Exhibit 10.1


    Exhibit
      10.1

    


     

    AMENDMENT
      NO. 1 TO CREDIT AGREEMENT

     

    AMENDMENT
      NO. 1, dated as of May 15, 2006, to the Credit Agreement (as defined
      below), between XL CAPITAL LTD, a Cayman Islands exempted limited company,
      X.L.
      AMERICA, INC., a Delaware corporation, XL INSURANCE (BERMUDA) LTD, a Bermuda
      limited liability company, and XL RE LTD, a Bermuda limited liability company,
      and DEUTSCHE BANK AG NEW YORK BRANCH, as the Lender.

     

    The
      Obligors and the Lender are parties to a 364-day Credit Agreement dated as
      of
      December 23, 2005 (the “Credit
      Agreement”),
      providing, subject to the terms and conditions thereof, for extensions of credit
      to be made by or on behalf of the Lender to the Account Parties in an aggregate
      principal or face amount not exceeding $100,000,000. The Obligors and the Lender
      wish to amend the Credit Agreement in certain respects and, accordingly, the
      parties hereto hereby agree as follows:

     

    Section
      1.
      Definitions.
      Except
      as otherwise defined in this Amendment No. 1, terms defined in the Credit
      Agreement are used herein as defined therein.

     

    Section
      2.
      Amendments.
      Effective as of the date hereof as provided in Section 5 of this Amendment
      No. 1, the Credit Agreement is hereby amended as follows:

     

    2.01.
      References in the Credit Agreement to “this Agreement” (and indirect references
      such as “hereunder”, “hereby”, “herein” and “hereof”) shall be deemed to be
      references to the Credit Agreement as amended hereby.

     

    2.02.
      Section 1.01 of the Credit Agreement is hereby amended by inserting the
      following definitions (or, in the case of any of the following defined terms
      that are already defined in the Credit Agreement, by amending and restating
      in
      its entirety each such term to read as set forth below) in their proper
      respective alphabetical locations:

     

    “SCA”
means
      Security Capital Assurance Ltd, a Bermuda limited liability
      company.

     

    “SCA
      IPO”
means
      the issuance or sale of common shares of SCA to the public pursuant to an
      effective registration statement filed under the Securities Act of 1933, as
      amended, in connection with an underwritten offering.

     

    “Significant
      Subsidiary”
means,
      at any time, each Subsidiary of XL Capital that, as of such time, meets the
      definition of a “significant subsidiary” under Regulation S-X of the SEC;
provided,
      however,
      that
      for purposes of this Agreement, from and after the consummation of the SCA
      IPO,
      neither SCA nor any of its Subsidiaries shall be a “Significant Subsidiary” of
      XL Capital.

     

    “Subsidiary”
means,
      with respect to any Person (the “parent”),
      at
      any date, any corporation (or similar entity) of which a majority of the shares
      of outstanding capital stock normally entitled to vote for the election of
      directors (regardless of any contingency which does or may suspend or dilute
      the
      voting rights of such capital stock) is at such time owned directly or
      indirectly by the parent or one or more subsidiaries of the parent;
      provided,
      however,
      that
      for purposes of this Agreement, from and after the consummation 

     


    
      
         

      

      
         

        
          

        

      

      
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    of
      the
      SCA IPO, neither SCA nor any of its Subsidiaries shall be a “Subsidiary” of any
      Account Party.
      Unless
      otherwise specified, “Subsidiary” means a Subsidiary of an Account
      Party.

     

    “XL
      Capital Group”
means
      XL Capital Group as determined from time to time by A.M. Best & Co. (or its
      successor).

     

    2.03.
      Section 6.09 of the Credit Agreement is hereby amended by inserting a new
      sentence at the end thereof to read as follows:

     

    “Notwithstanding
      anything in this Section to the contrary, from and after the SCA IPO, no Account
      Party will issue any Letter of Credit, or renew or permit to renew any Letter
      of
      Credit existing as of the SCA IPO, or use the proceeds of any Loan, to support
      the obligations of, or otherwise primarily for the general corporate purposes
      of, SCA and its Subsidiaries”.

     

    2.04.
      Section 7.07 and 7.08 of the Credit Agreement entitled “Financial Strength
      Ratings” and “Private Act”, respectively, are hereby amended by re-numbering
      such sections as Sections 7.08 and 7.09, respectively.

     

    2.05
      Section 7.08 of the Credit Agreement is hereby amended by inserting the
      word “Group” immediately after the reference in the first line thereof to “XL
      Capital”.

     

    Section
      3.
      Waiver.
      Effective as of the date hereof as provided in Section 5 of this Amendment
      No. 1, the Lender hereby agrees that, notwithstanding anything in
      Section 7.02 of the Credit Agreement to the contrary, the issuance or sale
      of shares of SCA pursuant to the SCA IPO shall be permitted and shall not reduce
      the basket under Section 7.02(b) of the Credit Agreement available to the
      Account Parties and their respective Subsidiaries for the calendar year ending
      December 31, 2006.

     

    Section
      4.
      Representations
      and Warranties.
      Each
      Account Party hereby represents and warrants to the Lender that (i) the
      representations and warranties of such Account Party set forth in
      Article IV of the Credit Agreement are, on the date hereof, true and
      complete as if made on the date hereof (and after giving effect to this
      Amendment No. 1) and as if each reference in said Article IV to “this Agreement”
includes reference to this Amendment No. 1 and (ii) both immediately before
      and after giving effect to the amendments under Section 2 hereof, no Default
      has
      occurred and is continuing.

     

    Section
      5.
      Conditions
      Precedent.
      The
      amendments to the Credit Agreement set forth in Section 2 of this Amendment
      No. 1 and the waiver under Section 3 of this Amendment No. 1 shall become
      effective, as of the date hereof, upon receipt by the Lender of one or more
      counterparts of this Amendment No. 1 duly executed and delivered by each of
      the
      Obligors and the Lender.

     

    Section
      6.
      Miscellaneous.
      Except
      as herein provided, the Credit Agreement shall remain unchanged and in full
      force and effect. This Amendment No. 1 may be executed in any number of
      counterparts, all of which taken together shall constitute one and the same
      agreement and any of the parties hereto may execute this Amendment No. 1 by
      signing any such 

     


    
      
         

      

      
         

        
          

        

      

      
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    counterpart.
      This Amendment No. 1 shall be governed by, and construed in accordance
      with, the laws of the State of New York.

     


    
      
         

      

      
         

        
          

        

      

      
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    IN
      WITNESS WHEREOF, the parties hereto have caused this Amendment No. 1 to be
      duly
      executed and delivered as of the day and year first above written.

     

    XL
      CAPITAL LTD,

     

    as
      an
      Account Party and a Guarantor

     

    By:  /s/
      Brian O’Hara            

           
Name: 
      Brian
      O’Hara

            Title:   
      President
      and Chief Executive

                         Officer

     

    X.L.
      AMERICA, INC.,

    as
      an
      Account Party and a Guarantor

     

    By: 
      /s/
      Gabriel Carino            

            Name: 
      Gabriel
      Carino

           
Title:   
      Senior
      Vice President &

                         Treasurer
      (XLGS)

     

    XL
      INSURANCE (BERMUDA) LTD,

    as
      an
      Account Party and a Guarantor

     

    By: 
      /s/
      Brian O’Hara            

           
Name: 
      Brian
      O’Hara

            Title:   
      Director 

     

    XL
      RE
      LTD,

    as
      an
      Account Party and a Guarantor

     

    By: 
      /s/
      Brian O’Hara            

           
Name: 
      Brian
      O’Hara

           
Title:   
      Director


    
      
         

      

      
         

        
          

        

      

      
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    DEUTSCHE
      BANK AG NEW YORK BRANCH

     

    


    By: 
      /s/
      Richard Herder            

            Name: 
      Richard Herder

           
      Title:    Managing Director

    


    


    By: 
      /s/
      Ruth Leung              

           
      Name:  Ruth Leung

           
      Title:    Director