Exhibit 10.1

June 21, 2007                

Max Bermuda Ltd.

Max Capital Group Ltd.

Max House

2 Front Street

Hamilton HM KX

Bermuda

Attention: Jim Tees

Executive Vice President

$600,000,000 Senior Credit Facility

Ladies and Gentlemen:

Bank of America, N.A. (“Bank of America”) is pleased to offer to be the sole and
exclusive administrative agent (in such capacity, the “Administrative Agent”)
for a $450,000,000 five year secured senior credit facility (the “Tranche A
Facility”) for letters of credit to Max Bermuda Ltd. (“Max Bermuda”) and a
$150,000,000 five year unsecured senior credit facility (the “Tranche B
Facility” and, together with the Tranche A Facility, the “Senior Credit
Facility”) for letters of credit to Max Bermuda and loans to Max Bermuda and Max
Capital Group Ltd. (“Max Capital” and, together with Max Bermuda, each a
“Borrower” and collectively, the “Borrowers”), and Bank of America is pleased to
offer its commitment to lend up to $125,000,000 of the Senior Credit Facility
(to be allocated prorata between the Tranche A Facility and the Tranche B
Facility), upon and subject to the terms and conditions of this letter and the
Summary of Terms and Conditions attached hereto (the “Summary of Terms”). Bane
of America Securities LLC (“BAS”) is pleased to advise you of its willingness in
connection with the foregoing commitment, as sole and exclusive lead arranger
and sole and exclusive book manager (in such capacities, the “Lead Arranger”)
for the Senior Credit Facility, to use commercially reasonable efforts to form a
syndicate of financial institutions (the “Lenders”) reasonably acceptable to you
for the Senior Credit Facility.

Bank of America will act as sole and exclusive Administrative Agent for the
Senior Credit Facility and BAS will act as sole and exclusive Lead Arranger for
the Senior Credit Facility. No additional agents, co-agents or arrangers will be
appointed and no other titles will be awarded without our mutual consent. It is
anticipated that Citibank, N.A. and ING Bank N.V. will be awarded syndication
agent titles in connection with their expected significant commitments to the
Senior Credit Facility.

The commitment of Bank of America hereunder and the undertaking of BAS to
provide the services described herein are subject to the satisfaction of each of
the following conditions precedent in a manner acceptable to Bank of America and
BAS: (a) the accuracy and completeness of all representations that you and your
affiliates make to Bank of America and BAS in connection with the Senior Credit
Facility and your compliance with the terms of this

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Commitment Letter (including the Summary of Terms) and the Fee Letter (as
hereinafter defined); (b) until the closing date of the Senior Credit Facility,
there shall be no competing offering, placement or arrangement of a competing
senior credit facility by or on behalf of the Borrowers or any of their
subsidiaries; (c) the negotiation, execution and delivery of definitive
documentation for the Senior Credit Facility consistent with the Summary of
Terms and otherwise reasonably satisfactory to Bank of America and BAS and,
unless such documentation is an amendment and restatement of the Credit
Agreement dated as of June 1, 2005 among the Borrowers, various financial
institutions and Bank of America as administrative agent (as amended to date,
the “Existing Credit Agreement”), the termination of the Existing Credit
Agreement; (d) no change, occurrence or development that shall have occurred or
become known to Bank of America or BAS since December 31, 2006 could reasonably
be expected to have a material adverse effect on the business, assets,
liabilities (actual or contingent), operations, condition (financial or
otherwise) or prospects of Max Bermuda and its subsidiaries or Max Capital and
its subsidiaries, in each case taken as a whole; and (e) commitments shall have
been received from financial institutions (the “Lenders”) for the remaining
$475,000,000 of the Senior Credit Facility on the terms and conditions referred
to herein and in the Summary of Terms.

BAS intends to commence syndication efforts promptly upon your acceptance of
this Commitment Letter and the Fee Letter. You agree to actively assist BAS in
achieving a syndication of the Senior Credit Facility that is satisfactory to
it. Such assistance shall include (a) your providing and causing your advisors
to provide Bank of America and BAS and the other Lenders upon request with all
information reasonably deemed necessary by Bank of America and BAS to complete
syndication; (b) your assistance in the preparation of an Information Memorandum
to be used in connection with the syndication of the Senior Credit Facility;
(c) your using commercially reasonable efforts to ensure that the syndication
efforts of BAS benefit materially from your existing banking relationships; and
(d) otherwise assisting Bank of America and BAS in their syndication efforts,
including by making your senior management and advisors available from time to
time to attend and make presentations regarding the business and prospects of
the Borrowers and their respective subsidiaries, as appropriate, at one or more
meetings of prospective Lenders.

It is understood and agreed that BAS will manage and control all aspects of the
syndication in consultation with you, including decisions as to the selection of
prospective Lenders and any titles offered to proposed Lenders, when commitments
will be accepted and the final allocations of the commitments among the Lenders.
It is understood that no Lender participating in the Senior Credit Facility will
receive compensation from you in order to obtain its commitment, except on the
terms contained herein and in the Summary of Terms.

You hereby represent, warrant and covenant that (a) all factual written
information, other than Projections (defined below), which has been or is
hereafter made available to Bank of America, BAS or the Lenders by you or any of
your representatives (or on your or their behalf) in connection with the
transactions contemplated hereby (the “Information”) is and will be true and
correct in all material respects as of the date given and does not and will not
contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements contained therein in light of the circumstances
under which they were made not materially misleading, and (b) all financial
projections concerning the Borrowers and their respective

 

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subsidiaries that have been or are hereafter made available to Bank of America,
BAS or the Lenders by you or any of your representatives in connection with the
transactions contemplated hereby (the “Projections”) have been or will be
prepared in good faith based upon reasonable assumptions. You agree to furnish
us with such Information and Projections as we may reasonably request and to
supplement the Information and the Projections from time to time until the
closing date for the Senior Credit Facility (the “Closing Date”) so that the
representation, warranty and covenant in the preceding sentence is correct on
the Closing Date. In issuing this commitment and in arranging and syndicating
the Senior Credit Facility, Bank of America and BAS are and will be using and
relying on the Information and the Projections (collectively, the
“Pre-Commitment Information”) without independent verification thereof.

By executing this Commitment Letter, you agree to reimburse Bank of America and
BAS from time to time on demand for reasonable out-of-pocket fees and expenses
as follows: (a) the reasonable fees, disbursements and other charges of Mayer,
Brown, Rowe & Maw LLP, as counsel to the Lead Arranger and the Administrative
Agent, (b) syndication expenses (including without limitation, travel, meeting
preparation and offering materials preparation), (c) due diligence expenses and
(d) all CUSIP fees for registration with the Standard & Poor’s CUSIP Service
Bureau, as incurred in connection with the Senior Credit Facility, the
syndication thereof, the preparation of the definitive documentation therefor
and the other transactions contemplated hereby.

Whether or not the transactions contemplated hereby are consummated, you agree
to indemnify and hold harmless Bank of America, BAS, each Lender and each of
their affiliates and their respective officers, directors, employees, agents,
advisors and other representatives (each, an “Indemnified Party”) from and
against liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, charges, expenses and disbursements (including, without
limitation, the reasonable fees, disbursements and other charges of counsel) of
any kind or nature whatsoever which may at any time be imposed on, incurred by
or asserted against any Indemnified Party, in each case arising out of or in
connection with or by reason of (including, without limitation, in connection
with any investigation, litigation or proceeding or preparation of a defense in
connection therewith) (a) any matters contemplated by this Commitment Letter or
any related transaction or (b) the Senior Credit Facility and any other
financings or any use made or proposed to be made with the proceeds thereof
whether or not any Indemnified Party is a party thereto (all the foregoing,
collectively, the “Indemnified Liabilities”); provided, that you shall have no
obligation hereunder to any Indemnified Party with respect to Indemnified
Liabilities resulting solely from the gross negligence or willful misconduct of
such Indemnified Person.

This Commitment Letter and the fee letter among you, Bank of America and BAS of
even date herewith (the “Fee Letter”) and the contents hereof and thereof are
confidential and, except for disclosure hereof or thereof on a confidential
basis to your accountants, attorneys and other professional advisors retained by
you in connection with the Senior Credit Facility or as otherwise required by
law, may not be disclosed in whole or in part to any person or entity without
our prior written consent; provided, however, it is understood and agreed that
you may disclose this Commitment Letter (including the Summary of Terms) but not
the Fee Letter after your acceptance of this Commitment Letter and the Fee
Letter, in filings with the Securities and Exchange Commission and other
applicable regulatory authorities and stock exchanges. Bank of America and BAS
hereby notify you that pursuant to the requirements of the USA PATRIOT

 

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Act, Title III of Pub. L. 107-56 (signed into law October 26, 2001) (the “Act”),
each of them is required to obtain, verify and record information that
identifies you, which information includes your name and address and other
information that will allow Bank of America or BAS, as applicable, to identify
you in accordance with the Act.

You acknowledge that Bank of America and BAS or their affiliates may be
providing financing or other services to parties whose interests may conflict
with yours. Bank of America and BAS agree that they will not furnish
confidential information obtained from you to any of their other customers and
that they will treat confidential information relating to you and your
affiliates with the same degree of care as they treat their own confidential
information. Bank of America and BAS further advise you that they will not make
available to you confidential information that they have obtained or may obtain
from any other customer. Solely in connection with the services and transactions
contemplated hereby, you agree that Bank of America and BAS are permitted to
access, use and share with any of their bank or non-bank affiliates, agents,
advisors (legal or otherwise) or representatives any information concerning you
or any of your affiliates that is or may come into the possession of Bank of
America, BAS or any of such affiliates.

In connection with all aspects of the transactions contemplated by this letter,
you acknowledge and agree, and acknowledge your affiliates’ understanding, that:
(i) the Senior Credit Facility and any related arranging or other services
described in this letter are arm’s-length commercial transactions between you
and your affiliates, on the one hand, and Bank of America and BAS on the other
hand, and you are capable of evaluating and understanding and understand and
accept the terms, risks and conditions of the transactions contemplated by this
letter; (ii) in connection with the process leading to such transactions, Bank
of America and BAS each is and has been acting solely as a principal and is not
the financial advisor, agent or fiduciary, for you or any of your affiliates,
stockholders, creditors or employees or any other party; (iii) none of Bank of
America or BAS has assumed or will assume an advisory, agency or fiduciary
responsibility in your or your affiliates’ favor with respect to any of the
transactions contemplated hereby or the process leading thereto (irrespective of
whether Bank of America or BAS has advised or is currently advising you or your
affiliates on other matters) and none of Bank of America or BAS has any
obligation to you or your affiliates with respect to the transactions
contemplated hereby except those obligations expressly set forth in this letter;
(iv) Bank of America and BAS and their respective affiliates may be engaged in a
broad range of transactions that involve interests that differ from yours and
your affiliates and Bank of America and BAS have no obligation to disclose any
of such interests by virtue of any advisory, agency or fiduciary relationship;
and (v) Bank of America and BAS have not provided any legal, accounting,
regulatory or tax advice with respect to any of the transactions contemplated
hereby and you have consulted your own legal, accounting, regulatory and tax
advisors to the extent you have deemed appropriate. You hereby waive and
release, to the fullest extent permitted by law, any claims that you may have
against Bank of America and BAS with respect to any breach or alleged breach of
agency or fiduciary duty.

The provisions of the immediately preceding five paragraphs shall remain in full
force and effect regardless of whether any definitive documentation for the
Senior Credit Facility shall be executed and delivered, and notwithstanding the
termination of this letter or any commitment or undertaking hereunder.

 

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This Commitment Letter and the Fee Letter may be executed in counterparts which,
taken together, shall constitute an original. Delivery of an executed
counterpart of this Commitment Letter or the Fee Letter by telecopier or
facsimile shall be effective as delivery of a manually executed counterpart
thereof.

This Commitment Letter and the Fee Letter shall be governed by, and construed in
accordance with, the laws of the State of New York. Each of you, Bank of America
and BAS hereby irrevocably waives any and all right to trial by jury in any
action, proceeding or counterclaim (whether based on contract, tort or
otherwise) arising out of or relating to this Commitment Letter (including,
without limitation, the Summary of Terms), the Fee Letter, the transactions
contemplated hereby and thereby or the actions of Bank of America and BAS in the
negotiation, performance or enforcement hereof. The commitments and undertakings
of Bank of America and BAS may be terminated by us, if you fail to perform your
obligations under this Commitment Letter or the Fee Letter on a timely basis.

This Commitment Letter, together with the Summary of Terms and the Fee Letter,
embodies the entire agreement and understanding among Bank of America, BAS, you
and your affiliates with respect to the Senior Credit Facility and supersedes
all prior agreements and understandings relating to the specific matters hereof.
However, please note that the terms and conditions of the commitment of Bank of
America and the undertaking of BAS hereunder are not limited to those set forth
herein or in the Summary of Terms. Those matters that are not covered or made
clear herein or in the Summary of Terms or the Fee Letter are subject to mutual
agreement of the parties. No party has been authorized by Bank of America or BAS
to make any oral or written statements that are inconsistent with this
Commitment Letter. This Commitment Letter is not assignable by the Borrowers
without our prior written consent and is intended to be solely for the benefit
of the parties hereto and the Indemnified Parties.

This offer will expire at 5:00 p.m. Chicago time on June 26, 2007 unless you
execute this letter and the Fee Letter and return them to us prior to that time
(which may be by facsimile transmission), whereupon this letter and the Fee
Letter (each of which may be signed in one or more counterparts) shall become
binding agreements. Thereafter, this undertaking and commitment will expire on
August 31, 2007 unless definitive documentation for the Senior Credit Facility
is executed and delivered prior to such date.

[THE BALANCE OF THIS PAGE IS INTENTIONALLY LEFT BLANK]

 

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We are pleased to have the opportunity to work with you in connection with this
important financing.

 

Very truly yours, BANK OF AMERICA, N.A. By:   LOGO [g40617img001.jpg] Name:  
Debra Basler Title:   Senior Vice President BANC OF AMERICA SECURITIES LLC By:  
LOGO [g40617img002.jpg] Name:   Jonathan Muller Title:   Principal

ACCEPTED AND AGREED TO

AS OF THE DATE FIRST ABOVE WRITTEN:

 

MAX BERMUDA LTD. By:   LOGO [g40617img003.jpg] Name:   Angelo M. Guagliano
Title:   President & CEO

 

MAX CAPITAL GROUP LTD. By:   LOGO [g40617img004.jpg] Name:   N James Tees Title:
  EVP & Chief Risk Officer

 

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SUMMARY OF TERMS AND CONDITIONS

MAX BERMUDA LTD.

$600,000,000 SENIOR CREDIT FACILITY

 

BORROWERS:    Max Bermuda Ltd., a Bermuda-domiciled insurance and reinsurance
company (“Max Bermuda”) and its parent, Max Capital Group Ltd., a Bermuda
holding company (“Max Capital” and together with Max Bermuda, the “Borrowers”).
ADMINISTRATIVE AGENT:    Bank of America, N.A. (the “Administrative Agent” or
“Bank of America”) will act as sole and exclusive administrative agent. SOLE
LEAD ARRANGER AND BOOK MANAGER:   

 

Banc of America Securities LLC (“BAS”).

LENDERS:    A syndicate of financial institutions (including Bank of America)
arranged by BAS, which institutions shall be acceptable to Max Bermuda and the
Administrative Agent (collectively, the “Lenders”). SENIOR CREDIT FACILITY:   

 

An aggregate principal amount will be available upon the terms and conditions
hereinafter set forth:

   Tranche A Facility: $450,000,000 secured five year facility for Max Bermuda
(the “Tranche A Facility”) for the issuance of standby Letters of Credit.   
Tranche B Facility: $150,000,000 unsecured five year facility for Max Bermuda
and Max Capital (the “Tranche B Facility”). Max Capital will be entitled to
request revolving loans (the “Loans”) and Max Bermuda will be entitled to
request Loans or the issuance of standby Letters of Credit.    The Tranche A
Facility and the Tranche B Facility are collectively referred to herein as the
“Senior Credit Facility”.    The Senior Credit Facility may be increased by $200
million. Any such increase will be allocated to the Tranche A Facility and/or
the Tranche B Facility provided that the aggregate commitments under the Tranche
B Facility can never be more than 25% of the aggregate commitments under the
Senior Credit Facility. Lenders shall be given the opportunity to participate in
the increase on a pro rata basis but no Lender shall be obligated to increase
its commitment. rata basis but no Lender shall be obligated to increase its
commitment. rata basis but no Lender shall be obligated to increase its
commitment.

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PURPOSE:    Standby letters of credit (each a “Letter of Credit”) issued under
the Senior Credit Facility will support obligations under insurance and
reinsurance liabilities or regulatory purposes of Max Bermuda. Letters of Credit
will have a maximum initial term of one year, and shall be annually
automatically renewable, clean, unconditional and irrevocable. Loans can be used
for general corporate purposes. LETTERS OF CREDIT ISSUANCE FORMAT:   

 

Letters of Credit will be issued either (i) by Bank of America, as letter of
credit agent, referencing each Lender (not “fronted” by Bank of America), and
each Lender will be severally (but not jointly) obligated to fund its pro rata
portion of any draw on a Letter of Credit or (ii) upon request of Max Bermuda,
by Bank of America as fronting bank and each Lender will severally purchase a
participation in such fronted letters of credit. In the event a Lender cannot
issue letters of credit directly, Bank of America will front for such Lender in
any letters of credit issued on a several basis. Draw requests on an issued
Letter of Credit will be presented to Bank of America as Letter of Credit Agent.
In the case of Letters of Credit issued by the Lenders on a several basis, Bank
of America, as Letter of Credit Agent, will only remit drawn amounts received
from the Lenders to the letter of credit beneficiary.

CLOSING DATE:    The execution of definitive loan documentation, to occur on or
before August 31, 2007 (the “Closing Date”). FEES:    As set forth in Addendum
I. COMMITMENT TERMINATION DATE/ MATURITY:   

 

The Commitment Termination Date for the Tranche A Facility will be five years
from the date of Closing. The last stated maturity date of Letters of Credit
under the Tranche A Facility will be on or before the date which is one year
after the Tranche A Facility Commitment Termination Date. The Commitment
Termination Date for the Tranche B Facility will be five years from the date of
Closing. All outstanding Loans shall be due and payable on the Commitment
Termination Date for the Tranche B Facility. The last stated maturity date of
Letters of Credit under the Tranche B Facility will be on or before the date
which is one year after the Tranche B Facility Commitment Termination Date.

 

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OPTIONAL PREPAYMENTS AND COMMITMENT REDUCTIONS:   

 

Loans under the Tranche B Facility may be prepaid in whole or in part at any
time without penalty, subject to reimbursement of the Lenders’ breakage and
redeployment costs in the case of prepayment of LIBOR borrowings. The unutilized
portion of any commitment under the Senior Credit Facility in excess of the
stated amount of all Letters of Credit and outstanding Loans, if any may be
irrevocably canceled in whole or in part by Max Bermuda; provided, however, that
after giving effect to any reduction in the commitments the aggregate
commitments under the Tranche B Facility shall not exceed 25% of the aggregate
commitments under the Senior Credit Facility.

COLLATERAL/ BORROWING BASE:    The Tranche A Facility will be secured by a first
priority, perfected security interest in certain of Max Bermuda’s investment
securities acceptable to Bank of America (“Eligible Investments”). The face
amount of Letters of Credit issued under the Tranche A Facility shall not exceed
an amount equal on any date to the Fair Market Value of Eligible Investments
times the percentage advance rates for each asset category as shown in
Attachment A hereto (the “Borrowing Base”);    Eligible Investments shall
consist of:   

•         Cash and cash equivalents (including certain time deposits and
repurchase agreements, money market funds, and short-term asset management
accounts)

  

•         Commercial paper of one year or less maturity rated at least A-1 by
S&P or P-l by Moody’s or the equivalent from at least one nationally recognized
rating agency

  

•         U.S. Governments and Agencies

  

•         Certain mortgage backed securities, including Agency pass-throughs and
Agency CMOs, and Non-Agency CMOs rated at least AA-Aa3 or the equivalent (both
Agency and Non-Agency CMOs are limited to TACs, PACs and Sequentials and exclude
Support Tranches (all as defined by Bloomberg))

  

•         Certain Asset Backed Securities rated AAA/Aaa or the equivalent,
including securitizations of auto loans, credit card receivables and home equity
loans

  

•         U.S. and non U.S. denominated Securities issued by G7 governments and
agencies (for Borrowing Base purposes, the fair market value will be converted
to Dollars using a method to be agreed upon by Max Bermuda and the
Administrative Agent)

 

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•         Publicly traded U.S. corporate and municipal securities rated at least
A-/A3 or the equivalent.

   All Collateral must be capable of being marked to market on a daily basis.
All Collateral shall be held by a custodian acceptable to the Administrative
Agent. CONDITIONS PRECEDENT To CLOSING:    The Closing (and the initial funding)
of the Senior Credit Facility will be subject to satisfaction of the conditions
precedent deemed appropriate by the Administrative Agent and the Lenders
including, but not limited to, the following:   

(i)     The negotiation, execution and delivery of definitive documentation
(including, without limitation, satisfactory legal opinions and other customary
closing documents) for the Senior Credit Facility satisfactory to BAS, the
Administrative Agent and the Lenders.

  

(ii)    The Lenders shall have received satisfactory evidence that the
Administrative Agent (on behalf of the Lenders) shall have a valid and perfected
first priority (subject to certain exceptions to be set forth in the loan
documentation) lien and security interest in the collateral referred to under
the section “Collateral/Borrowing Base” set forth above.

  

(iii)  There shall not have occurred a material adverse change (x) in the
business, assets, liabilities (actual or contingent), operations, condition
(financial or otherwise) or prospects of Max Bermuda and its subsidiaries or Max
Capital and its subsidiaries, in each case taken as a whole, since December 31,
2006 or (y) in the facts and information regarding such entities as represented
to date.

  

(iv)   The absence of any action, suit, investigation or proceeding pending or,
to the knowledge of the Borrowers, threatened in any court or before any
arbitrator or governmental authority that could reasonably be expected to (x)
have a material adverse effect on the business, assets, liabilities (actual and
contingent), operations, condition (financial or otherwise) or prospects of Max
Bermuda Ltd. or Max Capital, (y) adversely affect the ability of a Borrower to
perform its obligations under the loan documentation or (z) adversely affect the
rights and remedies of the Administrative Agent or the Lenders under the loan
documentation (collectively, a “Material Adverse Effect”).

 

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(v)    Unless the loan documentation takes the form of an amendment and
restatement of the Credit Agreement dated as of June 1, 2005 among the
Borrowers, various financial institutions and Bank of America as administrative
agent (as amended to date, the “Existing Credit Agreement”), the termination of
the Existing Credit Agreement.

CONDITIONS PRECEDENT TO ALL LOANS:   

 

Usual and customary for transactions of this type, to include without
limitation: (i) all representations and warranties are true and correct as of
the date of each issuance, amendment or renewal of a Letter of Credit or
issuance of such Loan (each, a “Credit Extension”); (ii) no event of default
under the Senior Credit Facility or incipient default has occurred and is
continuing, or would result from Credit Extension; (iii) the aggregate undrawn
amount of all outstanding Letters of Credit on such date under the Tranche A
Facility, after giving effect to such Credit Extension, shall not exceed the
lesser of (y) the aggregate commitments under the Tranche A Facility and (z) the
applicable Borrowing Base on such date; and (iv) the aggregate undrawn amount of
all outstanding Letters of Credit on such date plus the aggregate principal
amount of outstanding Loans under the Tranche B Facility, after giving effect to
such Credit Extension, shall not exceed the aggregate Commitments under the
Tranche B Facility.

REPRESENTATIONS AND WARRANTIES:   

 

Usual and customary for transactions of this type, to include without
limitation: (i) corporate existence and status; (ii) corporate power and
authority, enforceability; (iii) no violation of law, contracts or
organizational documents; (iv) no material litigation; (v) accuracy and
completeness of specified financial statements and no material adverse change;
(vi) no required governmental or third party approvals or consents; (vii) use of
proceeds and not engaging in business of purchasing/carrying margin stock;
(viii) status under Investment Company Act; (ix) ERISA matters; (x) tax matters;
(xi) ownership of property and insurance matters; (xii) accuracy of disclosure;
(xiii) compliance with laws; (xiv) subsidiaries; (xv) no default; and (xvi)
perfected liens, security interests and charges; and (xvii) solvency.

COVENANTS:    Usual and customary for transactions of this type, to include
without limitation: (i) delivery of financial statements, SAP filings,
compliance and borrowing base certificates and notices of default, material
litigation, material governmental, ERISA and environmental proceedings and
material changes in accounting or financial reporting practices; (ii) compliance
with laws and material contractual obligations; (iii) payment of obligations;
(iv)

 

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   preservation of existence; (v) maintenance of books and records and
inspection rights; (vi) use of proceeds; (vii) maintenance of insurance; (viii)
limitation on liens, mergers, consolidations, sales of assets, incurrence of
debt and capital expenditures; (ix) limitation on dividends, stock redemptions
and the redemption and/or prepayment of other debt; (x) limitation on
investments (including loans and advances) and acquisitions; and (xi) limitation
on transactions with affiliates.    Financial covenants to include (but not be
limited to):   

•        Eligible Investments:

  

•        Maintenance of minimum weighted average credit quality rating of
Eligible Investments of AA/Aa2 or the equivalent.

  

•        Concentration Limits on Eligible Investments (including per issue and
per issuer limitations) and diversification requirements.

  

•        Maintenance by Max Bermuda of an A.M. Best Company financial strength
rating of B++ or higher.

  

•        Consolidated Max Capital Debt to Total Capitalization not greater than
35%.1

  

•        An initial minimum GAAP Net Worth of Max Bermuda of $995,000,000 with
step ups as described below.

  

Commencing with the second fiscal quarter of 2007, during each fiscal year, the
required minimum GAAP Net Worth will increase quarterly by an amount equal to
50% of net income (with no deduction for net losses) plus 50% of the net cash
proceeds of any equity issuances. The required minimum GAAP Net Worth will be
recalculated annually to be the greater of (a) required minimum GAAP Net Worth
as of the first day of the previous fiscal year (without giving effect to the
increases referred to in the previous sentence) and (b) 65% of the GAAP Net
Worth as of such fiscal year end.

EVENTS OF DEFAULT:    Usual and customary in transactions of this type, to
include without limitation: (i) nonpayment of principal, interest, fees or other
amounts; (ii) any representation or warranty proving to have been materially
incorrect when made or confirmed; (iii) failure to

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1

For purposes of determining the Max Capital Debt to Total Capitalization Ratio,
only that portion of the $235,000,000 Total Return Equity Swap, including
notional value additions, and any similar total return equity swap transaction
entered into during the term of this Senior Credit Facility which is treated as
debt by A.M. Best Company will be included as Debt. Currently none of the
existing Total Return Equity Swap is treated as Debt by AM Best Company

 

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   perform or observe covenants set forth in the loan documentation within a
specified period of time, where customary and appropriate, after such failure;
(iv) cross-default to other indebtedness in an amount to be agreed; (v)
bankruptcy and insolvency defaults (with grace period for involuntary
proceedings); (vi) monetary judgment defaults in an amount to be agreed; (vii)
actual or asserted invalidity of any loan documentation; and (viii) change of
control. ASSIGNMENTS AND PARTICIPATIONS:   

 

Each Lender will be permitted to make assignments in respect of the Senior
Credit Facility in a minimum amount equal to $5 million to other financial
institutions approved by the Administrative Agent and, so long as no Event of
Default has occurred and is continuing, Max Bermuda, which approval shall not be
unreasonably withheld or delayed; provided, however, that the approval of Max
Bermuda shall not be required in connection with assignments to other Lenders or
to any affiliate of a Lender. Notwithstanding the foregoing, however, any Lender
assigning a Commitment (as such term shall be defined in the definitive loan
documentation) shall be required to obtain the approval of the Administrative
Agent and the Fronting Bank unless a proposed Assignee is already a Lender. An
assignment fee of $3,500 will be charged with respect to each Assignment. Each
Lender will also have the right, without consent of Max Bermuda or the
Administrative Agent, to assign as security all or part of its rights under the
loan documentation to any Federal Reserve Bank. Lenders will be permitted to
sell participations with voting rights limited to significant matters such as
changes in amount, rate to the extent it would be less than the Borrowing Base
and maturity date and releases of all or substantially all of the collateral to
the extent it would be less than the Borrowing Base.

WAIVERS AND

AMENDMENTS:

  

 

Amendments and waivers of the provisions of the loan agreement and other
definitive credit documentation will require the approval of Lenders holding
loans and commitments representing more than 50% of the aggregate amount of and
commitments under the Senior Credit Facility, except that the consent of all the
Lenders affected thereby shall be required with respect to (i) increases in the
commitment of such Lenders, (ii) reductions of principal, interest or fees,
(iii) extensions of scheduled maturities or times for payment, and (iv) releases
of all or substantially all of the collateral to the extent it would be less
than the Borrowing Base.

INDEMNIFICATION:    The Borrowers will indemnify and hold harmless the
Administrative Agent, BAS, each Lender and their respective affiliates and their
officers, directors, employees, agents and

 

7

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   advisors from and against all losses, liabilities, claims, damages or
expenses arising out of or relating to the Senior Credit Facility, the
Borrowers’ use of Loan proceeds, Letters of Credit or the commitments,
including, but not limited to, reasonable attorneys’ fees (including the
allocated cost of internal counsel) and settlement costs. This indemnification
shall survive and continue for the benefit of all such persons or entities,
notwithstanding any failure of the Senior Credit Facility to close. GOVERNING
LAW:    State of New York.

PRICING/FEES/

EXPENSES:

   As set forth in Addendum I. OTHER:    Each of the parties shall (i) waive its
right to a trial by jury and (ii) submit to New York jurisdiction. The loan
documentation will contain customary increased cost, withholding tax, capital
adequacy and yield protection provisions.

 

8

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ADDENDUM I

PRICING, FEES AND EXPENSES

 

NON-USE FEE:    The Borrowers will pay a fee (the “Non-Use Fee”) on the unused
portion of the Tranche A Facility commitments of 0.070% and on the unused
portion of the Tranche B Facility commitments in accordance with the Pricing
Grid below. The Non-Use Fee is payable quarterly in arrears commencing upon the
Closing Date. LETTERS OF CREDIT FEES:    Max Bermuda will pay a fee (the “Letter
of Credit Fee”) on the aggregate stated amount of each Letter of Credit that is
issued and outstanding under the Tranche A Facility or 0.250% and on the
aggregate stated amount of each Letter of Credit that is issued and outstanding
under Tranche B Facility in accordance with the Pricing Grid below. The Letter
of Credit Fee is payable quarterly in arrears, commencing on the Closing Date,
and will be shared proportionately by the Lenders. In addition, Max Bermuda will
pay a fronting fee to Bank of America of (a) 0.075% on fronted Letters of Credit
under the Tranche A Facility and (b) 0.10% on fronted Letters of Credit under
the Tranche B Facility. UTILIZATION FEE:    The Borrowers will pay a fee (the
“Utilization Fee”) of 0.050% on all outstanding Loans under the Tranche B
Facility if the aggregate principal amount of outstanding Loans issued under the
Tranche B Facility exceeds 50% of the aggregate amount of the Tranche B
Facility. The Utilization Fee is payable quarterly in arrears commencing upon
the Closing Date. INTEREST RATE:    At the Borrower’s option, any Loan under the
Tranche B Facility that is made to it will bear interest at a rate equal to (i)
LIBOR plus the Applicable Margin as set forth in the Pricing Grid below or (ii)
the Base Rate (to be defined as the higher of (a) the Bank of America prime rate
and (b) the Federal Funds Rate plus 0.50%).    The Borrowers may select interest
periods of one, two, three or six months for LIBOR loans, subject to
availability. Interest shall be payable at the end of the selected interest
period, but no less frequently than quarterly.    A default rate shall apply on
all obligations in the event of default under the Senior Credit Facility at a
rate per annum of 2% above the applicable interest rate or letter of credit fee.
PRICING:    The Non-Use Fee, Applicable Margin for LIBOR Loans and the Letter of
Credit Fee shall be, at any time, the rates per annum set forth in the
Performance Pricing grid below opposite the long term

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  unsecured senior, non-credit enhanced debt rating of Max Capital by Standard &
Poor’s Ratings Group and Moody’s Investors Service Inc. (In the case of a split
rating, the higher rating will apply; in the case of a multiple split rating,
the rating that is one level lower than the higher rating will apply; if there
is only one rating, the rating one level lower than such rating will apply; and
if there is no rating, the lowest rating set forth below will apply.)

 

     Non-Use Fee     Applicable Margin
for LIBOR Loans     Letter of Credit Fees  

Max Capital Debt Rating

   Tranche B Facility     Tranche B Facility     Tranche B Facility  

> A-/ A3

   0.060 %   0.300 %   0.300 %

BBB+/Baal

   0.070 %   0.375 %   0.375 %

BBB/Baa2

   0.080 %   0.450 %   0.450 %

BBB-/Baa3

   0.100 %   0.550 %   0.550 %

<BBB-/Baa3

   0.125 %   0.700 %   0.700 %

 

LETTERS OF CREDIT BORROWING RATE:   

 

Upon any draws under any Letter of Credit, Max Bermuda will immediately
reimburse Bank of America on behalf of the Lenders in full. In the event that
Bank of America is not immediately reimbursed, the reimbursement obligation will
bear interest from the date of the draw until the date of payment at a rate per
annum equal to the Base Rate plus 2.00%.

CALCULATION OF INTEREST AND FEES:   

 

Other than calculations in respect of interest at the Bank of America prime rate
(which shall be made on the basis of actual number of days elapsed in a 365/366
day year), all calculations of interest and fees shall be made on the basis of
actual number of days elapsed in a 360 day year.

COST AND YIELD PROTECTION:    Customary for transactions and facilities of this
type, including, without limitation, in respect of breakage or redeployment
costs incurred in connection with prepayments, changes in capital adequacy and
capital requirements or their interpretation, illegality, unavailability,
reserves without proration or offset and payments free and clear of withholding
or other taxes. EXPENSES:    The Borrowers will pay all reasonable costs and
expenses associated with the preparation, due diligence, administration,
syndication and closing of all loan documentation, including, without
limitation, the legal fees of counsel to the Administrative Agent and BAS,
regardless of whether or not the Senior Credit Facility is closed. The Borrowers
will also pay the expenses of the Administrative Agent and each Lender in
connection with the enforcement of any loan documentation.

 

2

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ATTACHMENT A

Collateral Advance Rates

 

Cash and cash equivalents (including certain time deposits, repurchase
agreements, money market funds and short-term management accounts

   100 %

Al/Pl commercial paper

   98 %

U.S. Governments and Agencies

  

< 5 years to maturity

   98 %

> 5 years to maturity

   95 %

MBS and ABS:

  

Agency Pass-throughs rated AA-/Aa3 or better

   90 %

Agency CMOs rated AA-/Aa3 or better

   90 %

Non-Agency CMOs rated AAA/Aaa

   90 %

Non-Agency CMOs rated Aa-/Aa3 or better

   87.5 %

AAA/Aaa rated Asset Backed Securities (securitizations of auto loans, credit
card receivables and home equity loans)

   95 %

U.S. and non U.S. denominated Securities issued by G7 governments and agencies:

  

Germany, U.K.

   95 %

France, Japan, Canada

   93 %

Italy

   92 %

U.S. Corporate and Municipal Debt:

  

Publicly traded AAA/Aaa rated corporate/municipal securities

   94 %

Publicly traded corporate/municipal securities rated at least AA-/Aa3

   93 %

Publicly traded corporate/municipal securities rated at least A-/A3

   92 %