subsidiaries) to maintain
at all times a financial strength rating of at least "B++" from A.M. Best & Co.
(or its successor); provided that any Regulated Insurance Company acquired or
created after the Effective Date shall not be required to comply with this
Section 5.10 until the date occurring 180 days after the date of such
acquisition or creation.

        Section 5.11.    End of Fiscal Years; Fiscal Quarters.    The Borrower
will cause (i) each of its, and each of its Subsidiaries', fiscal years to end
on December 31 of each year and (ii) each of its, and each of its Subsidiaries',
fiscal quarters to end on dates which are consistent with a fiscal year end as
described above, provided that the Borrower shall not be required to comply with
the foregoing with respect to any Subsidiary of the Borrower acquired after the
Effective Date having a fiscal year ending on a date other than December 31 at
the time of such acquisition.

ARTICLE VI

Negative Covenants

        Until the Commitments have expired or terminated and the principal of
and interest on each Loan and all fees payable hereunder have been paid in full,
the Borrower covenants and agrees with the Lenders that:

        Section 6.01.    Changes in Business and Investments.    The Borrower
will not, and will not permit any of its Subsidiaries to, engage (directly or
indirectly) in any business other than businesses in which they are engaged on
the Effective Date and reasonable extensions thereof and other businesses that
are complementary or reasonably related thereto.

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        Section 6.02.    Consolidations, Mergers, Sales of Assets and
Acquisitions.    (a) The Borrower will not, and will not permit any of its
Subsidiaries to, consolidate or merge with or into any other Person, provided
that (i) the Borrower may merge with another Person if (x) such Borrower is the
corporation surviving such merger and (y) immediately after giving effect to
such merger, no Default or Event of Default shall have occurred and be
continuing, and (ii) Subsidiaries of the Borrower may merge with one another.

        (b)   The Borrower will not, nor will it permit any of its Subsidiaries
to, sell, convey, assign, lease, abandon or otherwise transfer or dispose of,
voluntarily or involuntarily (any of the foregoing being referred to in this
Section 6.02(b) as a "Disposition" and any series of related Dispositions
constituting but a single Disposition), any of its properties or assets,
tangible or intangible (including but not limited to sale, assignment, discount
or other disposition of accounts, contract rights, chattel paper or general
intangibles with or without recourse), except:

          (i)  any Disposition of used, worn out, obsolete or surplus property
of the Borrower or any Subsidiary in the ordinary course of business;

         (ii)  the license (as licensor) of intellectual property so long as
such license does not materially interfere with the business of the Borrower or
any of its Subsidiaries;

        (iii)  the Disposition of cash, cash equivalents and investment
securities;

        (iv)  the release, surrender or waiver of contract, tort or other claims
of any kind as a result of the settlement of any litigation or threatened
litigation;

         (v)  the granting or existence of Liens (and foreclosure thereon) not
prohibited by this Agreement;

        (vi)  the lease or sublease of real property so long as such lease or
sublease does not materially interfere with the business of the Borrower or any
of its Subsidiaries;

       (vii)  Dividends not prohibited by Section 6.07;

      (viii)  any ceding of insurance or reinsurance in the ordinary course of
business;

        (ix)  any Disposition by the Borrower or any of its Subsidiaries of any
Non-Core Asset (as defined in the Subscription Agreement);

         (x)  Dispositions of properties or assets having an aggregate fair
value (as determined in good faith by the board of directors of the Borrower) of
less than $1,000,000;

        (xi)  Dispositions by the Borrower or any of its Subsidiaries of any of
their respective properties or assets to the Borrower or any Wholly-Owned
Subsidiary of the Borrower; and

       (xii)  other Dispositions to the extent that the fair market value of the
assets the subject thereof (as determined in good faith by the board of
directors or senior

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management of the Borrower), when added to the fair market value of the assets
the subject of any such other Disposition or Dispositions under this
clause (xii) previously consummated during the same fiscal year of the Borrower
(as determined in good faith by the board of directors or senior management of
the Borrower), does not constitute more than 10% of the consolidated assets of
the Borrower and its Subsidiaries as of the last day of the most recently ended
fiscal year of the Borrower.

        (c)   The Borrower will not, nor will it permit any of its Subsidiaries
to, acquire all or substantially all of the capital stock or assets of another
Person unless at such time and immediately after giving effect thereto no
Default or Event of Default exists or would result therefrom.

        Section 6.03.    Liens.    Neither the Borrower nor any of its
Subsidiaries will permit, create, assume, incur or suffer to exist any Lien on
any asset tangible or intangible now owned or hereafter acquired by it, except:

        (a)   Liens existing on the date hereof and listed on Schedule 6.03
hereto;

        (b)   Liens securing repurchase agreements constituting a borrowing of
funds by the Borrower or any Subsidiary of the Borrower in the ordinary course
of business for liquidity purposes and in no event for a period exceeding
90 days in each case;

        (c)   Liens arising pursuant to purchase money mortgages, capital leases
or security interests securing Indebtedness representing the purchase price (or
financing of the purchase price within 90 days after the respective purchase) of
assets acquired after the Effective Date;

        (d)   Liens (x) on any asset of any Person existing at the time such
Person is merged or consolidated with or into the Borrower or any of its
Subsidiaries and not created in contemplation of such event or (y) securing
Acquired Indebtedness so long as such Lien existed prior to the contemplated
acquisition, was not created in contemplation of such acquisition and only
relates to assets of the Person so acquired;

        (e)   Liens securing obligations owed by the Borrower to any of its
Subsidiaries or owed by any Subsidiary of the Borrower to the Borrower or any
Subsidiary of the Borrower, in each case solely to the extent that such Liens
are required by an Applicable Insurance Regulatory Authority for such Person to
maintain such obligations;

        (f)    Liens securing insurance obligations of Subsidiaries of the
Borrower owed by any Subsidiary of the Borrower to the Borrower or any
Subsidiary of the Borrower, in each case solely to the extent that such Liens
are required or requested by ratings agencies, clients or brokers for such
Person to maintain such insurance obligations;

        (g)   Liens on investments and cash balances of any Regulated Insurance
Company securing obligations of such Regulated Insurance Company in respect of
trust or similar arrangements formed, letters of credit issued or funds withheld
balances established, in each case, in the ordinary course of business for the
benefit of cedents to secure reinsurance recoverables owed to them by such
Regulated Insurance Company;

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        (h)   Inchoate Liens for taxes, assessments or governmental charges or
levies not yet due or Liens for taxes, assessments or governmental charges or
levies being contested in good faith and by appropriate proceedings for which
adequate reserves have been established in accordance with GAAP;

        (i)    Liens in respect of property or assets of the Borrower or any of
its Subsidiaries imposed by law, which were incurred in the ordinary course of
business and do not secure Indebtedness for borrowed money, such as carriers',
warehousemen's, materialmen's and mechanics' liens and other similar Liens
arising in the ordinary course of business, and (x) which do not in the
aggregate materially detract from the value of the Borrower's or such
Subsidiary's property or assets or materially impair the use thereof in the
operation of the business of the Borrower or such Subsidiary or (y) which are
being contested in good faith by appropriate proceedings, which proceedings have
the effect of preventing the forfeiture or sale of the property or assets
subject to any such Lien;

        (j)    Licenses, sublicenses, leases, or subleases granted to other
Persons not materially interfering with the conduct of the business of the
Borrower or any of its Subsidiaries;

        (k)   easements, rights-of-way, restrictions, encroachments and other
similar charges or encumbrances, and minor title deficiencies, in each case not
securing Indebtedness and not materially interfering with the conduct of the
business of the Borrower or any of its Subsidiaries;

        (l)    Liens arising out of the existence of judgments or awards not
constituting an Event of Default under Section 7.07;

        (m)  Liens (other than Liens imposed under ERISA) incurred in the
ordinary course of business in connection with workers compensation claims,
unemployment insurance and social security benefits and Liens securing the
performance of bids, tenders, leases and contracts in the ordinary course of
business, statutory obligations, surety bonds, performance bonds and other
obligations of a like nature incurred in the ordinary course of business and
consistent with past practice (exclusive of obligations in respect of the
payment for borrowed money);

        (n)   Bankers' Liens, rights of setoff and other similar Liens existing
solely with respect to cash and cash equivalents on deposit in one or more
accounts maintained by the Borrower or any of its Subsidiaries, in each case
granted in the ordinary course of business in favor of the bank or banks with
which such accounts are maintained;

        (o)   Liens arising out of the refinancing, extension, renewal or
refunding of any Indebtedness secured by any Lien permitted by any of the
clauses of this Section 6.03, provided that such Indebtedness is not increased
and is not secured by any additional assets;

        (p)   Liens in respect of property or assets of any Subsidiary of the
Borrower securing Indebtedness of the type described in clause (e) or (i) of the
definition of "Permitted Subsidiary Indebtedness";

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        (q)   Liens in respect of property or assets of any Subsidiary of the
Borrower securing Indebtedness of the type described in clause (h) of the
definition of "Permitted Subsidiary Indebtedness"; provided that the aggregate
amount of the Indebtedness secured by such Liens shall not, when added to the
aggregate amount of all outstanding obligations of the Borrower secured by Liens
incurred pursuant to Section 6.03(r), exceed at any time 5% of Consolidated Net
Worth at the time of incurrence of any new Liens under this clause (q); and

        (r)   in addition to the Liens described in clauses (a) through
(q) above, Liens securing obligations of the Borrower; provided that the
aggregate amount of the obligations secured by such Liens shall not, when added
to the aggregate amount of outstanding Indebtedness of Subsidiaries incurred
pursuant to clause (h) of the definition of "Permitted Subsidiary Indebtedness",
exceed at any time 5% of Consolidated Net Worth at the time of incurrence of any
new Liens under this clause (r).

        Section 6.04.    Indebtedness.    (a) The Borrower will not, create,
incur, assume or permit to exist any Indebtedness, or agree, become or remain
liable (contingent or otherwise) to do any of the foregoing, except for the
Loans and other Indebtedness which is either pari passu with, or subordinated in
right of payment to, the Loans.

        (b)   The Borrower will not permit any of its Subsidiaries to create,
incur, assume or permit to exist any Indebtedness, or agree, become or remain
liable (contingent or otherwise) to do any of the foregoing, except for the
Loans and Permitted Subsidiary Indebtedness.

        Section 6.05.    Issuance of Stock.    The Borrower will not, and will
not permit any of its Subsidiaries to, directly or indirectly issue, sell,
assign, pledge, or otherwise encumber or dispose of any shares of its preferred
or preference equity securities or options to acquire preferred or preference
equity securities, except the issuance of preferred or preference equity
securities, so long as (i) (x) no part of such preferred or preference equity
securities is mandatorily redeemable (whether on a scheduled basis or as a
result of the occurrence of any event or circumstance) prior to the first
anniversary of the Maturity Date or (y) all such preferred or preference equity
securities or options therefor are issued to and held by the Borrower and its
Wholly-Owned Subsidiaries and (ii) such preferred or preference equity
securities do not contain any financial performance related covenants or
incurrence covenants which restrict the operations of the issuer thereof;
provided that, the Borrower and its Subsidiaries may issue preferred stock as
described on Schedule 6.05.

        Section 6.06.    Dissolution.    The Borrower shall not suffer or permit
dissolution or liquidation either in whole or in part, except through corporate
reorganization to the extent permitted by Section 6.02.

        Section 6.07.    Restricted Payments.    The Borrower will not declare
or pay any dividends, purchase, redeem, retire, defease or otherwise acquire for
value any of its Equity Interests now or hereafter outstanding, return any
capital to its stockholders, partners or members (or the equivalent Persons
thereof) as such, make any distribution of assets, Equity Interests, obligations
or securities to its stockholders, partners or members (or the equivalent
Persons

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thereof) as such, or permit any of its Subsidiaries to purchase, redeem, retire,
defease or otherwise acquire for value any Equity Interests in the Borrower or
to sell any Equity Interests therein (each of the foregoing a "Dividend" and,
collectively, "Dividends") unless (i) no Default or Event of Default shall have
occurred and be continuing at the time of such Dividend or would result
therefrom and (ii) the Consolidated Net Worth of the Borrower and its
Subsidiaries after giving effect to such Dividend would equal or exceed an
amount equal to the remainder of (x) the Consolidated Net Worth of the Borrower
and its Subsidiaries on the Effective Date less (y) $100,000,000.

        Section 6.08.    Transactions with Affiliates.    Neither the Borrower
nor any of its Subsidiaries shall enter into or be a party to, a transaction
with any Affiliate of the Borrower or such Subsidiary (which Affiliate is not
the Borrower or a Subsidiary), except (i) transactions with Affiliates on terms
(x) no less favorable to the Borrower or such Subsidiary than those that could
have been obtained in a comparable transaction on an arm's length basis from an
unrelated Person or (y) approved by a majority of the disinterested members of
the board of directors of the Borrower, (ii) transactions and payments pursuant
to agreements and arrangements disclosed in, or listed as an exhibit to, the
Borrower's annual report on Form 10-K filed with the SEC on March 31, 2003 or
any subsequent other filing with the SEC through the Effective Date or any such
agreement or arrangement as thereafter amended, extended or replaced on terms
that are, in the aggregate, no less favorable to the Borrower and its
Subsidiaries than the terms of such agreement on the Effective Date, as the case
may be, (iii) Dividends not prohibited by Section 6.07, (iv) fees and
compensation paid to and indemnities provided on behalf of officers and
directors of the Borrower or any of its Subsidiaries as reasonably determined in
good faith by the board of directors or senior management of Borrower and
(v) the issuance of common stock of the Borrower.

        Section 6.09.    Maximum Leverage Ratio.    The Borrower will not permit
the Leverage Ratio on the last day of any fiscal quarter or fiscal year of the
Borrower to be greater than 0.35:1.00.

        Section 6.10.    Minimum Consolidated Tangible Net Worth.    The
Borrower will not permit Consolidated Tangible Net Worth on the last day of any
fiscal quarter or fiscal year of the Borrower to be less than the sum of
(i) $1,000,000,000 plus (ii) 40% of the sum of Consolidated Net Income for all
Test Periods ending after the Effective Date where Consolidated Net Income for
such respective Test Period or Test Periods was a positive amount, plus
(iii) 40% of the aggregate Net Cash Proceeds received from any issuance of
common or preferred equity interests of the Borrower consummated after the
Effective Date.

        Section 6.11.    Limitation on Certain Restrictions on
Subsidiaries.    The Borrower will not, and will not permit any of its
Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to
exist or become effective any consensual encumbrance or consensual restriction
on the ability of any such Subsidiary to (a) pay dividends or make any other
distributions on its capital stock or any other interest or participation in its
profits owned by the Borrower or any of its Subsidiaries, or pay any
Indebtedness owed to the Borrower or any of its Subsidiaries, (b) make loans or
advances to the Borrower or any of its Subsidiaries or (c) transfer any of its
properties or assets to the Borrower or any of its Subsidiaries, except for such
encumbrances or restrictions existing under or by reason of (i) applicable law,
(ii) the Existing

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LC Facility, (iii) the Shareholders Agreement, (iv) this Agreement and the other
Credit Documents, (v) customary provisions restricting subletting or assignment
of any lease governing any leasehold interest of the Borrower or any of its
Subsidiaries, (vi) customary provisions restricting assignment of any licensing
agreement (in which the Borrower or any of its Subsidiaries is the licensee) or
other contract (including leases) entered into by the Borrower or any of its
Subsidiaries in the ordinary course of business, (vii) restrictions on the
transfer of any asset pending the close of the sale of such asset,
(viii) restrictions on the transfer of any asset subject to a Lien permitted by
Section 6.03, (ix) agreements entered into by a Regulated Insurance Company with
an Applicable Insurance Regulatory Authority, (x) any instrument governing
Acquired Indebtedness, which encumbrance or restriction is not applicable to any
Person, or the properties or assets of any Person, other than the Person or the
properties or assets of the Person so acquired, (xi) customary provisions in
partnership agreements, limited liability company organizational governance
documents, joint venture agreements and other similar agreements entered into in
the ordinary course of business that restrict the transfer of ownership
interests in such partnership, limited liability company, joint venture or
similar Person, (xii) restrictions on cash or other deposits or net worth
imposed by customers under contracts entered into in the ordinary course of
business, (xiii) pursuant to an agreement or instrument relating to any
Permitted Subsidiary Indebtedness of the type described in clause (d), (g) or
(h) of the definition thereof (1) if the encumbrances and restrictions contained
in any such agreement or instrument taken as a whole are not materially less
favorable to the Lenders than the encumbrances and restrictions contained in the
Existing LC Facility or (2) if such encumbrance or restriction is not materially
more disadvantageous to the Lenders than is customary in comparable financings
and such encumbrance or restriction will not materially affect the Borrower's
ability to make principal or interest payments on the Loans, and (xiv) any
encumbrances or restrictions imposed by any amendments or refinancings of the
contracts, instruments or obligations referred to in clause (x) above provided
that such amendments or refinancings are no more materially restrictive with
respect to such encumbrances and restrictions that those prior to such amendment
or refinancing.

        Section 6.12.    Private Act.    The Borrower will not become subject to
a Private Act.

ARTICLE VII

Events of Default

        If any of the following events ("Events of Default") shall occur:

        Section 7.01.    Payments.    The Borrower shall (a) default in the
payment when due of any principal of any Loan, (b) default, and such default
shall continue for three or more Business Days, in the payment when due of any
interest on any Loan or any fees payable pursuant to the Credit Documents or
(c) default in the prompt payment following notice or demand in respect of any
other amounts owing hereunder or under any other Credit Document; or

        Section 7.02.    Representations, etc.    Any representation, warranty
or material statement made or deemed made pursuant to the last sentence of
Section 4.02 by the Borrower

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herein or in any other Credit Document or in any certificate or material
statement delivered or required to be delivered pursuant hereto or thereto shall
prove to be untrue in any material respect on the date as of which made or
deemed made; or

        Section 7.03.    Covenants.    The Borrower shall (a) default in the due
performance or observance by it of any term, covenant or agreement contained in
Section 5.01(d), 5.02(ii), 5.05 (but only with respect to the first sentence
thereof), 5.10 or Article VI, or (b) default in the due performance or
observance by it of any term, covenant or agreement (other than those referred
to in Section 7.01 or clause (a) of this Section 7.03) contained in this
Agreement and such default shall continue unremedied for a period of at least
45 days after written notice to the Borrower from the Administrative Agent or
the Required Lenders; or

        Section 7.04.    Default under other Agreements.    (a) The Borrower or
any of its Subsidiaries shall (i) default in any payment with respect to
Indebtedness (other than the Loans) in excess of $20,000,000 individually or in
the aggregate, for the Borrower and its Subsidiaries, beyond the period of
grace, if any, provided in the instrument or agreement under which such
Indebtedness was created or (ii) default in the observance or performance of any
agreement or condition relating to any such Indebtedness or contained in any
instrument or agreement evidencing, securing or relating thereto, or any other
event shall occur or condition exist, the effect of which default or other event
or condition is to cause, or to permit the holder or holders of such
Indebtedness (or a trustee or agent on behalf of such holder or holders) to
cause (determined without regard to whether any notice of acceleration, or any
lapse of time prior to the effectiveness of any notice of acceleration, is
required), any such Indebtedness to become due prior to its stated maturity; or
(b) Indebtedness of the Borrower or its Subsidiaries in excess of $20,000,000
shall be declared to be due and payable other than in accordance with the terms
of such Indebtedness or required to be prepaid, other than by a regularly
scheduled required prepayment or as a mandatory prepayment (unless such required
prepayment or mandatory prepayment results from a default thereunder or an event
of the type that constitutes an Event of Default), prior to the stated maturity
thereof; or

        Section 7.05.    Bankruptcy, etc.    The Borrower or any of its
Subsidiaries (other than Insignificant Subsidiaries) shall commence a voluntary
case concerning itself under Title 11 of the United States Code entitled
"Bankruptcy," as now or hereafter in effect, or any successor thereto (the
"Bankruptcy Code"); or an involuntary case is commenced against the Borrower or
any of its Subsidiaries (other than Insignificant Subsidiaries) and the petition
is not controverted within 10 days, or is not dismissed within 60 days, after
commencement of the case; or a custodian (as defined in the Bankruptcy Code) is
appointed for, or takes charge of, all or substantially all of the property of
the Borrower or any of its Subsidiaries (other than Insignificant Subsidiaries);
or the Borrower or any of its Subsidiaries (other than Insignificant
Subsidiaries) commences (including by way of applying for or consenting to the
appointment of, or the taking of possession by, a rehabilitator, receiver,
custodian, trustee, conservator or liquidator (collectively, a "conservator") of
itself or all or any substantial portion of its property) any other proceeding
under any reorganization, arrangement, adjustment of debt, relief of debtors,
dissolution, insolvency, liquidation, rehabilitation, supervision,
conservatorship or similar law of any jurisdiction or the Bermuda Companies Law
whether now or hereafter in effect relating to the Borrower or any of its
Subsidiaries (other than Insignificant Subsidiaries); or any such proceeding is
commenced against (a) any Regulated Insurance Company (other than any

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Regulated Insurance Company that is an Insignificant Subsidiary) which is
engaged in the business of underwriting insurance and/or reinsurance in the
United States, or (b) the Borrower or any of its Subsidiaries (other than
Insignificant Subsidiaries or any Regulated Insurance Company described in the
immediately preceding clause (a)) to the extent such proceeding is consented to
by such Person, and in the case of either clause (a) or (b) remains undismissed
for a period of 60 days; or the Borrower or any of its Subsidiaries (other than
Insignificant Subsidiaries) is adjudicated insolvent or bankrupt; or any order
of relief or other order approving any such case or proceeding is entered; or
(x) any Regulated Insurance Company (other than any Regulated Insurance Company
that is an Insignificant Subsidiary) which is engaged in the business of
underwriting insurance and/or reinsurance in the United States suffers any
appointment of any conservator or the like for it or any substantial part of its
property, or (y) the Borrower or any of its Subsidiaries (other than
Insignificant Subsidiaries or any Regulated Insurance Company described in the
immediately preceding clause (x)) consents to any appointment of any conservator
or the like for it or any substantial part of its property which continues
undischarged or unstayed for a period of 60 days; or the Borrower or any of its
Subsidiaries (other than Insignificant Subsidiaries) makes a general assignment
for the benefit of creditors; or any corporate action is taken by the Borrower
or any of its Subsidiaries (other than Insignificant Subsidiaries) for the
purpose of effecting any of the foregoing; or

        Section 7.06.    ERISA.    (i) An event or condition specified in
Section 5.07 shall occur or exist with respect to any Plan or Multiemployer Plan
or Foreign Pension Plan, (ii) the Borrower, any of its Subsidiaries or any of
its ERISA Affiliates shall fail to pay when due any amount which they shall have
become liable to pay to the PBGC or to a Plan or a Multiemployer Plan under
Title IV of ERISA, or (iii) a condition shall exist by reason of which the PBGC
would be entitled to obtain a decree adjudicating that any Plan must be
terminated, and as a result of such event, failure or condition, together with
all such other events, failures or conditions, the Borrower, any of its
Subsidiaries or any of its ERISA Affiliates shall be reasonably likely in the
opinion of the general counsel of the Borrower to incur a liability to a Plan, a
Multiemployer Plan, a Foreign Pension Plan or PBGC (or any combination of the
foregoing) which could reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect; or

        Section 7.07.    Judgments.    One or more judgments or decrees shall be
entered against the Borrower or any of its Subsidiaries involving a liability,
net of undisputed insurance and reinsurance, of $20,000,000 or more in the case
of any one such judgment or decree or in the aggregate for all such judgments
and decrees for the Borrower and its Subsidiaries and any such judgments or
decrees shall not have been vacated, discharged, satisfied, stayed or bonded
pending appeal within 60 days from the entry thereof; or

        Section 7.08.    Insurance Licenses.    Any one or more Insurance
Licenses of the Borrower or any of its Subsidiaries shall be suspended, limited
or terminated or shall not be renewed, or any other action shall be taken by any
Governmental Authority, and such action would reasonably be expected to have,
either individually or in the aggregate, a Material Adverse Effect; or

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        Section 7.09.    Change of Control.    A Change in Control shall occur;

then, and in any such event, and at any time thereafter, if any Event of Default
shall then be continuing, the Administrative Agent shall, upon the written
request of the Required Lenders, by written notice to the Borrower, take any or
all of the following actions, without prejudice to the rights of the
Administrative Agent or any Lender to enforce its claims against the Borrower,
except as otherwise specifically provided for in this Agreement (provided that
if an Event of Default specified in Section 7.05 of this Article shall occur
with respect to the Borrower, the result which would occur upon the giving of
written notice by the Administrative Agent as specified in clauses (i) and
(ii) below shall occur automatically without the giving of any such notice):
(a) declare the Commitments (or the unused portion thereof) terminated,
whereupon the Commitment of each Lender (or such unused portion) shall forthwith
terminate immediately and any commitment fees shall forthwith become due and
payable without any other notice of any kind and (ii) declare the principal of,
and any accrued interest in respect of, all Loans and all other obligations
owing hereunder and under the other Credit Documents to be, whereupon the same
shall become, forthwith due and payable without presentment, demand, protest or
other notice of any kind, all of which are hereby waived by the Borrower.
Notwithstanding the foregoing, the Administrative Agent shall have available to
it all other remedies at law or equity, and shall exercise any one or all of
them at the request of the Required Lenders.

ARTICLE VIII

The Administrative Agent

        Section 8.01.    Appointment.    Each of the Lenders hereby irrevocably
appoints the Administrative Agent as its agent and authorizes the Administrative
Agent to take such actions on its behalf and to exercise such powers as are
delegated to the Administrative Agent by the terms hereof, together with such
actions and powers as are reasonably incidental thereto.

        Section 8.02.    Administrative Agent in its Individual Capacity.    The
bank serving as the Administrative Agent hereunder shall have the same rights
and powers in its capacity as a Lender as any other Lender and may exercise the
same as though it were not the Administrative Agent, and such bank and its
Affiliates may accept deposits from, lend money to and generally engage in any
kind of business with the Borrower or any Subsidiary or other Affiliate thereof
as if it were not the Administrative Agent hereunder.

        Section 8.03.    Exculpatory Provisions.    The Administrative Agent
shall not have any duties or obligations except those expressly set forth
herein. Without limiting the generality of the foregoing, (a) the Administrative
Agent shall not be subject to any fiduciary or other implied duties, regardless
of whether a Default has occurred and is continuing, (b) the Administrative
Agent shall not have any duty to take any discretionary action or exercise any
discretionary powers, except discretionary rights and powers expressly
contemplated hereby that the Administrative Agent is required to exercise in
writing as directed by the Required Lenders (or such other number or percentage
of the Lenders as shall be necessary under the circumstances as provided in
Section 9.02), and (c) except as expressly set forth herein, the Administrative
Agent shall not have any duty to disclose, and shall not be liable for the
failure to disclose, any information relating to the Borrower or any of its
Subsidiaries that is

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communicated to or obtained by the bank serving as Administrative Agent or any
of its Affiliates in any capacity. The Administrative Agent shall not be liable
for any action taken or not taken by it with the consent or at the request of
the Required Lenders (or such other number or percentage of the Lenders as shall
be necessary under the circumstances as provided in Section 9.02) or in the
absence of its own gross negligence or willful misconduct. The Administrative
Agent shall be deemed not to have knowledge of any Default unless and until
written notice thereof is given to the Administrative Agent by the Borrower or a
Lender, and the Administrative Agent shall not be responsible for or have any
duty to ascertain or inquire into (i) any statement, warranty or representation
made in or in connection with this Agreement, (ii) the contents of any
certificate, report or other document delivered hereunder or in connection
herewith, (iii) the performance or observance of any of the covenants,
agreements or other terms or conditions set forth herein, (iv) the validity,
enforceability, effectiveness or genuineness of this Agreement or any other
agreement, instrument or document, or (v) the satisfaction of any condition set
forth in Article IV or elsewhere herein, other than to confirm receipt of items
expressly required to be delivered to the Administrative Agent.

        Section 8.04.    Reliance.    The Administrative Agent shall be entitled
to rely upon, and shall not incur any liability for relying upon, any notice,
request, certificate, consent, statement, instrument, document or other writing
believed by it to be genuine and to have been signed or sent by the proper
Person. The Administrative Agent also may rely upon any statement made to it
orally or by telephone and believed by it to be made by the proper Person, and
shall not incur any liability for relying thereon. The Administrative Agent may
consult with legal counsel (who may be counsel for the Borrower), independent
accountants and other experts selected by it, and shall not be liable for any
action taken or not taken by it in accordance with the advice of any such
counsel, accountants or experts.

        Section 8.05.    Delegation of Duties.    The Administrative Agent may
perform any and all its duties and exercise its rights and powers by or through
any one or more sub-agents appointed by the Administrative Agent. The
Administrative Agent and any such sub-agent may perform any and all its duties
and exercise its rights and powers through their respective Related Parties. The
exculpatory provisions of the preceding paragraphs shall apply to any such
sub-agent and to the Related Parties of the Administrative Agent and any such
sub-agent, and shall apply to their respective activities in connection with the
syndication of the credit facilities provided for herein as well as activities
as Administrative Agent.

        Section 8.06.    Resignation.    Subject to the appointment and
acceptance of a successor Administrative Agent as provided in this paragraph,
the Administrative Agent may resign at any time by notifying the Lenders and the
Borrower. Upon any such resignation, the Required Lenders shall have the right
to appoint a successor administrative agent, with the consent of the Borrower
(not to be unreasonably withheld or delayed), provided that no such consent
shall be required at any time when a Default or Event of Default exists. If no
successor shall have been so appointed by the Required Lenders and shall have
accepted such appointment within 30 days after the retiring Administrative Agent
gives notice of its resignation, then the retiring Administrative Agent may, on
behalf of the Lenders, appoint a successor Administrative Agent which shall be a
bank with an office in New York, New York, or an Affiliate of any such bank.
Upon the acceptance of its appointment as Administrative Agent hereunder by a
successor, such successor shall succeed to and become vested with all the
rights, powers,

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privileges and duties of the retiring Administrative Agent, and the retiring
Administrative Agent shall be discharged from its duties and obligations
hereunder. The fees payable by the Borrower to a successor Administrative Agent
shall be the same as those payable to its predecessor unless otherwise agreed
between the Borrower and such successor. After the Administrative Agent's
resignation hereunder, the provisions of this Article and Section 9.03 shall
continue in effect for the benefit of such retiring Administrative Agent, its
sub-agents and their respective Related Parties in respect of any actions taken
or omitted to be taken by any of them while it was acting as Administrative
Agent.

        Section 8.07.    Non-Reliance.    Each Lender acknowledges that it has,
independently and without reliance upon the Administrative Agent or any other
Lender and based on such documents and information as it has deemed appropriate,
made its own credit analysis and decision to enter into this Agreement. Each
Lender also acknowledges that it will, independently and without reliance upon
the Administrative Agent or any other Lender and based on such documents and
information as it shall from time to time deem appropriate, continue to make its
own decisions in taking or not taking action under or based upon this Agreement,
any related agreement or any document furnished hereunder or thereunder.

        Section 8.08.    Documentation Agents.    Notwithstanding any other
provision of this Agreement or any provision of any other Credit Document, each
of the Documentation Agents are named as such for recognition purposes only, and
in their respective capacities as such shall have no powers, duties,
responsibilities or liabilities with respect to this Agreement or the other
Credit Documents or the transactions contemplated hereby and thereby. Without
limitation of the foregoing, none of the Documentation Agents shall, solely by
reason of this Agreement or any other Credit Documents, have any fiduciary
relationship with any Lender or any other Person.

ARTICLE IX

Miscellaneous

        Section 9.01.    Notices.    (a) Except in the case of notices and other
communications expressly permitted to be given by telephone (and subject to
paragraph (b) below), all notices and other communications provided for herein
shall be in writing and shall be delivered by hand or overnight courier service,
mailed by certified or registered mail or sent by telecopy, as follows:

          (i)  if to the Borrower, to it at Arch Capital Group Ltd., Wessex
House, 3rd Floor, 45 Reid Street, Hamilton HM 12 Bermuda, Attention of chief
financial officer (Telecopy No. 441-278-9255);

         (ii)  if to the Administrative Agent, to (x) JPMorgan Chase Bank, Loan
and Agency Services Group, 1111 Fanin Street, Houston, Texas 77002, Attention of
Melissa Rivas (Telecopy No. (713) 750-2223), with a copy to JPMorgan Chase Bank,
270 Park Avenue, Fourth Floor, New York 10017, Attention of Heather Lindstrom
(Telecopy No. (212) 270-1511 or (y) in the case of notices and other
communications in respect of

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Alternate Currency Loans, J.P. Morgan Europe Limited, 125 London Wall, EC2Y 5AJ,
Attention of Caroline Walsh (Telecopy No. (44) 207-777-2360); and

        (iii)  if to any other Lender, to it at its address (or telecopy number)
set forth in its Administrative Questionnaire.

        (b)   Notices and other communications to the Lenders hereunder may be
delivered or furnished by electronic communications pursuant to procedures
approved by the Administrative Agent; provided that the foregoing shall not
apply to notices pursuant to (x) Article II unless otherwise agreed by the
Administrative Agent and the applicable Lender or (y) Section 5.01(d)(x). The
Administrative Agent or the Borrower may, in its discretion, agree to accept
notices and other communications to it hereunder by electronic communications
pursuant to procedures approved by it; provided that approval of such procedures
may be limited to particular notices or communications.

        (c)   Any party hereto may change its address or telecopy number for
notices and other communications hereunder by notice to the other parties
hereto. All notices and other communications given to any party hereto in
accordance with the provisions of this Agreement shall be deemed to have been
given on the date of receipt.

        Section 9.02.    Waivers; Amendments.    (a) No failure or delay by the
Administrative Agent, or any Lender in exercising any right or power hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise of
any such right or power, or any abandonment or discontinuance of steps to
enforce such a right or power, preclude any other or further exercise thereof or
the exercise of any other right or power. The rights and remedies of the
Administrative Agent, and the Lenders hereunder are cumulative and are not
exclusive of any rights or remedies that they would otherwise have. No waiver of
any provision of this Agreement or consent to any departure by the Borrower
therefrom shall in any event be effective unless the same shall be permitted by
paragraph (b) of this Section, and then such waiver or consent shall be
effective only in the specific instance and for the purpose for which given.
Without limiting the generality of the foregoing, the making of a Loan shall not
be construed as a waiver of any Default, regardless of whether the
Administrative Agent or any Lender may have had notice or knowledge of such
Default at the time.

        (b)   Neither this Agreement nor any provision hereof may be waived,
amended or modified except pursuant to an agreement or agreements in writing
entered into by the Borrower and the Required Lenders or by the Borrower and the
Administrative Agent with the consent of the Required Lenders; provided that no
such agreement shall (i) increase the Commitment of any Lender without the
written consent of such Lender, (ii) reduce the principal amount of any Loan or
reduce the rate of interest thereon, or reduce any fees payable hereunder,
without the written consent of each Lender affected thereby, (iii) postpone the
scheduled date of payment of the principal amount of any Loan or any interest
thereon, or any fees payable hereunder, or reduce the amount of, waive or excuse
any such payment, or postpone the scheduled date of expiration of any
Commitment, without the written consent of each Lender affected thereby,
(iv) change Section 2.15(b) or (c) in a manner that would alter the pro rata
sharing of payments required thereby, without the written consent of each
Lender, (v) change the definition of Approved Currency (or any component
definition thereof) to include an additional foreign

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currency not included therein on the date hereof without the written consent of
each Approved Currency Lender affected thereby, or (vi) change any of the
provisions of this Section or the definition of "Required Lenders" or any other
provision hereof specifying the number or percentage of Lenders required to
waive, amend or modify any rights hereunder or make any determination or grant
any consent hereunder, without the written consent of each Lender; provided,
further, that no such agreement shall amend, modify or otherwise affect the
rights or duties of the Administrative Agent hereunder without the prior written
consent of the Administrative Agent.

        Section 9.03.    Expenses; Indemnity; Damage Waiver.    (a) The Borrower
shall pay (i) all reasonable out-of-pocket expenses incurred by the
Administrative Agent and its Affiliates, including the reasonable fees, charges
and disbursements of counsel for the Administrative Agent, in connection with
the syndication of the credit facility provided for herein, the preparation and
administration of this Agreement or any amendments, modifications or waivers of
the provisions hereof (whether or not the transactions contemplated hereby or
thereby shall be consummated), and (ii) all out-of-pocket expenses incurred by
the Administrative Agent, or any Lender, including the fees, charges and
disbursements of any counsel for the Administrative Agent, or any Lender, in
connection with the enforcement or protection of its rights in connection with
this Agreement, including its rights under this Section, or in connection with
the Loans made hereunder, including all such out-of-pocket expenses incurred
during any workout, restructuring or negotiations in respect of such Loans.

        (b)   The Borrower shall indemnify the Administrative Agent, and each
Lender, and each Related Party of any of the foregoing Persons (each such Person
being called an "Indemnitee") against, and hold each Indemnitee harmless from,
any and all losses, claims, damages, liabilities and related expenses, including
the fees, charges and disbursements of any counsel for any Indemnitee, incurred
by or asserted against any Indemnitee arising out of, in connection with, or as
a result of (i) the execution or delivery of this Agreement or any agreement or
instrument contemplated hereby, the performance by the parties hereto of their
respective obligations hereunder or any other transactions contemplated hereby,
(ii) any Loan or the use of the proceeds therefrom, (iii) any actual or alleged
presence or release of Hazardous Materials on or from any property owned or
operated by the Borrower or any of its Subsidiaries, or any Environmental
Liability related in any way to the Borrower or any of its Subsidiaries, or
(iv) any actual or prospective claim, litigation, investigation or proceeding
relating to any of the foregoing, whether based on contract, tort or any other
theory and regardless of whether any Indemnitee is a party thereto; provided
that such indemnity shall not, as to any Indemnitee or any Related Party of such
Indemnitee, be available to the extent that such losses, claims, damages,
liabilities or related expenses are determined by a court of competent
jurisdiction by final and non-appealable judgment to have resulted from the
gross negligence or willful misconduct of such Indemnitee or any Related Party
of such Indemnitee.

        (c)   To the extent that the Borrower fails to pay any amount required
to be paid by it to the Administrative Agent, under paragraph (a) or (b) of this
Section, each Lender severally agrees to pay to the Administrative Agent such
Lender's Applicable Percentage (determined as of the time that the applicable
unreimbursed expense or indemnity payment is sought) of such unpaid amount;
provided that the unreimbursed expense or indemnified loss, claim,

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damage, liability or related expense, as the case may be, was incurred by or
asserted against the Administrative Agent, in its capacity as such.

        (d)   To the extent permitted by applicable law, the Borrower shall not
assert, and hereby waives, any claim against any Indemnitee, on any theory of
liability, for special, indirect, consequential or punitive damages (as opposed
to direct or actual damages) arising out of, in connection with, or as a result
of, this Agreement or any agreement or instrument contemplated hereby, any Loan
or the use of the proceeds thereof.

        (e)   All amounts due under this Section shall be payable promptly after
written demand therefor.

        Section 9.04.    Successors and Assigns.    (a) The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns permitted hereby except that (i) the
Borrower may not assign or otherwise transfer any of its rights or obligations
hereunder without the prior written consent of each Lender (and any attempted
assignment or transfer by the Borrower without such consent shall be null and
void) and (ii) no Lender may assign or otherwise transfer its rights or
obligations hereunder except in accordance with this Section. Nothing in this
Agreement, expressed or implied, shall be construed to confer upon any Person
(other than the parties hereto, their respective successors and assigns
permitted hereby, Participants (to the extent provided in paragraph (c) of this
Section) and, to the extent expressly contemplated hereby, the Related Parties
of each of the Administrative Agent, and the Lenders) any legal or equitable
right, remedy or claim under or by reason of this Agreement.

        (b)   (i) Subject to the conditions set forth in
paragraph (b)(ii) below, any Lender may assign to one or more banks, investment
funds or other institutions that make or hold commercial loans in the ordinary
course of their businesses all or a portion of its rights and obligations under
this Agreement (including all or a portion of its Commitment and the Loans at
the time owing to it) with the prior written consent (such consent not to be
unreasonably withheld) of:

        (A)  the Borrower, provided that no consent of the Borrower shall be
required for an assignment to a Lender, an Affiliate of a Lender, an Approved
Fund or, if an Event of Default has occurred and is continuing, any other
assignee; and

        (B)  the Administrative Agent, provided that no consent of the
Administrative Agent shall be required for an assignment of any Commitment to an
assignee that is a Lender with a Commitment immediately prior to giving effect
to such assignment.

         (ii)  Assignments shall be subject to the following additional
conditions:

        (A)  except in the case of an assignment to a Lender or an Affiliate of
a Lender or an assignment of the entire remaining amount of the assigning
Lender's Commitment or Loans of any Class, the amount of the Commitment or Loans
of the assigning Lender subject to each such assignment (determined as of the
date

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the Assignment and Assumption with respect to such assignment is delivered to
the Administrative Agent) shall not be less than $5,000,000 unless each of the
Borrower and the Administrative Agent otherwise consent, provided that no such
consent of the Borrower shall be required if an Event of Default under
Section 7.01, 7.02 or 7.05 has occurred and is continuing;

        (B)  each partial assignment shall be made as an assignment of a
proportionate part of all the assigning Lender's rights and obligations under
this Agreement, provided that this clause shall not be construed to prohibit the
assignment of a proportionate part of all the assigning Lender's rights and
obligations in respect of one Class of Commitments or Loans;

        (C)  the parties to each assignment shall execute and deliver to the
Administrative Agent an Assignment and Assumption, together with a processing
and recordation fee of $3,500; and

        (D)  the assignee, if it shall not be a Lender, shall deliver to the
Administrative Agent an Administrative Questionnaire.

        For the purposes of this Section 9.04(b), the term "Approved Fund" has
the following meaning:

        "Approved Fund" means any Person (other than a natural person) that is
engaged in making, purchasing, holding or investing in bank loans and similar
extensions of credit in the ordinary course of its business and that is
administered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an
entity or an Affiliate of an entity that administers or manages a Lender.

        (iii)  Subject to acceptance and recording thereof pursuant to
paragraph (b)(iv) of this Section, from and after the effective date specified
in each Assignment and Assumption the assignee thereunder shall be a party
hereto and, to the extent of the interest assigned by such Assignment and
Assumption, have the rights and obligations of a Lender under this Agreement
(provided that any liability of the Borrower to such assignee under
Section 2.12, 2.13 or 2.14 shall be limited to the amount, if any, that would
have been payable thereunder by the Borrower in the absence of such assignment,
except to the extent any such amounts are attributable to a Change in Law), and
the assigning Lender thereunder shall, to the extent of the interest assigned by
such Assignment and Assumption, be released from its obligations under this
Agreement (and, in the case of an Assignment and Assumption covering all of the
assigning Lender's rights and obligations under this Agreement, such Lender
shall cease to be a party hereto but shall continue to be entitled to the
benefits of Sections 2.12, 2.13, 2.14 and 9.03). Any assignment or transfer by a
Lender of rights or obligations under this Agreement that does not comply with
this Section 9.04 shall be treated for purposes of this Agreement as a sale by
such Lender of a participation in such rights and obligations in accordance with
paragraph (c) of this Section.

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        (iv)  The Administrative Agent, acting for this purpose as an agent of
the Borrower, shall maintain at one of its offices a copy of each Assignment and
Assumption delivered to it and a register for the recordation of the names and
addresses of the Lenders, and the Commitment of, and principal amount of the
Loans and owing to, each Lender pursuant to the terms hereof from time to time
(the "Register"). The entries in the Register shall be conclusive, and the
Borrower, the Administrative Agent and the Lenders may treat each Person whose
name is recorded in the Register pursuant to the terms hereof as a Lender
hereunder for all purposes of this Agreement, notwithstanding notice to the
contrary. The Register shall be available for inspection by the Borrower, and
any Lender, at any reasonable time and from time to time upon reasonable prior
notice.

        (v)   Upon its receipt of a duly completed Assignment and Assumption
executed by an assigning Lender and an assignee, the assignee's completed
Administrative Questionnaire (unless the assignee shall already be a Lender
hereunder), the processing and recordation fee referred to in paragraph (b) of
this Section and any written consent to such assignment required by
paragraph (b) of this Section, the Administrative Agent shall accept such
Assignment and Assumption and record the information contained therein in the
Register. No assignment shall be effective for purposes of this Agreement unless
it has been recorded in the Register as provided in this paragraph.

        (c)   (i) Any Lender may, without the consent of the Borrower or the
Administrative Agent, sell participations to one or more banks or other entities
(a "Participant") in all or a portion of such Lender's rights and obligations
under this Agreement (including all or a portion of its Commitment and the Loans
owing to it); provided that (A) such Lender's obligations under this Agreement
shall remain unchanged, (B) such Lender shall remain solely responsible to the
other parties hereto for the performance of such obligations and (C) the
Borrower, the Administrative Agent and the other Lenders shall continue to deal
solely and directly with such Lender in connection with such Lender's rights and
obligations under this Agreement. Any agreement or instrument pursuant to which
a Lender sells such a participation shall provide that such Lender shall retain
the sole right to enforce this Agreement and to approve any amendment,
modification or waiver of any provision of this Agreement; provided that such
agreement or instrument may provide that such Lender will not, without the
consent of the Participant, agree to any amendment, modification or waiver
described in the first proviso to Section 9.02(b) that affects such Participant.
Subject to paragraph (c)(ii) of this Section, the Borrower agrees that each
Participant shall be entitled to the benefits of Sections 2.12, 2.13 and 2.14 to
the same extent as if it were a Lender and had acquired its interest by
assignment pursuant to paragraph (b) of this Section. To the extent permitted by
law, each Participant also shall be entitled to the benefits of Section 9.08 as
though it were a Lender, provided such Participant agrees to be subject to
Section 2.15(c) as though it were a Lender.

        (ii)   A Participant shall not be entitled to receive any greater
payment under Section 2.12 or 2.14 than the applicable Lender would have been
entitled to receive with respect to the participation sold to such Participant,
unless the sale of the participation to such Participant is made with the
Borrower's prior written consent and the entitlement to greater payment results
solely from a Change in Law. A Participant that would be a Foreign Lender if it
were a Lender shall not be entitled to the benefits of Section 2.14 unless the
Borrower is notified of the

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participation sold to such Participant and such Participant agrees, for the
benefit of the Borrower, to comply with Section 2.14(e) as though it were a
Lender.

        (d)   Any Lender may at any time pledge or assign a security interest in
all or any portion of its rights under this Agreement to secure obligations of
such Lender, including without limitation any pledge or assignment to secure
obligations to a Federal Reserve Bank, and this Section shall not apply to any
such pledge or assignment of a security interest; provided that no such pledge
or assignment of a security interest shall release a Lender from any of its
obligations hereunder or substitute any such pledgee or assignee for such Lender
as a party hereto.

        (e)   Notwithstanding anything to the contrary contained herein, any
Lender (a "Granting Lender") may grant to a special purpose funding vehicle (an,
"SPC") of such Granting Lender, identified as such in writing from time to time
by the Granting Lender to the Administrative Agent and the Borrower, the option
to provide to the Borrower all or any part of any Loan that such Granting Lender
would otherwise be obligated to make to the Borrower pursuant to Section 2.01,
provided that (i) nothing herein shall constitute a commitment to make any Loan
by any SPC and (ii) if an SPC elects not to exercise such option or otherwise
fails to provide all or any part of such Loan, the Granting Lender shall be
obligated to make such Loan pursuant to the terms hereof. The making of a Loan
by an SPC hereunder shall utilize the Commitment of the Granting Lender to the
same extent, and as if, such Loan were made by the Granting Lender. Each party
hereto hereby agrees that (x) no SPC shall be liable for any payment under this
Agreement for which a Lender would otherwise be liable and (y) the Granting
Lender for any SPC shall be (and hereby agrees that it is) liable for any
payment under this Agreement for which the SPC would be liable in the absence of
preceding clause (x). In furtherance of the foregoing, each party hereto hereby
agrees that, prior to the date that is one year and one day after the payment in
full of all outstanding senior indebtedness of any SPC, it will not institute
against, or join any other person in instituting against, such SPC any
bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings
or similar proceedings under the laws of the United States or any State thereof.
In addition, notwithstanding anything to the contrary contained in this
Section 9.04 any SPC may (i) with notice to, but without the prior written
consent of, the Borrower or the Administrative Agent and without paying any
processing fee therefor, assign all or a portion of its interests in any Loans
to its Granting Lender or to any financial institutions (if consented to by the
Borrower and the Administrative Agent) providing liquidity and/or credit
facilities to or for the account of such SPC to fund the Loans made by such SPC
or to support the securities (if any) issued by such SPC to fund such Loans and
(ii) disclose on a confidential basis any non-public information relating to its
Loans to any rating agency, commercial paper dealer or provider of a surety,
guarantee or credit or liquidity enhancement to such SPC.

        Section 9.05.    Survival.    All covenants, agreements, representations
and warranties made by the Borrower herein and in the certificates or other
instruments delivered in connection with or pursuant to this Agreement shall be
considered to have been relied upon by the other parties hereto and shall
survive the execution and delivery of this Agreement and the making of any Loans
regardless of any investigation made by any such other party or on its behalf
and notwithstanding that the Administrative Agent or any Lender may have had
notice or knowledge of any Default or incorrect representation or warranty at
the time any credit is extended hereunder, and shall continue in full force and
effect as long as the principal of or any

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accrued interest on any Loan or any fee or any other amount payable under this
Agreement is outstanding and unpaid and so long as the Commitments have not
expired or terminated. The provisions of Sections 2.12, 2.13, 2.14 and 9.03 and
Article VIII shall survive and remain in full force and effect regardless of the
consummation of the transactions contemplated hereby, the repayment of the
Loans, the expiration or termination of the Commitments or the termination of
this Agreement or any provision hereof.

        Section 9.06.    Counterparts; Integration; Effectiveness.    This
Agreement may be executed in counterparts (and by different parties hereto on
different counterparts), each of which shall constitute an original, but all of
which when taken together shall constitute a single contract. This Agreement and
any separate letter agreements with respect to fees payable to the
Administrative Agent constitute the entire contract among the parties relating
to the subject matter hereof and supersede any and all previous agreements and
understandings, oral or written, relating to the subject matter hereof. Except
as provided in Section 4.01, this Agreement shall become effective when it shall
have been executed by the Administrative Agent and when the Administrative Agent
shall have received counterparts hereof which, when taken together, bear the
signatures of each of the other parties hereto, and thereafter shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns. Delivery of an executed counterpart of a signature page
of this Agreement by telecopy shall be effective as delivery of a manually
executed counterpart of this Agreement.

        Section 9.07.    Severability.    Any provision of this Agreement held
to be invalid, illegal or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability without affecting the validity, legality and enforceability of
the remaining provisions hereof; and the invalidity of a particular provision in
a particular jurisdiction shall not invalidate such provision in any other
jurisdiction.

        Section 9.08.    Right of Setoff.    If an Event of Default shall have
occurred and be continuing, each Lender and each of its Affiliates is hereby
authorized at any time and from time to time, to the fullest extent permitted by
law, to set off and apply any and all deposits (general or special, time or
demand, provisional or final) at any time held and other obligations at any time
owing by such Lender or Affiliate to or for the credit or the account of the
Borrower against any of and all the obligations of the Borrower now or hereafter
existing under this Agreement held by such Lender, irrespective of whether or
not such Lender shall have made any demand under this Agreement and although
such obligations may be unmatured. The rights of each Lender under this Section
are in addition to other rights and remedies (including other rights of setoff)
which such Lender may have.

        Section 9.09.    Governing Law; Jurisdiction; Consent to Service of
Process.    This Agreement shall be construed in accordance with and governed by
the law of the State of New York.

        (b)   Each party hereto hereby irrevocably and unconditionally submits,
for itself and its property, to the nonexclusive jurisdiction of the Supreme
Court of the State of New York sitting in New York County and of the United
States District Court of the Southern District of New York, and any appellate
court from any thereof, in any action or proceeding arising out of or relating
to this Agreement, or for recognition or enforcement of any judgment, and each
of

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the parties hereto hereby irrevocably and unconditionally agrees that all claims
in respect of any such action or proceeding may be heard and determined in such
New York State or, to the extent permitted by law, in such Federal court. Each
of the parties hereto agrees that a final judgment in any such action or
proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by law. Nothing in this
Agreement shall affect any right that the Administrative Agent, or any Lender
may otherwise have to bring any action or proceeding relating to this Agreement
against the Borrower or its properties in the courts of any jurisdiction.

        (c)   Each party hereto hereby irrevocably and unconditionally waives,
to the fullest extent it may legally and effectively do so, any objection which
it may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement in any court referred to
in paragraph (b) of this Section. Each of the parties hereto hereby irrevocably
waives, to the fullest extent permitted by law, the defense of an inconvenient
forum to the maintenance of such action or proceeding in any such court.

        (d)   Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 9.01. Nothing in this
Agreement will affect the right of any party to this Agreement to serve process
in any other manner permitted by law.

        Section 9.10.    WAIVER OF JURY TRIAL.    EACH PARTY HERETO HEREBY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE
TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF
OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER
BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES
THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT
AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY,
AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

        Section 9.11.    Headings.    Article and Section headings and the Table
of Contents used herein are for convenience of reference only, are not part of
this Agreement and shall not affect the construction of, or be taken into
consideration in interpreting, this Agreement.

        Section 9.12.    Confidentiality.    Each of the Administrative Agent
and the Lenders agrees to maintain the confidentiality of the Information (as
defined below), except that Information may be disclosed (a) to its and its
Affiliates' directors, officers, employees and agents, including accountants,
legal counsel and other advisors (it being understood that (i) the Persons to
whom such disclosure is made will be informed of the confidential nature of such
Information and instructed to keep such Information confidential in accordance
with the terms of this Agreement and (ii) that the Administrative Agent and each
Lender shall be responsible for any breach of this Section 9.12 by any of its
and its Affiliates' directors, officers, employees and agents, including
accountants, legal counsel and other advisors), (b) to the extent requested by
any regulatory authority, (c) to the extent required by applicable laws or
regulations or by any

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subpoena or similar legal process, (d) to any other party to this Agreement,
(e) in connection with the exercise of any remedies hereunder or any suit,
action or proceeding relating to this Agreement or the enforcement of rights
hereunder, (f) subject to an agreement containing provisions substantially the
same as those of this Section, to (i) any assignee of or Participant in, or any
prospective assignee of or Participant in, any of its rights or obligations
under this Agreement or (ii) any actual or prospective counterparty (or its
advisors) to any swap or derivative transaction relating to the Borrower and its
obligations, (g) with the consent of the Borrower or (h) to the extent such
Information (i) becomes publicly available other than as a result of a breach of
this Section or (ii) becomes available to the Administrative Agent, or any
Lender on a nonconfidential basis from a source other than the Borrower. For the
purposes of this Section, "Information" means all information received from the
Borrower relating to the Borrower or its business, other than any such
information that is available to the Administrative Agent, or any Lender on a
nonconfidential basis prior to disclosure by the Borrower. Any Person required
to maintain the confidentiality of Information as provided in this Section shall
be considered to have complied with its obligation to do so if such Person has
exercised the same degree of care to maintain the confidentiality of such
Information as such Person would accord to its own confidential information or,
in the case of any Lender, such Lender has treated such Information in a manner
consistent with banking industry standards for the treatment of confidential
information. Notwithstanding anything herein to the contrary, each party to this
Agreement (and any employee, representative or other agent of each such party)
may disclose to any and all persons, without limitation of any kind, the U.S.
federal income tax treatment and the U.S. federal income tax structure of the
transactions contemplated hereby 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. However, no disclosure of any information relating
to such tax treatment or tax structure may be made to the extent nondisclosure
is reasonably necessary in order to comply with applicable securities laws. The
provisions of this Section 9.12 shall survive the termination of the Commitments
and repayment of the Loans.

        Section 9.13.    Interest Rate Limitation.    Notwithstanding anything
herein to the contrary, if at any time the interest rate applicable to any Loan,
together with all fees, charges and other amounts which are treated as interest
on such Loan under applicable law (collectively the "Charges"), shall exceed the
maximum lawful rate (the "Maximum Rate") which may be contracted for, charged,
taken, received or reserved by the Lender holding such Loan in accordance with
applicable law, the rate of interest payable in respect of such Loan hereunder,
together with all Charges payable in respect thereof, shall be limited to the
Maximum Rate and, to the extent lawful, the interest and Charges that would have
been payable in respect of such Loan but were not payable as a result of the
operation of this Section shall be cumulated and the interest and Charges
payable to such Lender in respect of other Loans or periods shall be increased
(but not above the Maximum Rate therefor) until such cumulated amount, together
with interest thereon at the Federal Funds Effective Rate to the date of
repayment, shall have been received by such Lender.

        Section 9.14.    Calculations.    For purposes of this Agreement, the
Dollar Equivalent of each Loan that is an Alternate Currency Loan shall be
calculated on the date when any such Loan is made, on the first Business day of
each month and at such other times as designated by the Administrative Agent.
Such Dollar Equivalent shall remain in effect until the same is recalculated by
the Administrative Agent as provided above and notice of such

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recalculation is received by the Borrower, it being understood that until such
notice of such recalculation is received, the Dollar Equivalent shall be that
Dollar Equivalent as last reported to the Borrower by the Administrative Agent.
The Administrative Agent shall promptly notify the Borrower and the Lenders of
each such determination of the Dollar Equivalent.

        Section 9.15.    Euro.    (a) If at any time that an Alternate Currency
Loan is outstanding, the relevant Alternate Currency is fully replaced as the
lawful currency of the country that issued such Alternate Currency (the "Issuing
Country") by the Euro so that all payments are to be made in the Issuing Country
in Euros and not in the Alternate Currency previously the lawful currency of
such country, then such Alternate Currency Loan shall be automatically converted
into a Loan denominated in Euros in a principal amount equal to the amount of
Euros into which the principal amount of such Alternate Currency Loan would be
converted pursuant to the EMU Legislation or any other applicable law and
thereafter no further Loans will be available in such Alternate Currency, with
the basis of accrual of interest, notices requirements and payment offices with
respect to such converted Loans to be that consistent with the convention and
practices in the London interbank market for Euro denominated Loans.

        (b)   The Borrower shall from time to time, at the request of any
Lender, pay to such Lender the amount of any losses, damages, liabilities,
claims, reduction in yield, additional expense, increased cost, reduction in any
amount payable, reduction in the effective return of its capital, the decrease
or delay in the payment of interest or any other return forgone by such Lender
or its affiliates as a result of the tax or currency exchange resulting from the
introduction, changeover to or operation of the Euro in any applicable nation or
eurocurrency market.

        Section 9.16.    Judgment Currency.    (a) The Borrower's obligations
hereunder and under the other Credit Documents to make payments in the
applicable Approved Currency (the "Obligation Currency") shall not be discharged
or satisfied by any tender or recovery pursuant to any judgment expressed in or
converted into any currency other than the Obligation Currency, except to the
extent that such tender or recovery results in the effective receipt by the
Administrative Agent or the respective Lender of the full amount of the
Obligation Currency expressed to be payable to the Administrative Agent or such
Lender under this Agreement or the other Credit Documents. If, for the purpose
of obtaining or enforcing judgment against the Borrower in any court or in any
jurisdiction, it becomes necessary to convert into or from any currency other
than the Obligation Currency (such other currency being hereinafter referred to
as the "Judgment Currency") an amount due in the Obligation Currency, the
conversion shall be made on a basis consistent with the definition of Dollar
Equivalent but determined, in each case, on the Business Day immediately
preceding the day on which the judgment is given (such Business Day being
hereinafter referred to as the "Judgment Currency Conversion Date").

        (b)   If there is a change in the rate of exchange prevailing between
the Judgment Currency Conversion Date and the date of actual payment of the
amount due, the Borrower covenants and agrees to pay, or cause to be paid, such
additional amounts, if any (but in any event not a lesser amount) as may be
necessary to ensure that the amount paid in the Judgment Currency, when
converted at the rate of exchange prevailing on the date of payment, will
produce the amount of the Obligation Currency which could have been purchased
with the amount of Judgment Currency stipulated in the judgment or judicial
award at the rate of exchange prevailing on the Judgment Currency Conversion
Date.

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        (c)   For purposes of determining the Dollar Equivalent, or any other
rate of exchange for this Section, such amounts shall include any premium and
costs payable in connection with the purchase of the Obligation Currency.

        Section 9.17.    Special Provisions Relating to Currencies Other Than
Dollars.    (a) All funds to be made available to the Administrative Agent
pursuant to this Agreement in Euros or Pounds Sterling shall be made available
to the Administrative Agent in immediately available, freely transferable,
cleared funds to such account with such bank in such principal financial center
in such Participating Member State (or in London) as the Administrative Agent
shall from time to time nominate for this purpose.

        (b)   In relation to the payment of any amount denominated in Euros,
Pounds Sterling or in a European national currency unit, the Administrative
Agent shall not be liable to the Borrower or any of the Lenders for any delay,
or the consequences of any delay, in the crediting to any account of any amount
required by this Agreement to be paid by the Administrative Agent if the
Administrative Agent shall have taken all relevant and necessary steps to
achieve, on the date required by this Agreement, the payment of such amount in
immediately available, freely transferable, cleared funds (in Euros, Pounds
Sterling or, as the case may be, in the relevant European national currency
unit) to the account with the bank in the principal financial center in the
participating member state which the Borrower or, as the case may be, any Lender
shall have specified for such purpose. In this Section 9.17(b), "all relevant
steps" means all such steps as may be prescribed from time to time by the
regulations or operating procedures of such clearing or settlement system as the
Administrative Agent may from time to time determine for the purpose of clearing
or settling payments of Euros, Pounds Sterling or the relevant European national
currency unit. Furthermore, and without limiting the foregoing, the
Administrative Agent shall not be liable to the Borrower or any of the Lenders
with respect to the foregoing matters in the absence of its gross negligence or
willful misconduct (as determined by a court of competent jurisdiction in a
final and non-appealable decision or pursuant to a binding arbitration award or
as otherwise agreed in writing by the affected parties).

        Section 9.18.    Pro Rata Borrowings.    The Borrower will in good faith
endeavor, to the extent practicable, through the borrowing and/or repayment of
Dollar Revolving Loans and/or Approved Currency Revolving Loans denominated in
Dollars, to cause each of (i) the proportion of the average outstanding
Principal Amount of Revolving Loans to the total Commitments, (ii) the
proportion of the average outstanding Principal Amount of Dollar Loans to the
total Dollar Commitments and (iii) the proportion of the average outstanding
Principal Amount of Approved Currency Loans to the total Approved Currency
Commitments for any given period of six months to be roughly equivalent. Nothing
in this Section 9.18 shall be construed to place any obligation on Borrower with
respect to (i) the borrowing or repayment of Alternate Currency Loans or
(ii) the borrowing or repayment of Dollar Revolving Loans or Approved Currency
Revolving Loans denominated in Dollars in an amount greater or less than the
aggregate amount of Dollar Revolving Loans and Approved Currency Revolving Loans
denominated in Dollars, the Borrower otherwise intends to have outstanding based
on its determination of its business needs.

*            *

70

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

Address:         Wessex House, 3rd floor   ARCH CAPITAL GROUP LTD. 45 Reid
Street
Hamilton, HM 12 Bermuda         Attention: John D. Vollaro
Telephone: (441) 278-9253
Facsimile: (441) 278-9255   By:   /s/  CONSTANTINE IORDANOU      

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Title: President and Chief Executive Officer     JPMORGAN CHASE BANK,
Individually and as Administrative Agent
 
 
By:
 
/s/  ROBERT ANASTASIO      

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Title: Vice President
 
 
BANK OF AMERICA, N.A., Individually and as Syndication Agent
 
 
By:
 
/s/  DEBRA BASIER      

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Title: Principal
 
 
THE BANK OF BERMUDA LIMITED
 
 
By:
 
/s/  A. KERRY DAVISON      

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Title: Vice President
 
 
THE BANK OF NEW YORK
 
 
By:
 
/s/  JIMMY TSE      

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Title: Vice President

--------------------------------------------------------------------------------

 
 
THE BANK OF N.T. BUTTERFIELD & SON LIMITED
 
 
By:
 
/s/  JONATHAN RAYNOR      

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Title: Vice President
 
 
By:
 
/s/  MICHAEL McWATT      

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Title: Senior Vice President
 
 
BANK ONE, NA
 
 
By:
 
/s/  GERARD P. FOGARTY      

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Title: Director
 
 
BARCLAYS BANK PLC
 
 
By:
 
/s/  PAUL JOHNSON      

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Title: Relationship Director
 
 
CHANG HWA COMMERICAL BANK, LTD., NEW YORK BRANCH
 
 
By:
 
/s/  MING-HSIEN LIN      

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Title: SVP & General Manager
 
 
COMMERZBANK AG New York and Grand Cayman Branches
 
 
By:
 
/s/  MICHAEL P. McCARTHY      

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Title: Vice President
 
 
By:
 
/s/  WERNER SAMUEL      

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Title: Senior Vice President

--------------------------------------------------------------------------------

 
 
CREDIT SUISSE FIRST BOSTON, acting through its Cayman Islands Branch
 
 
By:
 
/s/  JAY CHALL      

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Title: Director
 
 
By:
 
/s/  CASSANDRA DROOGAN      

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Title: Associate
 
 
FIRST COMMERCIAL BANK, New York Agency
 
 
By:
 
/s/  BRUCE M. J. JU      

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Title: V.P. & General Manager
 
 
FLEET NATIONAL BANK
 
 
By:
 
/s/  LAWRENCE DAVIS      

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Title: Portfolio Manager
 
 
LLOYDS TSB BANK PLC
 
 
By:
 
/s/  MATTHEW S.R. TUCK      

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Title: Vice President Financial Institutions, USA
 
 
By:
 
/s/  CANDICE BEATO      

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Title: Assistant Vice President Financial Institutions, USA
 
 
MERRILL LYNCH BANK USA
 
 
By:
 
/s/  DAVID L. MILLETT      

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Title: Vice President          

--------------------------------------------------------------------------------

 
 
WACHOVIA BANK, NATIONAL ASSOCIATION
 
 
By:
 
/s/  GREG WILCOX      

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Title: Vice President

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EXHIBIT A

ASSIGNMENT AND ASSUMPTION

        This Assignment and Assumption (the "Assignment and Assumption") is
dated as of the Effective Date set forth below and is entered into by and
between [Insert name of Assignor] (the "Assignor") and [Insert name of Assignee]
(the "Assignee"). Capitalized terms used but not defined herein shall have the
meanings given to them in the Credit Agreement identified below (as amended, the
"Credit Agreement"), receipt of a copy of which is hereby acknowledged by the
Assignee. The Standard Terms and Conditions set forth in Annex 1 attached hereto
are hereby agreed to and incorporated herein by reference and made a part of
this Assignment and Assumption as if set forth herein in full.

        For an agreed consideration, the Assignor hereby irrevocably sells and
assigns to the Assignee, and the Assignee hereby irrevocably purchases and
assumes from the Assignor, subject to and in accordance with the Standard Terms
and Conditions and the Credit Agreement, as of the Effective Date inserted by
the Administrative Agent as contemplated below (i) all of the Assignor's rights
and obligations in its capacity as a Lender under the Credit Agreement and any
other documents or instruments delivered pursuant thereto to the extent related
to the amount and percentage interest identified below of all of such
outstanding rights and obligations of the Assignor under the respective
facilities identified below and (ii) to the extent permitted to be assigned
under applicable law, all claims, suits, causes of action and any other right of
the Assignor (in its capacity as a Lender) against any Person, whether known or
unknown, arising under or in connection with the Credit Agreement, any other
documents or instruments delivered pursuant thereto or the loan transactions
governed thereby or in any way based on or related to any of the foregoing,
including contract claims, tort claims, malpractice claims, statutory claims and
all other claims at law or in equity related to the rights and obligations sold
and assigned pursuant to clause (i) above (the rights and obligations sold and
assigned pursuant to clauses (i) and (ii) above being referred to herein
collectively as the "Assigned Interest"). Such sale and assignment is without
recourse to the Assignor and, except as expressly provided in this Assignment
and Assumption, without representation or warranty by the Assignor.

1.   Assignor:       

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2.
 
Assignee:
 
    

--------------------------------------------------------------------------------

[and is an Affiliate/Approved Fund of [identify Lender](1)]
3.
 
Borrower:
 
Arch Capital Group Ltd.
4.
 
Administrative Agent:
 
JPMorgan Chase Bank, as the administrative agent under the Credit Agreement
5.
 
Credit Agreement:
 
The Credit Agreement dated as of September 12, 2003 among Arch Capital Group
Ltd., the Lenders parties thereto,

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(1)Select as applicable.

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        JPMorgan Chase Bank, as Administrative Agent, Bank of America, N.A. as
Syndication Agent and Commerzbank AG, New York Branch, Credit Suisse First
Boston and Wachovia Bank, National Association, as Documentation Agents. 6.  
Assigned Interest:    

Facility Assigned(2)

--------------------------------------------------------------------------------

  Aggregate Amount of
Commitment/Loans for all
Lenders

--------------------------------------------------------------------------------

  Amount of Commitment/Loans
Assigned

--------------------------------------------------------------------------------

  Percentage Assigned of
Commitment/Loans(3)

--------------------------------------------------------------------------------

      $     $       %     $     $       %     $     $       %

Effective Date:                              , 20     [TO BE INSERTED BY
ADMINISTRATIVE AGENT AND WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF
TRANSFER IN THE REGISTER THEREFOR.]

The terms set forth in this Assignment and Assumption are hereby agreed to:

    ASSIGNOR     [NAME OF ASSIGNOR]
 
 
By:
 
    

--------------------------------------------------------------------------------

Title:
 
 
ASSIGNEE     [NAME OF ASSIGNEE]
 
 
By:
 
    

--------------------------------------------------------------------------------

Title:

--------------------------------------------------------------------------------

(2)Fill in the appropriate terminology for the types of facilities under the
Credit Agreement that are being assigned under this Assignment (e.g., "Dollar
Revolving Commitment," "Approved Currency Term Loans," etc.).

(3)Set forth, to at least 9 decimals, as a percentage of the Commitment/Loans of
all Lenders thereunder.

2

--------------------------------------------------------------------------------

[Consented to and](4) Accepted: [NAME OF ADMINISTRATIVE AGENT], as
Administrative Agent
By:
 
    

--------------------------------------------------------------------------------

Title:
 
 
[Consented to:](5) [ARCH CAPITAL GROUP LTD.]
By:
 
    

--------------------------------------------------------------------------------

Title:
 
              

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(4)To be added only if the consent of the Administrative Agent is required by
the terms of the Credit Agreement.

(5)To be added only if the consent of the Borrower is required by the terms of
the Credit Agreement.

3

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ANNEX 1

STANDARD TERMS AND CONDITIONS FOR
ASSIGNMENT AND ASSUMPTION

        1.    Representations and Warranties.    

        1.1    Assignor.    The Assignor (a) represents and warrants that (i) it
is the legal and beneficial owner of the Assigned Interest, (ii) the Assigned
Interest is free and clear of any lien, encumbrance or other adverse claim and
(iii) it has full power and authority, and has taken all action necessary, to
execute and deliver this Assignment and Assumption and to consummate the
transactions contemplated hereby; and (b) assumes no responsibility with respect
to (i) any statements, warranties or representations made in or in connection
with the Credit Agreement or any other Credit Document, (ii) the execution,
legality, validity, enforceability, genuineness, sufficiency or value of the
Credit Documents or any collateral thereunder, (iii) the financial condition of
the Borrower, any of its Subsidiaries or Affiliates or any other Person
obligated in respect of any Credit Document or (iv) the performance or
observance by the Borrower, any of its Subsidiaries or Affiliates or any other
Person of any of their respective obligations under any Credit Document.

        1.2.    Assignee.    The Assignee (a) represents and warrants that
(i) it has full power and authority, and has taken all action necessary, to
execute and deliver this Assignment and Assumption and to consummate the
transactions contemplated hereby and to become a Lender under the Credit
Agreement, (ii) it satisfies the requirements, if any, specified in the Credit
Agreement that are required to be satisfied by it in order to acquire the
Assigned Interest and become a Lender, (iii) from and after the Effective Date,
it shall be bound by the provisions of the Credit Agreement as a Lender
thereunder and, to the extent of the Assigned Interest, shall have the
obligations of a Lender thereunder, (iv) it has received a copy of the Credit
Agreement, together with copies of the most recent financial statements
delivered pursuant to Section 5.01 thereof, as applicable, and such other
documents and information as it has deemed appropriate to make its own credit
analysis and decision to enter into this Assignment and Assumption and to
purchase the Assigned Interest on the basis of which it has made such analysis
and decision independently and without reliance on the Administrative Agent or
any other Lender, and (v) if it is a Foreign Lender, attached to the Assignment
and Assumption is any documentation required to be delivered by it pursuant to
the terms of the Credit Agreement, duly completed and executed by the Assignee;
and (b) agrees that (i) it will, independently and without reliance on the
Administrative Agent, the Assignor or any other Lender, and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action under the Credit
Documents, and (ii) it will perform in accordance with their terms all of the
obligations which by the terms of the Credit Documents are required to be
performed by it as a Lender.

        2.    Payments.    From and after the Effective Date, the Administrative
Agent shall make all payments in respect of the Assigned Interest (including
payments of principal, interest, fees and other amounts) to the Assignor for
amounts which have accrued to but excluding the Effective Date and to the
Assignee for amounts which have accrued from and after the Effective Date.

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        3.    General Provisions.    This Assignment and Assumption shall be
binding upon, and inure to the benefit of, the parties hereto and their
respective successors and assigns. This Assignment and Assumption may be
executed in any number of counterparts, which together shall constitute one
instrument. Delivery of an executed counterpart of a signature page of this
Assignment and Assumption by telecopy shall be effective as delivery of a
manually executed counterpart of this Assignment and Assumption. This Assignment
and Assumption shall be governed by, and construed in accordance with, the law
of the State of New York.

2

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EXHIBIT B

FORM OF BORROWING REQUEST

[Date]

JPMorgan Chase Bank, as Administrative Agent
        for the Lenders parties to the
        Credit Agreement referred to below

One Chase Manhattan Plaza
New York, New York 10081

        Attention:                                                  

Ladies and Gentlemen:

        The undersigned, Arch Capital Group Ltd., refers to the Credit
Agreement, dated as of September 12, 2003 (as amended, modified or supplemented
from time to time, the "Credit Agreement," the terms defined therein being used
herein as therein defined), among the undersigned, the Lenders from time to time
party thereto, Commerzbank AG, Credit Suisse First Boston and Wachovia Bank,
National Association, as Documentation Agents, Bank of America, N.A. as
Syndication Agent and you, as Administrative Agent for such Lenders, and hereby
[gives you irrevocable notice] [confirms in writing the irrevocable telephone
notice], pursuant to Section 2.03 of the Credit Agreement, that the undersigned
[hereby requests] [has requested] a Borrowing of Revolving Loans under the
Credit Agreement, and in that connection sets forth below the information
relating to such Borrowing (the "Proposed Borrowing") as required by
Section 2.03 of the Credit Agreement:

          (i)  The aggregate principal amount of the Proposed Borrowing is
[                        ].(6)

         (ii)  The Business Day of the Proposed Borrowing is
                         20    .(7)

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(6)Amount to be expressed in (x) Dollars, if a Dollar Loan and (y) Dollars,
Euros or Pounds Sterling, if an Approved Currency Revolving Loan.

(7)(i) Shall be at least (x) three Business Days after the date hereof in the
case of Eurocurrency Loans denominated in Dollars, provided that any such notice
shall be deemed to have been given on a certain day only if given before
10:00 A.M. (New York time) on such day and (y) four Business Days after the date
hereof in the case of Eurocurrency Borrowing denominated in an Alternate
Currency, provided that any such notice shall be deemed to have been given on a
certain day only if given before 1:00 p.m. (New York time) on such day and
(ii) may be the same Business Day as the date hereof in the case of ABR Loans,
provided that any such notice shall be deemed to have been given on a certain
day only if given before 11:00 A.M. (New York time) on such day.

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         (ii)  The Proposed Borrowing is to consist of [Dollar Revolving Loans]
[Approved Currency Revolving Loans, which are to be denominated in [specify
currency]].

        (iii)  The Proposed Borrowing is to consist of [ABR Loans] [Eurocurrency
Loans].

       [(iv)  The initial Interest Period for the Proposed Borrowing is
             month[s]](8).

         (v)  The proceeds of the Borrowing are to be deposited as follows
                                     .(9)

        The undersigned, Arch Capital Group Ltd., hereby certifies that the
following statements are true on the date hereof, and will be true on the date
of the Proposed Borrowing:

        (A)  the representations and warranties made by or on behalf of the
Borrower contained in the Credit Agreement and in the other Credit Documents are
and will be true and correct in all material respects with the same effect as
though made on and as of the date hereof (it being understood and agreed that
any representation or warranty which by its terms is made as of a specified date
is true and correct in all material respects only as of such specified date);
and

        (B)  no Default or Event of Default has occurred and is continuing.

    Very truly yours,
 
 
ARCH CAPITAL GROUP LTD.
 
 
By
 
    

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Name:
Title:

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(8)To be included for a Proposed Borrowing of Eurocurrency Loans.

(9)Insert disbursement instructions.

2

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EXHIBIT C-1

[Opinion of Borrower's Special U.S. Counsel]

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EXHIBIT C-2

[Opinion of Borrower's Special Bermuda counsel]

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EXHIBIT D

ARCH CAPITAL GROUP LTD.

Officer's Certificate

        I, the undersigned, [President] [Vice President] of ARCH CAPITAL
GROUP LTD., a [company] [corporation] organized and existing under the laws of
Bermuda (the "Borrower"), do hereby certify that:

        1.     This Certificate is furnished pursuant to Section 4.01(d) of the
Credit Agreement, dated as of September 12, 2003, among Arch Capital Group Ltd.,
the Lenders from time to time party thereto, JPMorgan Chase Bank, as
Administrative Agent, Bank of America, N.A., as Syndication Agent and
Commerzbank AG, New York Branch, Credit Suisse First Boston and Wachovia Bank,
National Association as Documentation Agents (such Credit Agreement, as in
effect on the date of this Certificate, being herein called the "Credit
Agreement"). Unless otherwise defined herein capitalized terms used in this
Certificate have the meanings assigned to those terms in the Credit Agreement.

        2.     The persons named in Annex A have been duly elected, have duly
qualified as and at all times since                              , 20    (1) (to
and including and date hereof) have been officers of the Borrower, holding the
respective offices in Annex A set opposite their names, and the signatures on
Annex A set opposite their names are their genuine signatures.

        3.     Attached hereto as Annex B is a copy of the [Certificate of
Incorporation] [equivalent organizational document] of the Borrower as filed [in
the office of the [Registrar]] on                              ,             ,
together with all amendments thereto adopted through the date hereof.

        4.     Attached hereto as Annex C is a true and correct copy of the
[By-Laws] [equivalent organizational document] of the Borrower as in effect on
                             ,             (3) together with all amendments
thereto adopted through the date hereof.

        5.     Attached hereto as Annex D is a true and correct copy of
resolutions duly adopted on                  , [by unanimous written consent of
the Board of Directors of the Borrower] [by a meeting of the Board of Directors
of the Borrower, at which a quorum was present and acting throughout], which
resolutions have not been revoked, modified, amended or rescinded and are still
in full force and effect. Except as attached hereto as Annex D, no resolutions
have been adopted by the Board of Directors of the Borrower which deal with the
execution, delivery or performance of any of the Credit Documents.

        6.     On the date of this Certificate, all of the applicable conditions
set forth in Section 4.01(d) through 4.01(j), inclusive, of the Credit Agreement
have been satisfied.

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(1)Insert a date prior to the time of any corporate action relating to the
Credit Agreement.

(3)Insert same date as in paragraph 2 of this Certificate.

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        7.     On the date hereof, the representations and warranties made by or
on behalf of the Borrower contained in the Credit Agreement and the other Credit
Documents are true and correct in all material respects on the date of this
Certificate (it being understood and agreed that any representation or warranty
which by its terms is made as of a specified date shall be required to be true
and correct in all material respects only as of such specified date).

        8.     On the date hereof, no Default or Event of Default has occurred
and is continuing.

        9.     I know of no proceeding for the dissolution or liquidation of the
Borrower or threatening its existence.

        IN WITNESS WHEREOF, I have hereunto set my hand this day of
                        , 20    .

    [NAME OF BORROWER]
 
 
By
 
    

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Name:
Title:

2

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        I, the undersigned, [Insert title of Secretary][Assistant Secretary]] of
the Borrower, do hereby certify that:

        1.     [Insert name of Person making the above certifications] is the
duly elected and qualified [President] [Vice President] of the Borrower and the
signature above is his/her genuine signature.

        2.     The certifications made by [name] in items 2, 3, 4 and 5 above
are true and correct.

        3.     I know of no proceeding for the dissolution or liquidation of the
Borrower or threatening its existence.

        IN WITNESS WHEREOF, I have hereunto set my hand this              day of
                         20    .

    ARCH CAPITAL GROUP LTD.
 
 
By
 
    

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Name:
Title:

3

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ANNEX A

Name(2)

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  Office

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  Signature

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(2)Include name, office and signature of each officer who will sign any Credit
Document, including the officer who will sign the certification at the end of
this Certificate.

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QuickLinks

Exhibit 10.7

Table of Contents
ARTICLE I Definitions
ARTICLE II The Credits
ARTICLE III Representations and Warranties
ARTICLE IV Conditions
ARTICLE V Affirmative Covenants
ARTICLE VI Negative Covenants
ARTICLE VII Events of Default
ARTICLE VIII The Administrative Agent
ARTICLE IX Miscellaneous

ANNEX 1

EXHIBIT B

FORM OF BORROWING REQUEST

EXHIBIT C-1

EXHIBIT C-2

EXHIBIT D

ARCH CAPITAL GROUP LTD. Officer's Certificate

ANNEX A