Exhibit 10.10


MASTER COMMUTATION, RELEASE AND RESTRUCTURING
AGREEMENT


among


XL Capital Ltd; XL Insurance (Bermuda) Ltd;
XL Reinsurance America Inc.; X.L. Global 

Services, Inc.; XL Services (Bermuda) Ltd and X.L. America, Inc.;


Security Capital Assurance Ltd; XL Financial
Assurance Ltd.; XL Capital Assurance Inc.; XL 

Financial Administrative Services Inc.; SCA Bermuda Administrative Ltd.; XL
Capital 

Assurance (U.K.) Limited; and Certain Portfolio Trusts that are Affiliates of
XL Capital 

Assurance Inc. and may become party to this Agreement from time to time;


and


Counterparties to Credit Default Swap
Agreements with XL Capital Assurance Inc. and 

Affiliates of XL Capital Assurance Inc. that may become party to this Agreement
from time to 

time.


Dated as of July 28, 2008








	
 

	
 

	
 

	
 

	
 


	
TABLE OF CONTENTS


	
 


	
 

	
 

	
 

	
 

	
Page


	
 

	
 

	
 

	
 

	




	
 

	
 

	
 

	
 

	
 


	
ARTICLE I


	
 


	
DEFINITIONS


	
 


	
Section 1.01

	
 

	
Certain Defined Terms

	
 

	
8


	
Section 1.02

	
 

	
Definitions

	
 

	
17


	
Section 1.03

	
 

	
Interpretation and Rules of Construction

	
 

	
17


	
 

	
 

	
 

	
 

	
 


	
ARTICLE II


	
 


	
COMMUTATION AND RELEASE


	
 


	
Section 2.01

	
 

	
Commutation and Release of Reinsurance Agreements

	
 

	
18


	
Section 2.02

	
 

	
Termination of the Other Terminated Agreements

	
 

	
18


	
Section 2.03

	
 

	
Commutation and Release of Quota Share Treaty

	
 

	
18


	
Section 2.04

	
 

	
Commutation and Amendment of Other Reinsurance Agreements

	
 

	
18


	
Section 2.05

	
 

	
Mutual Releases

	
 

	
19


	
Section 2.06

	
 

	
Consideration

	
 

	
23


	
Section 2.07

	
 

	
Closing

	
 

	
23


	
Section 2.08

	
 

	
Closing Deliveries by the SCA Parties

	
 

	
23


	
Section 2.09

	
 

	
Closing Deliveries by the XL Parties

	
 

	
24


	
Section 2.10

	
 

	
Escrow

	
 

	
25


	
 

	
 

	
 

	
 

	
 


	
ARTICLE III


	
 


	
REPRESENTATIONS AND WARRANTIES OF THE SCA
 PARTIES


	
 


	
Section 3.01

	
 

	
Organization, Authority and Qualification of the SCA Parties

	
 

	
26


	
Section 3.02

	
 

	
No Conflict

	
 

	
26


	
Section 3.03

	
 

	
Governmental Consents and Approvals

	
 

	
27


	
Section 3.04

	
 

	
Financial Information

	
 

	
27


	
Section 3.05

	
 

	
Compliance with Laws

	
 

	
28


	
Section 3.06

	
 

	
Effect of Commutations

	
 

	
28


	
Section 3.07

	
 

	
Litigation

	
 

	
28


	
Section 3.08

	
 

	
Placement of Stock Consideration

	
 

	
28


	
Section 3.09

	
 

	
Regulatory Approvals

	
 

	
29


	
Section 3.10

	
 

	
MLI CDS Agreements

	
 

	
30


	
Section 3.11

	
 

	
Financial Security Master Facultative Commutation Agreement

	
 

	
30


	
Section 3.12

	
 

	
Third-Party Agreements

	
 

	
30


	
Section 3.13

	
 

	
Brokers

	
 

	
30












	
 

	
 

	
 

	
 

	
 


	
ARTICLE IV


	
 


	
REPRESENTATIONS AND WARRANTIES OF THE XL
 PARTIES


	
 


	
Section 4.01

	
 

	
Organization and Authority of the XL Parties

	
 

	
31


	
Section 4.02

	
 

	
No Conflict

	
 

	
31


	
Section 4.03

	
 

	
Governmental Consents and Approvals

	
 

	
31


	
Section 4.04

	
 

	
Capitalization

	
 

	
32


	
Section 4.05

	
 

	
XL Owned SCA Common Shares

	
 

	
32


	
Section 4.06

	
 

	
Litigation

	
 

	
32


	
Section 4.07

	
 

	
Regulatory Approvals

	
 

	
32


	
Section 4.08

	
 

	
Brokers

	
 

	
33


	
 

	
 

	
 

	
 

	
 


	
ARTICLE V


	
 


	
REPRESENTATIONS AND WARRANTIES OF THE CDS
 COUNTERPARTIES


	
 


	
Section 5.01

	
 

	
Status

	
 

	
33


	
Section 5.02

	
 

	
Powers

	
 

	
33


	
Section 5.03

	
 

	
No Violation or Conflict

	
 

	
33


	
Section 5.04

	
 

	
Consents

	
 

	
33


	
Section 5.05

	
 

	
Obligations Binding

	
 

	
33


	
Section 5.06

	
 

	
Absence of Litigation

	
 

	
33


	
Section 5.07

	
 

	
Consent to Transactions

	
 

	
34


	
Section 5.08

	
 

	
Ownership of Insurance Instruments

	
 

	
34


	
Section 5.09

	
 

	
Brokers

	
 

	
34


	
 

	
 

	
 

	
 

	
 


	
ARTICLE VI


	
 


	
ADDITIONAL AGREEMENTS


	
 


	
Section 6.01

	
 

	
Public Disclosure and Confidentiality

	
 

	
34


	
Section 6.02

	
 

	
Regulatory and Other Authorizations; Notices and Consents

	
 

	
36


	
Section 6.03

	
 

	
Notice of Developments

	
 

	
37


	
Section 6.04

	
 

	
MLI ABS CDO Credit Default Swap Agreements

	
 

	
37


	
Section 6.05

	
 

	
Third-Party Reinsurance Agreements

	
 

	
37


	
Section 6.06

	
 

	
Ownership of Insurance Instruments

	
 

	
38


	
Section 6.07

	
 

	
Compliance with Securities Laws

	
 

	
38


	
Section 6.08

	
 

	
Passive Investor

	
 

	
38


	
Section 6.09

	
 

	
XL Owned SCA Common Shares Covenant

	
 

	
38


	
Section 6.10

	
 

	
Forbearance

	
 

	
38


	
Section 6.11

	
 

	
Control of Litigation and Cooperation

	
 

	
40


	
Section 6.12

	
 

	
CDS Counterparty Restructuring

	
 

	
41


	
Section 6.13

	
 

	
Restriction on Commutations

	
 

	
42


	
Section 6.14

	
 

	
Treatment of Public Finance Business

	
 

	
42


	
Section 6.15

	
 

	
Further Action

	
 

	
43





-3-






	
 

	
 

	
 

	
 

	
 


	
Section 6.16

	
 

	
Resignation of XL Nominees

	
 

	
43


	
Section 6.17

	
 

	
Disclosure Schedules; Supplementation and Amendment of Schedules

	
 

	
43


	
Section 6.18

	
 

	
SCA Shareholder Entity

	
 

	
43


	
Section 6.19

	
 

	
Portfolio Trust

	
 

	
44


	
Section 6.20

	
 

	
BlackRock

	
 

	
44


	
Section 6.21

	
 

	
XLFA Merger

	
 

	
44


	
Section 6.22

	
 

	
Collipulli Temuco and Banco de Brasil Policies

	
 

	
44


	
Section 6.23

	
 

	
XLFA Redomestication

	
 

	
45


	
 

	
 

	
 

	
 

	
 


	
ARTICLE VII


	
 


	
CONDITIONS TO CLOSING


	
 


	
Section 7.01

	
 

	
Conditions to Obligations of the SCA Parties

	
 

	
45


	
Section 7.02

	
 

	
Conditions to Obligations of the XL Parties

	
 

	
46


	
Section 7.03

	
 

	
Conditions to Obligations of the CDS Counterparties

	
 

	
47


	
Section 7.04

	
 

	
Frustration of Closing Conditions

	
 

	
48


	
 

	
 

	
 

	
 

	
 


	
ARTICLE VIII


	
 


	
TERMINATION AND WITHDRAWAL


	
 


	
Section 8.01

	
 

	
Termination

	
 

	
48


	
Section 8.02

	
 

	
Effect of Termination

	
 

	
49


	
Section 8.03

	
 

	
CDS Counterparty Withdrawal

	
 

	
50


	
 

	
 

	
 

	
 

	
 


	
ARTICLE IX


	
 


	
GENERAL PROVISIONS


	
 


	
Section 9.01

	
 

	
Expenses

	
 

	
50


	
Section 9.02

	
 

	
Notices

	
 

	
50


	
Section 9.03

	
 

	
Severability

	
 

	
51


	
Section 9.04

	
 

	
Joinder of CDS Counterparties and Additional SCA Parties

	
 

	
52


	
Section 9.05

	
 

	
Entire Agreement

	
 

	
52


	
Section 9.06

	
 

	
Assignment

	
 

	
52


	
Section 9.07

	
 

	
Amendment

	
 

	
52


	
Section 9.08

	
 

	
Waiver

	
 

	
52


	
Section 9.09

	
 

	
No Third-Party Beneficiaries

	
 

	
53


	
Section 9.10

	
 

	
Rights and Remedies

	
 

	
53


	
Section 9.11

	
 

	
Indemnification

	
 

	
53


	
Section 9.12

	
 

	
No Survival

	
 

	
54


	
Section 9.13

	
 

	
Several Liability of the CDS Counterparties

	
 

	
54


	
Section 9.14

	
 

	
Governing Law and Jurisdiction

	
 

	
54


	
Section 9.15

	
 

	
Waiver of Jury Trial

	
 

	
55


	
Section 9.16

	
 

	
Fully Negotiated Agreement

	
 

	
55





-4-






	
 

	
 

	
 

	
 

	
 


	
Section 9.17

	
 

	
Currency

	
 

	
55


	
Section 9.18

	
 

	
Counterparts

	
 

	
55







EXHIBITS


	
 

	
 

	
 


	
Exhibit No.

	
 

	
Description


	


	
 

	



	
 

	
 

	
 


	
1.01(a)

	
 

	
2001
 Facultative Quota Share Commutation Agreement


	
1.01(b)

	
 

	
Adverse
 Development Cover Commutation Agreement


	
1.01(c)

	
 

	
Joinder
 Agreement


	
1.01(d)

	
 

	
Excess of
 Loss Commutation Agreement


	
1.01(e)

	
 

	
Facultative
 Master Certificate Commutation Agreement


	
1.01(f)

	
 

	
Quota Share
 Treaty Commutation Agreement


	
1.01(g)

	
 

	
Subscription
 Agreement


	
1.01(h)

	
 

	
XL Stock
 Resale and Registration Rights Agreement


	
1.01(i)

	
 

	
SCA
 Shareholder Entity Agreement


	
1.01(j)

	
 

	
SCA
 Registration Rights Agreement


	
1.01(k)

	
 

	
Transition
 Agreement Amendment


	
2.06

	
 

	
Securities
 Law Representations of the SCA Shareholder Entity


	
6.18

	
 

	
Form of SCA
 Shareholder Entity Trust Agreement


	
 

	
 

	
 


	
SCHEDULES


	
 


	
Schedule

	
 

	
Description


	


	
 

	



	
 

	
 

	
 


	
1.01(a)

	
 

	
MLI ABS CDO
 Credit Default Swap Agreements


	
1.01(b)

	
 

	
Other
 Terminated Agreements


	
1.01(c)

	
 

	
Knowledge of
 SCA


	
1.01(d)

	
 

	
Terms of the
 Escrow Agreement


	
2.01

	
 

	
Commuted
 Reinsurance Agreements


	
2.04

	
 

	
Other
 Reinsurance to be Commuted or Amended


	
2.05

	
 

	
Schedule
 2.05 Agreements


	
2.06(a)

	
 

	
SCA Parties
 Receiving a Portion of the Cash Consideration Amount


	
2.06(b)

	
 

	
SCA Parties
 Receiving a Portion of the Stock Consideration


	
9.02

	
 

	
Addresses
 for the CDS Counterparties


	
 

	
 

	
 


	
SCA PARTIES’ DISCLOSURE SCHEDULE


	
 


	
Section

	
 

	
Description


	


	
 

	



	
Section 3.02

	
 

	
Conflicts


	
Section 3.03

	
 

	
Governmental
 Consents and Approvals


	
Section 3.05

	
 

	
Compliance
 with Laws





-5-






	
 

	
 

	
 


	
XL PARTIES’ DISCLOSURE SCHEDULE


	
 


	
Section

	
 

	
Description


	


	
 

	



	
Section 4.02

	
 

	
Conflicts


	
Section 4.03

	
 

	
Governmental
 Consents and Approvals


	
Section
 4.04(a)

	
 

	
Capitalization





-6-






PREAMBLE


                    MASTER
COMMUTATION, RELEASE AND RESTRUCTURING AGREEMENT, dated as of July 28, 2008, is
entered into by and among: 


                    (a)
XL CAPITAL LTD, an exempted limited company incorporated under the Laws of
Cayman Islands (“XL”), XL INSURANCE (BERMUDA) LTD (formerly known as
X.L. Insurance Ltd), a Bermuda exempted company (“XLI”), XL REINSURANCE
AMERICA INC., a New York insurance corporation (“XLRA”), X.L. GLOBAL
SERVICES, INC., a service company incorporated under the Laws of Delaware (“XLGS”),
XL SERVICES (BERMUDA) LTD, a service company incorporated under the Laws of
Bermuda (“XLBS”) and X.L. AMERICA, INC., a company incorporated under
the Laws of Delaware (“XLA”); 


                    (b)
SECURITY CAPITAL ASSURANCE LTD, a Bermuda exempted company (“SCA”), XL
FINANCIAL ASSURANCE LTD., a Bermuda exempted company (“XLFA”), XL
CAPITAL ASSURANCE INC., a New York insurance company (“XLCA”), XL
FINANCIAL ADMINISTRATIVE SERVICES INC., a company incorporated under the Laws
of Delaware (“XLFAS”), SCA BERMUDA ADMINISTRATIVE LTD., a company
incorporated under the Laws of Bermuda (“SCAB”), XL CAPITAL ASSURANCE
(U.K.) LIMITED, an insurance company regulated by the Financial Services
Authority and incorporated under the Laws of England and Wales (“XLCAUK”),
and those portfolio trusts that are Affiliates of XLCA and become a Party to
this Agreement from time to time pursuant to the execution of a joinder
agreement in the form attached hereto as Exhibit 1.01(c); and 


                    (c)
Such counterparties to credit default swap agreements with XLCA or Affiliates
of XLCA that may become a Party to this Agreement from time to time pursuant to
the execution of a joinder agreement in the form attached hereto as Exhibit
1.01(c). 


RECITALS


                    WHEREAS,
XLI is the record and beneficial owner of approximately forty-six percent (46%)
of SCA’s issued and outstanding common shares (the “XL Owned SCA Common
Shares”); 


                    WHEREAS,
certain XL Parties and SCA Parties have entered into the Excess of Loss Agreement,
the Adverse Development Cover, the Facultative Master Certificate and the 2001
Facultative Quota Share Treaty (all as defined in Article I); 


                    WHEREAS,
XLCA and XLFA previously entered into a Facultative Quota Share Reinsurance Treaty,
dated as of October 6, 1999, as amended and restated by an Amended and Restated
Facultative Quota Share Reinsurance Treaty, dated as of June 22, 2001, as
further amended and restated by a Second Amended and Restated Facultative Quota
Share Reinsurance Treaty, dated as of May 1, 2004, and as further amended and
restated by a Third Amended and Restated Facultative Quota Share Reinsurance
Treaty, dated as of June 29, 2006 and effective July 1, 2006 (the “Quota
Share Treaty”); 






                    WHEREAS,
XLI guarantees the obligations of XLFA to XLCA under the Quota Share Treaty
pursuant to the Reinsurance Agreement Guarantee, dated as of October 6, 1999,
as amended as of June 22, 2001, as further amended as of May 1, 2004, and as
further amended as of August 4, 2006 (the “Guarantee”); 


                    WHEREAS,
XLFA and XLCA wish to (i) commute the Quota Share Treaty and all individual
risk cessions thereunder and (ii) fully and finally extinguish all rights and
obligations thereunder and thereby render the Guarantee null and void; 


                    WHEREAS,
the XL Parties and the SCA Parties wish to (i) commute the Excess of Loss
Agreement, the Adverse Development Cover, the Facultative Master Certificate
and all individual risk cessions thereunder, and the 2001 Facultative Quota
Share Treaty and all individual risk cessions thereunder and (ii) fully and
finally extinguish all the Parties’ rights and obligations under all such
agreements; 


                    WHEREAS,
the XL Parties and the SCA Parties have previously entered into those
agreements listed on Schedule 1.01(b) and now wish to (i) terminate such
agreements listed in Part I of Schedule 1.01(b) and (ii) fully and finally
extinguish all the Parties’ rights and obligations under such agreements,
except as may be explicitly set forth in this Agreement; and 


                    WHEREAS,
certain CDS Counterparties now and, on or prior to the Closing Date, additional
CDS Counterparties may, wish to enter into this Agreement and agree to consent
to the Transactions on the terms and conditions set forth in this Agreement
relating to the restructuring of SCA and its Affiliates. 


                    NOW,
THEREFORE, in consideration of the payments, covenants, conditions, promises
and releases contained herein, and for other fair and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, the Parties agree
as follows: 


ARTICLE I


DEFINITIONS


                    Section
1.01 Certain Defined Terms. For purposes of this Agreement: 


                    “1505
Application” means an application filed under Section 1505 of the New York
Insurance Laws. 


                    “2001
Facultative Quota Share Commutation Agreement” means the 2001 Facultative
Quota Share Commutation Agreement to be executed by XLFA and XLI and delivered
at the Closing, in the form of Exhibit 1.01(a). 


                    “2001
Facultative Quota Share Treaty” means the Facultative Quota Share
Reinsurance Agreement, dated as of August 17, 2001, as amended by Amendment No.
1 to the Facultative Quota Share Reinsurance Agreement, dated as of August 4,
2006, between XLFA and XLI. 


-8-






                    “ABS
CDO CDSs” means the asset backed securities collateralized debt obligation
credit default swaps between XLCA or an Affiliate of XLCA and a CDS
Counterparty that are listed on an official schedule held by the SCA Parties
and the CDS Financial Advisor. 


                    “Action”
means any judicial, administrative or arbitral action, suit, or proceeding by
or before any Governmental Authority. 


                    “Adverse
Development Cover” means the Adverse Development Reinsurance Agreement,
dated as of August 4, 2006, between XLCA and XLRA, and the Indemnification
Agreement, dated as of August 4, 2006, between XLFA and XLI. 


                    “Adverse
Development Cover Commutation Agreement” means the Adverse Development
Cover Commutation Agreement to be executed by XLCA, XLRA, XLFA and XLI
delivered at the Closing, in the form of Exhibit 1.01(b). 


                    “Affiliate”
means, with respect to any Person, any other Person directly or indirectly
Controlling, Controlled by, or under common Control with such Person, provided,
that none of the SCA Parties shall be deemed to be an Affiliate of any XL Party.



                    “Agreement”
or “this Agreement” means this Master Commutation, Release and
Restructuring Agreement among the Parties (including the Exhibits and Schedules
hereto, the SCA Parties’ Disclosure Schedule and the XL Parties’ Disclosure
Schedule) and all amendments or waivers hereto made in accordance with the
provisions of Sections 9.07 or 9.08 and joinder agreements hereto made
in accordance with the provisions of Sections 9.04. 


                    “Ancillary
Agreements” means the 2001 Facultative Quota Share Commutation Agreement,
the Excess of Loss Commutation Agreement, the Adverse Development Cover
Commutation Agreement, the Facultative Master Certificate Commutation
Agreement, the Quota Share Treaty Commutation Agreement, the Subscription
Agreement, the XL Stock Resale and Registration Rights Agreement and the SCA
Shareholder Entity Agreement. 


                    “Banco
de Brasil Policy” means the Financial Guaranty Insurance Policy No.
CA00127A, dated December 27, 2001, issued by XLCA in favor of MLI, together
with any endorsements thereto, relating to payments that are required to be
paid by FF Trust 2 to MLI in accordance with the original terms of a Single
Transaction ISDA Master Agreement and Schedule thereto, dated as of December
27, 2001 between FF Trust 2 and MLI. 


                    “BlackRock”
means BlackRock Financial Management, Inc. 


                    “BMA”
means the Bermuda Monetary Authority. 


                    “Business
Day” means any day that is not a Saturday, a Sunday or other day on which
banks are required or authorized by Law to be closed in Bermuda or New York. 


                    “CDS
Counterparties” means those counterparties to credit default swap
agreements with XLCA or Affiliates of XLCA that may become a Party to this
Agreement from time to time on or prior to Closing by way of executing a
joinder agreement pursuant to


-9-






Section 9.04 in the form of Exhibit 1.01(c),
either collectively or individually, as the context requires. 


                    “CDS
Financial Advisor” means FTI Consulting, Inc. or another advisor designated
by the Required Consenting Counterparties. 


                    “Closing
Date” means the date of the Closing. 


                    “Control,”
“Controlled,” or “Controlling,” with respect to the relationship
between or among two or more Persons, means the possession, directly or
indirectly, or as trustee, personal representative or executor, of the power to
direct or cause the direction of the affairs or management of a Person, whether
through the ownership of voting securities, as trustee, as personal
representative or executor, by contract, by credit arrangement or otherwise. 


                    “Collipulli
Temuco Policy” means the Financial Guaranty Insurance Policy No. 10030-X,
together with any endorsements thereto, relating to up to UF 1,150,000
aggregate principal amount of outstanding borrowings under the Contrato de
Apertura de Línea de Crédito, dated as of July 27, 2005, between Banco de
Crédito e Inversiones and Ruta de la Araucanía Sociedad Concesionaria S.A. and
issued pursuant to the Insurance and Reimbursement Agreement, dated as of November
29, 2005, between XLI and Banco de Crédito e Inversiones and Ruta de la
Araucanía Sociedad Concesionaria S.A. 


                    “Credit
Agreement” means that certain Credit Agreement, dated as of August 1, 2006,
among SCA, XLCA, and XLFA, the various lenders from time to time party thereto
and Citibank, N.A., as administrative agent (as the same may be amended,
supplemented or otherwise modified from time to time in accordance with the
terms thereof). 


                    “Declaration
of Trust” means a trust agreement in the form attached hereto as Exhibit
6.18 (with such reasonable changes thereto as the trustee of the SCA
Shareholder Entity or its counsel may require and that are approved by counsel
to the CDS Counterparties and counsel to the SCA Parties). 


                    “EIB”
means European Investment Bank, a non-profit bank owned by the Member States of
the European Union and established under the Treaty of Rome. 


                    “EIB
Guarantees” means (i) the Financial Guaranty 10017-X, dated July 5, 2001,
issued by XLI in favor of EIB (Algarve), (ii) the Financial Guaranty Number
10028-X, dated May 28, 2004, issued by XLI in favor of EIB (Autovia del Camino,
S.A.), (iii) the Financial Guaranty Number 10029-X, dated October 28, 2004, issued
by XLI in favor of EIB (Autovia del los Vinedos), (iv) the Financial Guaranty
Number 10023-X, dated June 8, 2005, issued by XLI in favor of EIB (Transform
School (North Lanarkshire) Funding plc), and (v) the Financial Guaranty Number
10019-X, dated May 4, 2005, issued by XLI in favor of EIB (Healthcare Support
(Newcastle) Finance plc). 


                    “EIB
Policies” means (i) the Financial Guaranty Number CA00041A, dated July 5,
2001, issued by XLCA in favor of EIB, (ii) the Financial Guaranty Number
CA00995A, dated May 28, 2004, issued by XLCA in favor of EIB and the Financial
Guaranty Number UK0003A, dated May 28, 2004 issued by XLCAUK in favor of EIB,
(iii) the Financial Guaranty Number 


-10-






CA01220A,
dated October 28, 2004, issued by XLCA in favor of EIB and the Financial
Guaranty Number UK0004A, dated October 28, 2004, issued by XLCAUK in favor of
EIB, (iv) the Financial Guaranty Number CA02062A, dated June 8, 2005, issued by
XLCA in favor of EIB and the Financial Guaranty Number UK0008A, dated June 8,
2005, issued by XLCAUK in favor of EIB and (v) the Financial Guaranty Number
CA01937A, dated May 4, 2005 issued by XLCA in favor of EIB and the Financial
Guaranty Number UK0007B, dated May 4, 2005, issued by XLCAUK in favor of EIB. 


                    “EIB
Resolution Event” means (i) commutation of all of the EIB Policies and full
and final extinguishment of all Persons’ rights and obligations thereunder,
(ii) a general release in form reasonably acceptable to the XL Parties by EIB
of the XL Parties’ obligations with respect to all of the EIB Guarantees or
(iii) the provision by a creditworthy entity reasonably acceptable to the XL
Parties of a guaranty guaranteeing 100% of the XL Parties’ obligations under
all of the EIB Guarantees. 


                    “Escrow
Agent” means HSBC Private Bank, Bermuda Trust Company Limited. 


                    “Escrow
Agreement” means the agreement pursuant to which the Escrow Agent will hold
the XL Owned SCA Common Shares pursuant to terms substantially the same as
those set forth in Schedule 1.01(d), if the XL Owned SCA Common Shares
are transferred to the Escrow Agent pursuant to Section 2.10. 


                    “Excess
of Loss Agreement” means the Excess of Loss Reinsurance Agreement by and
between XLFA and XLI, dated as of October 3, 2001. 


                    “Excess
of Loss Commutation Agreement” means the Excess of Loss Commutation
Agreement to be executed by XLFA and XLI and delivered at the Closing, in the
form of Exhibit 1.01(d). 


                    “Facultative
Master Certificate” means the Facultative Master Certificate effective as
of November 1, 2002, as amended and restated pursuant to the First Amended and
Restated Facultative Master Certificate, effective as of August 4, 2006, and as
further amended and restated pursuant to the Second Amended and Restated
Facultative Master Certificate by and between XLRA and XLCA, dated as of March
1, 2007. 


                    “Facultative
Master Certificate Commutation Agreement” means the Facultative Master Certificate
Commutation Agreement to be executed by XLCA and XLRA and delivered at the
Closing, in the form attached hereto as Exhibit 1.01(e). 


                    “Financial
Statements” means the GAAP Financial Statements, the XLCA Statutory
Financial Statements and the XLFA Statutory Financial Statements. 


                    “Financial
Security” means Financial Security Assurance Inc. 


                    “Financial
Security Commutations” means the Financial Security Master Facultative
Commutation and the commutations of the Other Financial Security Agreements. 


-11-






                    “Financial
Security Agreements” means the Financial Security Master Facultative
Agreement and the Other Financial Security Agreements. 


                    “Financial
Security Guarantee” means the Reinsurance Agreement Guarantee, dated
November 3, 1998 and amended on July 5, 2006, issued by X.L. Insurance Company,
Ltd (later renamed XLI), guaranteeing XLFA’s obligations to Financial Security
under the Financial Security Master Facultative Agreement. 


                    “Financial
Security Master Facultative Agreement” means the Amended and Restated
Master Facultative Reinsurance Agreement, dated as of November 3, 1998, between
Financial Security and XLFA; as amended by the First Amendment to the Master
Facultative Reinsurance Agreement, dated as of November 3, 1998, between
Financial Security and XLFA; as amended by the First Amendment to the Amended
and Restated Master Facultative Reinsurance Agreement, dated as of July 6, 2006,
between Financial Security and XLFA. 


                    “Financial
Security Master Facultative Commutation” means the commutation of the
Financial Security Master Facultative Agreement pursuant to a commutation and
release agreement. 


                    “GAAP”
means United States generally accepted accounting principles in effect from
time to time. 


                    “GAAP
Financial Statements” means (i) the audited balance sheet of each of SCA,
XLFA and XLCA for the fiscal year ended December 31, 2007 and the related
audited statements of income, retained earnings, stockholders’ equity and
changes in financial position, together with all related notes and schedules
thereto and accompanied by the reports thereon of the SCA Parties’ accountants,
and (ii) the unaudited balance sheet of each of SCA, XLFA and XLCA for the
three month period ended March 31, 2008 and the related unaudited statements of
income, retained earnings, stockholders’ equity and changes in financial
position, together with all related notes and schedules thereto. 


                    “Governmental
Authority” means any federal, national, supranational, state, provincial,
local, or similar government, governmental, regulatory or administrative
authority, agency or commission or any court, tribunal, or judicial or arbitral
body. 


                    “Governmental
Order” means any order, writ, judgment, injunction, decree, stipulation,
determination or award issued or entered by or with any Governmental Authority.



                    “Jeffco
Policies” means (i) the Municipal Bond Insurance Policy Number CA00370A,
together with any endorsements thereto, relating to $839,500,000 Jefferson
County, Alabama, Sewer Revenue Refunding Warrants Series 2002-C, consisting of
$74,450,000 Series 2002-C-1-A Warrants, $74,450,000 Series 2002-C-1-B Warrants,
$74,450,000 Series 2002-C-1-C Warrants, $75,450,000 Series 2002-C-1-D Warrants,
$73,700,000 Series 2002-C-2 Warrants, $98,300,000 Series 2002-C-3 Warrants,
$73,700,000 Series 2002-C-4 Warrants, $98,300,000 Series 2002-C-5 Warrants,
$147,600,000 Series 2002-C-6 Warrants and $49,100,000 Series 2002-C-7 Warrants;
(ii) the Municipal Bond Insurance Policy Number CA00522A, together with any
endorsements thereto, relating to $300,000,000 Jefferson County, Alabama Sewer
Revenue Refunding Warrants, Series 2003-B, consisting of $55,000,000 Series
2003-B-2 Warrants, 


-12-






$25,000,000
Series 2003B-3 Warrants, $25,000,000 Series 2003B-4 Warrants, $75,000,000
Series 2003B-5 Warrants, $15,000,000 Series 2003B-6 and $105,000,000 Series
2003B-7 Warrants; and (iii) the Debt Service Reserve Insurance Policy Number
CA01568A, together with any endorsements thereto, relating to up to
$164,863,746.40 Parity Securities as defined in the Trust Indenture, dated as
of February 1, 1997, between Jefferson County, Alabama and The Bank of New York
(as successor to AmSouth Bank of Alabama), as trustee, as such Indenture has
been supplemented and amended. 


                    “Knowledge
of SCA” means the actual knowledge after due inquiry of those Persons
identified on Schedule 1.01(c). 


                    “Law”
means any federal, national, supranational, state, provincial, local or similar
statute, law, ordinance, regulation, rule (including any rules regarding
discovery), code, order, requirement or rule of law (including common law). 


                    “Lien”
means any lien, pledge, mortgage, deed of trust, security interest, claim,
lease, charge, option, right of first refusal, easement, servitude, proxy,
voting trust or agreement, transfer restriction under any shareholder or
similar agreement, encumbrance or any other restriction or limitation
whatsoever. 


                    “Minimum
Consenting CDS Counterparty Restructuring Threshold” means (i) at least
seventy-five percent (75%) in notional amount of the aggregate sum of the
notional amounts of (A) the ABS CDO CDSs and (B) the collateralized debt
obligation credit default swaps between XLCA or an Affiliate of XLCA and a CDS
Counterparty that are listed on an official schedule held by the SCA Parties
and the CDS Financial Advisor; (ii) at least sixty-six and two-thirds percent
(66 2/3%) in total notional
amount of the ABS CDO CDSs; and (iii) at least sixty-six and two-thirds percent
(66 2/3%) in aggregate number of
the CDS Counterparties. 


                    “MLI
CDS Agreements” means the eight asset backed securities collateralized debt
obligation credit default swap agreements listed on Schedule 1.01(a). 


                    “NYID”
means the New York State Insurance Department. 


                    “Other
Financial Security Agreements” means all agreements between any SCA Party
and Financial Security, other than the Financial Security Master Facultative
Agreement, as to which the obligations of such SCA Parties are secured by a
letter of credit issued by the lenders pursuant to the Credit Agreement for the
benefit of Financial Security on September 19, 2006, as heretofore amended,
extended and renewed, bearing Citibank, N.A. reference number 61652611. 


                    “Other
Terminated Agreements” means those agreements listed on Schedule 1.01(b).



                    “Party”
means any party to this Agreement. 


-13-






                    “Person”
means an individual, corporation, partnership, association, trust or other entity
or organization, including a government or political subdivision or an agency
or instrumentality thereof. 


                    “Quota
Share Treaty Commutation” means the commutation of the Quota Share Treaty
pursuant to the Quota Share Treaty Commutation Agreement. 


                    “Quota
Share Treaty Commutation Agreement” means the Quota Share Treaty
Commutation Agreement to be executed by XLFA and XLCA and delivered at the
Closing, in the form of Exhibit 1.01(f). 


                    “Reinsurance
Guarantees” means (i) the Guarantee, (ii) the Financial Security Guarantee
and (iii) the EIB Guarantees. 


                    “Required
Consenting CDS Counterparties” means greater than 50% of the total notional
amount of all the credit default swaps between XLCA or an Affiliate of XLCA and
the CDS Counterparties. 


                    “SCA
Parties” means SCA, XLFA, XLCA, XLFAS, SCAB, XLCAUK and each of the
portfolio trusts that executes a joinder agreement pursuant to Section 9.04
in the form attached hereto as Exhibit 1.01(c), either collectively or
individually, as the context requires. 


                    “SCA
Registration Rights Agreement” means a registration rights agreement for
the XL Owned SCA Common Shares in substantially the form attached hereto as Exhibit
1.01(j). 


                    “SCA
Share Sale Proceeds” means the proceeds, together with any interest that
may accrue thereon, of any sale of the XL Owned SCA Common Shares as owned by
the SCA Shareholder Entity and any cash dividends or distributions paid with
respect to such shares during such time as the XL Owned SCA Common Shares are
owned by the SCA Shareholder Entity. 


                    “SCA
Shareholder Entity” means a special purpose trust or other entity formed
pursuant to the Declaration of Trust. 


                    “SCA
Shareholder Entity Agreement” means an agreement substantially in the form
attached hereto as Exhibit 1.01(i). 


                    “SCA
Shareholder Entity Formation Conditions” means (i) the selection of a
trustee of the SCA Shareholder Entity mutually acceptable to the Required
Consenting CDS Counterparties and the SCA Parties; (ii) the establishment of
the SCA Shareholder Entity; (iii) the delivery by the SCA Shareholder Entity of
a true and correct written copy of customary securities Law representations and
agreements set forth on Exhibit 2.06 to the XL Parties (or to the Escrow
Agent, with a copy to the XL Parties, if the XL Owned Common Shares have been
transferred to the Escrow Agent pursuant to Section 2.10); and (iv) any
required approval the NYID, the Delaware Insurance Department and the UK FSA of
the SCA Shareholder Entity’s acquisition of the XL Owned SCA Common Shares will
have been obtained. 


-14-






                    “SCA
Shareholder Entity Formation Conditions Certificate” means a certificate
certified by the Secretaries of SCA, XLFA and XLCA stating that the SCA
Shareholder Entity Formation Conditions have been satisfied. 


                    “Securities
Act” means the Securities Act of 1933, as amended. 


                    “Subscription
Agreement” means the Subscription Agreement to be executed by XLFA and XL
and delivered at the Closing, in the form of Exhibit 1.01(g). 


                    “Subsidiary”
or “Subsidiaries” means, with respect to a specified Person, any
corporation, partnership, limited partnership, limited liability company or
other entity as to which the specified Person, directly or indirectly
(including through one or more Subsidiaries), owns a majority of the
outstanding shares of stock or other ownership interests having voting power
under ordinary circumstances to elect directors of such corporation or other
Persons performing similar functions for such entity. 


                    “Third-Party
Reinsurance Agreements” means (i) the Financial Security Master Facultative
Agreement, and all individual risk cessions thereunder and (ii) the EIB
Policies. 


                    “Transaction
Documents” means this Agreement, the Ancillary Agreements and any
certificate, Financial Statement, report, list, writing or other document
delivered pursuant to this Agreement or the transactions contemplated by this
Agreement. 


                    “Transactions”
means all transactions contemplated by this Agreement and the Ancillary
Agreements. 


                    “Transfer”
means, with respect to a given security, any transaction whereby a Person (a)
offers, pledges, sells or contracts to sell any option or contract to purchase,
purchases any option or contract to sell, grants any option, right or warrant
to purchase, lends, or otherwise transfers or disposes of, directly or
indirectly, such security or any security convertible into, or exercisable or
exchangeable for, any or all of such security; or (b) enters into any swap or
other arrangement that transfers to another Person, in whole or in part, any of
the economic consequences of ownership of any or all of the given security,
whether any such transaction described in clause (a) or (b) is to be settled by
delivery of any or all of the given security or any other security, in cash or
otherwise. Notwithstanding the foregoing, in no event shall any transfer or
other transaction solely between or among the SCA Parties constitute a “Transfer.”



                    “Transition
Agreement” means the Transition Agreement, dated as of August 4, 2006 and
amended on May 3, 2007, among XL, XLI, XLA and SCA. 


                    “Transition
Agreement Amendment” means the Transition Agreement Amendment No. 2 among
XL, XLI, XLA and SCA in the form attached hereto as Exhibit 1.01(k). 


                    “Triggered
Enforcement Rights” means a Party’s right to accelerate, liquidate, close
out, terminate, assess or demand damages or termination payments under,
withhold or set off payments under, alter the payment terms of, demand
collateral in respect of, or otherwise exercise remedies or enforcement rights
in respect of one or more transactions (including swap 


-15-






transactions),
agreements, policies, guarantees or treaties to which an SCA Party or an
Affiliate thereof is a party, other than in respect of the Credit Agreement; provided,
that, solely for purposes of Section 6.10(b), the definition of
“Triggered Enforcement Rights” includes the right of any counterparty to a
credit default swap agreement with XLCA or Affiliates of XLCA to accelerate,
liquidate, close out, terminate, assess or demand damages or termination
payments under, withhold or set off payments under, alter the payment terms of,
demand collateral in respect of, or otherwise exercise remedies or enforcement
rights in respect of one or more transactions (including swap transactions),
agreements, policies, guarantees or treaties to which an SCA Party or an
Affiliate thereof is a party, other than in respect of the Credit Agreement. 


                    “UK
FSA” means the Financial Services Authority in the United Kingdom. 


                    “XLCA
Statutory Financial Statements” means the annual financial statements of
XLCA filed with the NYID for the year ended December 31, 2007, the quarterly
financial statements of XLCA filed with the NYID for the quarter ended March
31, 2008 and the Statement of Actuarial Opinion of XLCA filed with the NYID for
the year ended December 31, 2007. 


                    “XLFA
Redomestication” means the discontinuance of XLFA as a company existing
under the Laws of Bermuda and its continuation as a Delaware corporation and
the contribution to XLCA by the SCA Parties of all of the common shares and
Series A Redeemable Preferred Shares of XLFA. 


                    “XLFA
Statutory Financial Statements” means the annual financial statements of
XLFA filed with the BMA for the year ended December 31, 2007, and the quarterly
financial statements of XLFA filed with the BMA for the quarter ended March 31,
2008, each prepared in accordance with Bermuda statutory accounting principles
applied on a basis consistent with past practices, and the Statement of
Actuarial Opinion of XLFA filed with the BMA for the year ended December 31,
2007. 


                    “XL
Parties” means XL, XLI, XLRA, XLGS, XLBS and XLA, either collectively or
individually, as the context requires. 


                    “XL
Public Offering” means an offering of XL’s Class A Ordinary Shares, par
value $0.01 per share, and equity security units, in each case, registered
pursuant to the Securities Act. 


                    “XL
Stock Resale and Registration Rights Agreement” means the Resale
Registration Rights Agreement to be executed by XLFA and XL and delivered at
the Closing, in the form of Exhibit 1.01(h). 


                    “XL/SCA
Commutation Agreements” means (i) the 2001 Facultative Quota Share
Commutation Agreement, (ii) the Excess of Loss Commutation Agreement, (iii) the
Adverse Development Cover Commutation Agreement and (iv) the Facultative Master
Certificate Commutation Agreement. 


-16-






                    Section
1.02 Definitions. The following terms have the meanings set forth in the
Sections set forth below: 


	
 

	
 

	
 

	
 


	
Definition

	
 

	
Location

	
 


	


	
 

	



	
 


	
Allocated
 Funds

	
 

	
Section 6.12

	
 


	
Cash
 Consideration Amount

	
 

	
Section 2.06

	
 


	
CDS
 Counterparty Restructuring

	
 

	
Section 6.12

	
 


	
Challenging
 Action

	
 

	
Section
 6.11(a)

	
 


	
Closing

	
 

	
Section 2.07

	
 


	
Confidential
 Information

	
 

	
Section
 6.01(b)

	
 


	
Consideration

	
 

	
Section 2.06

	
 


	
Guarantee

	
 

	
Recitals

	
 


	
Losses

	
 

	
Section
 9.11(a)

	
 


	
MLI

	
 

	
Section 3.10

	
 


	
MLI
 Agreement

	
 

	
Section 3.10

	
 


	
Providing
 Group

	
 

	
Section
 6.01(b)

	
 


	
Quota Share
 Treaty

	
 

	
Recitals

	
 


	
Receiving
 Group

	
 

	
Section
 6.01(b)

	
 


	
SCA

	
 

	
Preamble

	
 


	
SCA
 Indemnitees

	
 

	
Section
 9.11(a)

	
 


	
SCAB

	
 

	
Preamble

	
 


	
SEC

	
 

	
Section
 3.08(e)

	
 


	
Stock
 Consideration

	
 

	
Section 2.06

	
 


	
XL

	
 

	
Preamble

	
 


	
XL
 Indemnitees

	
 

	
Section
 9.11(b)

	
 


	
XL Owned SCA
 Common Shares

	
 

	
Recitals

	
 


	
XLA

	
 

	
Preamble

	
 


	
XLBS

	
 

	
Preamble

	
 


	
XLCA

	
 

	
Preamble

	
 


	
XLCAUK

	
 

	
Preamble

	
 


	
XLFA

	
 

	
Preamble

	
 


	
XLFAS

	
 

	
Preamble

	
 


	
XLGS

	
 

	
Preamble

	
 


	
XLI

	
 

	
Preamble

	
 


	
XLRA

	
 

	
Preamble

	
 





                    Section
1.03 Interpretation and Rules of Construction. In this Agreement, except
to the extent otherwise provided or that the context otherwise requires: 


                    (a)
when a reference is made in this Agreement to an Article, Section, Exhibit or
Schedule, such reference is to an Article or Section of, or a Schedule or
Exhibit to, this Agreement unless otherwise indicated; 


                    (b)
the table of contents and headings for this Agreement are for reference
purposes only and do not affect in any way the meaning or interpretation of
this Agreement; 


-17-






                    (c)
whenever the words “include,” “includes” or “including” are used in this
Agreement, they are deemed to be followed by the words “without limitation”; 


                    (d)
the words “hereof,” “herein” and “hereunder” and words of similar import, when
used in this Agreement, refer to this Agreement as a whole and not to any
particular provision of this Agreement; 


                    (e)
all terms defined in this Agreement have the defined meanings when used in any
certificate or other document made or delivered pursuant hereto, unless
otherwise defined therein; 


                    (f)
the definitions contained in this Agreement are applicable to the singular as
well as the plural forms of such terms; 


                    (g)
any Law defined or referred to herein or in any agreement or instrument that is
referred to herein means such Law or statute as from time to time amended,
modified or supplemented, including by succession of comparable successor Laws;



                    (h)
references to a Person are also to its successors and permitted assigns; and 


                    (i)
the use of “or” is not intended to be exclusive unless expressly indicated
otherwise. 


ARTICLE II


COMMUTATION AND RELEASE


                    Subject
to the terms and conditions of this Agreement, at or prior to the Closing: 


                    Section
2.01 Commutation and Release of Reinsurance Agreements. The SCA Parties
and the XL Parties shall (i) commute the agreements listed in Part I of Schedule
2.01 and (ii) fully and finally extinguish all the Parties’ rights and
obligations under all such agreements pursuant to the XL/SCA Commutation
Agreements. 


                    Section
2.02 Termination of the Other Terminated Agreements. The SCA Parties and
the XL Parties shall terminate the Other Terminated Agreements listed in Part
I of Schedule 1.01(b) and, notwithstanding anything in any of the
Other Terminated Agreements listed in Part I of Schedule 1.01(b)
that provides that any term or condition survives termination, fully and
finally extinguish all rights and obligations of the Parties under all such
agreements. 


                    Section
2.03 Commutation and Release of Quota Share Treaty. XLCA and XLFA shall
(i) commute the Quota Share Treaty and (ii) fully and finally extinguish all
rights and obligations under the Quota Share Treaty pursuant to the Quota Share
Treaty Commutation Agreement. 


                    Section
2.04 Commutation and Amendment of Other Reinsurance Agreements. (a) The
SCA Parties intend to, but shall not be obligated to, commute or amend the
reinsurance 


-18-






agreements the
SCA Parties have with third parties that are identified on Schedule 2.04;
provided, that until October 15, 2008, no commutation or amendment of
any agreement listed on Schedule 2.04 may involve the payment of cash or
other consideration by any SCA Party. For the avoidance of doubt, no
commutation or amendment of any agreement listed on Schedule 2.04 shall
involve the payment of Allocated Funds. 


                    (b)
Notwithstanding the foregoing, (i) the Financial Security Commutations, (ii)
the commutations of each EIB Policy, (iii) the general releases in a form
reasonably acceptable to the XL Parties of the XL Parties with respect to each
EIB Guarantee or (iv) the provision by a creditworthy entity reasonably
acceptable to the XL Parties of a guarantee guaranteeing 100% of the XL
Parties’ obligations under each EIB Guarantee may involve payment of cash or
other consideration payable at any time by any SCA Party. 


                    Section
2.05 Mutual Releases. (a) As of the Closing Date: 


	
 

	
 


	
 

	
         (i)
 each SCA Party, on behalf of itself and its respective Subsidiaries, hereby
 irrevocably and unconditionally releases and forever discharges each XL
 Party, its parents, Subsidiaries and Affiliates, and its respective
 predecessors, successors, assigns, officers, directors, agents, employees,
 shareholders, representatives, underwriters, and attorneys, from any and all
 past, present and future actions, causes of action, suits, debts, Liens,
 contracts, rights, agreements, obligations, promises, liabilities, claims,
 counterclaims, demands, damages, controversies, losses, costs and expenses
 (including attorneys’ fees and costs actually incurred) of any kind,
 character, description or nature whatsoever, known or unknown to any of the
 SCA Parties, suspected or unsuspected, reported or unreported, fixed or
 contingent, accrued or unaccrued, liquidated or unliquidated, whether
 grounded in Law or equity or sounding in tort or contract or otherwise, which
 the SCA Party now has, owns, holds or claims to have, own, or hold, or at any
 time heretofore had, owned, or held or claimed to have had, owned, or held,
 or may hereafter have, own, or hold or claim to have, own, or hold, arising
 directly or indirectly out of, based upon, or in any way related to or in
 connection with (A) (1) the Financial Security Agreements; (2) the
 agreements, understandings, arrangements commuted or terminated pursuant to Sections
 2.01, 2.02 and 2.03, and Other Terminated Agreements listed
 in Part II of Schedule 1.01(b); (3) any of the Reinsurance
 Guarantees; (4) any commutation of an EIB Policy; (5) the commutation or
 termination of any of the foregoing listed in clauses (1), (2), (3) and (4);
 or (6) any commutation or amendment of any agreement listed on Schedule
 2.04 pursuant to or in accordance with this Agreement; (B) conduct or
 other matters occurring on or prior to the Closing, other than contractual
 obligations arising under written agreements between any XL Party and any SCA
 Party (including those described on Schedule 2.05, but excluding those
 expressly commuted or terminated pursuant to this Agreement or any Ancillary
 Agreement) or (C) any tax liability, whether stemming from policies issued by
 Subsidiaries of SCA prior to SCA’s IPO, after SCA’s IPO or otherwise, that
 results from the XLFA Redomestication; provided, however, with
 respect to both clauses (A) and (B), the provisions of this paragraph shall
 not discharge any obligation of any of the XL Parties that has been
 undertaken or imposed by the express terms of this Agreement or any Ancillary
 Agreement. 





-19-






	
 

	
 


	
 

	
         (ii)
 each SCA Party hereby irrevocably and unconditionally releases and forever
 discharges each CDS Counterparty, its parents, Subsidiaries and Affiliates,
 and its respective predecessors, successors, assigns, officers, directors,
 agents, employees, shareholders, representatives, underwriters, and
 attorneys, from any and all past, present and future actions, causes of
 action, suits, debts, Liens, contracts, rights, agreements, obligations,
 promises, liabilities, claims, counterclaims, demands, damages,
 controversies, losses, costs and expenses (including attorneys’ fees and
 costs actually incurred) of any kind, character, description or nature
 whatsoever, known or unknown to any of the SCA Parties, suspected or
 unsuspected, reported or unreported, fixed or contingent, accrued or unaccrued,
 liquidated or unliquidated, whether grounded in Law or equity or sounding in
 tort or contract or otherwise, which the SCA Party now has, owns, holds or
 claims to have, own, or hold, or at any time heretofore had, owned, or held
 or claimed to have had, owned, or held, or may hereafter have, own, or hold
 or claim to have, own, or hold, arising directly or indirectly out of, based
 upon, or in any way related to or in connection with (A) (1) the Financial
 Security Agreements; (2) the agreements, understandings, arrangements
 commuted or terminated pursuant to Sections 2.01, 2.02 and 2.03,
 and Other Terminated Agreements listed in Part II of Schedule
 1.01(b); (3) any of the Reinsurance Guarantees; (4) the commutation or
 termination of any of the foregoing listed in clauses (1), (2) and (3); (5)
 any commutation of an EIB Policy, any general release by EIB of the XL
 Parties’ obligations with respect to an EIB Guarantee, or any guaranty by a
 creditworthy entity reasonably acceptable to the XL Parties of the XL Parties’
 obligations under any EIB Guarantee, each in accordance with this Agreement;
 or (6) any commutation or amendment of any agreement listed on Schedule
 2.04 pursuant to or in accordance with this Agreement or (B) conduct
 occurring on or prior to the Closing with respect to this Agreement and the
 Transactions; provided, however, with respect to both clauses
 (A) and (B), the provisions of this paragraph shall not discharge any
 obligation of any of the CDS Counterparties that has been undertaken or
 imposed by the express terms of this Agreement, any Ancillary Agreement or
 any other agreement to which such CDS Counterparty is a party.


	
 

	
 


	
 

	
          (b)
 As of the Closing Date:


	
 

	
 


	
 

	
          (i)
 each XL Party, on behalf of itself and its respective Subsidiaries, hereby
 irrevocably and unconditionally releases and forever discharges each SCA
 Party, its parents, Subsidiaries and Affiliates, and its respective
 predecessors, successors, assigns, officers, directors, agents, employees,
 shareholders, representatives, underwriters, and attorneys, from any and all
 past, present and future actions, causes of action, suits, debts, Liens,
 contracts, rights, agreements, obligations, promises, liabilities, claims,
 counterclaims, demands, damages, controversies, losses, costs and expenses
 (including attorneys’ fees and costs actually incurred) of any kind,
 character, description or nature whatsoever, known or unknown to any of the
 XL Parties, suspected or unsuspected, reported or unreported, fixed or
 contingent, whether grounded in Law or equity or sounding in tort or contract
 or otherwise, which the XL Party now has, owns, holds or claims to have, own,
 or hold, or at any time heretofore had, owned, or held or claimed to have
 had, owned, or held, or may hereafter have, own, or hold or claim to have,
 own, or hold, arising directly or indirectly out of, based upon, or in any
 way related to or in connection with (A) (1) the Financial Security
 Agreements; (2) the agreements,





-20-






	
 

	
 


	
 

	
understandings,
 arrangements commuted or terminated pursuant to Sections 2.01, 2.02
 and 2.03, and Other Terminated Agreements listed in Part II of Schedule
 1.01(b); (3) any of the Reinsurance Guarantees; (4) any commutation of an
 EIB Policy; (5) the commutation or termination of any of the foregoing listed
 in clauses (1), (2), (3) and (4); or (6) any commutation or amendment of any
 agreement listed on Schedule 2.04 pursuant to or in accordance with
 this Agreement or (B) conduct or other matters occurring on or prior to the
 Closing, other than contractual obligations arising under written agreements
 between any XL Party and any SCA Party (including those described on Schedule
 2.05, but excluding those expressly commuted or terminated pursuant to
 this Agreement or any Ancillary Agreement); provided, however,
 with respect to both clauses (A) and (B), the provisions of this paragraph
 shall not discharge any obligation of any of the SCA Parties that has been
 undertaken or imposed by the express terms of this Agreement or any Ancillary
 Agreement.


	
 

	
 


	
 

	
          (ii)
 each XL Party hereby irrevocably and unconditionally releases and forever
 discharges each CDS Counterparty, its parents, Subsidiaries and Affiliates,
 and its respective predecessors, successors, assigns, officers, directors, agents,
 employees, shareholders, representatives, underwriters, and attorneys, from
 any and all past, present and future actions, causes of action, suits, debts,
 Liens, contracts, rights, agreements, obligations, promises, liabilities,
 claims, counterclaims, demands, damages, controversies, losses, costs and
 expenses (including attorneys’ fees and costs actually incurred) of any kind,
 character, description or nature whatsoever, known or unknown to any of the
 XL Parties, suspected or unsuspected, reported or unreported, fixed or
 contingent, accrued or unaccrued, liquidated or unliquidated, whether
 grounded in Law or equity or sounding in tort or contract or otherwise, which
 the XL Party now has, owns, holds or claims to have, own, or hold, or at any
 time heretofore had, owned, or held or claimed to have had, owned, or held,
 or may hereafter have, own, or hold or claim to have, own, or hold, arising
 directly or indirectly out of, based upon, or in any way related to or in
 connection with (A) (1) the Financial Security Agreements; (2) the
 agreements, understandings, arrangements commuted or terminated pursuant to Sections
 2.01, 2.02 and 2.03, and Other Terminated Agreements listed
 in Part II of Schedule 1.01(b); (3) any of the Reinsurance
 Guarantees; (4) the commutation or termination of any of the foregoing listed
 in clauses (1), (2) and (3); (5) any commutation of an EIB Policy, any
 general release by EIB of the XL Parties’ obligations with respect to an EIB
 Guarantee, or any guaranty by a creditworthy entity reasonably acceptable to
 the XL Parties of the XL Parties’ obligations under any EIB Guarantee, each
 in accordance with this Agreement; or (6) any commutation or amendment of any
 agreement listed on Schedule 2.04 pursuant to or in accordance with
 this Agreement, or (B) conduct occurring on or prior to the Closing with
 respect to this Agreement and the Transactions; provided, however,
 with respect to both clauses (A) and (B), the provisions of this paragraph
 shall not discharge any obligation of any of the CDS Counterparties that has
 been undertaken or imposed by the express terms of this Agreement, any
 Ancillary Agreement or any other agreement to which such CDS Counterparty is
 a party.





                    (c)
As of the Closing Date, each CDS Counterparty hereby irrevocably and unconditionally
releases and forever discharges each SCA Party, each XL Party, each of their
respective parents, Subsidiaries and Affiliates, and each of their respective
predecessors, 


-21-






successors,
assigns, officers, directors, agents, employees, shareholders, representatives,
underwriters, and attorneys, from any and all past, present and future actions,
causes of action, suits, debts, Liens, contracts, rights, agreements,
obligations, promises, liabilities, claims, counterclaims, demands, damages, controversies,
losses, costs and expenses (including attorneys’ fees and costs actually
incurred, except those costs and expenses expressly agreed in writing to be
paid by the SCA Parties) of any kind, character, description or nature
whatsoever, known or unknown to any of the CDS Counterparties, suspected or
unsuspected, reported or unreported, fixed or contingent, accrued or unaccrued,
liquidated or unliquidated, whether grounded in Law or equity or sounding in
tort or contract or otherwise, which the CDS Counterparty now has, owns, holds
or claims to have, own, or hold, or at any time heretofore had, owned, or held
or claimed to have had, owned, or held, or may hereafter have, own, or hold or
claim to have, own, or hold, arising directly or indirectly out of, based upon,
or in any way related to or in connection with (A) (1) the Financial Security
Agreements; (2) the agreements, understandings, arrangements commuted or
terminated pursuant to Sections 2.01, 2.02 and 2.03, and
Other Terminated Agreements listed in Part II of Schedule 1.01(b);
(3) any of the Reinsurance Guarantees; (4) the commutation or termination of
any of the foregoing listed in clauses (1), (2) and (3); (5) any commutation of
an EIB Policy, any general release by EIB of the XL Parties’ obligations with
respect to an EIB Guarantee, or any guaranty by a creditworthy entity
reasonably acceptable to the XL Parties of the XL Parties’ obligations under
any EIB Guarantee, each in accordance with this Agreement; or (6) commutation
or amendment of any agreement listed on Schedule 2.04 pursuant to or in
accordance with this Agreement; or (B) conduct occurring on or prior to the
Closing with respect to this Agreement and the Transactions; provided, however,
that nothing in this Section 2.05(c) releases any SCA Party or any XL
Party from fraud or intentional misconduct; provided, further,
that with respect to both clauses (A) and (B), the provisions of this paragraph
shall not discharge any obligation of any of the SCA Parties or XL Parties that
has been undertaken or imposed by the express terms of this Agreement, any
Ancillary Agreement or any other written agreement under which such CDS
Counterparty has any rights (whether as a party or otherwise) or otherwise
amend existing credit default swaps to which such CDS Counterparty is a party. 


                    (d)
The Parties acknowledge and agree that (A) the SCA Parties shall not be
responsible for the performance, or lack thereof, of any other Party’s
obligations pursuant to this Agreement or the Ancillary Agreements, (B) the XL
Parties shall not be responsible for the performance, or lack thereof, of any
other Party’s obligations pursuant to this Agreement or the Ancillary
Agreements and (C) a CDS Counterparty shall not be responsible for the performance,
or lack thereof, of any other Party’s obligations pursuant to this Agreement or
the Ancillary Agreements. 


                    (e)
Waiver of Statutory Rights. In connection with the releases granted
herein, each of the Parties hereby waives all rights conferred by the
provisions of California Civil Code Section 1542 and/or any similar state or
federal law. California Civil Code § 1542 provides as follows: 


A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS
WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE
TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST 


-22-






HAVE MATERIALLY AFFECTED HIS OR HER
SETTLEMENT WITH THE DEBTOR. 


The Parties
understand and acknowledge the significance and consequence of their waiver of
§ 1542 of the California Civil Code, as well as any other federal or state
statute or common law principle of similar effect, and acknowledge that this
waiver is a material inducement to and consideration for each Party’s execution
of this Agreement; provided, however, the provisions of this
paragraph shall not discharge any obligation of any of the Parties that has
been undertaken or imposed by the express terms of this Agreement, any
Ancillary or any other written agreement to which such Party is a party. 


                    Section
2.06 Consideration. At the Closing, the XL Parties shall (i) pay to the
SCA Parties an aggregate amount (inclusive of any amounts specified within the
XL/SCA Commutation Agreements) equal to One Billion, Seven Hundred and Seventy-Five
Million Dollars ($1,775,000,000) (the “Cash Consideration Amount”),
which will be paid to each of the SCA Parties in the amounts set forth on Schedule
2.06(a); (ii) issue and transfer to the SCA Parties, free and clear of any
Liens, an aggregate of eight million (8,000,000) shares of XL’s Class A
Ordinary Shares, par value $0.01 per share (the “Stock Consideration”),
which will be transferred to each of the SCA Parties in the number of shares
set forth on Schedule 2.06(b), pursuant to the terms of the Subscription
Agreement and the XL Stock Resale and Registration Rights Agreement; and (iii)
subject to Section 2.10, transfer to the SCA Shareholder Entity, free
and clear of any Liens, all of the XL Owned SCA Common Shares to be held in
accordance with the terms of the Declaration of Trust (the XL Owned SCA Common
Shares, together with the Cash Consideration Amount and the Stock
Consideration, the “Consideration”). 


                    Section
2.07 Closing. (a) Subject to (i) satisfaction or waiver of all
conditions to the obligations of the parties set forth in Article VII
(other than those conditions anticipated to occur at Closing) and (ii) the
completion of an XL Public Offering, the closing of the commutations,
terminations and releases that are the subject of this Agreement (the “Closing”)
will be held at the offices of Weil, Gotshal & Manges LLP, 767 Fifth
Avenue, New York, NY 10153 at 10:00 a.m., New York time, on the same Business
Day as the completion of an XL Public Offering, or at such other place or at
such other time or on such other date as the Parties may mutually agree upon in
writing. Notwithstanding anything to the contrary contained herein, under no
circumstances will the XL Parties have any obligation to consummate any of the
Transactions required to be completed on or prior to the Closing until the
completion of an XL Public Offering. 


                    (b)
All of the actions to be taken at Closing will be deemed to occur
simultaneously, except that the Cash Consideration Amount to be received
by XLFA shall be received prior to the XLFA Redomestication, and the
commutation of the Quota Share Treaty shall occur after the XLFA
Redomestication. 


                    Section
2.08 Closing Deliveries by the SCA Parties. (a) At Closing, the SCA
Parties shall deliver or cause to be delivered to the XL Parties: 


                    (i)
receipt for the Cash Consideration Amount and the Stock Consideration received
by the applicable SCA Parties; 


-23-






                    (ii)
the Subscription Agreement executed by each SCA Party which is a party thereto;



                    (iii)
the XL Stock Resale and Registration Rights Agreement executed by each SCA
Party which is a party thereto; 


                    (iv)
the 2001 Facultative Quota Share Commutation Agreement executed by each SCA
Party which is a party thereto; 


                    (v)
the Excess of Loss Commutation Agreement executed by each SCA Party which is a
party thereto; 


                    (vi)
the Adverse Development Cover Commutation Agreement executed by each SCA Party
which is a party thereto; 


                    (vii)
the Facultative Master Certificate Commutation Agreement executed by each SCA
Party which is a party thereto; 


                    (viii)
a true and complete original copy of a fully executed Quota Share Treaty
Commutation Agreement; 


                    (ix)
the Transition Agreement Amendment executed by each SCA Party which is a party
thereto; and 


                    (x)
an SCA Shareholder Entity Formation Conditions Certificate, if the SCA
Shareholder Entity Formation Conditions have been satisfied. 


                    (b)
At Closing, the SCA Parties shall deliver or cause to be delivered to the XL
Parties and the CDS Counterparties a true and complete copy, certified by the
Secretary or Director of each of the SCA Parties, of the resolutions duly and
validly adopted by the Boards of Directors (or, in the case of each portfolio
trust that is an SCA Party, a direction letter authorized by its unitholder) of
each of the SCA Parties evidencing its authorization of the execution and
delivery of this Agreement and the Ancillary Agreements to which it is a party
and the consummation of the Transactions. 


                    Section
2.09 Closing Deliveries by the XL Parties. (a) At Closing, the XL
Parties shall deliver to the SCA Parties: 


	
 

	
 


	
 

	
          (i)
 the Cash Consideration Amount by wire transfer in immediately available funds
 to a bank account or bank accounts of XLFA or XLCA (and, for the avoidance of
 doubt, no other entity) as SCA may direct, consistent with the allocation of
 the Cash Consideration Amount attached hereto as Schedule 2.06(a), in
 writing to XL at least three days prior to Closing; 


	
 

	
 


	
 

	
          (ii)
 stock certificates evidencing the Stock Consideration registered in the names
 of those SCA Parties designated on Schedule 2.06(b), together with an
 executed share transfer form evidencing the transfer of the XL Owned SCA
 Common Shares; 





-24-






	
 

	
 


	
 

	
          (iii)
 the Subscription Agreement executed by each XL Party which is a party
 thereto; 


	
 

	
 


	
 

	
          (iv)
 the XL Stock Resale and Registration Rights Agreement executed by each XL
 Party which is a party thereto; 


	
 

	
 


	
 

	
          (v)
 the 2001 Facultative Quota Share Commutation Agreement executed by each XL
 Party which is a party thereto; 


	
 

	
 


	
 

	
          (vi)
 the Excess of Loss Commutation Agreement executed by each XL Party which is a
 party thereto; 


	
 

	
 


	
 

	
          (vii)
 the Adverse Development Cover Commutation Agreement executed by each XL Party
 which is a party thereto; 


	
 

	
 


	
 

	
          (viii)
 the Facultative Master Certificate Commutation Agreement executed by each XL
 Party which is a party thereto; and 


	
 

	
 


	
 

	
          (ix)
 the Transition Agreement Amendment executed by each XL Party which is a party
 thereto. 





                    (b)
At Closing, the XL Parties shall deliver to the SCA Parties and the CDS
Counterparties a true and complete copy, certified by the Secretary or Director
of each of the XL Parties, of the resolutions duly and validly adopted by the
Boards of Directors of each of the XL Parties evidencing its authorization of
the execution and delivery of this Agreement and the Ancillary Agreements to
which it is a party and the consummation of the Transactions. 


                    (c)
At Closing, but subject to Section 2.10, the XL Parties shall cause the
XL Owned SCA Common Shares (together with certificates evidencing such XL Owned
SCA Common Shares and stock powers duly endorsed in blank to be transferred to
the SCA Shareholder Entity, which will be owned and managed pursuant to the
terms of the Declaration of Trust. 


                    Section
2.10 Escrow. Notwithstanding anything to the contrary contained in this
Agreement, if XL does not receive an SCA Shareholder Entity Formation Conditions
Certificate from the SCA Parties in accordance with Section 2.08(a) at
or prior to the Closing, the XL Parties shall, at Closing, deposit with the
Escrow Agent certificates evidencing all of the XL Owned SCA Common Shares,
free and clear of any Liens, together with stock powers duly endorsed in blank,
which are to be held by the Escrow Agent until released in accordance with the
Escrow Agreement. From and after delivery of such certificates to the Escrow
Agent at Closing, the XL Parties shall refrain from exercising, and hereby
irrevocably disclaim, any and all voting, economic or other rights with respect
to the XL Owned SCA Common Shares, and the XL Parties will have no liability or
further obligations to the SCA Parties or the CDS Counterparties thereafter
with respect to the XL Owned SCA Common Shares. 


-25-






ARTICLE III


REPRESENTATIONS AND WARRANTIES OF THE SCA
PARTIES


                    The
SCA Parties hereby jointly and severally represent and warrant to each of the
XL Parties and CDS Counterparties as follows: 


                    Section
3.01 Organization, Authority and Qualification of the SCA Parties. Each
of the SCA Parties is a corporation, company or business entity duly organized,
validly existing and in good standing under the Laws of the jurisdiction of its
incorporation or organization and has all necessary power and authority to
enter into this Agreement and the Ancillary Agreements to which it may be a
party, to carry out its obligations hereunder and thereunder and to consummate
the Transactions. Except as set forth in Section 3.01 of the SCA
Parties’ Disclosure Schedule, each of the SCA Parties is duly licensed or
qualified to do business and is in good standing in each jurisdiction in which
the properties owned or leased by it or the operation of its business makes
such licensing or qualification necessary. The execution and delivery of this
Agreement and the Ancillary Agreements to which each SCA Party is a party, the
performance by each SCA Party of its obligations hereunder and thereunder and
the consummation by each SCA Party of the Transactions have been duly
authorized by all requisite action on the part of each SCA Party and its
shareholders. This Agreement, the Transition Agreement Amendment, the SCA
Shareholder Entity Agreement and each Transaction have been approved by an
independent committee of SCA’s Board of Directors that did not include any
member that was nominated to SCA’s Board by any of the XL Parties, and this
Agreement and each Ancillary Agreement and Transaction to which each other SCA
Party is a party has been approved by such SCA Party’s Board of Directors (or,
in the case of each portfolio trust that is an SCA Party, a direction letter
authorized by its unitholder) or other appropriate authorizing body or Person.
This Agreement has been, and, upon their execution, the Ancillary Agreements to
which each SCA Party is a party shall have been, duly executed and delivered by
each SCA Party, and, assuming due authorization, execution and delivery by each
of the XL Parties and CDS Counterparties and receipt of all consents and
approvals by Governmental Authorities as required by Law, this Agreement
constitutes, and, upon their execution, the Ancillary Agreements shall
constitute, legal, valid and binding obligations of the SCA Parties enforceable
against each of the SCA Parties in accordance with their respective terms,
subject to remedies under applicable bankruptcy, insolvency, reorganization,
moratorium and similar Laws affecting creditors’ rights. 


                    Section
3.02 No Conflict. Assuming the making and obtaining of all filings,
notifications, consents, approvals, authorizations and other actions referred
to in Section 3.03, the execution, delivery and performance by each of
the SCA Parties of this Agreement and the Ancillary Agreements to which it is a
party do not and will not (a) violate, conflict with or result in the breach of
any provision of the Certificate of Incorporation or Bye-Laws (or similar
organizational documents) of any SCA Party, (b) conflict with or violate any
Law or Governmental Order applicable to any of the SCA Parties or any of their
assets, properties or businesses or, (c) except as set forth in Section 3.02
of the SCA Parties’ Disclosure Schedule, conflict with, result in any breach
of, constitute a default (or event which with the giving of notice or lapse of
time, or both, would become a default) under, require any consent under, or
give to others any rights of termination, amendment, acceleration, suspension,
revocation or 


-26-






cancellation
of, any note, bond, mortgage, indenture, contract, agreement, lease, sublease,
license, permit, franchise or other instrument or arrangement to which any SCA
Party is a party, which would adversely affect the ability of any SCA Party to
carry out its obligations under this Agreement or any Ancillary Agreement or to
consummate the Transactions. 


                    Section
3.03 Governmental Consents and Approvals. (a) The execution, delivery
and performance of this Agreement and each Ancillary Agreement to which any SCA
Party is a party by the SCA Parties does not and will not require any consent,
approval, authorization or other order of, action by, filing with or
notification to, any Governmental Authority, except as described in Section
3.03 of the SCA Parties’ Disclosure Schedule. 


                    (b)
The SCA Parties sought and obtained (other than with respect to obtaining
confirmation from the NYID, the Delaware Insurance Department and the UK FSA
that they do not object to the transfer of the XL Owned SCA Common Shares to
the SCA Shareholder Entity, which confirmation will be sought and is
anticipated to be obtained promptly after the completion of the documentation
related to the Shareholder Entity) approval of this Agreement and each commutation
or other Transaction to which XLCA is a party from the NYID on the grounds that
(among other things) they are collectively, and each is individually, fair and
equitable. The SCA Parties have obtained (other than with respect to obtaining
confirmation from the NYID, the Delaware Insurance Department and the UK FSA
that they do not object to the transfer of the XL Owned SCA Common Shares to
the SCA Shareholder Entity, which confirmation will be sought and is
anticipated to be obtained promptly after the completion of the documentation
related to the Shareholder Entity) or completed all consents, approvals,
authorizations, orders, actions, filings or notifications listed on Section
3.03 of the SCA Parties’ Disclosure Schedule. The SCA Parties have provided
true and correct copies of such approvals to the XL Parties. To the Knowledge
of SCA, approvals have not been rescinded, modified or amended in any way. 


                    Section
3.04 Financial Information. (a) True and complete copies of the Financial
Statements have been delivered by the SCA Parties to the XL Parties and CDS
Counterparties. The Financial Statements (i) were prepared in accordance with
the books of account and other financial records of the SCA Parties and (ii)
present fairly the financial condition and results of operations of the SCA
Parties as of the dates thereof or for the periods covered thereby. The GAAP
Financial Statements have been prepared in accordance with GAAP applied on a
basis consistent with past practices. The XLCA Statutory Financial Statements
have been prepared in accordance with New York State statutory accounting
principles applied on a basis consistent with past practices. The XLFA
Statutory Financial Statements have been prepared in accordance with Bermuda statutory
accounting principles applied on a basis consistent with past practices. 


                    (b)
True and complete copies of all pro forma balance sheets of the SCA Parties and
any related statements of income, retained earnings, stockholders’ equity,
changes in financial position and related notes and schedules thereto, prepared
to reflect each of the SCA Parties’ financial condition after giving effect to
the Transactions and provided to the NYID, have been delivered by the SCA
Parties to the XL Parties and the CDS Counterparties. 


-27-






                    Section
3.05 Compliance with Laws. (a) There is no violation of Law by any SCA
Party that has, or, if known by an appropriate Governmental Authority, could
reasonably be expected to adversely affect the legality, validity or
enforceability of this Agreement, any Ancillary Agreement or the consummation
of the Transactions and (b) except as provided in Section 3.05 of the
SCA Parties’ Disclosure Schedule, there is no Governmental Order that is applicable
to any SCA Party that has or could reasonably be expected to adversely affect
the legality, validity or enforceability of this Agreement, any Ancillary
Agreement or the consummation of the Transactions. 


                    Section
3.06 Effect of Commutations. As of the Closing, as a result of (i)
commutation of the Quota Share Treaty pursuant to the Quota Share Commutation
Agreement and (ii) commutation of the Financial Security Master Facultative
Agreement, the Guarantee and the Financial Security Guarantee shall no longer
have any force or effect and for all purposes shall be considered a nullity. If
any of the EIB Policies are commutated, then each EIB Guarantee that guarantees
XLCA’s obligations under each commuted EIB Policy will no longer have any force
or effect and will, for all purposes, be considered a nullity. 


                    Section
3.07 Litigation. No Action by or against any of the SCA Parties is
pending or, to the Knowledge of SCA, threatened, which could reasonably be
expected to affect the legality, validity or enforceability of this Agreement,
any Ancillary Agreement or the consummation of the Transactions. 


                    Section
3.08 Placement of Stock Consideration. Each of the SCA Parties that will
acquire a portion of the Stock Consideration: 


                    (a)
is acquiring the Stock Consideration for investment purposes only and not with
a view to or for distributing or reselling such Stock Consideration or any part
thereof, without prejudice, however, to such SCA Party’s right, subject to the
provisions of this Agreement, at all times to sell or otherwise dispose of all
or any part of such Stock Consideration pursuant to an effective registration
statement under the Securities Act or under an exemption from such registration
and in compliance with applicable federal and state securities or “blue sky”
Laws. Each such SCA Party understands that it must bear the economic risk of
this investment indefinitely, unless the Stock Consideration is registered
pursuant to the Securities Act and any applicable state securities or “blue
sky” Laws or an exemption from such registration is available. None of the SCA
Parties has any intention of participating in the formulation, determination,
or direction of the basic business decisions of any of the XL Parties; 


                    (b)
at the time it was first offered the Stock Consideration was, and at the date
hereof is, an “accredited investor” as defined in Rule 501(a) under the
Securities Act; 


                    (c)
understands that the Stock Consideration is being offered and provided as
partial consideration to it in reliance upon specific exemptions from the
registration requirements of United States federal and state securities or
“blue sky” Laws, and that the XL Parties are relying upon the truth and
accuracy of, and such SCA Party’s compliance with, the representations,
warranties, agreements, acknowledgments and understandings of such SCA Party
set forth herein in order to determine the availability of such exemptions and
the eligibility of such SCA Party to acquire the Stock Consideration; 


-28-






                    (d)
has, either alone or together with its representatives, such knowledge,
sophistication and experience in business and financial matters so as to be capable
of evaluating the merits and risks of the prospective investment in the Stock
Consideration, and has so evaluated the merits and risks of such investment.
Such SCA Party understands that an investment in the Stock Consideration
involves a high degree of risk that could result in complete loss, is able to
bear the economic risk of an investment in the Stock Consideration and, at the
present time, is able to afford a complete loss of such investment; 


                    (e)
is knowledgeable, sophisticated and experienced in making, and is qualified to
make, decisions with respect to investments in securities representing an
investment decision like that involved in the acquisition of the Stock
Consideration. Such SCA Party acknowledges that it has (i) access to XL’s
disclosures about its Class A Ordinary Shares made in XL’s filings with the
Securities and Exchange Commission (“SEC”), including its Annual Report
on Form 10-K for its last completed fiscal year, its Quarterly Reports on Form
10-Q for its latest fiscal quarters, and any Current Report on Form 8-K filed
by XL since the date of its last respective Annual Report on Form 10-K for its
last completed fiscal year; (ii) access to information about XL and its
financial condition, results of operations, business, properties, management
and prospects contained in an offering memorandum related to the issuance of
the Stock Consideration provided to the SCA Parties; and (iii) adequate access
and opportunity to discuss the investment opportunity with the management of
the XL Parties; 


                    (f)
in connection with its acceptance of the Stock Consideration, has not relied
upon any representations made by, or other information (whether oral or
written) furnished by or on behalf of, any of the XL Parties other than as set
forth in this Agreement, the Ancillary Agreements or XL’s filings with the SEC
or an offering memorandum related to the issuance of the stock consideration
provided to the SCA Parties. 


                    (g)
acknowledges that the Stock Consideration was offered and will be issued to the
SCA Parties without any general solicitation or general advertising, including
any advertisement, article, notice or other communication published in any
newspaper, magazine or similar media or broadcast over television or radio, or
any seminar or meeting whose attendees have been invited by any general
solicitation or general advertising; 


                    (h)
understands that nothing in this Agreement or any other materials presented by
or on behalf of XL to the SCA Parties in connection with the issuance of the
Stock Consideration constitutes legal, tax or investment advice. Each SCA Party
has consulted such legal, tax and investment advisors as it, in its sole
discretion, has deemed necessary or appropriate in connection with its receipt
of the Stock Consideration; and 


                    (i)
if located or domiciled outside the United States, has complied with all Laws
in each foreign jurisdiction in which it will receive or be the record or beneficial
owner of the Stock Consideration. 


                    Section
3.09 Regulatory Approvals. The NYID has approved in writing the terms of
this Agreement and any Transaction to which XLCA is a party, including the
Quota Share Treaty Commutation Agreement, pursuant to applicable Law, including
Section 1505 of the New York Insurance Law. The BMA has approved in writing the
terms of this Agreement as 


-29-






they relate to
XLFA prior to the XLFA Redomestication. The UK FSA has been provided a copy of
this Agreement and has raised no objection to XLCAUK entering into this
Agreement, and the UK FSA has confirmed in writing that the 14-day waiting
period applicable under the Letter of Undertaking, dated May 20, 2008, will not
apply to XLCAUK’s execution of this Agreement. A copy of each such written
approval has been delivered to the XL Parties and the CDS Counterparties and
such written approvals have not been withdrawn, rescinded, revoked, amended or
altered in any way. The SCA Parties have provided the NYID, the BMA and the UK
FSA with all information the SCA Parties deemed material and all information
requested by the NYID, the BMA or the UK FSA. All information provided by the
SCA Parties to the NYID, the BMA or the UK FSA was true, correct and complete
in all material respects. Notwithstanding anything to the contrary, the NYID,
the BMA and the UK FSA have not confirmed that they are not objecting to the
transfer of the XL Owned SCA Common Shares to the SCA Shareholder Entity but
the SCA Parties will seek to obtain such confirmations promptly and anticipate
that such confirmations will be obtained promptly after the completion of the
documentation related to the Shareholder Entity. 


                    Section
3.10 MLI CDS Agreements. The SCA Parties have entered into an agreement
with Merrill Lynch International (“MLI”) pursuant to which MLI will
terminate the MLI CDS Agreements prior to or simultaneously with the Closing
(the “MLI Agreement”). A true and correct copy of the MLI Agreement has
been delivered to the XL Parties. The MLI Agreement remains in full force and
effect and has not been amended, waived, terminated or repealed in any way. The
amount of consideration for the termination of the MLI CDS Agreements pursuant
to the MLI Agreement is no greater than $500 million in the aggregate together
with the release of all claims related to such MLI CDS Agreements. 


                    Section
3.11 Financial Security Master Facultative Commutation Agreement. The
SCA Parties have entered into an agreement with Financial Security pursuant to
which the Financial Security Master Facultative Agreement will be commuted
prior to, or simultaneously with, the Closing. A true and correct copy of the
Financial Security Master Facultative Commutation Agreement has been delivered
to the XL Parties. The Financial Security Master Facultative Commutation
Agreement remains in full force and effect and has not been amended, waived,
terminated or repealed in any way. 


                    Section
3.12 Third-Party Agreements. None of the transactions contemplated by Section
2.04 and listed on Schedule 2.04 is between any SCA Party or any of
its affiliates, officers, directors, employees, agents, counsel,
sub-contractors or other representatives or related parties, on the one hand,
and any other SCA Party or any of its affiliates, officers, directors,
employees, agents, counsel, sub-contractors or other representatives or related
parties, on the other hand. 


                    Section
3.13 Brokers. Except for Rothschild & Sons Limited, whose fees will
be paid exclusively by the SCA Parties, no broker, advisor, finder or
investment banker is entitled to any brokerage, finder’s or other fee or
commission in connection with the Transactions based upon arrangements made by
or on behalf of the SCA Parties. 


-30-






ARTICLE IV


REPRESENTATIONS AND WARRANTIES OF THE XL PARTIES


                    The
XL Parties hereby jointly and severally represent and warrant to each of the
SCA Parties and the CDS Counterparties as follows: 


                    Section
4.01 Organization and Authority of the XL Parties. Each of the XL
Parties is a corporation, company or business entity duly organized, validly
existing and in good standing under the Laws of the jurisdiction of its
incorporation or organization and has all necessary power and authority to
enter into this Agreement and the Ancillary Agreements to which it may be a
party, to carry out its obligations hereunder and thereunder and to consummate
the Transactions. Each of the XL Parties is duly licensed or qualified to do
business and is in good standing in each jurisdiction in which the properties
owned or leased by it or the operation of its business makes such licensing or
qualification necessary. The execution and delivery of this Agreement and the
Ancillary Agreements to which each XL Party is a party, the performance by each
XL Party of its obligations hereunder and thereunder, and the consummation by
each XL Party of the Transactions have been duly authorized by all requisite
action on the part of each XL Party. This Agreement has been, and, upon the
execution of the Ancillary Agreements to which each XL Party is a party, shall
have been, duly executed and delivered by each XL Party, and, assuming due
authorization, execution and delivery by each of the SCA Parties and CDS Counterparties
and receipt of all consents and approvals by Governmental Authorities as
required by Law, this Agreement constitutes, and upon their execution, the
Ancillary Agreements shall constitute, legal, valid and binding obligations of
the XL Parties enforceable against each of the XL Parties in accordance with
their respective terms, subject to remedies under applicable bankruptcy,
insolvency, reorganization, moratorium and similar Laws affecting creditors’
rights. 


                    Section
4.02 No Conflict. Assuming the making and obtaining of all filings,
notifications, consents, approvals, authorizations and other actions referred
to in Section 4.03, the execution, delivery and performance by each of
the XL Parties of this Agreement and the Ancillary Agreements to which it is a
party do not and will not (a) violate, conflict with or result in the breach of
any provision of the Certificate of Incorporation or Bye-Laws (or similar
organizational documents) of each XL Party, (b) conflict with or violate any
Law or Governmental Order applicable to any XL Party or (c) except as set forth
in Section 4.02 of the XL Parties’ Disclosure Schedule, conflict with,
or result in any breach of, constitute a default (or event which with the
giving of notice or lapse of time, or both, would become a default) under,
require any consent under, or give to others any rights of termination,
amendment, acceleration, suspension, revocation or cancellation of, any note,
bond, mortgage, indenture, contract, agreement, lease, sublease, license,
permit, franchise or other instrument or arrangement to which any XL Party is a
party, which would adversely affect the ability of any XL Party to carry out
its obligations under this Agreement or any Ancillary Agreement and to consummate
the Transactions. 


                    Section
4.03 Governmental Consents and Approvals. (a) The execution, delivery
and performance of this Agreement and each Ancillary Agreement to which it is a
party by each of the XL Parties does not and will not require any consent,
approval, authorization or 


-31-






other order
of, action by, filing with or notification to any Governmental Authority,
except as described in Section 4.03 of the XL Parties’ Disclosure
Schedule. 


                    
(b) The XL Parties sought and obtained approval of this Agreement and each
commutation or other Transaction to which XLRA is a party from the NYID on the
grounds that (among other things) they are collectively, and each is
individually, fair and equitable. The XL Parties have provided true and correct
copies of such approval to the SCA Parties. To the knowledge of XL’s executive
officers, after due inquiry, such approval has not been rescinded, modified or
amended in any way. 


                    Section
4.04 Capitalization. (a) Section 4.04(a) of the XL Parties’
Disclosure Schedule sets forth the type and number of authorized equity
securities of XL and the type and number of such equity securities that are
issued and outstanding as at July 25, 2008. 


                    
(b) All issued and outstanding shares of XL’s capital stock as at July 28, 2008
have been duly authorized for issuance, are validly issued and are fully paid
and nonassessable. The Stock Consideration has been duly authorized and, upon
issuance to the SCA Parties pursuant to the terms of this Agreement and the
Subscription Agreement, will be validly issued, fully paid and nonassessable,
free and clear of all Liens other than those contained in applicable securities
Laws. 


                    Section
4.05 XL Owned SCA Common Shares. XLI is the record and beneficial owner
of the XL Owned SCA Common Shares, free and clear of any and all Liens other
than restrictions on transfer imposed by applicable securities and insurance
Laws, has all right, title and interest in and to the XL Owned SCA Common
Shares and has all requisite power and authority to sell, assign, transfer and
deliver the XL Owned SCA Common Shares, free and clear of all Liens other than
restrictions on transfer contained in applicable securities or insurance Laws,
or deposit with the Escrow Agent certificates evidencing all of the XL Owned
SCA Common Shares, free and clear of any Liens, together with stock powers duly
endorsed in blank pursuant to Section 2.10, as the case may be, to the
SCA Shareholder Entity. 


                    Section
4.06 Litigation. No Action by or against any of the XL Parties is
pending or, to the actual knowledge of each of the XL Parties after due
inquiry, threatened, which could reasonably be expected to affect the legality,
validity or enforceability of this Agreement, any Ancillary Agreement or the
consummation of the Transactions. 


                    Section
4.07 Regulatory Approvals. The NYID has approved in writing the terms of
this Agreement and any Transaction to which XLRA is a party, including the
Adverse Development Cover Commutation Agreement, pursuant to applicable Law,
including Section 1505 of the New York State Insurance Laws. A copy of each
such written approval has been delivered to the SCA Parties and the CDS
Counterparties and such written approvals have not been withdrawn, rescinded,
revoked, amended or altered. The XL Parties have provided the NYID, the BMA and
the UK FSA with all information the XL Parties deemed material and all
information requested by the NYID, the BMA or the UK FSA. All information
provided by the XL Parties to the NYID, the BMA or the UK FSA was true, correct
and complete in all material respects. 


-32-






                    Section
4.08 Brokers. Except for The Blackstone Group L.P. whose fees will be
paid exclusively by the XL Parties, no broker, advisor, finder or investment
banker is entitled to any brokerage, finder’s or other fee or commission in
connection with the Transactions (other than in respect of the XL Public
Offering) based upon arrangements made by or on behalf of the XL Parties. 


ARTICLE V


REPRESENTATIONS AND WARRANTIES OF THE CDS
COUNTERPARTIES


                    Each
of the CDS Counterparties hereby represents and warrants as to itself only, and
neither jointly nor jointly and severally with the other CDS Counterparties, to
each of the XL Parties and SCA Parties as follows: 


                    Section
5.01 Status. It is duly organized and validly existing under the laws of
the jurisdiction of its organization or incorporation and, if relevant under
such laws, is in good standing. 


                    Section
5.02 Powers. It has the power to execute this Agreement and any other
documentation relating to this Agreement (including the Ancillary Agreements to
which it is a party), to deliver this Agreement and any other documentation
relating to this Agreement that it is required by this Agreement to deliver,
and to perform its obligations under this Agreement, and it has taken all
necessary action to authorize such execution, delivery and performance. 


                    Section
5.03 No Violation or Conflict. Such execution, delivery and performance
do not violate or conflict with any law applicable to it, any provision of its
constitutional documents, any order or judgment of any court or other agency of
government applicable to it or any of its assets or any contractual restriction
binding on or affecting it or any of its assets. 


                    Section
5.04 Consents. All governmental and other consents that are required to
have been obtained by it with respect to this Agreement have been obtained and
are in full force and effect and all conditions of any such consents have been
complied with. 


                    Section
5.05 Obligations Binding. Its obligations under this Agreement
constitute its legal, valid and binding obligations, enforceable in accordance
with their respective terms (subject to applicable bankruptcy, reorganization,
insolvency, moratorium or similar Laws affecting creditors’ rights generally,
and subject, as to enforceability, to equitable principles of general
application (regardless of whether enforcement is sought in a proceeding in
equity or at Law)). 


                    Section
5.06 Absence of Litigation. There is no pending, and it has not received
written threat of any action, suit or proceeding at Law or in equity or before
any court, tribunal, governmental body, agency or official or any arbitrator
that is likely to affect the legality, validity or enforceability of this
Agreement against it or its ability to perform its obligations under this
Agreement. 


-33-






                    Section
5.07 Consent to Transactions. It consents to the effect of the
consummation of the covenants contained in this Agreement and the Ancillary
Agreements, including (i) the commutation of the Quota Share Treaty pursuant to
the Quota Share Commutation Agreement, (ii) the commutation of the Financial
Security Master Facultative Agreement, (iii) the commutation of any EIB Policy
in accordance with Section 6.05(c) and (iv) as a consequence of the
foregoing, the effective nullity of the Guarantee and the Financial Security
Guarantee and, if any EIB Policy is commuted, the EIB Guarantee that guarantees
XLCA’s obligation under such commuted EIB Policy, such that each has no further
force or effect. 


	
 

	
 


	
 

	
          Section
 5.08 Ownership of Insurance Instruments. (a) It has: 


	
 

	
 


	
 

	
          (i)
 provided to the SCA Parties a written list (prepared in good faith by, and
 reflecting the best belief of, an officer of such CDS Counterparty) of (A)
 those credit default swap agreements with XLCA or Affiliates of XLCA to which
 such CDS Counterparty is party, and of which such CDS Counterparty is a
 beneficial owner, at the time it became a Party and (B) the notional amount of
 each such credit default swap agreement; or 


	
 

	
 


	
 

	
          (ii)
 confirmed in writing by an officer of such CDS Counterparty, to the best
 belief of such confirming officer, a list provided by the SCA Parties of (A)
 those credit default swap agreements with XLCA or Affiliates of XLCA to which
 such CDS Counterparty is party, and of which such CDS Counterparty is a
 beneficial owner, at the time it became a Party and (B) the notional amount
 of each such credit default swap agreement. 





                    (b)
For an abundance of clarity, the foregoing representations and warranties
contained in Section 5.08(a) only reflect the best belief of the officer
of the CDS Counterparty preparing the list or confirming a list prepared by
SCA. The CDS Counterparty is not making any representation or warranty that is
not qualified by the best belief of such officer, and it will not be bound by
or subject to liability based on any inaccuracy contained in any such list that
ultimately results from such officer’s best belief being inadvertently
inaccurate. 


                    Section
5.09 Brokers. Except for the CDS Financial Advisor and BlackRock, whose
fees will be paid exclusively by the SCA Parties, no broker, advisor, finder or
investment banker is entitled to any brokerage, finder’s or other fee or
commission from it in connection with the Transactions based upon arrangements
made by or on behalf of any of the CDS Counterparties. 


ARTICLE VI


ADDITIONAL AGREEMENTS


                    Section
6.01 Public Disclosure and Confidentiality. (a) No SCA Party or XL Party
shall make or permit any of its officers, employees, agents, counsel,
sub-contractors or other representatives to make any public disclosure
simultaneously with, or close in time to, the execution of this Agreement or
the Closing, other than in conjunction with an XL Public 


-34-






Offering (such
information disclosed in conjunction with an XL Public Offering to be pursuant
to a Quarterly Report on Form 10-Q, a Current Report on Form 8-K, a prospectus
supplement, or other material that complies with the requirements of the
Securities Act, including any press release, other material or internet
postings) regarding the existence or terms of this Agreement, to any person or
company or to the public, without the prior written consent of the other
Parties subject to this Section 6.01, such consent not to be
unreasonably withheld or delayed; provided, further, that XL and
any of its officers, employees, agents, counsels, sub-contractors or other
representatives (expressly including any investment banks) may make disclosures
relating to the existence and terms of this Agreement and the Transactions to
rating agencies and potential investors in connection with the marketing of an
XL Public Offering, including, for the avoidance of doubt, information relating
to the reinsurance agreements and guarantees being terminated pursuant to this
Agreement such as exposures, valuations and other data; provided, further,
that if a disclosure is required by Law, the SCA Party or the XL Party so
required may make such disclosure so long as (i) it uses its reasonable best
efforts to reasonably cooperate as to the timing and content of such disclosure
to the extent reasonably practicable without violating any Law and (ii) other
than with respect to press releases, securities filings and similar public
disclosure or disclosures in conjunction with an XL Public Offering, it
reasonably cooperates with any other SCA Party or XL Party seeking to obtain a
protective order concerning such disclosure if such XL Party or SCA Party
requesting cooperation shall pay for all reasonable fees and expenses,
including legal fees, associated with such cooperation. 


                    (b)
Past Confidential Information. The SCA Parties and their officers,
employees, agents, counsel, sub-contractors and other representatives, as a
group, and the XL Parties and their officers, employees, agents, counsel,
sub-contractors and other representatives, as a group, agree to keep
confidential within their groups any information received prior to Closing from
any Party in the other group pursuant to a confidentiality agreement,
arrangement or understanding in place prior to Closing between the SCA Parties
and the XL Parties that was commuted or terminated pursuant to Sections 2.01,
2.02 or 2.03 of this Agreement or set forth in Part II of Schedule
1.01(b) (“Confidential Information”), including information about
exposure, claims, mark or other information related to an individual CDS
Counterparty; provided, that Confidential Information will not include
any information that (i) was publicly available prior to its disclosure to a
member of the group receiving the Confidential Information (a “Receiving
Group”), (ii) was known to a member of the Receiving Group prior to
disclosure by a member of the group providing the Confidential Information (a “Providing
Group”) and was not received under obligations of confidentiality or from a
Person obligated to keep such information confidential or (iii) is or becomes
available to the Receiving Group on a nonconfidential basis from a source other
than the Providing Group or its agents, provided, that such other Person
is not bound by a confidentiality agreement with the Providing Group, provided,
further, that XL and any of its officers, employees, agents, counsels,
sub-contractors or other representatives (expressly including any investment
banks) may make disclosures relating to the existence and terms of this
Agreement and the transactions contemplated in this Agreement to rating
agencies and investors in connection with the marketing of an XL Public
Offering, including, for the avoidance of doubt, information relating to the
reinsurance agreements and guarantees being terminated pursuant to this
Agreement such as exposures, valuations and other data. In the event that any
Party subject to this Section 6.01(b), or such Party’s agents, becomes
legally compelled by deposition, subpoena, or other court or action by a
Governmental Authority to disclose any of the Confidential Information covered
by this Agreement, the Receiving Group with which such 


-35-






Party is
associated is permitted to make such disclosure of Confidential Information as
it determines is reasonably necessary, upon consultation with counsel, to
comply with applicable Laws; provided, that such Receiving Group makes a
reasonable effort to provide the Providing Group with prompt written notice to
that effect and such Receiving Group reasonably cooperates with the Providing
Group if the Providing Group seeks to obtain a protective order concerning such
Confidential Information, provided, that the Providing Group pays for
all of the Receiving Group’s fees and expenses, including legal fees,
associated with such cooperation. Notwithstanding anything contained in any
other agreement, arrangement or understanding between the SCA Parties and the
XL Parties, (i) the XL Parties may disclose Confidential Information, as
reasonably needed, to any other XL Party, any nationally recognized rating
agency then providing a financial strength rating for any XL Party or any
officer, employee, agent, counselor, sub-contractor and other representative of
any such agency or any XL Party, (ii) the SCA Parties may disclose Confidential
Information, as reasonably needed, to any other SCA Party, any nationally
recognized rating agency then providing a financial strength rating for any SCA
Party, or any officer, employee, agent, counselor, sub-contractor and other
representative of any such agency or any SCA Party and (iii) this Section
6.01(b) supersedes all prior confidentiality rights and obligations between
the SCA Parties and the XL Parties with respect to “Confidential Information,”
as defined above. 


                    (c)
Regulatory Compliance. The SCA Parties will provide the XL Parties, at
the XL Parties’ sole cost and expense, upon reasonable notice and during normal
business hours, all documents, files, books and records and reasonable access
to, and will request reasonable cooperation from, all employees of the SCA
Parties, as the XL Parties may reasonably request from time to time, for the
limited use by the XL Parties in compliance with any legal, regulatory,
accounting, or audit requirement or examination. The XL Parties will provide
the SCA Parties, at the SCA Parties’ sole cost and expense, upon reasonable
notice and during normal business hours, all documents, files, books and
records and reasonable access to, and will request reasonable cooperation from,
all employees of the XL Parties, as the SCA Parties may reasonably request from
time to time, for the limited use by the SCA Parties in compliance with any
legal, regulatory, accounting, or audit requirement or examination. The XL
Parties and the SCA Parties will treat all information received pursuant to
this Section 6.01(c) as if it were Confidential Information subject to Section
6.01(b). 


                    Section
6.02 Regulatory and Other Authorizations; Notices and Consents. The SCA
Parties and the XL Parties shall use their reasonable best efforts to obtain
and maintain all authorizations, consents, orders and approvals of all
Governmental Authorities and officials that may be or become necessary for the
execution and delivery of, and the performance of their obligations pursuant
to, this Agreement and the Ancillary Agreements, and will reasonably cooperate
with the other SCA Parties and XL Parties in promptly seeking to obtain all
such authorizations, consents, orders and approvals. Each of the SCA Parties
and XL Parties shall use reasonable best efforts to resolve objections, if any,
as may be asserted by any Governmental Authority with respect to the
Transactions under any Law. In connection therewith, if any Action is
instituted (or threatened to be instituted) challenging any Transaction as
violative of any Law, subject to and in accordance with Section 6.11,
the SCA Parties and the XL Parties shall use their reasonable best efforts and
reasonably cooperate with one another to contest and resist any such Action and
to have vacated, lifted, reversed, or overturned any decree, judgment, injunction
or other order, whether temporary, preliminary or permanent, that is in effect
and that prohibits, 


-36-






prevents, or
restricts consummation of the Transactions, including by pursuing all available
avenues of administrative and judicial appeal, unless, by mutual agreement, the
SCA Parties and the XL Parties decide that litigation is not in their
respective best interests. 


                    Section
6.03 Notice of Developments. Prior to the Closing, each Party shall
promptly notify the other Parties in writing of all events, circumstances,
facts and occurrences arising subsequent to the date of this Agreement which
could reasonably be expected to result in any material breach of a
representation or warranty or covenant of such Party contained in this
Agreement or which could have the effect of making any material representation
or warranty of such Party contained in this Agreement untrue or incorrect in
any respect. 


                    Section
6.04 MLI ABS CDO Credit Default Swap Agreements. Prior to the Closing,
the SCA Parties shall not amend, alter, waive or repeal any of the terms of the
MLI CDS Agreement without the prior written approval of the XL Parties. 


                    Section
6.05 Third-Party Reinsurance Agreements. (a) The SCA Parties shall (i)
provide the XL Parties with copies of all documents, files, books and records
relating to any Third-Party Reinsurance Agreement for so long as it remains in
force as reasonably requested by the XL Parties from time to time, and
reasonable access to, and will request reasonable cooperation from, upon
reasonable notice during normal business hours, all employees of the SCA
Parties whose employment responsibilities are related to any Third-Party
Reinsurance Agreement for so long as it remains in force and (ii) subject to
any applicable Law, pay all claims under any Third-Party Reinsurance Agreement
for so long as it remains in force as they become due, other than claims
reasonably contested by the SCA Parties in good faith. 


                    
(b) Prior to the Closing, the SCA Parties shall not amend, alter, waive or
repeal any of the terms of the Financial Security Master Facultative
Commutation Agreement without the prior written approval of the XL Parties. 


                    
(c) The SCA Parties shall use their commercially reasonable efforts to commute
each of the EIB Policies and fully and finally extinguish each Person’s rights
and obligations thereunder pursuant to commutation and release agreements in
forms reasonably satisfactory to the XL Parties or effectuate another EIB
Resolution Event; provided, however, that the use of such
commercially reasonable efforts shall not require the SCA Parties to pay
amounts in excess of those set forth in a letter delivered concurrently
herewith to the XL Parties and the CDS Financial Advisor. Until an EIB
Resolution Event occurs, XLCA shall (i) refrain from novating or assigning the
EIB Policies to any Person, provided, that it may reinsure the EIB
Policies as it sees fit and (ii) refrain from selling, leasing, assigning,
reinsuring or transferring in any way (whether in one transaction or a series
of related transactions) a majority of its assets to any Person, unless either
(A) the EIB Policies are sold, leased, assigned, reinsured or transferred (as
the case may be) with all or substantially all of such assets to the Person
purchasing, leasing, reinsuring, or receiving all or substantially all of such
assets or (B) the XL Parties provide their consent, which consent shall not be
unreasonably withheld or delayed. Notwithstanding the foregoing, nothing in
this paragraph shall in any way restrict or limit the SCA Parties from selling,
leasing, assigning, reinsuring, transferring or otherwise disposing of, in any
manner (whether in one or more transactions) the public finance business of the
SCA Parties. 


-37-






                    Section
6.06 Ownership of Insurance Instruments. (a) On and as of the date
hereof, and on the Closing Date (at a time prior to the Closing) and as of the
Closing, the SCA Parties shall provide written notice to the XL Parties setting
forth, to the Knowledge of SCA, the then current aggregate notional value of
all credit default swap agreements with XLCA or Affiliates of XLCA of which the
CDS Counterparties have either represented in writing to the SCA Parties in
accordance with Section 5.08 or confirmed in writing to the SCA Parties
in accordance with Section 5.08, as being a party thereto and a
beneficial owner thereof. 


                    
(b) Each CDS Counterparty, in respect of itself, agrees that, prior to Closing,
it will not sell or transfer in any way any right to or title in any credit
default swap agreement with XLCA or an Affiliate of XLCA in which such CDS
Counterparty has beneficial ownership, or to which it is party, unless the
transferee agrees to become a Party to this Agreement pursuant to Section
9.04 by signing a joinder agreement immediately upon consummation of any
such sale or transfer. 


                    Section
6.07 Compliance with Securities Laws. If any SCA Party is or becomes the
record or beneficial owner of any or all of the Stock Consideration, it will
comply with all Laws applicable to the Transfer of any or all of the Stock
Consideration. 


                    Section
6.08 Passive Investor. For a period of two years from the Closing, none
of the SCA Parties will take any action to participate in the formulation,
determination or direction of the basic business decisions of any of the XL
Parties. 


                    Section
6.09 XL Owned SCA Common Shares Covenant. If any CDS Counterparty
becomes the record or beneficial owner of any or all of the XL Owned SCA Common
Shares, it will comply with all Laws applicable to the Transfer of any or all
of the XL Owned SCA Common Shares. 


                    Section
6.10 Forbearance. The Parties covenant and agree with each other and
their respective Affiliates, successors and assigns, that: 


	
 

	
 


	
 

	
          (a)
 subsequent to the date hereof: 


	
 

	
 


	
 

	
          (i)
 none of the SCA Parties shall hereinafter, for any reason whatsoever, demand,
 claim, file suit or initiate any Action against any of the XL Parties or the
 CDS Counterparties in respect of any rights released pursuant to Section
 2.05(a); 


	
 

	
 


	
 

	
          (ii)
 none of the XL Parties shall hereinafter, for any reason whatsoever, demand,
 claim, file suit or initiate any Action against any of the SCA Parties or the
 CDS Counterparties in respect of any rights released pursuant to Section
 2.05(b); and 


	
 

	
 


	
 

	
          (iii)
 none of the CDS Counterparties shall hereinafter, for any reason whatsoever,
 demand, claim, file suit or initiate any Action against any of the SCA
 Parties or the XL Parties in respect of any rights released pursuant to Section
 2.05(c). 





                    
(b) Subsequent to the date hereof and until the earlier of (i) October 15, 2008
or (ii) the termination of this Agreement pursuant to Section 8.01, no
CDS Counterparty will exercise any Triggered Enforcement Right to the extent
triggered (or argued by any CDS 


-38-






Counterparty to be triggered) as a result of the fact that any of the
SCA Parties or any of their Affiliates (A) is or is becoming insolvent (either
because its financial condition is such that the sum of its debts is greater
than the fair market value of its assets, or because the fair saleable value of
its assets is less than the amount required to pay its probable liabilities on
its existing debts as they mature), (B) has or will have unreasonably small
capital with which to engage in its business, (C) has or will have incurred debts
beyond its ability to pay as they become due, (D) does not have or will not
have an excess of required reserves and other liabilities over admitted assets,
(E) has or will have insufficient assets to reinsure all outstanding risks with
other solvent authorized assuming insurers after paying all accrued claims
owed, (F) has a credit rating that has been downgraded or withdrawn by any
rating agency, or has sold credit protection or provided a guarantee with
respect to an asset-backed security or other reference obligation and the
credit rating with respect to such asset-backed security or other reference
obligation has been downgraded or withdrawn by any rating agency, (G) is a
party to an agreement with or for the benefit of a CDS Counterparty where a cross-default
or termination event has occurred or to the extent it results from the
occurrence of an event described in clauses (A) through (F), or (H) has
admitted in writing to any set of circumstances described in clauses (A)
through (G); provided, that if any counterparty to a credit default swap
agreement with XLCA or Affiliates of XLCA exercises a Triggered Enforcement
Right in respect of such credit default swap as a result of the occurrence of
an event described in clauses (A) through (E) or (H) (but solely with respect
to clauses (A) through (E)), and the CDS Counterparties representing the
Minimum Consenting CDS Counterparty Restructuring Threshold so elect in
writing, this Section 6.10(b) shall no longer apply to any CDS
Counterparty; provided, further that this sentence shall not
apply with respect to any such Triggered Enforcement Right (x) withdrawn by
such counterparty or deemed ineffective by a Governmental Authority within five
(5) Business Days or (y) if the current payment obligation of the SCA Parties
arising from the exercise of such Triggered Enforcement Right does not exceed
$35 million with respect to any given counterparty. The SCA Parties shall give
notice to the CDS Counterparties promptly after receiving notice of the
exercise of a Triggered Enforcement Right. 


                    
(c) Subsequent to the date hereof and until the earlier of (i) Closing or (ii)
the termination of this Agreement pursuant to Section 8.01, the XL
Parties will not exercise any Triggered Enforcement Rights to the extent
triggered as a result of the fact that any of the SCA Parties or any of their
Affiliates (A) is or is becoming insolvent (either because its financial
condition is such that the sum of its debts is greater than the fair market
value of its assets or because the fair saleable value of its assets is less
than the amount required to pay its probable liabilities on its existing debts
as they mature), (B) has or will have unreasonably small capital with which to
engage in its business and (C) has or will have incurred debts beyond its
ability to pay as they become due, (D) does not have or will not have an excess
of required reserves and other liabilities over admitted assets, (E) has or
will have insufficient assets to reinsure all outstanding risks with other
solvent authorized assuming insurers after paying all accrued claims owed, (F)
has a credit rating that has been downgraded or withdrawn by any rating agency,
or has sold credit protection or provided a guarantee with respect to an
asset-backed security or other reference obligation and the credit rating with
respect to such asset-backed security or other reference obligation has been
downgraded or withdrawn by any rating agency, (G) is a party to an agreement
with or for the benefit of a CDS Counterparty where a cross-default or
termination event has occurred or to the extent it results from the occurrence
of an event described in clauses 


-39-






(A) through
(F), or (H) has admitted in writing to any set of circumstances described in
clauses (A) through (G). 


                    
(d) For the avoidance of doubt, nothing herein shall restrict or impair the
exercise of Triggered Enforcement Rights by any CDS Counterparty or by any XL
Party in the event that any of the SCA Parties or any of their Affiliates
institutes or has instituted against it a proceeding relating to its
insolvency, bankruptcy, rehabilitation, liquidation, or reorganization under
any bankruptcy or insolvency Law or other similar Law affecting creditors’
rights, or has a petition presented relating to its winding-up, rehabilitation,
insolvency, bankruptcy, reorganization or liquidation, regardless of whether or
not such proceeding or petition (i) results in a judgment of insolvency or
bankruptcy or the entry of an order against it relating to any rehabilitation,
insolvency, bankruptcy, reorganization or liquidation or (ii) is not dismissed,
discharged, stayed or restrained. Further, for the avoidance of doubt, the CDS
Counterparties may submit claims on account of their credit default swaps,
policies or other agreements with any SCA Party to the SCA Parties as they
become due in the ordinary course, other than claims subject to forbearance
pursuant to Section 6.10(b). 


                    Section
6.11 Control of Litigation and Cooperation. (a) As between the SCA
Parties and the XL Parties, the XL Parties shall have the right (but not the
obligation) to control and direct, through counsel of its own choosing, the
defense and settlement of any Action against any SCA Party brought by any Person
that challenges the validity or enforceability of this Agreement or any
Ancillary Agreement, including any fraudulent conveyance Action or any other
Action under any bankruptcy or insolvency Law or other similar Law affecting
creditors’ rights (a “Challenging Action”). The SCA Parties and the XL
Parties shall promptly provide written notice to each other and the CDS
Counterparties upon becoming aware of any Challenging Action or threatened
Challenging Action. Subject to the first sentence of this Section 6.11(a),
the SCA Parties shall be entitled to participate fully in the defense of such
Challenging Action with internal counsel or with outside counsel (at the SCA
Parties’ own expense). 


                    
(b) The SCA Parties shall actively and in good faith reasonably cooperate in
any defense of a Challenging Action controlled by the XL Parties. Such
cooperation by the SCA Parties shall include (i) providing to the XL Parties,
upon their reasonable request, all documents and information necessary to, or
which could assist in, the defense, appeal or settlement of any such
Challenging Action, (ii) making the SCA Parties’ employees (and using its
commercially reasonable efforts to make the SCA Parties’ former employees) and
representatives available to be interviewed by the XL Parties upon reasonable
notice and at reasonable times and (iii) offering truthful deposition and trial
testimony upon the request of the XL Parties. 


                    
(c) The XL Parties and the SCA Parties shall actively and in good faith
reasonably cooperate in the defense of any third-party Actions other than
Challenging Actions brought or made against any such Party relating to the
subject matter of, or any Transactions consummated or to be consummated under,
this Agreement or any Ancillary Agreement. Such cooperation shall include (i)
providing to any such Party against which any such Action is made, upon such
Party’s reasonable request, all documents and information necessary to, or
which could assist in, the defense, appeal or settlement of any such Action,
(ii) making its employees (and using its commercially reasonable efforts to
make its former employees) and representatives 


-40-






available to
be interviewed by the Party against which any such Action is made upon reasonable
notice and at reasonable times, (iii) offering truthful deposition and trial
testimony upon the request of the Party against which any such Action is made
and (iv) otherwise consulting with the Party against which any such Action is
made and, to the extent the Action is made against more than one Party,
coordinating, to the extent feasible, the handling and defense of any such
Action; provided, however, that nothing herein shall require
disclosure by any such Party of any information subject to the attorney-client
privilege or in conflict with any contractual confidentiality restriction to
which such Party is bound, except when a protective order issued by a
Governmental Authority would reasonably ensure Confidentiality of the
disclosed. 


                    Section
6.12 CDS Counterparty Restructuring. Following the Closing Date (except
to the extent the Allocated Funds, as defined below, are paid to or for the
benefit of the CDS Counterparties pursuant to clause (i) or (ii) of this Section
6.12), XLCA shall segregate and hold an aggregate amount of Eight Hundred
and Twenty Million Dollars ($820,000,000) in cash (together with any SCA Share
Sale Proceeds and the premiums or other payments described in the last sentence
of this Section 6.12) separately in an interest bearing account or
otherwise invested as may be agreed in writing between the SCA Parties and the
Required Consenting CDS Counterparties (together with any interest earned
thereon, the “Allocated Funds”), it being understood that such interest bearing
account or other investment vehicle described in this sentence will be
maintained at Wilmington Trust Company, or, if maintained with a CDS
Counterparty or an Affiliate of a CDS Counterparty, such CDS Counterparty shall
have waived in writing its rights of set-off with respect to, and any security
interest or other lien on, the Allocated Funds, solely for purposes of (i)
commuting, terminating, amending and/or otherwise restructuring, as applicable,
existing agreements (a “CDS Counterparty Restructuring”) pursuant to an
agreement among the applicable SCA Parties and CDS Counterparties representing
not less than the Minimum Consenting CDS Counterparty Restructuring Threshold
and (ii) after October 15, 2008, the payment of any actual claims or losses on
existing agreements and insurance policies issued to or for the benefit of CDS
Counterparties and, it being understood that, such funds shall not be used for
any other purpose, except that, in the event that XLCA becomes subject to a
rehabilitation or liquidation proceeding, the Allocated Funds shall no longer
be separately held or segregated or limited in use to the purpose stated above
and shall be part of the general assets of XLCA. XLCA shall provide quarterly
reports to the CDS Counterparties setting forth an accounting, in reasonable
detail, with respect to the Allocated Funds and any investments maintained
therein; provided, that nothing in this Section 6.12, including
the creation of the Allocated Funds, shall (i) in any way limit the rights or
claims of the CDS Counterparties, the liabilities of the SCA Parties in respect
of such claims, or the rights of the CDS Counterparties in respect of other
assets of the SCA Parties or (ii) constitute a waiver of any defense the SCA
Parties may have with respect to any such claims or liabilities.
Notwithstanding anything else herein, no CDS Counterparty has any obligation to
participate in the CDS Counterparty Restructuring, including, for the avoidance
of doubt, commuting, terminating, amending and/or otherwise restructuring, as
applicable, existing agreements. The premiums or other payments that a CDS
Counterparty makes in respect of its credit default swap agreements with XLCA
or Affiliates of XLCA during the period that such CDS Counterparty forbears
from exercising any Triggered Enforcement Right under such credit default swap
pursuant to Section 6.10(b) shall be included in the Allocated Funds.
After the Closing, the SCA Parties and the CDS Counterparties will negotiate in
good faith in an effort to reach agreement 


-41-






on a CDS
Counterparty Restructuring on or prior to October 15, 2008 that is fair and
equitable to both the SCA Parties and the CDS Counterparties. 


                    Section
6.13 Restriction on Commutations. Until October 15, 2008, the SCA
Parties shall not effect any commutations, settlements, restructurings or
terminations of policies or contracts not expressly contemplated by this
Agreement that involve the payment of any consideration by the SCA Parties,
without the consent of CDS Counterparties representing the Minimum Consenting
CDS Counterparty Restructuring Threshold, provided, that during such
period the SCA Parties may effect any action (including commutations) related
to the EIB Policies in accordance with Section 6.05, may consummate the
Financial Security Commutations, and may effect commutations, settlements,
restructurings and terminations (i) that involve cash payments not in excess of
an aggregate amount set forth in a letter delivered concurrently herewith to
the XL Parties and the CDS Financial Advisor during such period (of which (A)
an amount set forth in such letter may not be used for the commutation,
settlement, restructuring or termination of any policy or contract other than
JeffCo Policies and (B) no more than an amount set forth in such letter may be
for CDS policies and contracts); provided, however, that no such
commutation, settlement, restructuring or termination (other than with respect
to JeffCo Policies) may involve payment by the SCA Parties of cash, debt or
other consideration in excess of the reserves (including case and unearned
premium reserves) related to the risks being commuted; (ii) of the reinsurance
contracts provided in Schedule 2.04 (in accordance with Section 2.04);
(iii) that are settlements required pursuant to the express terms of insurance
policies and contracts of the SCA Parties; and (iv) that are for cash
collateralization of up to $24 million of letters of credit issued under the
Credit Agreement; provided, that such outstanding letters of credit
shall be extended for one year; provided, further, that until
October 15, 2008, prior to effecting any commutation, settlement, restructuring
or termination permitted under Section 6.13(i) or (ii): (w) XLCA shall
provide the CDS Financial Advisor reasonable advance notice and such
information as may be reasonably necessary to evaluate such proposed
commutation, settlement, restructuring or termination (which advance notice and
information shall be supplied to the CDS Financial Advisor not later than five
(5) Business Days prior to consideration of such commutation, settlement,
restructuring or termination by XLCA’s board of directors as provided below);
(x) at the option of the CDS Financial Advisor, and no later than five (5)
Business Days after being provided such notice and information by XLCA
regarding such proposed commutation, settlement, restructuring or termination,
the CDS Financial Advisor may provide XLCA with a written response to such
proposed commutation, settlement, restructuring or termination; (y) XLCA shall
provide such written response to its board of directors for consideration at
the XLCA board of directors meeting at which such commutation, settlement,
restructuring or termination will be presented for approval; and (z) will obtain
the approval of the XLCA board of directors for such commutation, settlement,
restructuring or termination after so providing such response to the board. For
the avoidance of doubt, no such commutation, settlement, restructuring or
amendment shall involve the payment of Allocated Funds except to the extent
provided in Section 6.12. 


                    Section
6.14 Treatment of Public Finance Business. The SCA Parties and the CDS
Counterparties understand that the approval by the NYID of any CDS Counterparty
Restructuring will require addressing XLCA’s public finance business to the
satisfaction of the NYID. The SCA Parties and the CDS Counterparties hereby
agree to negotiate in good faith in an effort to reach an agreement on the
appropriate treatment of such public finance business in 


-42-






connection
with the CDS Counterparty Restructuring (it being understood that failure to
reach such agreement, notwithstanding good faith negotiations, shall not
constitute a default hereunder or give rise to any cause of action against any
Party hereto). Without the consent of CDS Counterparties representing the
Minimum Consenting CDS Counterparty Restructuring Threshold, the SCA Parties
shall not transfer or otherwise dispose of such public finance business prior to
October 15, 2008, except for reinsurance cessions for risk management purposes
not intended to effectuate a transfer of the business in whole or any
substantial part or to the extent it is agreed between the NYID and the SCA
Parties that to transfer such public finance business is necessary and/or in
the public interest (as to which the CDS Counterparties reserve all rights to
challenge or object). 


                    Section
6.15 Further Action. Subject to the next sentence, each of the Parties
shall use its reasonable best efforts to take, or cause to be taken, all
appropriate action, to do or cause to be done all things necessary, proper or
advisable under applicable Law, and to execute and deliver such documents and
other papers, as may be required to carry out the provisions of this Agreement
and the Ancillary Agreements to which it is a party and to consummate and make
effective the Transactions reasonably as requested by the Parties, including
the matters contemplated by Section 6.18. Notwithstanding anything to
the contrary herein or otherwise, the Parties agree that the XL Parties have
(i) complete and sole discretion whether or not any XL Public Offering will be
completed and (ii) no obligation to the SCA Parties or the CDS Counterparties
to complete any XL Public Offering. 


                    Section
6.16 Resignation of XL Nominees. The XL Parties shall use their
reasonable best efforts to cause those four members of the SCA Board of
Directors nominated by any of the XL Parties to resign from SCA’s Board of
Directors effective as of the Closing. From and after the Closing, XL shall
refrain from exercising any rights granted to it under SCA’s Bye-Laws. 


                    Section
6.17 Disclosure Schedules; Supplementation and Amendment of Schedules.
The SCA Parties may, at their option, include in the Schedules items that are
not material in order to avoid any misunderstanding, and such inclusion, or any
references to dollar amounts, shall not be deemed to be an acknowledgement or
representation that such items are material, to establish any standard of
materiality or to define further the meaning of such terms for purposes of this
Agreement. Information disclosed in the Schedules shall constitute a disclosure
for all purposes under this Agreement notwithstanding any reference to a
specific section, and all such information shall be deemed to qualify the
entire Agreement and not just such section. From time to time, prior to the
Closing, the SCA Parties shall have the right to supplement or amend the
Schedules with respect to any matter arising hereafter or discovered after the
delivery of the Schedules pursuant to this Agreement. No such supplement or
amendment shall have any effect on the satisfaction of the condition to closing
set forth in Section 7.01(a); provided, however, if the
Closing shall occur, then the Parties (other than the SCA Parties) shall be
deemed to have waived any right or claim pursuant to the terms of this
Agreement or otherwise, including pursuant to Section 9.11 hereof, with
respect to any and all matters disclosed pursuant to any such supplement or
amendment prior to the Closing. 


                    Section
6.18 SCA Shareholder Entity. The SCA Parties and the CDS Counterparties
agree to cause the SCA Shareholder Entity to be promptly created, and in no 


-43-






event later
than ten (10) days after the Closing, by taking all actions reasonably
necessary to cause a trustee to enter into the Declaration of Trust. SCA and
the SCA Shareholder Entity shall enter into the SCA Shareholder Entity
Agreement and the SCA Registration Rights Agreement concurrent with or promptly
after creation of the SCA Shareholder Entity. If the XL Owned SCA Common Shares
are transferred to the Escrow Agent pursuant to Section 2.10, then SCA
and XLCA shall promptly, but in no event later than two (2) Business Days
following the satisfaction of the SCA Shareholder Entity Formation Conditions,
deliver a written notice to the Escrow Agent conforming to the requirements of
the Escrow Agreement directing the Escrow Agreement to release all of the XL
Owned SCA Common Shares (together with the related certificates and stock
powers) to the SCA Shareholder Entity. The vacancies on the board of directors
of SCA created by the resignations as of the Closing of the four directors of
SCA nominated by the XL Parties shall be filled by appointment of the initial
nominees of the SCA Shareholder Entity to the board of directors of SCA in
accordance with the SCA Shareholder Entity Agreement. Each of the SCA Parties
and the Required Consenting CDS Counterparties will use their reasonable best
efforts to take all appropriate action and will cooperate fully with each other
and their respective officers, directors, employees, agents, counsel,
accountants and other designees in connection with any steps required to be
taken to satisfy each of the SCA Shareholder Entity Formation Conditions.
Furthermore, the SCA Parties and the CDS Counterparties shall work together in
good faith to achieve the goals of the SCA Parties and the CDS Counterparties
as set forth in this Agreement and any Ancillary Agreement to which an SCA
Party and a CDS Counterparty is a party, and those described in this Section
6.18. Notwithstanding Sections 9.07 and 9.08, the SCA
Shareholder Entity Formation Conditions may be amended and modified from time
to time upon the written agreement of SCA and the Required Consenting CDS
Counterparties. 


                    Section
6.19 Portfolio Trust. The SCA Parties will direct each portfolio trust
that is a party to a credit default swap agreement with a CDS Counterparty to
execute a joinder agreement in the form attached hereto as Exhibit 1.01(c)
and become a Party to this Agreement promptly upon receiving notice that such
CDS Counterparty became a Party, and in no event later than the earlier of (i)
the Closing or (ii) three (3) Business Days after such CDS Counterparty became
a Party. 


                    Section
6.20 BlackRock. The SCA Parties shall reasonably cooperate with
BlackRock, including providing BlackRock with reasonable access to information
and reasonable access to, and will request reasonable cooperation from,
personnel of the SCA Parties, in order to permit BlackRock to complete its work
as early in the month of August 2008 as is reasonably practicable. 


                    Section
6.21 XLFA Merger. As soon as practicable following the later of (i) the
Closing and (ii) the occurrence of the XLFA Redomestication, XLFA as continued
in Delaware or its successor pursuant to the XLFA Redomestication shall merge
into and with XLCA. 


                    Section
6.22 Collipulli Temuco and Banco de Brasil Policies. (a) (i) The SCA
Parties will provide the XL Parties with copies of all documents, files, books
and records relating to either the Collipulli Temuco Policy or the Banco de
Brasil Policy as reasonably requested by the XL Parties from time to time, and
reasonable access to, and will request reasonable cooperation from, upon
reasonable notice and during normal business hours, all employees of the 


-44-






SCA
Parties whose employment responsibilities are related to either the Collipulli
Temuco Policy or the Banco de Brasil Policy. 


	
 

	
 


	
 

	
          (ii)
 The XL Parties will provide the SCA Parties with copies of all documents,
 files, books and records relating to either the Collipulli Temuco Policy or
 the Banco de Brasil Policy as reasonably requested by the SCA Parties from
 time to time, and reasonable access to, and will request reasonable
 cooperation from, upon reasonable notice and during normal business hours,
 all employees of the XL Parties whose employment responsibilities are related
 to either the Collipulli Temuco Policy or the Banco de Brasil Policy. 





                    (b)
The XL Parties will reasonably cooperate with the SCA Parties in connection
with the remediation of the Collipulli Temuco Policy and will cause XLI to
issue a replacement policy for the Collipulli Temuco Policy to the new
liquidity provider on substantially the same terms as the XLI policy currently
in force. 


                    (c)
Upon written direction of the SCA Parties, and only upon written direction of
the SCA Parties, the XL Parties will exercise any right, power or authority
provided to it with respect to the Collipulli Temuco transaction, including the
giving of consents, providing appropriate waivers and taking any other actions
related to the performance and enforcement of its rights under the financing
documents; provided, that the XL Parties are not required to take any
action that will be in violation of any Law, and may take any action required
by, or necessary to be in compliance with, any applicable Law. 


                    Section
6.23 XLFA Redomestication. Prior to the Closing, the SCA Parties shall
pre-clear the certificate that will effect the XLFA Redomestication with the
Delaware Secretary of State and provide evidence of such pre-clearance to the
other parties hereto. At the Closing, after XLFA receives the Cash
Consideration Amount to be received by it under Section 2.08, the SCA
Parties shall cause such pre-cleared certificate to be filed with the Secretary
of State of Delaware, thereby effecting the XLFA Redomestication. 


ARTICLE VII


CONDITIONS TO CLOSING


                    Section
7.01 Conditions to Obligations of the SCA Parties. The obligations of
the SCA Parties to consummate the Transactions are subject to the fulfillment
or written waiver, at or prior to the Closing, of each of the following
conditions: 


                    (a)
Representations, Warranties and Covenants. (i) The representations and
warranties of the XL Parties contained in this Agreement (A) that are not
qualified by “materiality” will have been true and correct in all material
respects when made and will be true and correct in all material respects as of
the Closing with the same force and effect as if made as of the Closing, and
(B) that are qualified by “materiality” will have been true and correct when
made and will be true and correct as of the Closing with the same force and
effect as if made as of the Closing, except to the extent such representations
and warranties are as of another date, in which case such representations and
warranties will be true and correct as of that date, (ii) the 


-45-






covenants and
agreements contained in this Agreement to be complied with by the XL Parties on
or before the Closing will have been complied with in all material respects,
(iii) the representations and warranties of the CDS Counterparties contained in
this Agreement (A) that are not qualified by “materiality” will have been true and
correct in all material respects when made and will be true and correct in all
material respects as of the Closing with the same force and effect as if made
as of the Closing, and (B) that are qualified by “materiality” will have been
true and correct when made and will be true and correct as of the Closing with
the same force and effect as if made as of the Closing, except to the extent
such representations and warranties are as of another date, in which case such
representations and warranties will be true and correct as of that date, and
(iv) the covenants and agreements contained in this Agreement to be complied
with by the CDS Counterparties on or before the Closing will have been complied
with in all material respects; 


                    (b)
No Proceeding or Litigation. No Action will have been commenced by any
Governmental Authority against any of the Parties seeking to restrain or
materially and adversely alter the Transactions which, in the reasonable, good
faith determination of the Board of Directors of each of the SCA Parties, after
consulting with legal counsel, is likely to render it impossible or unlawful to
consummate such transactions; 


                    (c)
Outside Date. 10:00 a.m., New York time, on August 5, 2008, shall have
passed; 


                    (d)
Closing Deliveries. All closing documents required to be delivered under
Section 2.08 and Section 2.09 hereof shall have been delivered; 


                    (e)
Financial Security Commutations. The Financial Security Commutations shall
have been consummated prior to or simultaneously with the Closing; 


                    (f)
MLI CDS Agreements. Termination of the MLI CDS Agreements will have
occurred prior to, or will occur simultaneously with, the Closing; 


                    (g)
Effectiveness of Board Resignations. All four directors of SCA
designated by the XL Parties shall have tendered their resignations effective
as of the Closing; 


                    (h)
Consents. None of the consents listed in Section 3.03 of the SCA
Parties’ Disclosure Schedule or Section 4.03 of the XL Parties’
Disclosure Schedule have been withdrawn, rescinded, revised, amended or altered
in any way; and 


                    (i)
Officers Certificate. Receipt of a certificate simultaneously with the
Closing of a duly authorized officer of each of the XL Parties certifying in
respect of such XL Party as to the matters set forth in Sections 7.01(a)(i)
and 7.01(a)(ii). 


                    Section
7.02 Conditions to Obligations of the XL Parties. The obligations of the
XL Parties to consummate the Transactions are subject to the fulfillment or
written waiver, at or prior to the Closing, of each of the following
conditions: 


                    (a)
Representations, Warranties and Covenants. (i) The representations and
warranties of the SCA Parties contained in this Agreement (A) that are not
qualified by 


-46-






“materiality”
will have been true and correct in all material respects when made and will be
true and correct in all material respects as of the Closing with the same force
and effect as if made as of the Closing, and (B) that are qualified by
“materiality” will have been true and correct when made and will be true and
correct as of the Closing with the same force and effect as if made as of the
Closing, except to the extent such representations and warranties are as of
another date, in which case such representations and warranties will be true
and correct as of that date, (ii) the covenants and agreements contained in
this Agreement to be complied with by the SCA Parties on or before the Closing
will have been complied with in all material respects, (iii) the
representations and warranties of the CDS Counterparties contained in this
Agreement (A) that are not qualified by “materiality” will have been true and
correct in all material respects when made and will be true and correct in all
material respects as of the Closing with the same force and effect as if made
as of the Closing, and (B) that are qualified by “materiality” will have been
true and correct when made and will be true and correct as of the Closing with
the same force and effect as if made as of the Closing, except to the extent
such representations and warranties are as of another date, in which case such
representations and warranties will be true and correct as of that date, and
(iv) the covenants and agreements contained in this Agreement to be complied
with by the CDS Counterparties on or before the Closing will have been complied
with in all material respects; 


                    (b)
Financial Security Commutations. The Financial Security Commutations
shall have been consummated prior to or simultaneously with the Closing; 


                    (c)
No Proceeding or Litigation. No Action will have been commenced by any
Governmental Authority against any of the Parties seeking to restrain or
materially and adversely alter the Transactions which, in the reasonable, good
faith determination of the Board of Directors of each of the XL Parties, after
consulting with legal counsel, is likely to render it impossible or unlawful to
consummate such transactions; 


                    (d)
Consents. None of the consents listed in Section 3.03 of the SCA
Parties’ Disclosure Schedule or Section 4.03 of the XL Parties’
Disclosure Schedule have been withdrawn, rescinded, revised, amended or altered
in any way; 


                    (e)
Closing Deliveries. The closing documents required to be delivered under
Section 2.08 and Section 2.09 hereof shall have been delivered; 


                    (f)
MLI CDS Agreements. Termination of the MLI CDS Agreements will have
occurred prior to, or will occur simultaneously with, the Closing; and 


                    (g)
Officers Certificate. Receipt of a certificate simultaneously with the
Closing of a duly authorized officer of each of the SCA Parties certifying in
respect of such SCA Party as to the matters set forth in Sections 7.02(a)(i)
and 7.02(a)(ii). 


                    Section
7.03 Conditions to Obligations of the CDS Counterparties. The
obligations of each CDS Counterparty to consummate the Transactions are subject
to the fulfillment or written waiver, at or prior to the Closing, of each of
the following conditions: 


                    (a)
Representations, Warranties and Covenants. (i) The representations and
warranties of the SCA Parties contained in this Agreement (A) that are not
qualified by 


-47-






“materiality” will
have been true and correct in all material respects when made and will be true
and correct in all material respects as of the Closing with the same force and
effect as if made as of the Closing, and (B) that are qualified by
“materiality” will have been true and correct when made and will be true and
correct as of the Closing with the same force and effect as if made as of the
Closing, except to the extent such representations and warranties are as of
another date, in which case such representations and warranties will be true
and correct as of that date, (ii) the covenants and agreements contained in
this Agreement to be complied with by the SCA Parties on or before the Closing
will have been complied with in all material respects, (iii) the representations
and warranties of the XL Parties contained in this Agreement (A) that are not
qualified by “materiality” will have been true and correct in all material
respects when made and will be true and correct in all material respects as of
the Closing with the same force and effect as if made as of the Closing, and
(B) that are qualified by “materiality” will have been true and correct when
made and will be true and correct as of the Closing with the same force and
effect as if made as of the Closing, except to the extent such representations
and warranties are as of another date, in which case such representations and
warranties will be true and correct as of that date, and (iv) the covenants and
agreements contained in this Agreement to be complied with by the XL Parties on
or before the Closing will have been complied with in all material respects; 


                    (b)
No Proceeding or Litigation. No Action will have been commenced by any
Governmental Authority against any of the Parties seeking to restrain or
materially and adversely alter the Transactions which, in the reasonable, good
faith determination of the CDS Counterparties, after consulting with legal
counsel, is likely to render it impossible or unlawful to consummate such
Transactions; 


                    (c)
Effectiveness of Board Resignations. All four directors of SCA
designated by the XL Parties shall have tendered their resignations effective
as of the Closing; and 


                    (d)
Closing Deliveries. The closing documents required to be delivered under
Section 2.08 and Section 2.09 hereof shall have been delivered. 


                    Section
7.04 Frustration of Closing Conditions. None of the XL Parties, the SCA
Parties or any CDS Counterparty may rely on the failure of any condition set
forth in Section 7.01, Section 7.02 or Section 7.03, as
the case may be, to be satisfied if such failure was primarily caused by such
Party’s or Parties’ breach of any provision of this Agreement or failure to use
its or their reasonable best efforts to consummate the Transactions in
accordance with the terms of this Agreement. 


ARTICLE VIII


TERMINATION AND WITHDRAWAL


                    Section
8.01 Termination. This Agreement may be terminated at any time prior to
the Closing: 


                    (a)
by the XL Parties, provided, that they are not in breach of this
Agreement, if between the date hereof and the Closing Date if: (i) any of the
representations and warranties of any of the SCA Parties or the CDS
Counterparties contained in this Agreement, (A) that are 


-48-






not qualified
by “materiality,” were not true and correct in all material respects when made,
or, (B) that are qualified by “materiality,” were not true and correct when
made; (ii) any of the SCA Parties or the CDS Counterparties failed to comply in
any material respect with the covenants or agreements contained in this
Agreement to be complied with by it; or (iii) any of the SCA Parties makes a
general assignment for the benefit of its creditors or any proceeding is
instituted by or against any of the SCA Parties seeking to adjudicate any one
of them as bankrupt or insolvent, seeking the liquidation, winding up or
reorganization of any one of them, or seeking any arrangement, adjustment,
protection, relief or composition of its debts under any Law relating to
bankruptcy, insolvency, rehabilitation or reorganization as to any one of them;
provided, however, that prior to termination for any breach of
this Agreement described in the preceding subsection (i) or (ii), the XL
Parties must provide written notice of such breach to the SCA Parties and such
breach must remain outstanding without material cure for fifteen (15) days
after delivery of such notice; 


                    (b)
by the SCA Parties, provided, that they are not in breach of this
Agreement, if between the date hereof and the Closing Date if: (i) any of the
representations and warranties of any of the XL Parties or the CDS
Counterparties contained in this Agreement, (A) that are not qualified by
“materiality,” were not true and correct in all material respects when made,
or, (B) that are qualified by “materiality,” were not true and correct when
made; (ii) any of the XL Parties or the CDS Counterparties failed to comply in
any material respect with the covenants or agreements contained in this
Agreement to be complied with by it; or (iii) any of the XL Parties makes a
general assignment for the benefit of its creditors or any proceeding is
instituted by or against any XL Party seeking to adjudicate any one of them as
bankrupt or insolvent, seeking the liquidation, winding up or reorganization of
any one of them, or seeking any arrangement, adjustment, protection, relief or
composition of its debts under any Law relating to bankruptcy, insolvency,
rehabilitation or reorganization as to any one of them; provided, however,
that prior to termination for any breach of this Agreement described in the
preceding subsection (i) or (ii), the SCA Parties must provide
written notice of such breach to the XL Parties and such breach must remain
outstanding without material cure for fifteen (15) days after delivery of such
notice; 


                    (c)
by the SCA Parties, as a group, or the XL Parties, as a group, if the Closing
shall not have occurred on or prior to August 15, 2008; provided, however,
that the right to terminate this Agreement under this Section 8.01(c)
shall not be available to the SCA Parties, as a group, or the XL Parties, as a
group, if failure to fulfill any obligation under this Agreement by any member
of such group shall have been the cause of, or shall have resulted in, the
failure of the Closing to occur on or prior to such date; 


                    (d)
by any Party, in the event that any Governmental Authority shall have issued an
order, decree or ruling or taken any other action restraining, enjoining or
otherwise prohibiting the Transactions, and such order, decree, ruling or other
action shall have become final and non-appealable; or 


                    (e)
by the mutual written consent of the SCA Parties and the XL Parties. 


                    Section
8.02 Effect of Termination. In the event of termination of this
Agreement as provided in Section 8.01, this Agreement shall forthwith
become void and there 


-49-






shall be no
continuing obligations on the part of any Party hereto except (a) as set forth
in Sections 6.01, 9.01, 9.11, 9.12, 9.13 and
9.14, and (b) that nothing herein shall relieve any Party from liability
for any breach of this Agreement prior to its termination. 


                    Section
8.03 CDS Counterparty Withdrawal. If the Closing does not take place on
or prior to August 15, 2008, a CDS Counterparty may withdraw from this
Agreement and such CDS Counterparty shall have no obligations or rights
hereunder or in connection with the Transactions (including under Sections
2.05(c) and 6.10(b) and notwithstanding any provision to the
contrary in Section 9.08 or otherwise), by providing notice of such
withdrawal to all Parties by August 20, 2008, and after such withdrawal, such
CDS Counterparty will no longer be deemed to be a “CDS Counterparty” for
purposes of this Agreement and any Ancillary Agreement. 


ARTICLE IX


GENERAL PROVISIONS


                    Section
9.01 Expenses. Except as otherwise specified in this Agreement or any
other written agreement, all costs and expenses, including fees and
disbursements of counsel, financial advisors and accountants, incurred in
connection with this Agreement and the Transactions, shall be paid by the Party
incurring such costs and expenses, whether or not the Closing shall have
occurred. 


                    Section
9.02 Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given or made (and
shall be deemed to have been duly given or made upon receipt) by delivery in
person, by an internationally recognized overnight courier service, by
facsimile or electronic mail (upon electronic confirmation of delivery), or by
registered or certified mail (postage prepaid, return receipt requested), to
the respective Parties at the following addresses (or at such other address for
a Party as shall be specified in a notice given in accordance with this Section
9.02): 


          (a)
if to any of the SCA Parties: 


	
 

	
 

	
 


	
Address:

	
 

	
c/o XL
 Capital Assurance Inc.


	
 

	
 

	
1221 Avenue
 of the Americas


	
 

	
 

	
New York, NY
 10020-1001


	
Facsimile:

	
 

	
212.478.3579


	
Electronic
 Mail:

	
 

	
susan.comparato@scafg.com


	
Attention:

	
 

	
Susan
 Comparato, General Counsel


	
 

	
 

	
 


	
with a copy
 to:

	
 

	
 


	
 

	
 

	
 


	
Address:

	
 

	
Weil,
 Gotshal & Manges


	
 

	
 

	
767 Fifth
 Avenue


	
 

	
 

	
New York, NY
 10153


	
Facsimile:

	
 

	
212.310.8007


	
Electronic
 Mail:

	
 

	
gary.holtzer@weil.com





-50-






	
 

	
 

	
 


	
Attention:

	
 

	
Gary T.
 Holtzer


	
 

	
 

	
 





                    (b)
if to any of the XL Parties:


	
 

	
 

	
 


	
Address:

	
 

	
c/o XL
 Capital Ltd


	
 

	
 

	
XL House


	
 

	
 

	
One
 Bermudiana Road


	
 

	
 

	
Hamilton


	
 

	
 

	
Bermuda, HM
 11


	
Facsimile:

	
 

	
441.294.7307


	
Electronic
 Mail:

	
 

	
kirstin.gould@xlgroup.com


	
Attention:

	
 

	
Kirstin
 Gould, General Counsel


	
 

	
 

	
 


	
with a copy
 to:

	
 

	
 


	
 

	
 

	
 


	
Address:

	
 

	
Cadwalader,
 Wickersham & Taft LLP


	
 

	
 

	
One World
 Financial Center


	
 

	
 

	
New York, NY
 10281


	
Facsimile:

	
 

	
212.504.6666


	
Electronic
 Mail:

	
 

	
louis.bevilacqua@cwt.com


	
Attention:

	
 

	
Louis J.
 Bevilacqua






                    (c)
if to the CDS Counterparties, to the address, facsimile or electronic mail
address listed on Schedule 9.02 hereto, which shall be kept on file by XL, and updated by
XL from time to time (with copies of updates provided to the SCA Parties and
Davis Polk & Wardwell at the address listed below) based on the execution
and delivery of joinder agreements by additional CDS Counterparties in
accordance with Section 9.04 below:  


	
 

	
 

	
 


	
with a copy
 to:

	
 

	
 


	
 

	
 

	
 


	
Address:

	
 

	
Davis Polk
 & Wardwell


	
 

	
 

	
450
 Lexington Avenue


	
 

	
 

	
New York, NY
 10017


	
Facsimile:

	
 

	
212.450.3092


	
Electronic
 Mail:

	
 

	
donald.bernstein@dpw.com


	
Attention:

	
 

	
Donald S.
 Bernstein





                    Section
9.03 Severability. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced under any Law or public policy,
all other terms and provisions of this Agreement shall nevertheless remain in
full force and effect for so long as the economic or legal substance of the
Transactions is not affected in any manner materially adverse to either Party
hereto. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the Parties shall negotiate in good
faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in an 


-51-






acceptable
manner so that the Transactions are consummated as originally contemplated to
the greatest extent possible. 


                    Section
9.04 Joinder of CDS Counterparties and Additional SCA Parties. Any
counterparty to a credit default swap agreement with XLCA or an Affiliate of
XLCA or any portfolio trust that is an Affiliate of XLCA may become a Party to
this Agreement prior to the Closing by executing a joinder agreement in the
form attached hereto as Exhibit 1.01(c). Upon execution and delivery of
each joinder agreement pursuant to its terms, each party will be deemed to be a
CDS Counterparty or an SCA Party (as applicable) for all purposes related
hereto and shall be deemed, without limitation, to have made the releases set
forth in Section 2.05(c) hereof (with respect to the CDS Counterparties)
or in Section 2.05(a) hereof (with respect to the SCA Parties). 


                    Section
9.05 Entire Agreement. This Agreement and the Ancillary Agreements
constitute the entire agreement of the Parties with respect to the subject
matter hereof and thereof and supersede all prior agreements and undertakings,
both written and oral, between any of the Parties with respect to the subject
matter hereof and thereof. 


                    Section
9.06 Assignment. This Agreement may not be assigned by operation of Law
or otherwise without the express written consent of all Parties (which consent
may be granted or withheld in the sole discretion of each of the Parties) and
any such assignment or attempted assignment without such consent shall be void.




                    Section
9.07 Amendment. This Agreement may not be amended, altered, supplemented
or modified except (a) by an instrument in writing signed by, or on behalf of,
all Parties, or (b) by a waiver in accordance with Section 9.08; provided,
that, notwithstanding anything to the contrary in this Section 9.07 or
in Section 9.08 below, the following sections and definitions set forth in this Agreement
may not be amended, altered, supplemented, modified or waived without the
unanimous consent of the CDS Counterparties: the definitions of “XLFA
Redomestication,” “Minimum Consenting CDS Counterparty Restructuring Threshold”
and “Required Consenting CDS Counterparties,” and Sections 2.05, 2.06,
2.07(b), 2.10, 6.03, 6.04, 6.05, 6.06,
6.07, 6.10(b), 6.10(d), 6.12, 6.13, 6.14,
6.16, 6.18, 6.20, 6.21, 6.23, 9.07 and 9.08.  


                    Section
9.08 Waiver. Subject to the provisions in Section 9.07 above,
which provide that, notwithstanding anything to the contrary in Section 9.07
or this Section 9.08, the following sections and definitions set forth
in this Agreement may not be amended, altered, supplemented, modified or waived
without the unanimous consent of the CDS Counterparties: the definitions of
“XLFA Redomestication,” “Minimum Consenting CDS Counterparty Restructuring
Threshold” and “Required Consenting CDS Counterparties,” and Sections 2.05,
2.06, 2.07(b), 2.10, 6.03, 6.04, 6.05,
6.06, 6.07, 6.10(b), 6.10(d), 6.12, 6.13,
6.14, 6.16, 6.18, 6.20, 6.21, 6.23, 9.07
and 9.08, the SCA Parties, acting unanimously as a group, and the XL
Parties, acting unanimously as a group, may (a) extend the time for the
performance of any of the obligations that one or more members of another group
owes to one or more of its members, (b) waive any right that one or more of its
members may have due to inaccuracies in the representations and warranties made
by any member of another group or contained in any Transaction Document or (c)
waive compliance with any of the agreements of any member of another group,
solely as they relate to the members of such waiving group, or conditions to
the 


-52-






obligations of
the members of such waiving group contained herein. Any such extension, waiver
or amendment shall be valid only if set forth in an instrument in writing
signed by all of the SCA Parties and XL Parties to be bound thereby. Any such
extension, waiver or amendment will promptly be provided to all CDS
Counterparties in writing and, if any CDS Counterparty objects to such
extension, waiver or amendment, such CDS Counterparty will have five (5)
Business Days from receipt of such extension, waiver or amendment to provide
written notice to all other Parties that it intends to withdraw from this
Agreement. If such CDS Counterparty provides such timely notice, it will be
deemed to have withdrawn as a Party to this Agreement on the date that such waiver,
extension or amendment becomes effective and the terms hereof shall have no
further force or effect with regard to such CDS Counterparty; provided,
that (i) any release made by any CDS Counterparty withdrawing as a party to
this Agreement pursuant to this Section 9.08 and any release made by any
SCA Party or any XL Party with respect to such withdrawing CDS Counterparty, in
each case to the extent such releases shall have become effective prior to the
time of such withdrawal, shall in each case remain in full force and effect
after such withdrawal, and (ii) following such withdrawal, subject to the
preceding clause (i), such withdrawing CDS Counterparty shall cease to
have any other obligations or rights hereunder or in connection with the
Transactions (including under Sections 2.05(c) and 6.10(b)), and after such
withdrawal, such CDS Counterparty will no longer be deemed to be a “CDS
Counterparty” for purposes of this Agreement or any Ancillary Agreement. If the
CDS Counterparty does not provide such timely notice, it shall be deemed to
have approved the waiver, extension or amendment. Any waiver of any term or
condition shall not be construed as a waiver of any subsequent breach or a
subsequent waiver of the same term or condition or as a waiver of any other
term or condition of this Agreement. The failure of any Party hereto to assert
any of its rights hereunder shall not constitute a waiver of any other rights.
All rights and remedies existing under this Agreement are cumulative to, and
not exclusive of, any rights or remedies otherwise available. 


                    Section
9.09 No Third-Party Beneficiaries. This Agreement shall be binding upon
and inure solely to the benefit of the Parties and, except as provided in Section
2.05, their respective successors and permitted assigns, and nothing
herein, express or implied, is intended to or shall confer upon any other
Person any legal or equitable right, benefit, remedy or right of action of any
nature whatsoever, arising directly or indirectly out of, based upon, or in any
way related to or in connection with this Agreement or the Ancillary
Agreements. 


                    Section
9.10 Rights and Remedies. Each Party acknowledges and agrees that each
Party would be irreparably damaged if any of the provisions of this Agreement
are not performed in accordance with their specific terms and that any material
breach of this Agreement by another Party could not be adequately compensated
by monetary damages alone. Accordingly, in addition to any other right or remedy
to which such Party may be entitled, at Law or in equity, it shall be entitled
to enforce any provision of this Agreement by a decree of specific performance
and to temporary, preliminary and permanent injunctive relief to prevent
breaches or threatened breaches of any of the provisions of this Agreement,
without posting any bond or other undertaking. For the avoidance of doubt, any
liability of any CDS Counterparty that may arise in connection with this
Agreement shall neither be joint nor joint and several with any other CDS
Counterparty. 


                    Section
9.11 Indemnification. (a) The XL Parties shall jointly and severally
indemnify and hold harmless each of the SCA Parties, and their respective
Subsidiaries, 


-53-






Affiliates,
officers, directors, employees, agents, successors and permitted assigns
(collectively, “SCA Indemnitees”), for and against any and all
liabilities, losses, damages, claims, costs, expenses, interest, awards,
judgments and penalties (including attorneys’ and consultants’ fees and
expenses) actually suffered or incurred (including any action, claim, suit or
other proceeding brought or otherwise initiated by any of them) (“Losses”)
by any such SCA Indemnitee arising out of or resulting from the breach of any
provision of this Agreement prior to Closing by any of the XL Parties. 


                    (b)
The SCA Parties shall jointly and severally indemnify and hold harmless each of
the XL Parties, and their respective Subsidiaries, Affiliates, officers,
directors, employees, agents, successors and permitted assigns (collectively, “XL
Indemnitees”), for and against any and all Losses incurred by any such XL
Indemnitee arising out of or resulting from (i) the breach of any provision of
this Agreement prior to Closing by any of the SCA Parties or (ii) any action
taken pursuant to the written direction of the SCA Parties under Section
6.22 or prohibited to be taken pursuant to Section 6.22. 


                    Section
9.12 No Survival. None of the representations and warranties other than
those contained in Sections 3.01 (other than as to enforceability for reasons
other than fraud, ultra vires
action, improper authorization, or failure to be duly organized, validly
existing or in good standing in any applicable jurisdiction), 3.02, 3.03,
4.01, 4.02, 4.03, 4.04, 4.05, 5.01, 5.02
and 5.03 shall survive the Closing. The representations and warranties
contained in Sections 3.01 (other than as to enforceability for reasons
other than fraud, ultra vires
action, improper authorization, or failure to be duly organized, validly
existing or in good standing in any applicable jurisdiction), 3.02, 3.03,
4.01, 4.02, 4.03, 4.04, 4.05, 5.01, 5.02
and 5.03 shall survive for the statute of limitations for contracts of
the nature of this Agreement. 


                    Section
9.13 Several Liability of the CDS Counterparties. For the avoidance of
doubt, the obligations of the CDS Counterparties under this Agreement shall be
several and not joint and several. 


                    Section
9.14 Governing Law and Jurisdiction. This Agreement shall be interpreted under
and governed by the Laws of the State of New York without giving effect to
conflicts of law provisions thereof. In the event that there is a dispute
between or among the Parties arising under this Agreement, other than with
respect to events arising under the 2001 Facultative Quota Share Commutation
Agreement or the Excess of Loss Commutation Agreement, the Parties (i) agree
that the exclusive forum to seek remedy shall be to institute a legal
proceeding in the courts of the State of New York located in the City and
County of New York, (ii) hereby expressly submit to the personal jurisdiction
and venue of such courts for the purposes thereof and expressly waive any claim
of lack of personal jurisdiction and improper venue and any claim that such
courts are an inconvenient forum and (iii) agree that the prevailing Parties
shall be entitled to recover their reasonable attorneys’ fees, costs and
disbursements from the other Parties (in addition to any other relief to which
the prevailing Parties may be entitled). Each Party hereby irrevocably consents
to the service of process of any of the aforementioned courts in any such suit,
action or proceeding by the mailing of copies thereof by registered or
certified mail, postage prepaid, to the address provided to the Parties in
accordance with Section 9.02, such service to become effective ten (10) days
after such mailing. 


-54-






                    Section
9.15 Waiver of Jury Trial. Each of the Parties hereby waives to the
fullest extent permitted by applicable Law any right it may have to a trial by
jury with respect to any litigation directly or indirectly arising out of,
under, or in connection with this Agreement or the Transactions. Each of the Parties
hereby (i) 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 (ii)
acknowledges that it has been induced to enter into this Agreement and the
Transactions, as applicable, by, among other things, the mutual waivers and
certifications in this Section 9.15. 


                    Section
9.16 Fully Negotiated Agreement. Each Party has had the opportunity to
negotiate the terms, consult with counsel, and modify the provisions of this
Agreement and the Ancillary Agreements. Therefore, the terms of this Agreement
and the Ancillary Agreements shall be considered and interpreted without any
presumption, inference or rule requiring construction or interpretation of any
provision of this Agreement against the interests of the drafter of the
Agreement. 


                    Section
9.17 Currency. Unless otherwise specified in this Agreement, all
references to currency, monetary values and dollars set forth herein shall mean
United States (U.S.) Dollars and all payments hereunder shall be made in United
States Dollars. 


                    Section
9.18 Counterparts. This Agreement may be executed and delivered in
multiple counterparts, each of which, when so executed and delivered, shall be
an original, but such counterparts shall together constitute but one and the
same instrument and agreement. A facsimile or Portable Document Format copy of
a signature shall have the same force and effect as an original signature. 


[NO FURTHER TEXT ON THIS PAGE]


-55-






                    IN
WITNESS WHEREOF, the SCA Parties, XL Parties and CDS Counterparties have caused
this Agreement to be executed as of the date first written above. 


	
 

	
 

	
 


	
 

	
XL CAPITAL
 LTD


	
 

	
 

	
 


	
 

	
By:

	
/s/ Fiona
 Luck


	
 

	
 

	



	
 

	
 

	
Name: Fiona
 Luck


	
 

	
 

	
Title:
 Executive Vice President and Chief of Staff


	
 

	
 

	
 


	
 

	
XL INSURANCE
 (BERMUDA) LTD


	
 

	
 

	
 


	
 

	
By:

	
/s/ Fiona
 Luck


	
 

	
 

	



	
 

	
 

	
Name: Fiona
 Luck


	
 

	
 

	
Title:
 Executive Vice President and Chief of Staff


	
 

	
 

	
 


	
 

	
XL
 REINSURANCE AMERICA INC.


	
 

	
 

	
 


	
 

	
By:

	
/s/ Steven
 P. Agosta


	
 

	
 

	



	
 

	
 

	
Name: Steven
 P. Agosta


	
 

	
 

	
Title: Vice
 President, General Counsel and Secretary


	
 

	
 

	
 


	
 

	
X.L. GLOBAL
 SERVICES, INC.


	
 

	
 

	
 


	
 

	
By:

	
/s/ Kenneth
 P. Meagher


	
 

	
 

	



	
 

	
 

	
Name:
 Kenneth P. Meagher


	
 

	
 

	
Title:
 Assistant Secretary





[SIGNATURE PAGE – COMMUTATION, RELEASE AND
RESTRUCTURING AGREEMENT]






	
 

	
 

	
 


	
 

	
XL SERVICES
 (BERMUDA) LTD


	
 

	
 

	
 


	
 

	
By:

	
/s/ Fiona
 Luck


	
 

	
 

	



	
 

	
 

	
Name: Fiona
 Luck


	
 

	
 

	
Title:
 Deputy Chairman


	
 

	
 

	
 


	
 

	
X.L.
 AMERICA, INC.


	
 

	
 

	
 


	
 

	
By:

	
/s/ Richard
 G. McCarty


	
 

	
 

	



	
 

	
 

	
Name:
 Richard G. McCarty


	
 

	
 

	
Title:
 Senior Vice President, General Counsel and Secretary


	
 

	
 

	
 


	
 

	
SECURITY
 CAPITAL ASSURANCE LTD


	
 

	
 

	
 


	
 

	
By:

	
/s/ Claude
 LeBlanc


	
 

	
 

	



	
 

	
 

	
Name: Claude
 LeBlanc


	
 

	
 

	
Title:
 Executive Vice President


	
 

	
 

	
 


	
 

	
XL FINANCIAL
 ASSURANCE LTD.


	
 

	
 

	
 


	
 

	
By:

	
/s/ Thomas
 Currie


	
 

	
 

	



	
 

	
 

	
Name: Thomas
 Currie


	
 

	
 

	
Title:
 Senior Vice President





[SIGNATURE PAGE – COMMUTATION, RELEASE AND
RESTRUCTURING AGREEMENT]






	
 

	
 

	
 


	
 

	
XL CAPITAL
 ASSURANCE INC.


	
 

	
 

	
 


	
 

	
By:

	
/s/ Susan
 Comparato


	
 

	
 

	



	
 

	
 

	
Name: Susan
 Comparato


	
 

	
 

	
Title:
 Senior Vice President and General Counsel


	
 

	
 

	
 


	
 

	
XL FINANCIAL
 ADMINISTRATIVE SERVICES INC.


	
 

	
 

	
 


	
 

	
By:

	
/s/ Susan
 Comparato


	
 

	
 

	



	
 

	
 

	
Name: Susan
 Comparato


	
 

	
 

	
Title:
 Managing Director and Secretary


	
 

	
 

	
 


	
 

	
SCA BERMUDA
 ADMINISTRATIVE LTD.


	
 

	
 

	
 


	
 

	
By:

	
/s/ Thomas
 Currie


	
 

	
 

	



	
 

	
 

	
Name: Thomas
 Currie


	
 

	
 

	
Title:
 Senior Vice President


	
 

	
 

	
 


	
 

	
XL CAPITAL
 ASSURANCE (U.K.) LIMITED


	
 

	
 

	
 


	
 

	
By:

	
/s/ Fredrick
 B. Hnat


	
 

	
 

	



	
 

	
 

	
Name:
 Fredrick B. Hnat


	
 

	
 

	
Title:
 Managing Director and Chief Operating Officer





[SIGNATURE PAGE – COMMUTATION, RELEASE AND RESTRUCTURING AGREEMENT]







EXHIBIT 1.01(a)


FORM OF 2001 FACULTATIVE QUOTA SHARE COMMUTATION AGREEMENT


Exhibit 1.01(a)






COMMUTATION AND RELEASE AGREEMENT


                    This
Commutation and Release Agreement (the “Agreement”) dated as of
________, 2008, is made by and between XL Financial Assurance Ltd, a company
domiciled in Bermuda (the “Company”) and XL Insurance (Bermuda) Ltd,
formerly known as XL Insurance Ltd, a company also domiciled in Bermuda (the “Reinsurer”).
The Reinsurer and the Company are hereinafter referred to collectively as the “Parties.”



RECITALS


                    WHEREAS,
the Parties previously entered
into a Facultative Quota Share Reinsurance Treaty dated August 17, 2001, as
amended, pursuant to which the Reinsurer agreed to reinsure certain liabilities
of the Company (the “Reinsurance Agreement”); and 


                    WHEREAS,
the Parties are parties to that
certain Master Commutation, Release and Restructuring Agreement, dated as of
July __, 2008, by and among the Company, the Reinsurer, Security Capital
Assurance Ltd and the other parties thereto (the “Master Transaction Agreement”),
pursuant to which the Company and the Reinsurer have agreed to enter into this
Agreement; and 


                    WHEREAS,
the Parties agree that it is in
each of their best interests to freely and voluntarily enter into this
Agreement and to fully and forever release and discharge each other from their
respective existing and future liabilities and obligations, including
contingent and uncertain liabilities, both known and unknown, under the
Reinsurance Agreement and the individual risk cessions thereunder and to
compromise, resolve and settle all amounts due, or which may become due,
between each other arising out of, in respect of, or relating to the
Reinsurance Agreement and/or the individual risk cessions thereunder; and 


                    WHEREAS,
Company and Reinsurer, or their
affiliates, may be parties to agreements other than the Reinsurance Agreement,
and it is the intent of the Parties that this Agreement will not have any
effect upon such other agreements. 


                    NOW,
THEREFORE, in consideration of the
covenants, conditions, promises and releases contained herein, and for other
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the Parties agree as follows: 


ARTICLE I 

PAYMENT


                    
(a) The Reinsurer shall pay to the Company the sum of Twenty Five Million
Dollars ($25,000,000.00) (the “Commutation Amount”) via direct wire
transfer, in immediately available funds, in accordance with the payment
instructions set forth on Schedule A hereto on the Closing Date (as such
term is defined in the Master Transaction Agreement). The date on which the
Commutation Amount is paid and received shall be referred to hereinafter as the
“Effective Date.” 


Exh. 1.01(a)-1






                    (b)
The Company shall accept the Commutation Amount in full satisfaction of all of
the Reinsurer’s liabilities and obligations under the Reinsurance Agreement
and/or the individual risk cessions thereunder. 


ARTICLE II 

RELEASE


                    (a)
Upon the Reinsurer’s payment of the Commutation Amount to the Company, the
Company, on behalf of itself and its shareholders, parents, affiliates and
subsidiaries, and their respective officers, directors, and employees, hereby
irrevocably and unconditionally releases and forever discharges the Reinsurer,
its parents, subsidiaries and affiliates, and their respective predecessors,
successors, assigns, officers, directors, agents, employees, shareholders,
representatives, and attorneys from any and all present and future actions,
causes of action, suits, debts, liens, contracts, rights, agreements,
obligations, promises, liabilities, claims, counterclaims, demands, damages, controversies,
losses, costs and expenses (including attorneys’ fees and costs actually
incurred) of any kind, character, description or nature whatsoever, known or
unknown to either or both Parties, suspected or unsuspected, reported or
unreported, fixed or contingent, which the Company now has, owns or holds or
claims to have, own, or hold, or at any time heretofore had, owned, or held or
claimed to have had, owned, or held, or may hereafter have, own, or hold or
claim to have, own, or hold, arising out of conduct or matters occurring on,
prior to or subsequent to the Effective Date, against the Reinsurer, arising
directly or indirectly out of, based upon, or in any way related to or in
connection with the Reinsurance Agreement and/or the individual risk cessions
thereunder, whether grounded in law or equity, or sounding in tort or contract
or otherwise; provided, however, that the provisions of this Article
II(a) shall not discharge obligations of the Reinsurer, which have been
undertaken or imposed by the express terms of this Agreement or the Master
Transaction Agreement (including the Ancillary Agreements). 


                    (b)
Contemporaneous with the payment of the Commutation Amount to the Company, the
Reinsurer, on behalf of itself and its shareholders, parents, affiliates and
subsidiaries, and their respective officers, directors and employees, hereby
irrevocably and unconditionally releases and forever discharges the Company,
its shareholders, parents, subsidiaries and affiliates, and their respective
predecessors, successors, assigns, officers, directors, agents, employees,
shareholders, representatives, and attorneys from any and all present and
future actions, causes of action, suits, debts, liens, contracts, rights,
agreements, obligations, promises, liabilities, claims, counterclaims, demands,
damages, controversies, losses, costs and expenses (including attorneys’ fees
and costs actually incurred) of any kind, character, description or nature
whatsoever, known or unknown to either or both Parties, suspected or
unsuspected, reported or unreported, fixed or contingent, which the Reinsurer
now has, owns, holds or claims to have, own, or hold, or at any time heretofore
had, owned, or held or claimed to have had, owned, or held, or may hereafter
have, own, or hold or claim to have, own, or hold, arising out of conduct or
matters occurring on, prior to or subsequent to the Effective Date, against the
Company, arising directly or indirectly out of, based upon, or in any way
related to or in connection with the Reinsurance Agreement and/or the
individual risk cessions thereunder, whether grounded in law or equity or
sounding in tort or contract or otherwise; provided, however,
that the provisions of this Article II(b) shall not discharge
obligations of the 


Exh. 1.01(a)-2






Company, which
have been undertaken or imposed by the express terms of this Agreement or the
Master Transaction Agreement (including the Ancillary Agreements). 


                    (c)
The Parties understand that it is possible that unknown losses or claims may
exist, or that present or future losses or claims may be underestimated in
amounts or severity. Furthermore, the Parties expressly accept and assume the
risk that the factual or legal assumptions made by any Party in connection with
this Agreement may be found hereafter to be different from the true facts or
law, and the Parties agree that this Agreement shall be and shall remain in
full force and effect notwithstanding such differences in facts or law. Each
Party expressly takes all of the foregoing into account in determining the
amount of consideration to be given and paid for the giving of this Agreement,
and a portion of the said consideration, having been bargained for between the
Parties with the knowledge of the possibility of such unknown losses and
claims, is given in exchange for the full accord, satisfaction and discharge of
all such losses and claims. 


                    (d)
Full payment of the Commutation Amount shall be in complete accord,
satisfaction, settlement and commutation of any and all past, current and
future liabilities and obligations that each Party owes or may owe to the other
arising directly or indirectly out of or related to or in connection with the
Reinsurance Agreement and/or the individual risk cessions thereunder and that
upon payment of the Commutation Amount, the Reinsurance Agreement shall be
terminated as of the Effective Date and neither Party shall have any further
obligation or liability to the other Party under the Reinsurance Agreement and/or
the individual risk cessions thereunder. 


ARTICLE III 

NON-RELIANCE


                    (a)
This Agreement fully and finally resolves the rights, duties and obligations of
the Company and the Reinsurer under the Reinsurance Agreement, and neither
Party shall: 


	
 

	
 


	
 

	
          (i)
 have any remedy in respect of any representation, warranty or undertaking of
 the other that is not specifically set forth in this Agreement, the Master
 Transaction Agreement, or the Ancillary Agreements commuting the reinsurance
 agreements listed in Part I of Schedule 2.01 of the Master Transaction
 Agreement, whether or not relied upon by the other Party; or 


	
 

	
 


	
 

	
          (ii)
 seek to reopen or set aside this Agreement or the Reinsurance Agreement on
 any basis whatsoever, including, without limitation, that this Agreement or
 the Reinsurance Agreement is void or voidable due to a mistake or change in
 law or a unilateral or mutual mistake of fact in any way related to this
 Agreement or the Reinsurance Agreement. 





                    (b)
The Company and the Reinsurer have voluntarily entered into this Agreement
based: (i) upon their own independent assessment of the relevant facts and
their rights and obligations under the Reinsurance Agreement and (ii) except as
expressly set forth in Article III and Article IV of the Master
Transaction Agreement, not upon any representations that were made or
disclosures that were made by the other Party, their affiliates, officers, 


Exh. 1.01(a)-3






directors,
shareholders, employees, representatives, agents, attorneys or their respective
heirs, administrators, predecessors, successors and assigns. Each Party
acknowledges that it has carefully read, and that it understands the scope and
effect of this Agreement and has had a full and fair opportunity to consult
with, and seek the advice and recommendations of its attorneys, actuaries and
other professional advisors prior to its execution of this Agreement. 


                    (c)
This Agreement and the negotiations and proceedings leading to this Agreement
shall not form the basis of any claim by either Party against the other Party
or against any officer, director, consultant, professional or shareholder of
the other Party, except with respect to an action for enforcement of this
Agreement or the Master Transaction Agreement (including the Ancillary
Agreements). 


ARTICLE IV 

EXCLUSIVE BENEFIT OF THE PARTIES AND BINDING EFFECT


                    The
rights, duties and obligations set forth herein shall inure to the benefit of
and be binding upon the Company and the Reinsurer as they are identified in
this Agreement and their parents, subsidiaries and affiliates, and their
respective predecessors, successors, assigns, officers, directors, agents,
employees, shareholders, representatives, and attorneys and this Agreement is
not intended to confer any rights or benefits upon persons or entities other
than the foregoing parties. 


ARTICLE V 

COMPROMISE


                    This
Agreement sets forth a compromise and shall never at any time for any purpose
be considered as an admission of liability or responsibility on the part of any
party hereto regarding any aspect of the Reinsurance Agreement. Neither this
Agreement nor any of its terms shall be admissible in any action, arbitration,
or proceeding other than one to enforce the terms of this Agreement or the
Master Transaction Agreement (including the Ancillary Agreements), including,
but not limited to, the releases provided in Article II. 


ARTICLE VI 

FURTHER ASSURANCES


                    The
Parties, without further consideration, shall execute and deliver such other
documents and take such other action as may be necessary to effect this
Agreement. 


ARTICLE VII 

MISCELLANEOUS


                    (a)
Should any part, term or provision of this Agreement, except Article I
or Article II, be declared or determined to be illegal or invalid
pursuant to a final and unappealable order of a court of competent
jurisdiction, the validity of the remaining parts, terms and provisions shall
not be affected thereby and such illegal or invalid part, term or provision
shall be deemed not to be part of this Agreement. If either Article I or
Article II is determined by a court 


Exh. 1.01(a)-4






of competent
jurisdiction or regulatory authority to be unenforceable, either Party, at its
option, shall be entitled to rescind this Agreement, and the Reinsurer shall be
entitled to repayment of the Commutation Amount immediately upon such
rescission. Upon such rescission, the Reinsurance Agreement and all rights,
obligations and liabilities of the Parties under the Reinsurance Agreement
shall be reinstated as if this Agreement had never been executed.
Notwithstanding the foregoing, the releases given pursuant to Article II
shall remain in full force and effect as to the Parties’ officers, directors,
agents, employees, shareholders, representatives, advisors and attorneys. 


                    (b)
This Agreement and the Master Transaction Agreement (including the Ancillary
Agreements) set forth the entire agreement between the Parties with respect to
the subject matter hereof and supersedes all prior agreements or understanding
between them pertaining to the subject matter hereof. A facsimile copy of a
signature shall have the same force and effect as an original signature. 


                    (c)
This Agreement may not be amended, altered, supplemented or modified, except by
written agreement signed by the Parties. 


                    (d)
This Agreement may be executed and delivered in multiple counterparts, each of
which, when so executed and delivered, shall be an original, but such
counterparts shall together constitute but one and the same instrument and
agreement. 


                    (e)
For purposes of this Agreement, a “Business Day” is any day other than a
Saturday, Sunday or a public holiday in Bermuda. 


                    (f)
This Agreement shall be governed by and construed in accordance with the laws
of Bermuda without regard to principles of conflicts of law or choice of law
and the Parties submit to the exclusive jurisdiction of the Supreme Court of
Bermuda in respect of all disputes arising out of or in connection with this
Agreement. 


                    (g)
All notices under this Agreement shall be in writing and shall be deemed to be
duly given and received (i) upon delivery if delivered by certified mail; or
(ii) on the next Business Day if sent by overnight courier (iii) on the date
sent by facsimile if sent during the recipient’s normal business hours or, if
sent by facsimile outside such hours, on the next Business Day; provided, that
such notices are sent to a Party to its Address for Notices set forth on Schedule
B hereto or to such other address as either Party may have furnished to the
other in writing. 


                    (h)
For all purposes this Agreement shall be deemed to have been drafted jointly by
both Parties. 


                    (i)
This Agreement is an agreement solely between the Company and the Reinsurer. No
right of action against the Reinsurer shall accrue to any insured,
policyholder, or other contracting party of the Company unless granted herein
by virtue of this Agreement. 


Exh. 1.01(a)-5






                    IN
WITNESS WHEREOF, the Parties have executed this Agreement by their respective
authorized officers as of the day and year first written below. 


	
 

	
 

	
 

	
 

	
 


	
Dated: 

	
 

	
 

	
XL FINANCIAL ASSURANCE LTD


	
 

	


	
 

	
 


	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
By: 

	
 


	
 

	
 

	
 

	
 

	



	
 

	
 

	
 

	
 

	
Name:


	
 

	
 

	
 

	
 

	
Title:


	
 

	
 

	
 

	
 

	
 


	
Dated: 

	
 

	
 

	
XL INSURANCE (BERMUDA) LTD


	
 

	


	
 

	
FORMERLY KNOWN AS


	
 

	
 

	
 

	
XL INSURANCE LTD


	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
By: 

	
 


	
 

	
 

	
 

	
 

	



	
 

	
 

	
 

	
 

	
Name:


	
 

	
 

	
 

	
 

	
Title:





Exh. 1.01(a)-6






SCHEDULE A


WIRE TRANSFER INSTRUCTIONS


Transfer instructions for remitting funds to
XL Financial Assurance Ltd


[Intentionally
omitted]


Please send e-mail / fax containing details
of the transfer to: 


[Intentionally
omitted]


	
 

	
 


	
Rebecca
 O’Connell (VP & Assistant Treasurer) at SCA 


	
Phone:

	
(212)
 478-3629 


	
Fax:

	
(212)
 478-3587 


	
E-mail:

	
rebecca.oconnell@xlgroup.com
 





Exh. 1.01(a)-7






SCHEDULE
B


ADDRESS
FOR NOTICE


	
 

	
 


	
TO THE COMPANY:


	
 


	
 

	
XL Financial
 Assurance Ltd


	
 

	
A.S. Cooper
 Building


	
 

	
26 Reid
 Street, 4th Floor


	
 

	
Hamilton,
 Bermuda HM 11


	
 

	
Attn:
 President


	
 

	
Facsimile:
 441-296-4351


	
 

	
 


	
 

	
and


	
 

	
 


	
 

	
XL Capital
 Assurance Inc.


	
 

	
1221 Avenue
 of the Americas


	
 

	
New York,
 New York 10022


	
 

	
Attn:
 General Counsel


	
 

	
Facsimile:
 212-478-3579


	
 

	
 


	
TO THE REINSURER:


	
 


	
 

	
XL Insurance
 (Bermuda) Ltd


	
 

	
XL House


	
 

	
One
 Bermudiana Road


	
 

	
Hamilton HM
 11


	
 

	
Bermuda


	
 

	
Attention:
 General Counsel


	
 

	
Facsimile:
 441-295-2840





Exh. 1.01(a)-8







EXHIBIT 1.01(b)


FORM OF ADVERSE DEVELOPMENT COVER COMMUTATION AGREEMENT


Exhibit 1.01(b)






COMMUTATION AND RELEASE AGREEMENT


                    This
Commutation and Release Agreement (the “Agreement”) dated as of
________, 2008, is made by and among XL Capital Assurance Inc., a company
domiciled in New York (“XLCA”), XL Financial Assurance Ltd, a company
domiciled in Bermuda (“XLFA”), XL Reinsurance America Inc., a company
also domiciled in New York (“XLRA”), and XL Insurance (Bermuda) Ltd,
formerly known as XL Insurance Ltd, a company also domiciled in Bermuda (“XLI”).
XLCA and XLFA are hereinafter referred to collectively as the “SCA Companies;”
XLRA and XLI are hereinafter referred to collectively as the “XL Companies;”
and the SCA Companies and the XL Companies are hereinafter referred to
collectively as the “Parties.” 


RECITALS


                    WHEREAS,
XLCA and XLRA previously entered
into an Adverse Development Reinsurance Agreement effective as of August 4,
2006, pursuant to which XLRA agreed to reinsure certain liabilities of XLCA
(the “Reinsurance Agreement”); and 


                    WHEREAS,
XLFA and XLI previously entered
into an Indemnification Agreement, dated August 4, 2006, pursuant to which XLI
agreed to indemnify XLFA in respect of future adverse development as respect
certain of its liabilities (the “Indemnification Agreement,” the
Reinsurance Agreement and the Indemnification Agreement are hereinafter
referred to collectively as the “Adverse Development Cover”); and 


                    WHEREAS,
the Parties are parties to that
certain Master Commutation, Release and Restructuring Agreement, dated as of
July __, 2008, by and among the SCA Companies, the XL Companies, Security
Capital Assurance Ltd and the other parties thereto (the “Master Transaction
Agreement”), pursuant to which the Parties have agreed to enter into this
Agreement; and 


                    WHEREAS,
the Parties agree that it is in
each of their best interests to freely and voluntarily enter into this
Agreement and to fully and forever release and discharge each other from their
respective existing and future liabilities and obligations, including
contingent and uncertain liabilities, both known and unknown, under the Adverse
Development Cover and to compromise, resolve and settle all amounts due, or
which may become due, between each other arising out of, in respect of, or
relating to the Adverse Development Cover; and 


                    WHEREAS,
the Parties or their affiliates,
may be parties to agreements other than the Adverse Development Cover, and it
is the intent of the Parties that this Agreement will not have any effect upon such
other agreements. 


                    NOW,
THEREFORE, in consideration of the
covenants, conditions, promises and releases contained herein, and for other
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the Parties agree as follows: 


Exh. 1.01(b)-1






ARTICLE I 

PAYMENT


                    (a)
The XL Companies shall pay to the SCA Companies the sum of Sixty Five Million,
Three Hundred Thousand Dollars ($65,300,000.00) (the “Commutation Amount”)
via direct wire transfer, in immediately available funds, in accordance with
the payment instructions set forth on Schedule A hereto on the Closing
Date (as such term is defined in the Master Transaction Agreement) as follows:
(i) XLI shall pay to XLFA the sum of Fifty Eight Million, Three Hundred
Thousand Dollars ($58,300,000.00); and (ii) XLRA shall pay to XLCA the sum of
Seven Million Dollars ($7,000,000.00). The date on which the Commutation
Amount is paid and received shall be referred to hereinafter as the “Effective
Date.” 


                    (b)
The SCA Companies shall accept the Commutation Amount in full satisfaction of
all of the XL Companies’ liabilities and obligations under the Adverse
Development Cover. 


ARTICLE II 

RELEASE


                    (a)
Upon the XL Companies’ payment of the Commutation Amount to the SCA Companies,
the SCA Companies, on behalf of themselves and their shareholders, parents,
affiliates and subsidiaries, and their respective officers, directors and
employees, hereby irrevocably and unconditionally releases and forever
discharges the XL Companies, their parents, subsidiaries and affiliates, and
their respective predecessors, successors, assigns, officers, directors,
agents, employees, shareholders, representatives, and attorneys from any and
all present and future actions, causes of action, suits, debts, liens,
contracts, rights, agreements, obligations, promises, liabilities, claims,
counterclaims, demands, damages, controversies, losses, costs and expenses
(including attorneys’ fees and costs actually incurred) of any kind, character,
description or nature whatsoever, known or unknown to any or all of the
Parties, suspected or unsuspected, reported or unreported, fixed or contingent,
which the SCA Companies now have, own or hold or claim to have, own, or hold,
or at any time heretofore had, owned, or held or claimed to have had, owned, or
held, or may hereafter have, own, or hold or claim to have, own, or hold,
arising out of conduct or matters occurring on, prior to or subsequent to the
Effective Date, against the XL Companies, arising directly or indirectly out
of, based upon, or in any way related to or in connection with the Adverse
Development Cover, whether grounded in law or equity, or sounding in tort or
contract or otherwise; provided, however, that the provisions of
this Article II(a) shall not discharge obligations of the XL Companies,
which have been undertaken or imposed by the express terms of this Agreement or
the Master Transaction Agreement (including the Ancillary Agreements). 


                    (b)
Contemporaneous with the payment of the Commutation Amount to the SCA
Companies, the XL Companies, on behalf of themselves and their shareholders,
parents, affiliates and subsidiaries, and their respective officers, directors
and employees, hereby irrevocably and unconditionally releases and forever
discharges the SCA Companies, their shareholders, parents, subsidiaries and
affiliates, and their respective predecessors, successors, assigns, officers,
directors, agents, employees, shareholders, representatives, and attorneys from
any and all present and future actions, causes of action, suits, debts, liens,
contracts, rights, 


Exh. 1.01(b)-2






agreements,
obligations, promises, liabilities, claims, counterclaims, demands, damages,
controversies, losses, costs and expenses (including attorneys’ fees and costs
actually incurred) of any kind, character, description or nature whatsoever,
known or unknown to any or all of the Parties, suspected or unsuspected,
reported or unreported, fixed or contingent, which the XL Companies now have,
own, hold or claim to have, own, or hold, or at any time heretofore had, owned,
or held or claimed to have had, owned, or held, or may hereafter have, own, or
hold or claim to have, own, or hold, arising out of conduct or matters
occurring on, prior to or subsequent to the Effective Date, against the SCA
Companies, arising directly or indirectly out of, based upon, or in any way
related to or in connection with the Adverse Development Cover, whether grounded
in law or equity or sounding in tort or contract or otherwise; provided,
however, that the provisions of this Article II(b) shall not
discharge obligations of the SCA Companies, which have been undertaken or
imposed by the express terms of this Agreement or the Master Transaction
Agreement (including the Ancillary Agreements). 


                    (c)
The Parties understand that it is possible that unknown losses or claims may
exist, or that present or future losses or claims may be underestimated in
amounts or severity. Furthermore, the Parties expressly accept and assume the
risk that the factual or legal assumptions made by any Party in connection with
this Agreement may be found hereafter to be different from the true facts or
law, and the Parties agree that this Agreement shall be and shall remain in
full force and effect notwithstanding such differences in facts or law. Each
Party expressly takes all of the foregoing into account in determining the
amount of consideration to be given and paid for the giving of this Agreement,
and a portion of the said consideration, having been bargained for between the
Parties with the knowledge of the possibility of such unknown losses and
claims, is given in exchange for the full accord, satisfaction and discharge of
all such losses and claims. 


                    (d)
Full payment of the Commutation Amount shall be in complete accord,
satisfaction, settlement and commutation of any and all past, current and
future liabilities and obligations that each Party owes or may owe to the other
arising directly or indirectly out of or related to or in connection with the
Adverse Development Cover and that upon payment of the Commutation Amount, the
Adverse Development Cover shall be terminated as of the Effective Date and no
Party shall have any further obligation or liability to the other Party under
the Adverse Development Cover. 


ARTICLE III 

NON-RELIANCE


                    (a)
This Agreement fully and finally resolves the rights, duties and obligations of
the Parties under the Adverse Development Cover, and no Party shall: 


	
 

	
 


	
 

	
          (i)
 have any remedy in respect of any representation, warranty or undertaking of
 the other that is not specifically set forth in this Agreement, the Master
 Transaction Agreement, or the Ancillary Agreements commuting the reinsurance
 agreements listed in Part I of Schedule 2.01 of the Master Transaction
 Agreement, whether or not relied upon by the other Party; or 





Exh. 1.01(b)-3






	
 

	
 


	
 

	
          (ii)
 seek to reopen or set aside this Agreement or the Adverse Development Cover
 on any basis whatsoever, including, without limitation, that this Agreement
 or the Adverse Development Cover are void or voidable due to a mistake or
 change in law or a unilateral or mutual mistake of fact in any way related to
 this Agreement or the Adverse Development Cover. 





                    (b)
The SCA Companies and the XL Companies have voluntarily entered into this
Agreement based: (i) upon their own independent assessment of the relevant
facts and their rights and obligations under the Adverse Development Cover and
(ii) except as expressly set forth in Article III and Article IV
of the Master Transaction Agreement, not upon any representations that were
made or disclosures that were made by the other Party, their affiliates,
officers, directors, shareholders, employees, representatives, agents,
attorneys or their respective heirs, administrators, predecessors, successors
and assigns. Each Party acknowledges that it has carefully read, and that it
understands the scope and effect of this Agreement and has had a full and fair
opportunity to consult with, and seek the advice and recommendations of its
attorneys, actuaries and other professional advisors prior to its execution of
this Agreement. 


                    (c)
This Agreement and the negotiations and proceedings leading to this Agreement
shall not form the basis of any claim by a Party against another Party or
against any officer, director, consultant, professional or shareholder of the
another Party, except with respect to an action for enforcement of this
Agreement or the Master Transaction Agreement (including the Ancillary
Agreements). 


ARTICLE IV 

EXCLUSIVE BENEFIT OF THE PARTIES AND BINDING EFFECT


                    The
rights, duties and obligations set forth herein shall inure to the benefit of
and be binding upon the SCA Companies and the XL Companies as they are
identified in this Agreement and their parents, subsidiaries and affiliates,
and their respective predecessors, successors, assigns, officers, directors,
agents, employees, shareholders, representatives, and attorneys and this
Agreement is not intended to confer any rights or benefits upon persons or
entities other than the foregoing parties. 


ARTICLE V 

COMPROMISE


                    This
Agreement sets forth a compromise and shall never at any time for any purpose
be considered as an admission of liability or responsibility on the part of any
party hereto regarding any aspect of the Adverse Development Cover. Neither
this Agreement nor any of its terms shall be admissible in any action,
arbitration, or proceeding other than one to enforce the terms of this
Agreement or the Master Transaction Agreement (including the Ancillary
Agreements), including, but not limited to, the releases provided in Article
II. 


Exh. 1.01(b)-4






ARTICLE VI 

FURTHER ASSURANCES


                    The
Parties, without further consideration, shall execute and deliver such other
documents and take such other action as may be necessary to effect this
Agreement. 


ARTICLE VII 

MISCELLANEOUS


                    (a)
Should any part, term or provision of this Agreement, except Article I
or Article II, be declared or determined to be illegal or invalid
pursuant to a final and unappealable order of a court of competent jurisdiction,
the validity of the remaining parts, terms and provisions shall not be affected
thereby and such illegal or invalid part, term or provision shall be deemed not
to be part of this Agreement. If either Article I or Article II
is determined by a court of competent jurisdiction or regulatory authority to
be unenforceable, any Party, at its option, shall be entitled to rescind this
Agreement, and the XL Companies shall be entitled to repayment of the
Commutation Amount immediately upon such rescission. Upon such rescission, the
Adverse Development Cover and all rights, obligations and liabilities of the
Parties under the Adverse Development Cover shall be reinstated as if this
Agreement had never been executed. Notwithstanding the foregoing, the releases given
pursuant to Article II shall remain in full force and effect as to the
Parties’ officers, directors, agents, employees, shareholders, representatives,
advisors and attorneys. 


                    (b)
This Agreement and the Master Transaction Agreement (including the Ancillary
Agreements) set forth the entire agreement between the Parties with respect to
the subject matter hereof and supersedes all prior agreements or understanding
between them pertaining to the subject matter hereof. A facsimile copy of a
signature shall have the same force and effect as an original signature. 


                    (c)
This Agreement may not be amended, altered, supplemented or modified, except by
written agreement signed by the Parties. 


                    (d)
This Agreement may be executed and delivered in multiple counterparts, each of
which, when so executed and delivered, shall be an original, but such
counterparts shall together constitute but one and the same instrument and
agreement. 


                    (e)
For purposes of this Agreement, a “Business
Day” is any day other than a Saturday, Sunday or a public holiday in New
York. 


                    (f)
This Agreement shall be governed by and construed in accordance with the laws
of New York without regard to principles of conflicts of law or choice of law
and the Parties submit to the exclusive jurisdiction of the Supreme Court of
the State of New York in respect of all disputes arising out of or in
connection with this Agreement. 


                    (g)
All notices under this Agreement shall be in writing and shall be deemed to be
duly given and received (i) upon delivery if delivered by certified mail; or
(ii) on the next Business Day if sent by overnight courier (iii) on the date
sent by facsimile if sent during the 


Exh. 1.01(b)-5






recipient’s
normal business hours or, if sent by facsimile outside such hours, on the next
Business Day; provided, that such notices are sent to a Party to its Address
for Notices set forth on Schedule B hereto or to such other address as
either Party may have furnished to the other in writing. 


                    (h)
For all purposes this Agreement shall be deemed to have been drafted jointly by
the Parties. 


                    (i)
This Agreement is an agreement solely between the SCA Companies and the XL
Companies. No right of action against the XL Companies shall accrue to any
insured, policyholder, or other contracting party of the SCA Companies unless
granted herein by virtue of this Agreement. 


Exh. 1.01(b)-6






                    IN
WITNESS WHEREOF, the Parties have
executed this Agreement by their respective authorized officers as of the day
and year first written below. 


	
 

	
 

	
 

	
 

	
 


	
Dated: 

	
 

	
 

	
XL CAPITAL ASSURANCE INC.


	
 

	


	
 

	
 

	
 


	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
By: 

	
 


	
 

	
 

	
 

	
 

	



	
 

	
 

	
 

	
 

	
Name:


	
 

	
 

	
 

	
 

	
Title:


	
 

	
 

	
 

	
 


	
Dated: 

	
 

	
 

	
XL FINANCIAL ASSURANCE LTD


	
 

	


	
 

	
 


	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
By:

	
 


	
 

	
 

	
 

	
 

	



	
 

	
 

	
 

	
 

	
Name:


	
 

	
 

	
 

	
 

	
Title:


	
 

	
 

	
 

	
 


	
Dated: 

	
 

	
 

	
XL REINSURANCE AMERICA INC.


	
 

	


	
 

	
 


	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
By:

	
 


	
 

	
 

	
 

	
 

	



	
 

	
 

	
 

	
 

	
Name:


	
 

	
 

	
 

	
 

	
Title:


	
 

	
 

	
 

	
 


	
Dated: 

	
 

	
 

	
XL INSURANCE (BERMUDA) LTD


	
 

	


	
 

	
FORMERLY KNOWN AS


	
 

	
 

	
 

	
XL INSURANCE LTD


	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
By: 

	
 


	
 

	
 

	
 

	
 

	



	
 

	
 

	
 

	
 

	
Name:


	
 

	
 

	
 

	
 

	
Title:





Exh. 1.01(b)-7






SCHEDULE A


WIRE TRANSFER INSTRUCTIONS


Transfer instructions for remitting funds to
XL Capital Assurance Inc. 


[Intentionally
omitted]


Please send e-mail / fax containing details
of the transfer to: 


[Intentionally
omitted]


Rebecca
O’Connell (VP & Assistant Treasurer) at SCA

Phone: (212) 478-3629 

Fax: (212) 478-3587 

E-mail: rebecca.oconnell@xlgroup.com 


Transfer instructions for remitting funds to
XL Financial Assurance Ltd


[Intentionally
omitted]


Please send e-mail / fax containing details
of the transfer to: 


[Intentionally
omitted]


Rebecca
O’Connell (VP & Assistant Treasurer) at SCA 

Phone: (212) 478-3629 

Fax: (212) 478-3587 

E-mail: rebecca.oconnell@xlgroup.com 


Exh. 1.01(b)-8






SCHEDULE B


ADDRESS FOR NOTICE


	
 

	
 


	
TO XLCA:


	
 


	
 

	
XL Capital
 Assurance Inc.


	
 

	
1221 Avenue
 of the Americas


	
 

	
New York,
 New York 10022


	
 

	
Attn:
 General Counsel


	
 

	
Facsimile:
 212-478-3579


	
 

	
 


	
TO XLFA:


	
 


	
 

	
XL Financial
 Assurance Ltd


	
 

	
A.S. Cooper
 Building


	
 

	
26 Reid
 Street, 4th Floor


	
 

	
Hamilton,
 Bermuda HM 11


	
 

	
Attn:
 President


	
 

	
Facsimile:
 441-296-4351


	
 

	
 


	
 

	
and


	
 

	
 


	
 

	
XL Capital
 Assurance Inc.


	
 

	
1221 Avenue
 of the Americas


	
 

	
New York,
 New York 10022


	
 

	
Attn:
 General Counsel


	
 

	
Facsimile:
 212-478-3579


	
 

	
 


	
TO XLRA:


	
 


	
 

	
XL Reinsurance
 America Inc.


	
 

	
Seaview
 House


	
 

	
70 Seaview
 Avenue 


	
 

	
Stamford, CT
 06902-6040 


	
 

	
Attention:
 General Counsel


	
 

	
Facsimile:
 203-964-5309


	
 

	
 


	
TO XLI:


	
 


	
 

	
XL Insurance
 (Bermuda) Ltd


	
 

	
XL House


	
 

	
One
 Bermudiana Road


	
 

	
Hamilton HM
 11


	
 

	
Bermuda


	
 

	
Attention:
 General Counsel


	
 

	
Facsimile:
 441-295-2840





Exh. 1.01(b)-9







EXHIBIT 1.01(c) 


FORM OF JOINDER AGREEMENT


Exhibit 1.01(c)






JOINDER AGREEMENT


          JOINDER
AGREEMENT (this “Joinder Agreement”), dated as of _____, 2008, is
entered into pursuant to the Master Commutation, Release and Restructuring
Agreement (as amended, supplemented or otherwise modified from time to time,
the “Master Agreement”), dated as of July __, 2008, among XL CAPITAL
LTD, an exempted limited company incorporated under the Laws of the Cayman
Islands (“XL”), XL INSURANCE (BERMUDA) LTD, (formerly known as X.L.
Insurance Ltd) a Bermuda exempted company (“XLI”), XL REINSURANCE
AMERICA INC., a New York insurance corporation (“XLRA”), X.L. GLOBAL
SERVICES, INC., a service company incorporated under the Laws of Delaware (“XLGS”),
XL SERVICES (BERMUDA) LTD, a service company incorporated under the Laws of
Bermuda (“XLBS”), X.L. AMERICA, INC., a company incorporated under the
Laws of Delaware (“XLA”), SECURITY CAPITAL ASSURANCE LTD, a Bermuda
exempted company (“SCA”), XL FINANCIAL ASSURANCE LTD., a Bermuda
exempted company (“XLFA”), XL CAPITAL ASSURANCE INC., a New York
insurance company (“XLCA”), XL FINANCIAL ADMINISTRATIVE SERVICES INC., a
company incorporated under the Laws of Delaware (“XLFAS”), SCA BERMUDA
ADMINISTRATIVE LTD., a company incorporated under the Laws of Bermuda (“SCAB”),
XL CAPITAL ASSURANCE (U.K.) LIMITED, an insurance company regulated by the
Financial Services Authority and incorporated under the Laws of England and
Wales (“XLCAUK”), those portfolio trusts that may become a Party to the
Agreement from time to time, and such counterparties to credit default swap
agreements with Affiliates of XLCA that may become Party to the Agreement from
time to time. Unless otherwise defined herein, capitalized terms used herein
and defined in the Master Agreement and shall have the meanings given to them
in the Master Agreement. 


RECITALS:


          WHEREAS,
the party hereto wishes to enter into the Master Agreement; 


          NOW,
THEREFORE, IT IS AGREED: 


          1.
Joinder to the Master Agreement. The party hereto confirms that it has
received a copy of the Master Agreement and such other documents and
information as it has deemed appropriate to conduct its own analysis and make
its own decision to enter into this Joinder Agreement and agrees to: 


                    (a)
join the Master Agreement as a [CDS Counterparty/portfolio trust Affiliate of
XLCA that is an SCA Party] thereunder with the same force and effect as if
originally named therein as a CDS Counterparty and, without limiting the generality
of the foregoing, hereby expressly accepts and assumes all rights and
obligations of a [CDS Counterparty/SCA Party] thereunder, including the
releases entered into by such party pursuant to Section 2.05 of the
Master Agreement; 


                    (b)
be bound by, and hereby confirms, all covenants, agreements, consents,
submissions, appointments, benefits and acknowledgments attributable to a [CDS
Counterparty/SCA Party] in the Master Agreement; and 


Exh. 1.01(c)-1






                    (c)
perform all obligations required of it as a [CDS Counterparty/SCA Party] by the
Master Agreement. 


          2.
Representations and Warranties. Each [CDS Counterparty/SCA Party] hereby
represents and warrants that the representations and warranties with respect to
it contained in, or made by it in, [Article V/III] of the Master Agreement, are
true and correct in all material respects on the date hereof (after giving
effect to this Joinder Agreement) as if made on and as of the date hereof
(except that any applicable representation or warranty that by its terms is
made as of an earlier date is true and correct as of such earlier date). 


          3.
Effective Date. The effective date of this Joinder Agreement shall be
the date hereof (the “Effective Date”). Upon execution, the party hereto
shall promptly provide delivery of an executed copy of this Joinder Agreement
to the XL Parties, the SCA Parties and Davis Polk & Wardwell as counsel to
the CDS Counterparties along with all disclosure schedules and information required
to be delivered pursuant to the Master Agreement. This Joinder Agreement shall
become effective upon delivery to XL. 


          4.
Governing Law. This Joinder Agreement shall be interpreted under and
governed by the Laws of the State of New York, without giving effect to
conflicts of law provisions thereof. 


          5.
Signature Pages. A facsimile or Portable Document Format copy of a
signature shall have the same force and effect as an original signature. 


[SIGNATURE FOLLOWS IMMEDIATELY HEREAFTER]


Exh. 1.01(c)-2






                    IN
WITNESS WHEREOF, the party hereto has caused this Joinder Agreement to be duly
executed and delivered by its proper and duly authorized officers as of this
[___] day of [_______], 2008. 


	
 

	
 

	
 


	
 

	
[CDS
 Counterparty/Portfolio Trust]


	
 

	
 

	
 


	
 

	
By: 

	
 


	
 

	
 

	



	
 

	
 

	
Name:


	
 

	
 

	
Title:


	
 

	
 

	
 


	
[Notice
 Information]

	
 

	
 





Exh. 1.01(c)-3








EXHIBIT 1.01(d) 


FORM OF EXCESS OF LOSS COMMUTATION AGREEMENT


Exhibit 1.01(d)






COMMUTATION AND RELEASE AGREEMENT


                    This
Commutation and Release Agreement (the “Agreement”) dated as of _____,
2008, is made by and between XL Financial Assurance Ltd, a company domiciled in
Bermuda (the “Company”) and XL Insurance (Bermuda) Ltd, formerly known
as XL Insurance Ltd, a company also domiciled in Bermuda ( the “Reinsurer”).
The Reinsurer and the Company are hereinafter referred to collectively as the “Parties.”



RECITALS


                    WHEREAS,
the Parties previously entered
into a reinsurance agreement entitled the Excess of Loss Reinsurance Agreement executed
on October 3, 2001, as amended, pursuant to which the Reinsurer agreed to
reinsure certain liabilities of the Company (the “Reinsurance Agreement”);
and 


                    WHEREAS,
the vast majority of the
Reinsurer’s exposure under the Reinsurance Agreement is attributable to a
Facultative Quota Share Reinsurance Treaty dated as of October 6, 1999 as
amended and restated by an Amended and Restated Facultative Quota Share
Reinsurance Treaty dated as of June 22, 2001, as further amended and restated
by a Second Amended and Restated Facultative Quota Share Reinsurance Treaty
dated as of May 1, 2004, and as further amended and restated by a Third Amended
and Restated Facultative Quota Share Reinsurance Treaty dated as of June 29,
2006 (the “Quota Share”) pursuant to which the Company reinsures certain
liabilities of XL Capital Assurance Inc. (“XLCA”); and 


                    WHEREAS,
the Parties and XLCA are parties
to that certain Master Commutation, Release and Restructuring Agreement, dated
as of July __, 2008, by and among the Company, the Reinsurer, Security Capital
Assurance Ltd and other parties thereto (the “Master Transaction Agreement”),
pursuant to which (a) the Company and the Reinsurer have agreed to enter into
this Agreement; and (b) XLCA and the Company have agreed to commute the Quota
Share and fully and finally extinguish all of the parties’ rights and
obligations under the Quota Share (the “Quota Share Commutation”); and 


                    WHEREAS,
the Reinsurer believes it is entitled
to terminate the Reinsurance Agreement upon thirty (30) days notice and to seek
reimbursement of the monies it previously paid under the Reinsurance Agreement
based upon its belief that the Company used an improper “Threshold Amount” for
purposes of calculating the “Liability Amount” under the Reinsurance Agreement,
and the Company believes that the Reinsurer has no such entitlement and
confirms its position that it had used the proper Threshold Amount for purposes
of calculating the Liability Amount under the Reinsurance Agreement (the “Dispute”);
and 


                    WHEREAS,
the Parties agree that it is in
each of their best interests to freely and voluntarily enter into this
Agreement and the Master Transaction Agreement and to settle the Dispute and to
fully and forever release and discharge each other from their respective
existing and future liabilities and obligations, including contingent and
uncertain liabilities, both known and unknown, under the Reinsurance Agreement
and to compromise, resolve and settle all amounts due, or which may become due,
between each other arising out of, in respect of, or relating to the
Reinsurance Agreement; and 


Exh. 1.01(d)-1






                    WHEREAS,
the Company has agreed that it
will pay the Commutation Amount it receives under this Agreement as part of the
consideration it pays to XLCA under the Quota Share Commutation; 


                    WHEREAS,
the Company and the Reinsurer, or
their affiliates, may be parties to agreements other than the Reinsurance
Agreement, and it is the intent of the Parties that this Agreement will not
have any effect upon such other agreements. 


                    NOW,
THEREFORE, in consideration of the
covenants, conditions, promises and releases contained herein, and for other
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the Parties agree as follows: 


ARTICLE I


PAYMENT


                    (a)
The Reinsurer shall pay to the Company the sum of One Hundred Million Dollars
($100,000,000.00) (the “Commutation Amount”) via direct wire transfer,
in immediately available funds, in accordance with the payment instructions set
forth on Schedule A hereto on the Closing Date (as such term is defined
in the Master Transaction Agreement). The date on which the Commutation Amount
is paid and received shall be referred to hereinafter as the “Effective Date.”



                    (b)
The Company shall accept the Commutation Amount in full satisfaction of all of
the Reinsurer’s liabilities and obligations under the Reinsurance Agreement. 


ARTICLE II


RELEASE


                    (a)
Upon the Reinsurer’s payment of the Commutation Amount to the Company, the
Company, on behalf of itself and its shareholders, parents, affiliates and
subsidiaries, and their respective officers, directors and employees, hereby
irrevocably and unconditionally releases and forever discharges the Reinsurer,
its parents, subsidiaries and affiliates, and their respective predecessors,
successors, assigns, officers, directors, agents, employees, shareholders,
representatives, and attorneys from any and all present and future actions,
causes of action, suits, debts, liens, contracts, rights, agreements,
obligations, promises, liabilities, claims, counterclaims, demands, damages,
controversies, losses, costs and expenses (including attorneys’ fees and costs
actually incurred) of any kind, character, description or nature whatsoever,
known or unknown to either or both Parties, suspected or unsuspected, reported
or unreported, fixed or contingent, which the Company now has, owns or holds or
claims to have, own, or hold, or at any time heretofore had, owned, or held or
claimed to have had, owned, or held, or may hereafter have, own, or hold or
claim to have, own, or hold, arising out of conduct or matters occurring on,
prior to or subsequent to the Effective Date, against the Reinsurer, arising
directly or indirectly out of, based upon, or in any way related to or in
connection with the Reinsurance Agreement, whether grounded in law or equity, or
sounding in tort or contract or otherwise; provided, however,
that the provisions of this Article II(a) shall not discharge 


Exh. 1.01(d)-2






obligations of
the Reinsurer, which have been undertaken or imposed by the express terms of
this Agreement or the Master Transaction Agreement (including the Ancillary
Agreements). 


                    (b)
Contemporaneous with the payment of the Commutation Amount to the Company, the
Reinsurer, on behalf of itself and its shareholders, parents, affiliates and
subsidiaries, and their respective officers, directors and employees, hereby
irrevocably and unconditionally releases and forever discharges the Company,
its shareholders, parents, subsidiaries and affiliates, and their respective
predecessors, successors, assigns, officers, directors, agents, employees,
shareholders, representatives, and attorneys from any and all present and
future actions, causes of action, suits, debts, liens, contracts, rights,
agreements, obligations, promises, liabilities, claims, counterclaims, demands,
damages, controversies, losses, costs and expenses (including attorneys’ fees
and costs actually incurred) of any kind, character, description or nature
whatsoever, known or unknown to either or both Parties, suspected or
unsuspected, reported or unreported, fixed or contingent, which the Reinsurer
now has, owns, holds or claims to have, own, or hold, or at any time heretofore
had, owned, or held or claimed to have had, owned, or held, or may hereafter
have, own, or hold or claim to have, own, or hold, arising out of conduct or
matters occurring on, prior to or subsequent to the Effective Date, against the
Company, arising directly or indirectly out of, based upon, or in any way
related to or in connection with the Reinsurance Agreement, whether grounded in
law or equity or sounding in tort or contract or otherwise; provided, however,
that the provisions of this Article II(b) shall not discharge
obligations of the Company, which have been undertaken or imposed by the
express terms of this Agreement or the Master Transaction Agreement (including
the Ancillary Agreements). 


                    (c)
The Parties understand that it is possible that unknown losses or claims may
exist, or that present or future losses or claims may be underestimated in
amounts or severity. Furthermore, the Parties expressly accept and assume the
risk that the factual or legal assumptions made by any Party in connection with
this Agreement may be found hereafter to be different from the true facts or
law, and the Parties agree that this Agreement shall be and shall remain in
full force and effect notwithstanding such differences in facts or law. Each
Party expressly takes all of the foregoing into account in determining the
amount of consideration to be given and paid for the giving of this Agreement,
and a portion of the said consideration, having been bargained for between the
Parties with the knowledge of the possibility of such unknown losses and
claims, is given in exchange for the full accord, satisfaction and discharge of
all such losses and claims. 


                    (d)
Full payment of the Commutation Amount shall be in complete accord,
satisfaction, settlement and commutation of any and all past, current and
future liabilities and obligations that each Party owes or may owe to the other
arising directly or indirectly out of or related to or in connection with the
Reinsurance Agreement and that upon payment of the Commutation Amount, the
Reinsurance Agreement shall be terminated as of the Effective Date and neither
Party shall have any further obligation or liability to the other Party under
the Reinsurance Agreement. 


Exh. 1.01(d)-3






ARTICLE III


NON-RELIANCE


                    (a)
This Agreement fully and finally resolves the rights, duties and obligations of
the Company and the Reinsurer under the Reinsurance Agreement, and neither
Party shall: 


	
 

	
 


	
 

	
          (i)
 have any remedy in respect of any representation, warranty or undertaking of
 the other that is not specifically set forth in this Agreement, the Master
 Transaction Agreement, or the Ancillary Agreements commuting the reinsurance
 agreements listed in Part I of Schedule 2.01 of the Master Transaction
 Agreement, whether or not relied upon by the other Party; or 


	
 

	
 


	
 

	
          (ii)
 seek to reopen or set aside this Agreement or the Reinsurance Agreement on
 any basis whatsoever, including, without limitation, that this Agreement or
 the Reinsurance Agreement is void or voidable due to a mistake or change in
 law or a unilateral or mutual mistake of fact in any way related to this
 Agreement or the Reinsurance Agreement. 





                    (b)
The Company and the Reinsurer have voluntarily entered into this Agreement
based: (i) upon their own independent assessment of the relevant facts and
their rights and obligations under the Reinsurance Agreement and (ii) except as
expressly set forth in Article III and Article IV of the Master
Transaction Agreement, not upon any representations that were made or
disclosures that were made by the other Party, their affiliates, officers,
directors, shareholders, employees, representatives, agents, attorneys or their
respective heirs, administrators, predecessors, successors and assigns. Each
Party acknowledges that it has carefully read, and that it understands the
scope and effect of this Agreement and has had a full and fair opportunity to
consult with, and seek the advice and recommendations of its attorneys,
actuaries and other professional advisors prior to its execution of this
Agreement. 


                    (c)
This Agreement and the negotiations and proceedings leading to this Agreement
shall not form the basis of any claim by either Party against the other Party
or against any officer, director, consultant, professional or shareholder of
the other Party, except with respect to an action for enforcement of this
Agreement or the Master Transaction Agreement (including the Ancillary
Agreements). 


ARTICLE IV


EXCLUSIVE BENEFIT OF THE PARTIES AND BINDING
EFFECT


                    The
rights, duties and obligations set forth herein shall inure to the benefit of
and be binding upon the Company and the Reinsurer as they are identified in
this Agreement and their parents, subsidiaries and affiliates, and their
respective predecessors, successors, assigns, officers, directors, agents,
employees, shareholders, representatives, and attorneys and this Agreement is
not intended to confer any rights or benefits upon persons or entities other
than the foregoing parties. 


Exh. 1.01(d)-4






ARTICLE V


COMPROMISE


                    This
Agreement sets forth a compromise and shall never at any time for any purpose
be considered as an admission of liability or responsibility on the part of any
party hereto regarding any aspect of the Reinsurance Agreement. Neither this
Agreement nor any of its terms shall be admissible in any action, arbitration,
or proceeding other than one to enforce the terms of this Agreement or the
Master Transaction Agreement (including the Ancillary Agreements), including,
but not limited to, the releases provided in Article II. 


ARTICLE VI


FURTHER ASSURANCES


                    The
Parties, without further consideration, shall execute and deliver such other
documents and take such other action as may be necessary to effect this
Agreement. 


ARTICLE VII


MISCELLANEOUS


                    (a)
Should any part, term or provision of this Agreement, except Article I
or Article II, be declared or determined to be illegal or invalid
pursuant to a final and unappealable order of a court of competent
jurisdiction, the validity of the remaining parts, terms and provisions shall
not be affected thereby and such illegal or invalid part, term or provision
shall be deemed not to be part of this Agreement. If either Article I or
Article II is determined by a court of competent jurisdiction or
regulatory authority to be unenforceable, either Party, at its option, shall be
entitled to rescind this Agreement, and the Reinsurer shall be entitled to
repayment of the Commutation Amount immediately upon such rescission. Upon such
rescission, the Reinsurance Agreement and all rights, obligations and
liabilities of the Parties under the Reinsurance Agreement shall be reinstated
as if this Agreement had never been executed. Notwithstanding the foregoing,
the releases given pursuant to Article II shall remain in full force and
effect as to the Parties’ officers, directors, agents, employees, shareholders,
representatives, advisors and attorneys. 


                    (b)
This Agreement and the Master Transaction Agreement (including the Ancillary
Agreements thereto) set forth the entire agreement between the Parties with
respect to the subject matter hereof and supersedes all prior agreements or
understanding between them pertaining to the subject matter hereof. A facsimile
copy of a signature shall have the same force and effect as an original
signature. 


                    (c)
This Agreement may not be amended, altered, supplemented or modified, except by
written agreement signed by the Parties. 


Exh. 1.01(d)-5






                    (d)
This Agreement may be executed and delivered in multiple counterparts, each of
which, when so executed and delivered, shall be an original, but such
counterparts shall together constitute but one and the same instrument and
agreement. 


                    (e)
For purposes of this Agreement, a “Business Day” is any day other than a
Saturday, Sunday or a public holiday in Bermuda. 


                    (f)
This Agreement shall be governed by and construed in accordance with the laws
of Bermuda without regard to principles of conflicts of law or choice of law
and the Parties submit to the exclusive jurisdiction of the Supreme Court of
Bermuda in respect of all disputes arising out of or in connection with this
Agreement. 


                    (g)
All notices under this Agreement shall be in writing and shall be deemed to be
duly given and received (i) upon delivery if delivered by certified mail; or
(ii) on the next Business Day if sent by overnight courier (iii) on the date
sent by facsimile if sent during the recipient’s normal business hours or, if
sent by facsimile outside such hours, on the next Business Day; provided, that
such notices are sent to a Party to its Address for Notices set forth on Schedule
B hereto or to such other address as either Party may have furnished to the
other in writing. 


                    (h)
For all purposes this Agreement shall be deemed to have been drafted jointly by
the Parties. 


                    (i)
This Agreement is an agreement solely between the Company and the Reinsurer. No
right of action against the Reinsurer shall accrue to any insured,
policyholder, or other contracting party of the Company unless granted herein
by virtue of this Agreement. 


Exh. 1.01(d)-6






                    IN
WITNESS WHEREOF, the Parties have
executed this Agreement by their respective authorized officers as of the day
and year first written below. 


	
 

	
 

	
 

	
 

	
 


	
Dated:

	
 

	
 

	
XL FINANCIAL ASSURANCE LTD


	
 

	


	
 

	
 


	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
By: 

	
 


	
 

	
 

	
 

	
 

	



	
 

	
 

	
 

	
 

	
Name:


	
 

	
 

	
 

	
 

	
Title:


	
 

	
 

	
 

	
 

	
 


	
Dated:

	
 

	
 

	
XL INSURANCE (BERMUDA) LTD


	
 

	


	
 

	
FORMERLY KNOWN AS XL


	
 

	
 

	
 

	
INSURANCE LTD


	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
By: 

	
 


	
 

	
 

	
 

	
 

	



	
 

	
 

	
 

	
 

	
Name:


	
 

	
 

	
 

	
 

	
Title:





Exh. 1.01(d)-7






SCHEDULE A


WIRE TRANSFER INSTRUCTIONS


Transfer instructions for remitting funds to
XL Financial Assurance Ltd 


[Intentionally
omitted] 


Please send e-mail / fax containing details of
the transfer to: 


[Intentionally
omitted] 


Rebecca
O’Connell (VP & Assistant Treasurer) at SCA

Phone: (212) 478-3629

Fax: (212) 478-3587

E-mail: rebecca.oconnell@xlgroup.com 


Exh. 1.01(d)-8






SCHEDULE B


ADDRESS FOR NOTICE


	
 

	
 


	
TO THE COMPANY:


	
 


	
 

	
XL Financial
 Assurance Ltd


	
 

	
A.S. Cooper
 Building


	
 

	
26 Reid
 Street, 4th Floor


	
 

	
Hamilton,
 Bermuda HM 11


	
 

	
Attn:
 President


	
 

	
Facsimile:
 441-296-4351


	
 

	
 


	
 

	
and


	
 

	
 


	
 

	
XL Capital
 Assurance Inc.


	
 

	
1221 Avenue
 of the Americas


	
 

	
New York,
 New York 10022


	
 

	
Attn:
 General Counsel


	
 

	
Facsimile:
 212-478-3579


	
 

	
 


	
TO THE REINSURER:


	
 

	
 


	
 

	
XL Insurance
 (Bermuda) Ltd


	
 

	
XL House


	
 

	
One
 Bermudiana Road


	
 

	
Hamilton HM
 11


	
 

	
Bermuda


	
 

	
Attention:
 General Counsel


	
 

	
Facsimile:
 441-295-2840





Exh. 1.01(d)-9








\EXHIBIT 1.01(e)


FORM OF FACULTATIVE MASTER CERTIFICATE
COMMUTATION AGREEMENT


[Intentionally omitted—superseded by

Amendment No. 1 to Master Transaction Agreement]


Exhibit 1.01(e)








EXHIBIT 1.01(f)


FORM OF QUOTA SHARE TREATY COMMUTATION
AGREEMENT


[Intentionally omitted—superseded by

Amendment No. 1 to Master Transaction Agreement]


Exhibit 1.01(f)








EXHIBIT 1.01(g)


FORM OF SUBSCRIPTION AGREEMENT


[Intentionally omitted—superseded by

Amendment No. 1 to Master Transaction Agreement]


Exhibit 1.01(g)








EXHIBIT 1.01(h)


FORM OF XL STOCK RESALE AND REGISTRATION
RIGHTS AGREEMENT


[Intentionally omitted—superseded by the 

Amended and Restated Registration Rights Agreement

dated as of August 5, 2008]


Exhibit 1.01(h)








EXHIBIT 1.01(i)


FORM OF SCA SHAREHOLDER ENTITY AGREEMENT


Exhibit 1.01(i)






SHAREHOLDER AGREEMENT


          THIS
SHAREHOLDER AGREEMENT (this “Agreement”) dated August [__], 2008, is
entered into between [HSBC Private Bank, Bermuda Trust Company Limited] (the “Trustee”),
a Bermuda exempted company as trustee of the special purpose trust (the “Trust”)
established by the Declaration of Trust defined below and known as [name of
trust] (the “SCA Shareholder Entity”), and Security Capital Assurance
Ltd, a Bermuda exempted company (“SCA”). 


          WHEREAS,
SCA has entered into the Master Commutation, Release and Restructuring
Agreement dated as of July [__], 2008 (the “Master Restructuring Agreement”)
among SCA, XL Capital Assurance Inc. (“XLCA”), XL Financial Assurance
Ltd., XL Financial Administrative Services Inc., SCA Bermuda Administrative
Ltd., XL Capital Assurance (U.K.) Limited and those Portfolio Trusts a party
thereto, XL Capital Ltd., XL Insurance (Bermuda) Ltd. (“XLI”), XL
Reinsurance America Inc., X.L. Global Services Inc., XL Services (Bermuda)
Limited and X.L. America, Inc. and the consenting counterparties party thereto
(the “Consenting Counterparties”);


          WHEREAS,
the parties to the Master Restructuring Agreement have agreed that 30,069,049
Common Shares (as hereinafter defined), which represent approximately 46% of
the outstanding Common Shares and all of the Common Shares beneficially owned
by XLI as of the date of this Agreement (the “SCA Shares”), shall be
transferred to the SCA Shareholder Entity, which shall hold the SCA Shares in
accordance with the terms of that certain Declaration of Trust dated as of the
date hereof (the “Declaration of
Trust”) establishing the SCA Shareholder Entity; and 


          WHEREAS,
the parties to the Master Restructuring Agreement have agreed that in connection
with the transfer of the SCA Shares to the SCA Shareholder Entity, certain
rights afforded to XLI under the Bye-Laws (as hereinafter defined) and under
that certain transition agreement entered into on August 4, 2006 between XLI,
SCA and the other parties thereto shall be transferred to the SCA Shareholder
Entity.


          NOW,
THEREFORE, in consideration of the covenants and agreements contained herein,
the parties hereto agree as follows: 


          SECTION
1. Definitions. 


          (a)
“Act” means the Companies Act 1981 of Bermuda, as amended from time to
time.


          (b)
“Affiliate” means, with respect to any Person, any other Person directly
or indirectly controlling, controlled by or under common control with such
Person. For purposes of this definition, the term “control” (including its
correlative meanings, the terms “controlling”, “controlled by” and “under
common control with”) shall mean the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of a
Person, whether through the ownership of voting securities, by contract or
otherwise. For purposes of this Agreement, no Consenting Counterparty shall be
deemed to be an Affiliate of


Exh. 1.01(i)-1






the SCA
Shareholder Entity and the SCA Shareholder Entity shall not be deemed to be an
Affiliate of SCA or any of its Subsidiaries. 


          (c)
“Business Day” means any day excluding Saturday, Sunday and any day on
which banks in New York, New York or Hamilton, Bermuda have the option or are
required by law or other governmental action to close. 


          (d)
“Bye-Laws” means the Amended and Restated Bye-Laws of SCA, as amended
from time to time. 


          (e)
“Common Shares” means the common shares, $0.01 par value per common
share, of SCA, and any share capital into which such common shares shall have
been converted or any share capital resulting from a reclassification of such
common shares. 


          (f)
“Finance and Risk Oversight Committee” means the finance and risk
oversight committee of the SCA Board. 


          (g)
“Independent” means, with respect to any director or nominee for
director, an individual who is both (i) “independent” (as defined in the
corporate governance rules of the listing standards of the New York Stock
Exchange) of (A) SCA and its subsidiaries and (B) each Consenting Counterparty
and the SCA Shareholder Entity assuming for purposes of this clause (B) that
such independence standard were applied to, and such individual were a director
of, each such Consenting Counterparty and the SCA Shareholder Entity and (ii)
not a director, officer or employee of the SCA Shareholder Entity or any
Consenting Counterparty, or an officer or employee of SCA or any of its
Affiliates. 


          (h)
“Material Subsidiary” means at any time, (i) XLCA and (ii) any
subsidiary of SCA which at such time is a “significant subsidiary” under
Regulation S-X of the Securities Exchange Act of 1934, as amended. 


          (i)
“New York Stock Exchange” means the New York Stock Exchange Inc. 


          (j)
“Person” means an individual, corporation, partnership, association,
trust, limited liability company or any other entity or organization, including
a government or political subdivision or an agency, unit or instrumentality
thereof. 


          (k)
“Representatives” means with respect to any Person, such Person’s
Affiliates and its and their respective officers, directors, employees,
accountants, counsel, consultants, advisors, agents and representatives. 


          (l)
“SCA Board” means the board of directors of SCA. 


          (m)
“SCA Board Nominee” means an individual who was nominated for election
by the SCA Board (and who is not an SCA Shareholder Entity Nominee). 


          (n)
“Voting Restriction Termination Event” means the time at which the SCA
Shareholder Entity’s and its Affiliates’ aggregate ownership of the then
outstanding Common Shares is first equal to or less than 35%. 


Exh. 1.01(i)-2






          SECTION
2. Corporate Governance.


          (a)
Voting of SCA Shares. The SCA Shareholder Entity will vote the SCA
Shares at each annual or special meeting of stockholders of SCA at which
directors are to be elected, or execute proxies or written consents, as the
case may be, in favor of (i) each SCA Shareholder Entity Nominee then standing for
election and (ii) with respect to each other open board seat then standing for
election that is not required to be filled by an SCA Shareholder Entity Nominee
pursuant to Section 2(b) below, an individual that is Independent or, at the
SCA Shareholder Entity’s election, an SCA Board Nominee; provided that in exercising its discretion
pursuant to the foregoing clause (ii), the SCA Shareholder Entity will vote the
SCA Shares so that a majority of the SCA Board is at all times Independent; provided, however, that the SCA
Shareholder Entity shall not vote in favor of any individual who, to the SCA
Shareholder Entity’s knowledge (after reasonable inquiry), is either receiving
or entitled to receive, directly or indirectly, any compensation or entitlement
to indemnification, or is named or entitled to be named as a beneficiary under
any D&O insurance policy, for service on the SCA Board, any SCA Board
committees or any SCA subsidiary boards or committees from the Consenting
Counterparties or the SCA Shareholder Entity. 


	
 

	
 


	
 

	
(b) SCA
 Shareholder Entity Nominees. 


	
 

	
 


	
 

	
          (i)
 Until the occurrence of a Voting Restriction Termination Event, the SCA
 Shareholder Entity will have the right to nominate for the SCA Board (i) for
 so long as the SCA Board consists of nine or fewer directors, such number of
 nominees as would equal one nominee less than a majority of the directors and
 (ii) for so long as the SCA Board consists of ten or more directors, such
 number of nominees as would equal two nominees less than a majority of the
 directors (the “SCA Shareholder Entity Nominees”); provided that until the occurrence of a
 Voting Restriction Termination Event, the SCA Shareholder Entity shall at all
 times be entitled to nominate at least one nominee to the SCA Board. Such SCA
 Shareholder Entity Nominees will be allocated among the classes of the SCA
 Board as follows: (i) two to the “Class I” directors and (ii) one each to the
 “Class II” directors and “Class III” directors (or as substantially
 equivalent thereto if for any reason the SCA Board consists of more or fewer
 than nine directors), in each case, as such “classes” of directors are
 described in paragraph (3) of Section 8 of the Bye-Laws. For the avoidance of
 doubt, so long as the SCA Board consists of eleven directors, the SCA
 Shareholder Entity will have the right to nominate four of the eleven
 directors. If, for any reason, there is a vacancy in the SCA Board, which
 vacancy is of a director so nominated by the SCA Shareholder Entity, SCA
 shall replace that directorship as soon as practicable with a nominee
 selected by the SCA Shareholder Entity. Similarly, if there is a vacancy
 created by an increase in the number of directors, then such vacancy shall be
 filled in a manner consistent with the SCA Shareholder Entity’s rights set
 forth in this Section 2(b)(i). Moreover, if the size of the SCA Board is at
 any time reduced, the SCA Shareholder Entity shall cause such number of SCA
 Shareholder Entity Nominees, if any, in excess of those to which the SCA
 Shareholder Entity is entitled based on the reduced size of the SCA Board to
 resign from the SCA Board and any directorships they hold with subsidiaries
 of SCA. All SCA Shareholder Entity Nominees shall be Independent and shall be
 designated for nomination in accordance with Section 1.2.3 of Schedule B of
 the Declaration of Trust. SCA shall, subject to Section 2(b)(vi), take all
 action reasonably 





Exh. 1.01(i)-3






	
 

	
 


	
 

	
necessary to
 appoint the initial SCA Shareholder Entity Nominees to the SCA Board as
 promptly as practicable following the execution and delivery hereof.


	
 

	
 


	
 

	
          (ii)
 SCA shall include the SCA Shareholder Entity Nominees in each slate of
 directors proposed, recommended or nominated for election by SCA or the SCA
 Board, and will use the same efforts to cause the election of such nominees
 as it uses for the SCA Board Nominees in connection with that election (it
 being understood that for so long as the SCA Board shall remain classified
 under the Act, this Section 2(b)(ii) shall apply to only the SCA Shareholder
 Entity Nominees assigned to the appropriate “class” then up for election). 


	
 

	
 


	
 

	
          (iii)
 SCA agrees that each SCA Shareholder Entity Nominee shall be entitled to
 receive compensation and indemnification from SCA and its subsidiaries, and
 to be covered by D&O insurance policies of SCA and its subsidiaries, on
 the same terms as the SCA Board Nominees who are Independent. The SCA
 Shareholder Entity agrees that no SCA Shareholder Entity Nominee shall
 receive, directly or indirectly, any compensation or entitlement to
 indemnification, or be named as a beneficiary under any D&O insurance
 policy, for service on the SCA Board, any SCA Board committees or any SCA
 subsidiary boards or committees from the Consenting Counterparties or the SCA
 Shareholder Entity. 


	
 

	
 


	
 

	
          (iv)
 Notwithstanding any provision of SCA’s Corporate Governance Guidelines and
 any confidentiality undertaking by the SCA Shareholder Entity or any SCA
 Shareholder Entity Nominee to the contrary, the parties acknowledge and agree
 that each SCA Shareholder Entity Nominee (i) is hereby authorized to disclose
 information to the SCA Shareholder Entity and its Representatives, (ii) is
 under no obligation to communicate any information received from the SCA
 Shareholder Entity or any of its Representatives to the SCA Chairman or any
 other Person and (iii) is authorized to initiate communications, directly or
 indirectly, with the SCA Shareholder Entity and its Representatives without
 any requirement to first pre-clear such communications with the SCA Chairman
 or any other Person, in each case, to the extent such SCA Shareholder Entity
 Nominee determines in good faith that the taking or the failure to take any
 such actions will not be inconsistent with his or her fiduciary duties to SCA
 under applicable law. For the avoidance of doubt, the provisions of the
 immediately preceding sentence shall not apply to disclosures to or
 communications with the Consenting Counterparties or their Representatives.
 SCA shall, effective as of the date hereof, amend SCA’s Corporate Governance
 Guidelines to extent necessary so that SCA’s Corporate Governance Guidelines
 do not contain any provisions inconsistent with the second preceding
 sentence. 


	
 

	
 


	
 

	
          (v)
 Until the occurrence of a Voting Restriction Termination Event, the SCA
 Shareholder Entity will not form or join a “group” within the meaning of
 Section 13(d)(3) of the Exchange Act with any other Person, including without
 limitation any of the Consenting Counterparties, for the purpose of seeking
 to elect more than the number of SCA Shareholder Entity Nominees to which it
 is then entitled under Section 2(b)(i); provided
 that, subject to Section 2(a), the foregoing shall in no way prohibit the SCA
 Shareholder Entity from voting any securities of SCA in its discretion
 (including in 





Exh. 1.01(i)-4






	
 

	
 


	
 

	
connection
 with any election contest) or otherwise independently exercising its rights
 as a stockholder of SCA.


	
 

	
 


	
 

	
          (vi)
 The SCA Shareholder Entity agrees not to nominate any individual that SCA’s
 Nominating & Governance Committee, after having the opportunity to
 conduct a reasonable inquiry, reasonably determines in the good faith
 discharge of its fiduciary duties (i) does not meet the requirements set
 forth in the penultimate sentence of Section 2(b)(i) or would be a party to
 or benefit from any arrangement that would violate the last sentence of
 Section 2(b)(iii) or (ii) does not meet the suitability criteria of the SCA
 Board, which criteria shall be consistently applied to individuals presented
 as SCA Shareholder Entity Nominees to the same extent as those presented as
 Independent SCA Board Nominees. 


	
 

	
 


	
 

	
(c) Committees;
 Subsidiary Boards. 


	
 

	
 


	
 

	
          (i)
 Until the occurrence of the Voting Restriction Termination Event, (i) the SCA
 Shareholder Entity will have the right to designate one member of the SCA
 Compensation Committee and (ii) the Compensation Committee of the SCA Board
 shall consist of at least five members which number of members shall not be
 changed without the SCA Shareholder Entity’s prior consent (subject to any
 restrictions imposed by applicable law, rule or regulation). 


	
 

	
 


	
 

	
          (ii)
 Until the occurrence of the Voting Restriction Termination Event, (i) SCA
 will maintain a Finance and Risk Oversight Committee whose charter shall be
 substantially in its current form (with such changes thereto as may be agreed
 by a majority of the members of the Finance and Risk Oversight Committee and
 the SCA Board), (ii) the Finance and Risk Oversight Committee shall consist
 of at five members which number of members shall not be changed without the
 SCA Shareholder Entity’s prior consent, and (iii) two of the members of such
 Committee shall be SCA Shareholder Entity Nominees. 


	
 

	
 


	
 

	
          (iii)
 Other than the Audit Committee, a Compensation Committee, a Nominating &
 Governance Committee and a Finance and Risk Oversight Committee, SCA shall
 establish no other committees of the SCA Board without the prior written
 consent of at least a majority of the SCA Shareholder Entity Nominees then in
 office (which shall not unreasonably be withheld).


	
 

	
 


	
 

	
          (iv)
 Subject to applicable law (including the Act) and New York Stock Exchange
 regulations, until the occurrence of the Voting Restriction Termination
 Event, upon the request of the SCA Shareholder Entity, SCA and the SCA Board
 shall take all actions necessary so that the composition of the board of
 directors, general partner, managing member (or controlling committee
 thereof) or any other board or committee serving a similar function with respect
 to each of SCA’s Material Subsidiaries (each a “Subsidiary Board”)
 shall be proportionate to the composition requirements of the SCA Board such
 that the SCA Shareholder Entity shall have the same proportional
 representation (rounded to the nearest whole number of directors, but in no
 event less 





Exh. 1.01(i)-5






	
 

	
 


	
 

	
than one) on
 each such Subsidiary Board and committee thereof as it has on the SCA Board.


	
 

	
 


	
 

	
          (v)
 In each case where the SCA Shareholder Entity has the right to designate one
 or more members to any committee of the SCA Board, any Subsidiary Board or
 any committee thereof in accordance with this Section 2(c), the SCA Board
 shall select the SCA Shareholder Entity Nominee or SCA Shareholder Entity
 Nominees, as the case may be, to serve on such Subsidiary Board or committee
 in the same manner as Independent SCA Board Nominees are selected to serve on
 such Subsidiary Board or committee. 





          (d)
Notice of SCA Board Meetings. In addition to any other notice required
by the Act or the Bye-Laws, SCA shall give each SCA Shareholder Entity Nominee
the same notice and information provided to any other member of the SCA Board
with respect to each meeting of the SCA Board or any committee thereof (even if
such SCA Shareholder Entity Nominee is not a member of such committee), at the
same time such notice is first made available to any such other member of the
SCA Board; provided that if such
notice and information is given by means other than email, SCA shall,
simultaneously with the giving of such notice and information by such other
means, deliver such notice and information to each SCA Shareholder Entity
Nominee by email to the email address of such SCA Shareholder Entity Nominee
provided to SCA. 


          (e)
Approval of Certain Matters. In addition to any other actions or
approvals required under the Act or the Bye-Laws, each of SCA and the
Shareholder Entity Nominee agree that until the occurrence of the Voting
Restriction Termination Event, (i) the acquisition, sale, lease or transfer of
all or substantially all of the assets of SCA, (ii) the discontinuance or
redomestication of SCA out of Bermuda to another jurisdiction, (iii) mergers or
amalgamations and (iv) the liquidation, dissolution or winding-up of SCA shall,
in each case, require, as a condition to consummation thereof, the approval by
the affirmative vote of at least sixty-six and two-thirds percent (66 2/3%) of
the votes cast in accordance with the provisions of the Bye-Laws; provided that this Section 2(e) shall not
apply to the approval of any of the Transactions (as such term is defined in
the Master Restructuring Agreement). 


          SECTION
3. Certain Additional Agreements. 


          (a)
No Voting Reduction of SCA Shares. SCA hereby acknowledges and agrees
that for purposes of Section 44 of the Bye-Laws, (x) clause (ii) of paragraph
(1) of Section 44 of the Bye-Laws applies to the transfer of the SCA Shares by
XLI to the SCA Shareholder Entity and, in accordance with such clause, no
reduction in votes contemplated by Section 44 of the Bye-Laws shall occur with
respect to the SCA Shares or any other Common Shares acquired by the SCA
Shareholder Entity (or any Affiliate thereof) for so long as the SCA
Shareholder Entity (or any Affiliate thereof) continues to hold such shares,
(y) the Master Restructuring Agreement shall be deemed to constitute for all
purposes of Section 44 of the Bye-Laws the notice required to be delivered by
XLI to the SCA Board pursuant clause (ii) of paragraph (1) of Section 44 of the
Bye-Laws in connection with the transfer of the SCA Shares and no other
condition as to the applicability of such clause is required to be satisfied
and (z) the SCA Shareholder Entity (and its Affiliates) are entitled to the
full benefit of clause (ii) of paragraph (1) of Section 44 of the Bye-Laws
(including as to the applicability of such benefit to Section 45 of the
Bye-Laws).


Exh. 1.01(i)-6






          (b)
Applicability of Paragraph (2) of Bye-Law 44. The SCA Shareholder Entity
agrees that paragraph (2) of Section 44 of the Bye-Laws shall apply to the SCA
Shareholder Entity on a mutatis mutandis
basis as though the SCA Shareholder Entity were XL for purposes of such
paragraph. 


          (c)
Information Rights. Until the occurrence of the Voting Restriction
Termination Event, SCA shall furnish or make available to the SCA Shareholder
Entity, promptly after such information becomes available to SCA: 


	
 

	
 


	
 

	
          (i)
 such annual budget, business plans and financial forecasts as are customarily
 provided to the SCA Board; 


	
 

	
 


	
 

	
          (ii)
 following the end of each fiscal quarter and fiscal year of SCA, such
 consolidated financial statements and operations reports of SCA (including
 audit reports with respect to fiscal years) as are customarily provided to
 the SCA Board; and 


	
 

	
 


	
 

	
          (iii)
 all information that is provided to members of the Finance and Risk Oversight
 Committee in their capacity as such. 


	
 

	
 


	
          (d)
 Access. Until the occurrence of the Voting Restriction Termination
 Event, SCA will, and will cause its subsidiaries, officers, directors and
 employees to, afford that SCA Shareholder Entity and its Representatives the
 opportunity to discuss SCA’s and its subsidiaries’ affairs, finances and
 accounts with SCA’s and its subsidiaries’ officers from time to time as the
 SCA Shareholder Entity may reasonably request, in each event, only to the
 extent necessary or reasonably appropriate to accomplish the reasonable
 purpose of the proposed inspection.


	
 

	
 


	
 

	
(e) Confidentiality.


	
 

	
 


	
 

	
          (i)
 The SCA Shareholder Entity shall not, and shall not permit any of its
 Representatives to, disclose any information of a known confidential nature
 received from SCA or any of its subsidiaries in connection with the SCA
 Shareholder Entity’s investment in SCA (“Confidential Information”).
 The SCA Shareholder Entity may disclose Confidential Information to its
 Representatives so long as such Representatives are informed by the SCA
 Shareholder Entity of the confidential nature of such information and
 provided that in any event the SCA Shareholder Entity will be responsible for
 any breach of this Section 3(e) by its Representatives. For the avoidance of
 doubt, the SCA Shareholder Entity shall not disclose any Confidential
 Information to the Consenting Counterparties or any of their respective
 Representatives; provided that
 a Person that serves as an accountant, counsel, consultant, advisor, agent
 and/or other representative to both a Consenting Counterparty and the SCA
 Shareholder Entity shall not be deemed to be a Representative of such
 Consenting Counterparty if (A) such Person is not acting as a Representative
 of such Consenting Counterparty in connection with the transactions
 contemplated by the Master Restructuring Agreement and (B) internal
 information barriers customary for the applicable industry are established as
 may be reasonably necessary to prevent the unauthorized disclosure of
 Confidential Information between such Person and any Person serving as a
 Representative to such Consenting 





Exh. 1.01(i)-7






	
 

	
 


	
 

	
Counterparty
 with respect to the transactions contemplated by the Master Restructuring
 Agreement.


	
 

	
 


	
 

	
          (ii)
 “Confidential Information” shall not include information (A) that is
 or becomes generally known on a non-confidential basis from a source other
 than the SCA Shareholder Entity or its Representatives, (B) that has become
 available to the SCA Shareholder Entity on a non-confidential basis from a
 source that is not, to the SCA Shareholder Entity’s knowledge, under an
 obligation of confidentiality or (C) that has been developed by or on behalf
 of the SCA Shareholder Entity or any of its Representatives independently of
 any disclosure from SCA or its subsidiaries. 


	
 

	
 


	
 

	
          (iii)
 If the SCA Shareholder Entity or any of its Representatives is legally requested
 or required under an order or subpoena issued by a court, administrative
 agency or arbitration panel, or to comply with regulatory or ratings agency
 requests or requirements (through oral examination, interrogatories, requests
 for information or documents, civil investigation demand or other legal,
 administrative or arbitration processes) to disclose any Confidential
 Information, such Person being so requested or required to disclose such
 Confidential Information shall use reasonable efforts to give SCA such
 request or requirement prompt written notice of the request, requirement,
 subpoena or order to permit (to the extent reasonable) SCA (if it so elects
 at its expense) to seek an appropriate protective order preventing or
 limiting disclosure or waive compliance with the provisions of this Section
 3(e). If, in the absence of such protective order or waiver, the SCA
 Shareholder Entity or any of its Representatives is compelled to disclose
 Confidential Information, such Person may disclose such Confidential
 Information without liability hereunder. 


	
 

	
 


	
 

	
          (iv)
 The SCA Shareholder Entity agrees that money damages would not be a
 sufficient remedy for any breach of this Section 3(e) and that, in addition
 to all other remedies, SCA shall be entitled to specific performance and
 injunctive or other equitable relief as a remedy for any such breach. 


	
 

	
 


	
 

	
          (v)
 The SCA Shareholder Entity acknowledges that any information provided to the
 SCA Shareholder Entity or any of its Representatives by SCA pursuant to
 Section 3(c) or Section 3(d) may constitute material non-public information
 and that its possession of such information may subject the SCA Shareholder
 Entity to the restrictions imposed by federal and state securities laws on
 Persons in possession of material non-public information. 


	
 

	
 


	
 

	
(f) Constituent
 Documents.


	
 

	
 


	
 

	
          (i)
 SCA shall take or cause to be taken all lawful action necessary or
 appropriate to ensure that none of SCA’s Memorandum of Association, Bye-Laws,
 Corporate Governance Guidelines and any other similar documents of SCA and
 any of the corresponding constituent documents of SCA’s subsidiaries contain
 any provisions inconsistent with this Agreement or which would in any way
 nullify or impair the terms of this Agreement or the rights of the SCA
 Shareholder Entity hereunder. 





Exh. 1.01(i)-8






	
 

	
 


	
 

	
          (ii)
 Until the occurrence of the Voting Restriction Termination Event, SCA shall
 not, without the prior written consent of the SCA Shareholder Entity, amend,
 alter or repeal its Memorandum of Association, Bye-Laws, Corporate Governance
 Guidelines and any other similar document of SCA in any manner adverse to the
 SCA Shareholder Entity. 





          SECTION
4. Miscellaneous.


          (a)
Interpretation. In this Agreement, the SCA Shareholder Entity shall be
deemed to be the Trust, the Trustee (or any trustee or trustees of the Trust)
acting in its capacity as such trustee, in each case as the context may require
to be most protective of the interests of SCA. 


          (b)
Termination. This Agreement (except for the provisions of Sections 3(a)
and 3(e)) shall terminate upon the occurrence of the Voting Restriction
Termination Event at which time the SCA Shareholder Entity shall cause the SCA
Shareholder Entity Nominees to resign from the SCA Board and all directorships
they hold in subsidiaries of SCA. 


          (c)
Amendment and Waiver. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the SCA and the SCA
Shareholder Entity. Any party hereto may waive any right of such party
hereunder by an instrument in writing signed by such party and delivered to the
other party. The failure of any party to enforce any of the provisions of this
Agreement shall in no way be construed as a waiver of such provisions and shall
not affect the right of such party thereafter to enforce each and every
provision of this Agreement in accordance with its terms. 


          (d)
Severability. If any provision of this Agreement shall be declared by
any court of competent jurisdiction to be illegal, void or unenforceable, all
other provisions of this Agreement shall not be affected and shall remain in
full force and effect. 


          (e)
Entire Agreement. This Agreement embodies the complete agreement and
understanding among the parties hereto with respect to the subject matter
hereof and supersedes and preempts any prior understandings, agreements or
representations by or among the parties, written or oral, that may have related
to the subject matter hereof in any way. 


          (f)
Successors and Assigns. Neither this Agreement nor any right or
obligation hereunder is assignable in whole or in part by any party without the
prior written consent of the other party hereto; provided, that the SCA
Shareholder Entity may assign any or all its rights under this Agreement to one
or more of its Affiliates; provided, further, that no such
assignment shall relieve the SCA Shareholder Entity of any of its obligations
hereunder and all Common Shares held by any subsidiary or Affiliate of the SCA
Shareholder Entity shall be deemed to be held by the SCA Shareholder Entity for
all purposes under this Agreement. 


          (g)
Counterparts; Execution by Facsimile Signature. This Agreement may be
executed in any number of counterparts, each of which shall be an original, but
all of which together shall constitute one instrument. This Agreement may be
executed by facsimile signature(s). 


Exh. 1.01(i)-9






          (h)
Public Announcement. No party to this Agreement shall make, or cause to
be made, any press release or public announcement or otherwise communicate with
any news media in respect of this Agreement or the transactions contemplated
hereby without the prior consent of the other party and the parties shall
cooperate as to the timing of any such press release or public announcement; provided,
however, that this provision does not apply to any disclosures required
by law. 


          (i)
Notices. All notices required or permitted hereunder shall be in writing
and shall be deemed effectively given (i) upon personal delivery to the party
to be notified, (ii) when sent by confirmed facsimile if sent during normal
business hours of the recipient, if not, then on the next Business Day or (iii)
one Business Day after deposit with a nationally recognized overnight courier,
specifying next day delivery, with written verification of receipt. All
communications shall be sent to the addresses set forth below or such other
address or facsimile number as a party may from time to time specify by notice
to the other parties hereto: 


	
 

	
 

	
 


	
 

	
If to SCA: 


	
 

	
 

	
 


	
 

	
 

	
A.S. Cooper
 Building 


	
 

	
 

	
26 Reid
 Street, 4th Floor 


	
 

	
 

	
Hamilton HM
 11 


	
 

	
 

	
Bermuda 


	
 

	
 

	
Attention:
 General Counsel 


	
 

	
 

	
Fax: (441)
 296-4351 


	
 

	
 

	
 


	
 

	
with a copy
 (which shall not constitute notice) to: 


	
 

	
 

	
 


	
 

	
 

	
Weil,
 Gotshal & Manges LLP, 


	
 

	
 

	
767 Fifth
 Avenue 


	
 

	
 

	
New York,
 New York 10153 


	
 

	
 

	
Attention:
 Gary Holtzer 


	
 

	
 

	
Fax: (212)
 310-8007


	
 

	
 

	
 


	
 

	
If to the
 SCA Shareholder Entity: 


	
 

	
 

	
 


	
 

	
 

	
[ ___________________ ]


	
 

	
 

	
[ ___________________ ]


	
 

	
 

	
Attention: [  __________ ]


	
 

	
 

	
Fax: [ _______________ ]


	
 

	
 

	
 


	
 

	
with a copy
 (which shall not constitute notice) to: 


	
 

	
 

	
 


	
 

	
 

	
[ ___________________ ]


	
 

	
 

	
[ ___________________ ]


	
 

	
 

	
Attention: [  __________ ]


	
 

	
 

	
Fax: [ _______________ ]





Exh. 1.01(i)-10






	
 

	
 


	
 

	
(j) Governing
 Law; Consent to Jurisdiction.


	
 

	
 


	
 

	
          (i)
 This Agreement shall be governed in all respects by the laws of the State of
 New York, without regard to its conflicts of laws principles. 


	
 

	
 


	
 

	
          (ii)
 Each of the parties hereto agrees that any suit, action or proceeding seeking
 to enforce any provision of, or based on any matter arising out of or in
 connection with, this Agreement or the transactions contemplated hereby shall
 be brought in any Federal or state court located in the Borough of Manhattan
 in the City of New York, New York, and each of the parties hereby consents to
 the exclusive jurisdiction of such courts (and of the appropriate appellate
 courts therefrom) in any such suit, action or proceeding and irrevocably
 waives, to the fullest extent permitted by law, any objection which it may
 now or hereafter have to the laying of the venue of any such suit, action or
 proceeding in any such court or that any such suit, action or proceeding
 which is brought in any such court has been brought in an inconvenient forum.
 Process in any such suit, action or proceeding may be served on any party
 anywhere in the world, whether within or without the jurisdiction of any such
 court. Without limiting the foregoing, each party agrees that service of
 process on such party as provided in Section 4(i) shall be deemed effective
 service of process on such party. 


	
 

	
 


	
 

	
          (iii)
 Each of the parties hereto hereby irrevocably and unconditionally waives
 trial by jury in any legal Action or proceeding in relation to this Agreement
 and for any counterclaim therein. 





          (k)
Headings. The headings used in this Agreement have been inserted for
convenience of reference only and do not define or limit the provisions hereof.



          (l)
No Third Party Beneficiaries. This Agreement is solely for the benefit
of the parties hereto and shall not be deemed to confer upon third parties
(including stockholders or members of any party hereto) any remedy, claim,
reimbursement, claim of action or other right in excess of those existing
without reference to this Agreement. 


          (m)
Specific Performance. Each party hereto acknowledges that the remedies
at law of the other parties for a breach or threatened breach of this Agreement
would be inadequate and, in recognition of this fact, any party to this
Agreement, without posting any bond, and in addition to all other remedies that
may be available, shall be entitled to obtain equitable relief in the form of
specific performance, a temporary restraining order, a temporary or permanent
injunction or any other equitable remedy that may then be available. 


[signature page follows]


Exh. 1.01(i)-11






                    IN
WITNESS WHEREOF, the parties hereto have executed this Shareholders Agreement
as of the date first written above. 


	
 

	
 

	
 


	
 

	
SECURITY
 CAPITAL ASSURANCE LTD. 


	
 

	
 

	
 


	
 

	
By:

	
 


	
 

	
 

	



	
 

	
 

	
Name: 


	
 

	
 

	
Title: 


	
 

	
 

	
 


	
 

	
[SCA
 SHAREHOLDER ENTITY] 


	
 

	
 

	
 


	
 

	
By:

	
 


	
 

	
 

	



	
 

	
 

	
Name: 


	
 

	
 

	
Title: 





Exh. 1.01(i)-12








EXHIBIT 1.01(j)


FORM OF SCA REGISTRATION RIGHTS AGREEMENT


Exhibit 1.01(j)






REGISTRATION RIGHTS AGREEMENT


          REGISTRATION
RIGHTS AGREEMENT, dated as of August [__], 2008, by and between Security
Capital Assurance Ltd., a Bermuda exempted company (the “Company”), and [ HSBC
Private Bank,
Bermuda Trust Company Limited] (the “Trustee”),
a Bermuda exempted company as trustee of the special purpose trust (the “Trust”)
established by that certain
Declaration of Trust dated as of the date hereof and known as [name of trust]
(the “SCA Shareholder Entity”).


          WHEREAS,
pursuant to that certain Master Commutation, Release and Restructuring
Agreement, dated as of July [__], 2008, by and among the Company, XL
Capital Assurance Ltd., XL Financial Assurance Ltd., XL Capital Ltd. and the
other parties thereto (the “Master
Transaction Agreement”), among other things, the Company has
agreed to provide the SCA Shareholder Entity certain rights as set forth
herein. 


          NOW,
THEREFORE, in consideration of the premises and of the mutual covenants and
obligations hereinafter set forth (and for other good and valuable
consideration the receipt and sufficiency of which are hereby acknowledged by
the Company), the parties hereto hereby agree as follows: 


ARTICLE I 

DEFINITIONS


          Section
1.1 Certain Defined Terms. As used herein, the following terms shall
have the following meanings: 


          “Action”
means any legal,
administrative, regulatory or other suit, action, claim, audit, assessment,
arbitration or other proceeding, investigation or inquiry. 


          “Affiliate” shall
mean, with respect
to any Person, any other Person directly or indirectly controlling, controlled
by or under common control with, such Person. For purposes of this definition,
“control” (including its correlative meanings, “controlled by” and “under
common control with”) when used with respect to any Person, means the
possession, directly or indirectly, of the power to cause the direction of
management and/or policies of such Person, whether through the ownership of
voting securities, by contract or otherwise. 


          “Agreement” means
this Registration
Rights Agreement as it may be amended, supplemented, restated or modified from
time to time. 


          “Beneficial
Ownership” by a Person
of any securities includes ownership by any Person who, directly or indirectly,
through any contract, arrangement, understanding, relationship or otherwise,
has or shares (i) voting power which includes the power to vote, or to direct
the voting of, such security; and/or (ii) investment power which includes the
power to dispose, or to direct the disposition, of such security; and shall
otherwise be interpreted in accordance with the term “beneficial ownership” as
defined in Rule 13d-3 adopted by the SEC under the Exchange Act. The term “Beneficially
Own” shall have a
correlative meaning. 


Exh. 1.01(j)-1






          “Business
Day” means any day, other
than a Saturday, Sunday or a day on which banking institutions in New York, New
York are authorized or obligated to close. 


          “Common
Shares” means the Common
Shares, $0.01 par value per share, of the Company. 


          “Exchange
Act” means the Securities
Exchange Act of 1934, as amended, and the rules and regulations promulgated by
the SEC from time to time thereunder. 


          “Form
S-3” means such form under the
Securities Act as is in effect on the date hereof or any successor registration
form under the Securities Act subsequently adopted by the SEC which permits
inclusion or incorporation of substantial information by reference to other
documents filed by the Company with the SEC. 


          “Governmental
Entity” shall mean any
court, administrative agency or commission or other governmental authority or
instrumentality, whether federal, state, local or foreign and any applicable
industry self-regulatory organization. 


          “Holders” means
the SCA Shareholder
Entity and any Transferee of Registrable Securities that agrees to be bound by
the terms of this Agreement pursuant to Section 3.6 hereof (and “Holder” means any
of such Persons). 


          “Holders’
Representative” means the
SCA Shareholder Entity or any or any other Holder designated by the SCA
Shareholder Entity as the Holders’ Representative. 


          “Issuer Free Writing
Prospectus”
means an issuer free writing prospectus, as defined in Rule 433 under the
Securities Act, relating to an offer of the Registrable Securities. 


          “Law”
means any statute, law, code,
ordinance, rule or regulation of any Governmental Entity. 


          “Other Securities”
means Common Shares other than Registrable Securities. 


          “Person”
means any individual,
corporation, limited liability company, limited or general partnership, joint
venture, association, joint stock company, trust, unincorporated organization,
government or any agency or political subdivisions thereof or any group (within
the meaning of Section 13(d)(3) of the Exchange Act) comprised of two or more
of the foregoing. 


          “Prospectus” means
the prospectus
included in any Registration Statement (including a prospectus that discloses
information previously omitted from a prospectus filed as part of an effective
Registration Statement in reliance upon Rule 430A or Rule 430B promulgated
under the Securities Act), as amended or supplemented by any prospectus
supplement with respect to the terms of the offering of any portion of the
Registrable Securities covered by such Registration Statement, any Issuer Free
Writing Prospectus related thereto, and all other amendments and supplements to
such prospectus, including post-effective amendments, and all material
incorporated by reference or deemed to be incorporated by reference in such
prospectus. 


Exh. 1.01(j)-2






          “Registrable
Securities” means (a)
all Common Shares held by the SCA Shareholder Entity as of the date of this
Agreement, and (b) any securities issued directly or indirectly with respect to
such shares described in clause (a) because of stock splits, stock dividends,
reclassifications, recapitalizations, mergers, consolidations, or similar
events. As to any particular Registrable Securities, such Registrable
Securities shall cease to be Registrable Securities when (i) a Registration
Statement with respect to the sale of such securities shall have become effective
under the Securities Act and such securities shall have been disposed of in
accordance with such Registration Statement, or (ii) such securities shall have
been disposed of pursuant to Rule 144, or (iii) following any transfer of such
securities to a Transferee, such securities are eligible to be sold to the
public without volume limitations pursuant to Rule 144, it being understood
that in the event that such securities cease to be eligible to be sold to the
public without volume limitations pursuant to Rule 144 as a result of any act
or failure to act of the Company, then subject to clauses (i) and (ii) above
such securities will again be Registrable Securities hereunder until such time
as such securities are eligible to be sold to the public without volume
limitations pursuant to Rule 144. 


          “Registration
Statement” means any
registration statement of the Company under the Securities Act which permits
the public offering of any of the Registrable Securities pursuant to the
provisions of this Agreement, including the Prospectus, amendments and
supplements to such registration statement, including post-effective
amendments, all exhibits and all material incorporated by reference or deemed
to be incorporated by reference in such registration statement. 


          “Rule
144” means Rule 144 under the
Securities Act (or any successor provision). 


          “SEC”
means the United States
Securities and Exchange Commission. 


          “Securities
Act” means the
Securities Act of 1933, as amended, and the rules and regulations promulgated
by the SEC from time to time thereunder. 


          “Selling
Holder” means each Holder
of Registrable Securities included in a registration pursuant to Article II. 


          “Shelf Registration
Statement” means a
Registration Statement of the Company filed with the SEC on Form S-3 for an
offering to be made on a continuous or delayed basis pursuant to Rule 415 under
the Securities Act covering Registrable Securities. To the extent the Company
is a well-known seasoned issuer (as defined in Rule 405 under the Securities
Act), a “Shelf Registration Statement” shall be deemed to refer to an automatic
shelf registration statement (as defined in Rule 405 under the Securities Act)
on Form S-3. 


          A
“Subsidiary” of any person
means another person, an amount of the voting securities, other voting
ownership or voting partnership interests of which is sufficient to elect at
least a majority of its board of directors or other governing body (or, if
there are no such voting interests, 50% or more of the equity interests of
which) is owned directly or indirectly by such first person. 


          “Transferee” means
any of (i) the
transferee of all or any portion of the Registrable Securities held by the SCA
Shareholder Entity or (ii) the subsequent transferee of all or any 


Exh. 1.01(j)-3






portion of the
Registrable Securities held by any such transferee; provided, that no Transferee shall be entitled to
any
benefits of a Transferee hereunder unless such Transferee executes and delivers
to the Company an instrument substantially in the form provided as Exhibit A
attached hereto. 


          Section
1.2 Terms Generally. The definitions in Section 1.1 shall apply equally
to both 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”, unless the
context expressly provides otherwise. All references herein to Articles,
Sections, paragraphs, subparagraphs, clauses or Exhibits shall be deemed
references to Articles, Sections, paragraphs, subparagraphs or clauses of, or
Exhibits to, this Agreement, unless the context requires otherwise. Unless
otherwise expressly defined, terms defined in this Agreement have the same
meanings when used in any Exhibit hereto. Unless otherwise specified, the words
“this Agreement”, “herein”, “hereof”, “hereto” and
“hereunder” and other words of
similar import refer to this Agreement as a whole (including the Exhibits) and
not to any particular provision of this Agreement. The term “or” is not
exclusive. The word “extent” in the phrase “to the extent” shall mean the
degree to which a subject or other thing extends, and such phrase shall not
mean simply “if”. Unless expressly stated otherwise, any Law defined or
referred to herein means such Law as from time to time amended, modified or
supplemented, including by succession of comparable successor Laws and
references to all attachments thereto and instruments incorporated therein.
References to a Person are also to its permitted successors and assigns. The
headings contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement. 


ARTICLE II 

REGISTRATION
RIGHTS


          Section
2.1 Demand Registrations. (a) Subject to Section 2.1(h), at any time and
from time to time, the Holders’ Representative shall have the right by delivering
a written notice to the Company (a “Demand
Notice”) to require the Company to, pursuant to the terms of
this Agreement, register under and in accordance with the provisions of the
Securities Act the number of Registrable Securities Beneficially Owned by
Holders and requested by such Demand Notice to be so registered (a “Demand
Registration”); provided,
however, that a Demand Notice may only be made if the amount of
Registrable Securities requested to be registered is either (i) at least 20% of
the aggregate number of Registrable Securities then held by all Holders or (ii)
reasonably expected to generate aggregate gross proceeds on sale (prior to
deducting underwriting discounts and commissions and offering expenses) of at
least $10 million. A Demand Notice shall also specify the expected method or
methods of disposition of the applicable Registrable Securities. Following
receipt of a Demand Notice, the Company shall use its reasonable best efforts
to file, as promptly as reasonably practicable, but not later than, 60 days
with respect to any underwritten offering, or 30 days with respect to any other
offering, after receipt by the Company of such Demand Notice (subject to
paragraph (e) of this Section 2.1), a Registration Statement relating to the
offer and sale of the Registrable Securities requested to be included therein
by the Holders thereof in accordance with the methods of distribution elected
by such Holders (a “Demand Registration
Statement”) and shall use its 


Exh. 1.01(j)-4






reasonable
best efforts to cause such Registration Statement to be declared effective
under the Securities Act as promptly as practicable after the filing thereof. 


                    (b)
No securities shall be included under any Demand Registration Statement related
to an underwritten offering without the written consent of the Holders’
Representative, except Registrable Securities requested to be included therein
pursuant to Section 2.1(a). Subject to the preceding sentence, if any of the
Registrable Securities to be registered pursuant to a Demand Registration are
to be sold in a firm commitment underwritten offering, and the managing
underwriter(s) of such underwritten offering advise the Holders in writing that
it is their good faith opinion that the total number or dollar amount of
Registrable Securities proposed to be sold in such offering, together with any
Other Securities proposed to be included by holders thereof which are entitled
to include securities in such Registration Statement, exceeds the total number
or dollar amount of such securities that can be sold without having an adverse
effect on the price, timing or distribution of the Registrable Securities to be
so included together with all such Other Securities, then there shall be
included in such firm commitment underwritten offering the number or dollar
amount of Registrable Securities and such Other Securities that in the opinion
of such managing underwriter(s) can be sold without so adversely affecting such
offering, and such number of Registrable Securities and Other Securities shall
be allocated for inclusion as follows: 


	
 

	
 


	
 

	
          (i)
 first, the Registrable Securities for which inclusion in such demand offering
 was requested by the Holders, pro rata
 (if applicable), based on the number of Registrable Securities Beneficially
 Owned by each such Holder; and 


	
 

	
 


	
 

	
          (ii)
 second, among any holders of Other Securities, pro rata, based on the number of Other Securities
 Beneficially Owned by each such holder. 





                    (c)
The Holders collectively shall be entitled to request no more than three Demand
Registrations pursuant to this Section 2.1; provided, however,
that (i) in no event shall the Company be required to effect more than one
Demand Registration in any three-month period and (ii) subject to Section
2.1(h), in case the Company shall receive from the Holders’ Representative a
Demand Notice requesting that the Company effect a registration on Form S-3
(provided that the Company is eligible to effect such registration on Form S-3
at such time), the Company shall be obligated to effect any such Demand
Registration without regard to the number of Demand Registrations made. 


                    (d)
In the event of a Demand Registration, the Company shall use its reasonable
best efforts to maintain the continuous effectiveness of the applicable
Registration Statement for a period of at least 180 days after the effective
date thereof or such shorter period in which all Registrable Securities
included in such Registration Statement have actually been sold. For the
avoidance of doubt, the foregoing sentence is not intended to limit the
obligation of the Company to maintain the continuous effectiveness of the
Short-Form Registration contemplated by Section 2.2 as required by Section 2.2.



                    (e)
The Company shall be entitled to postpone (but not more than once in any
six-month period), for a reasonable period of time, together with any
postponement under Section 2.2(c), not in excess of 60 days (and not for
periods exceeding, in the aggregate, 90 days 


Exh. 1.01(j)-5






during any
twelve-month period), the filing or initial effectiveness of, or suspend the
use of, a Demand Registration Statement if the Company delivers to the Holders’
Representative a certificate signed by both the Chief Executive Officer and
Chief Financial Officer of the Company certifying that, in their good faith
judgment, such registration, offering or use would reasonably be expected to
materially adversely affect or materially interfere with any bona fide and
imminent material financing of the Company or any imminent material transaction
under consideration by the Company or would require the disclosure of
information that has not been, and is not otherwise required to be, disclosed
to the public, the premature disclosure of which would materially adversely
affect the Company. Such certificate shall contain, if requested by the
Holders’ Representative (and subject to their entering into a customary
confidentiality obligation as to such information), a reasonably detailed
statement of the reasons for such postponement or suspension and an
approximation of the anticipated delay. If the Company so postpones the filing
of a Registration Statement, the Holders’ Representative will have the right to
withdraw the request for registration by giving written notice to the Company
within ten days of the anticipated termination date of the postponement period,
as provided in the notice delivered to the Holders’ Representative and such
withdrawn registration will not count as a Demand Registration. 


                    (f)
The Holders’ Representative shall have the right to notify the Company that it
has determined that the Registration Statement relating to a Demand
Registration be abandoned or withdrawn, in which event the Company shall
promptly abandon or withdraw such Registration Statement. 


                    (g)
No request for registration will count for the purposes of the limitations in
Section 2.1(c) if: (A) the Holders’ Representative determines in good faith to
withdraw the proposed registration prior to the effectiveness of the
Registration Statement relating to such request due to marketing conditions or
regulatory reasons relating to the Company, (B) the Registration Statement
relating to such request is not declared effective within 60 days of the date
such Registration Statement is first filed with the SEC (other than solely by
reason of the applicable Holders having refused to proceed), (C) the
Registration Statement is not maintained effective for the period required
pursuant to this Section 2.1(d), (D) prior to the sale of at least 90% of the
Registrable Securities included in the applicable registration relating to such
request, such registration is adversely affected by any stop order, injunction
or other order or requirement of the SEC or other Governmental Entity or court,
(E) more than 10% of the Registrable Securities requested by the Holders to be
included in the registration are not so included pursuant to Section 2.1(b), or
(F) the conditions to closing specified in any underwriting agreement or
purchase agreement entered into in connection with the registration relating to
such request are not satisfied (other than as a result of a material default or
breach thereunder by the applicable Holders). Notwithstanding anything to the
contrary, the Company will pay all expenses (in accordance with Section 2.9) in
connection with any request for registration pursuant to this Agreement
regardless of whether or not such request counts toward the limitation set forth
above. 


                    (h)
Notwithstanding anything else to the contrary in this Section 2.1, if, prior to
any request for registration pursuant to this Section 2.1, (i) the Company
shall have filed a Shelf Registration Statement covering all of the Registrable
Securities in accordance with Section 2.2, (ii) the plan of distribution set
forth in such Shelf Registration Statement includes 


Exh. 1.01(j)-6






underwritten
offerings and (iii) the Shelf Registration Statement is effective when the
Holders’ Representative would otherwise make a request for registration under
this Section 2.1, the Company shall not be required to separately register any
Registrable Securities (including, for the avoidance of doubt, any request that
the Company effect a registration on Form S-3 pursuant to clause (ii) of
Section 2.1(c)) in response to such request, and such request shall be deemed
to be a request that the Company cooperate in effecting a Takedown of the
Registrable Securities pursuant to such Shelf Registration Statement. Subject
to Section 2.2(e), the Company may also register Other Securities on any such
Shelf Registration Statement. 


          Section
2.2 Shelf Registration. (a) As promptly as practicable (but no later
than 60 days) after the Company becomes eligible to effect a registration on
Form S-3 (and provided that the Company is eligible to effect such registration
at such time), the Company shall file with the SEC a Shelf Registration
Statement providing for the registration and sale of all of the Registrable
Securities by the Holders and shall use its reasonable best efforts to cause
such Shelf Registration Statement to be declared effective under the Securities
Act as soon as reasonably practicable thereafter (provided that the Company is
eligible to effect such registration at such time). 


                    (b)
Subject to the Company being eligible to do so under the Securities Act, the
Company shall use its reasonable best efforts to keep such Shelf Registration
Statement continuously effective under the Securities Act in order to permit
the Prospectus forming a part thereof to be usable by Holders until the earlier
of (i) all Common Shares held by all Holders are no longer Registrable
Securities and (ii) the date as of which all Registrable Securities have
been sold pursuant to the Shelf Registration Statement or another Registration
Statement has been filed under the Securities Act (but in no event prior to the
applicable period referred to in Section 4(3) of the Securities Act and
Rule 174 thereunder) (such period of effectiveness, the “Shelf Period”).
Subject to Section 2.2(c), the Company shall not be deemed to have used its
reasonable best efforts to keep the Shelf Registration Statement effective
during the Shelf Period if the Company voluntarily takes any action or omits to
take any action that would result in Holders of Registrable Securities covered
thereby not being able to offer and sell any Registrable Securities pursuant to
such Shelf Registration Statement during the Shelf Period, unless such action
or omission is required by applicable Law.


                    (c)
The Company shall be entitled to postpone (but not more than once in any
six-month period), for a reasonable period of time, together with any
postponement under Section 2.1(e), not in excess of 60 days (and not for
periods exceeding, in the aggregate, 90 days during any twelve-month period),
the filing or initial effectiveness of, or suspend the use of, a Shelf
Registration Statement if the Company delivers to the Holders’ Representative a
certificate signed by both the Chief Executive Officer and Chief Financial
Officer of the Company certifying that, in their good faith judgment, such
registration, offering or use would reasonably be expected to materially
adversely affect or materially interfere with any bona fide material financing
of the Company or any material transaction under consideration by the Company
or would require the disclosure of information that has not been, and is not
otherwise required to be, disclosed to the public, the premature disclosure of
which would materially adversely affect the Company. Such certificate shall
contain, if requested by the Holders’ Representative (and subject to their
entering into a customary confidentiality obligation as to such information), a
reasonably 


Exh. 1.01(j)-7






detailed
statement of the reasons for such postponement or suspension and an
approximation of the anticipated delay. 


                    (d)
Upon a written request from any Holder (an “Initiating Holder”) to effect an
offering under the Shelf
Registration Statement (a “Takedown”),
provided that the Company is eligible to utilize such Registration Statement at
such time, the Company will, as soon as practicable, (x) deliver a written
notice relating to the proposed Takedown to all other Holders and (y) promptly
(and in any event not later than twenty days after receiving such Initiating
Holder’s request) supplement the Prospectus included in the Shelf Registration
Statement as would permit or facilitate the sale and distribution of all or
such portion of such Initiating Holder’s Registrable Securities as are
specified in such request together with the Registrable Securities requested to
be included in such Takedown by any other Holders who notify the Company in writing
within ten business days after receipt of such written notice from the Company.
If the Company and/or the holders of any Other Securities request inclusion of
Other Securities in a Takedown, such Other Securities shall be included in the
Takedown if, and only if, inclusion of such Other Securities would not be
reasonably likely to delay in any material respect the timely effectuation of
the Takedown or the sale of Registrable Securities pursuant to the Takedown. In
the case of a request for or effectuation of a Takedown, all references in this
Agreement to the effective date of a Registration Statement shall be deemed to
refer to the date of pricing of such Takedown and all references to
registration shall be deemed to refer to the Takedown. 


                    (e)
If any of the Registrable Securities to be sold pursuant to a Shelf
Registration Statement are to be sold in a firm commitment underwritten
offering, and the managing underwriter(s) of such underwritten offering advise
the Holders in writing that it is their good faith opinion that the total
number or dollar amount of Registrable Securities proposed to be sold in such
offering, together with any Other Securities proposed to be included by holders
thereof which are entitled to include securities in such Registration
Statement, exceeds the total number or dollar amount of such securities that
can be sold without having an adverse effect on the price, timing or
distribution of the Registrable Securities to be so included together with all
such Other Securities, then there shall be included in such firm commitment
underwritten offering the number or dollar amount of Registrable Securities and
such Other Securities that in the opinion of such managing underwriter(s) can
be sold without so adversely affecting such offering, and such number of
Registrable Securities and Other Securities shall be allocated for inclusion as
follows: 


	
 

	
 


	
 

	
          (i)
 first, the Registrable Securities for which inclusion in such underwritten
 offering requested by the Holders, pro
 rata (if applicable), based on the number of Registrable
 Securities Beneficially Owned by each such Holder; and 


	
 

	
 


	
 

	
          (ii)
 second, among any holders of Other Securities, pro rata, based on the number of Other Securities
 Beneficially Owned by each such holder of Other Securities. 





          Section
2.3 Piggyback Registrations. (a) If, other than pursuant to Section 2.1
or Section 2.2, the Company proposes or is required to file a registration
statement under the Securities Act with respect to an offering of Common
Shares, whether or not for sale for its own account (other than a registration
statement (i) on Form S-4, Form S-8 or any successor forms 


Exh. 1.01(j)-8






thereto, (ii)
filed solely in connection with any employee benefit or dividend reinvestment
plan, or (iii) so long as a Shelf Registration Statement is effective and
available pursuant to Section 2.2 hereof, filed solely in connection with the
issuance or resale of Common Shares issuable upon conversion, exercise or
exchange of any securities of the Company or any of its Subsidiaries, where
such convertible, exercisable or exchangeable securities were issued in, or as
part of, a financing transaction), in a manner that would permit registration
of Registrable Securities for sale to the public under the Securities Act, then
the Company shall give prompt written notice of such proposed filing at least
30 days before the anticipated filing date (the “Piggyback Notice”) to the Holders.
The Piggyback
Notice shall offer the Holders the opportunity to include in such registration
statement the number of Registrable Securities as they may request (a “Piggyback
Registration”). Subject
to Section 2.3(b) hereof, the Company shall include in each such Piggyback
Registration all Registrable Securities with respect to which the Company has
received written requests for inclusion therein within 15 days after notice has
been given to the Holders, to permit the distribution of such Registrable
Securities in accordance with the methods of distribution elected by such
Holders. The Holders shall be permitted to withdraw all or part of the
Registrable Securities from a Piggyback Registration at any time at least two
Business Days prior to the effective date of the Registration Statement
relating to such Piggyback Registration. The Company shall use its reasonable
best efforts to maintain the effectiveness of the Registration Statement for a
Piggyback Registration for a period of at least 180 days after the effective
date thereof or such shorter period in which all Registrable Securities
included in such Registration Statement have actually been sold. No Piggyback
Registration shall count towards registrations required under Section 2.1. 


                    (b)
If any of the securities to be registered pursuant to the registration giving
rise to the Holders’ rights under this Section 2.3 are to be sold in an
underwritten offering, the Holders shall be permitted to include all
Registrable Securities requested to be included in such registration in such
offering on the same terms and conditions as any Other Securities included
therein; provided, however, that if such offering involves a firm
commitment underwritten offering and the managing underwriter(s) of such
underwritten offering advise the Company in writing that it is their good faith
opinion that the total amount of Registrable Securities requested to be so
included, together with all Other Securities that the Company and any other
Persons having rights to participate in such registration intend to include in
such offering, exceeds the total number or dollar amount of such securities
that can be sold without having an adverse effect on the price, timing or
distribution of the Registrable Securities to be so included together with all
Other Securities, then there shall be included in such firm commitment
underwritten offering the number or dollar amount of Registrable Securities and
such Other Securities that in the opinion of such managing underwriter(s) can
be sold without so adversely affecting such offering, and such number of
Registrable Securities and Other Securities shall be allocated for inclusion as
follows: 


	
 

	
 


	
 

	
          (i)
 first, all Other Securities being sold by the Company for its own account or
 by any Person (other than a Holder) exercising a contractual right to demand
 registration; 


	
 

	
 


	
 

	
          (ii)
 second, all Registrable Securities requested to be included by the Holders, pro rata (if
applicable), based on the
 number of Registrable Securities Beneficially Owned by each such Holder; and 





Exh. 1.01(j)-9






	
 

	
 


	
 

	
          (iii)
 third, among any other holders of Other Securities requesting such
 registration, pro rata, based
 on the number of Other Securities Beneficially Owned by each such holder of
 Other Securities. 





          Section
2.4 Registration Procedures. If and whenever the Company is required to
use its reasonable best efforts to effect the registration of any Registrable
Securities under the Securities Act as provided in Article II, the Company
shall effect such registration to permit the sale of such Registrable
Securities in accordance with the intended method or methods of disposition
thereof, and pursuant thereto the Company shall cooperate in the sale of the
securities and shall, as expeditiously as possible (to the extent applicable,
in the case of a Takedown): 


                    (a)
Prepare and file with the SEC a Registration Statement or Registration
Statements on such form which shall be available for the sale of the
Registrable Securities by the Holders or the Company in accordance with the
intended method or methods of distribution thereof, and use its reasonable best
efforts to cause such Registration Statement to become effective and to remain
effective as provided herein; provided, however, that before
filing a Registration Statement or Prospectus or any amendments or supplements
thereto (excluding documents that would be incorporated or deemed to be
incorporated therein by reference), the Company shall furnish or otherwise make
available to the Selling Holders, their counsel and the managing
underwriter(s), if any, copies of all such documents proposed to be filed,
which documents will be subject to the reasonable review and comment of such
counsel, and such other documents reasonably requested by such counsel, including
any comment letter from the SEC, and, if requested by such counsel, provide
such counsel reasonable opportunity to participate in the preparation of such
Registration Statement and each Prospectus included therein and such other
opportunities to conduct a reasonable investigation within the meaning of the
Securities Act, including reasonable access to the Company’s books and records,
officers, accountants and other advisors. The Company shall not file any such
Registration Statement or Prospectus or any amendments or supplements thereto
(excluding such documents that, upon filing, would be incorporated or deemed to
be incorporated by reference therein) with respect to any registration pursuant
to Section 2.1, 2.2 or 2.3 to which any Holder (if such Registration Statement
includes Registrable Securities of such Holder), its counsel, or the managing
underwriter(s), if any, shall reasonably object, in writing, on a timely basis,
unless, in the opinion of the Company, such filing is necessary to comply with
applicable Law. 


                    (b)
Prepare and file with the SEC such amendments and post-effective amendments to
each Registration Statement as may be necessary to keep such Registration
Statement continuously effective during the period provided herein and comply
in all material respects with the provisions of the Securities Act with respect
to the disposition of all securities covered by such Registration Statement,
and cause the related Prospectus to be supplemented by any Prospectus
supplement or Issuer Free Writing Prospectus as may be necessary to comply with
the provisions of the Securities Act with respect to the disposition of the
securities covered by such Registration Statement, and as so supplemented to be
filed pursuant to Rule 424 (or any similar provisions then in force) under the
Securities Act. 


                    (c)
Notify each Selling Holder and the managing underwriter(s), if any, promptly,
and (if requested by any such Person) confirm such notice in writing, (i) when
a Prospectus or any Prospectus supplement, Issuer Free Writing Prospectus or
post-effective


Exh. 1.01(j)-10






amendment has been filed, and, with respect to a Registration
Statement or any post-effective amendment, when the same has become effective,
(ii) of any request by the SEC or any other
Governmental Entity for amendments or supplements to a Registration Statement
or related Prospectus or Issuer Free Writing Prospectus or for additional
information, (iii) of the issuance by the SEC of any stop order suspending the
effectiveness of a Registration Statement or the initiation of any proceedings
for that purpose, (iv) if at any time the representations and warranties of the
Company contained in any agreement (including any underwriting agreement
contemplated by Section 2.4(o) below) cease to be true and correct, (v) of the
receipt by the Company of any notification with respect to the suspension of
the qualification or exemption from qualification of any of the Registrable
Securities for sale in any jurisdiction, or the initiation or threatening of
any proceeding for such purpose, and (vi) of the happening of any event that
makes any statement made in such Registration Statement or related Prospectus
or any document incorporated or deemed to be incorporated therein by reference
or any Issuer Free Writing Prospectus related thereto untrue in any material
respect or that requires the making of any changes in such Registration
Statement, Prospectus, documents or Issuer Free Writing Prospectus so that, in
the case of the Registration Statement, it will not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, not misleading, and
that in the case of any Prospectus or Issuer Free Writing Prospectus, it will
not contain any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. 


                    (d)
Use its reasonable best efforts to avoid the issuance of any order suspending
the effectiveness of a Registration Statement or any suspension of the
qualification (or exemption from qualification) of any of the Registrable
Securities for sale in any jurisdiction, or, if issued, to obtain the
withdrawal or lifting of any such order or suspension at the reasonably
earliest practicable date. 


                    (e)
If requested by the managing underwriter(s), if any, or the Holders of a majority
of the Registrable Securities being sold in connection with an underwritten
offering, promptly include in a Prospectus supplement, post-effective amendment
or Issuer Free Writing Prospectus such information as the managing
underwriter(s), if any, or such Holders may reasonably request in order to
permit the intended method of distribution of such securities and make all
required filings of such Prospectus supplement, such post-effective amendment
or Issuer Free Writing Prospectus as soon as practicable after the Company has
received such request. 


                    (f)
Furnish or make available to each Selling Holder, and each managing
underwriter, if any, without charge, such number of conformed copies of the
Registration Statement and each post-effective amendment thereto, including
financial statements (but excluding schedules, all documents incorporated or
deemed to be incorporated therein by reference, and all exhibits, unless
requested in writing by such Holder, counsel or managing underwriter(s)), and
such other documents, as such Holders or such managing underwriter(s) may
reasonably request, and upon request a copy of any and all transmittal letters
or other correspondence to or received from, the SEC or any other Governmental
Entity relating to such offering.


Exh. 1.01(j)-11






                    (g)
Deliver to each Selling Holder, and the managing underwriter(s), if any,
without charge, as many copies of the Prospectus or Prospectuses (including
each form of Prospectus and any Issuer Free Writing Prospectus related to any
such Prospectuses) and each amendment or supplement thereto as such Persons may
reasonably request in connection with the distribution of the Registrable
Securities; and the Company, subject to Section 2.5(b), hereby consents to the
use of such Prospectus and each amendment or supplement thereto by each of the
Selling Holders and the managing underwriter(s), if any, in connection with the
offering and sale of the Registrable Securities covered by such Prospectus and
any such amendment or supplement thereto. 


                    (h)
Prior to any public offering of Registrable Securities, use its reasonable best
efforts to register or qualify or cooperate with the Selling Holders, the
managing underwriter(s), if any, and their respective counsel in connection
with the registration or qualification (or exemption from such registration or
qualification) of such Registrable Securities for offer and sale under the
securities or “Blue Sky” laws of such jurisdictions within the United States as
any Selling Holder or managing underwriter(s) reasonably requests in writing
and to keep each such registration or qualification (or exemption therefrom)
effective during the period such Registration Statement is required to be kept
effective and to take any other action that may be necessary or advisable to
enable such Selling Holders to consummate the disposition of such Registrable
Securities in such jurisdiction; provided, however, that the
Company will not be required to (i) qualify generally to do business in any
jurisdiction where it is not then so qualified, (ii) subject itself to material
taxation in any such jurisdiction where it is not then so subject, or (iii)
take any action that would subject it to general service of process in any such
jurisdiction where it is not then so subject. 


                    (i)
Cooperate with the Selling Holders and the managing underwriter(s), if any, to
facilitate the timely preparation and delivery of certificates (not bearing any
legends) representing Registrable Securities to be sold after receiving written
representations from each Selling Holder that the Registrable Securities
represented by the certificates so delivered by such Selling Holder will be
transferred in accordance with the Registration Statement, and enable such
Registrable Securities to be in such denominations and registered in such names
as the managing underwriter(s), if any, or the Selling Holders may request at
least two Business Days prior to any sale of Registrable Securities. 


                    (j)
Use its reasonable best efforts to cause the Registrable Securities covered by
the Registration Statement to be registered with or approved by such other
Governmental Entities within the United States, except as may be required
solely as a consequence of the nature of such Selling Holder’s business, in
which case the Company will cooperate in all reasonable respects with the
filing of such Registration Statement and the granting of such approvals, as
may be necessary to enable the seller or sellers thereof or the managing
underwriter(s), if any, to consummate the disposition of such Registrable
Securities. 


                    (k)
Upon the occurrence of any event contemplated by Section 2.4(c)(ii), (c)(iii),
(c)(iv), (c)(v) or (c)(vi) above, prepare a supplement or post-effective
amendment to the Registration Statement or a supplement to the related
Prospectus or any document incorporated or deemed to be incorporated therein by
reference or an Issuer Free Writing Prospectus related thereto, or file any
other required document so that, as thereafter delivered to the Selling
Holders, 


Exh. 1.01(j)-12






such
Prospectus will not contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. 


                    (l)
Prior to the effective date of the Registration Statement relating to the
Registrable Securities, provide a CUSIP number for the Registrable Securities. 


                    (m)
Provide and cause to be maintained a transfer agent and registrar for all
Registrable Securities covered by such Registration Statement from and after a
date not later than the effective date of such Registration Statement. 


                    (n)
To the extent that the Common Shares are then listed on any national securities
exchange, use reasonable best efforts to cause all Registrable Securities
covered by such Registration Statement to be authorized to be listed on such
national securities exchange, provided, however, that the Company shall have no
obligation under this Section 2.3(n) if at the time of such registration the
Company or Common Shares do not satisfy all criteria imposed by such national
securities exchange to maintain such listing. 


                    (o)
Enter into such agreements (including an underwriting agreement in form, scope
and substance as is customary in underwritten offerings) and take all such
other actions reasonably requested by the Holders of a majority of the
Registrable Securities being sold in connection therewith or by the managing
underwriter(s), if any, to expedite or facilitate the disposition of such
Registrable Securities, and in connection therewith, whether or not an
underwriting agreement is entered into and whether or not the registration is
an underwritten registration, (i) make such representations and warranties to
the Selling Holders and the managing underwriter(s), if any, with respect to
the business of the Company and its Subsidiaries, and the Registration
Statement, Prospectus and documents, if any, incorporated or deemed to be
incorporated by reference therein, in each case, in form, substance and scope
as are customarily made by issuers in underwritten offerings, and, if true,
confirm the same if and when requested, (ii) use its reasonable best efforts to
furnish to the Selling Holders of such Registrable Securities opinions of
counsel to the Company and updates thereof (which counsel and opinions (in
form, scope and substance) shall be reasonably satisfactory to the managing
underwriter(s), if any, and counsels to the Selling Holders of the Registrable
Securities), addressed to each Selling Holder of Registrable Securities and
each of the managing underwriter(s), if any, covering the matters customarily
covered in opinions requested in underwritten offerings and such other matters
as may be reasonably requested by such counsel and managing underwriter(s),
(iii) use its reasonable best efforts to obtain “comfort” letters and updates
thereof from the independent certified public accountants of the Company (and,
if necessary, any other independent certified public accountants of any
Subsidiary of the Company or of any business acquired by the Company for which
financial statements and financial data are, or are required to be, included in
the Registration Statement) who have certified the financial statements
included in such Registration Statement, addressed to each Selling Holder of
Registrable Securities (unless such accountants shall be prohibited from so
addressing such letters by applicable standards of the accounting profession or
such action is otherwise inconsistent with the then current practice in the
accounting profession) and each of the managing underwriter(s), if any, such
letters to be in customary form and covering matters of the type customarily
covered in “comfort” letters in connection with underwritten offerings, (iv) if
an underwriting agreement is entered into, the 


Exh. 1.01(j)-13






same shall
contain customary indemnification provisions and procedures, except as
otherwise agreed by the Holders of a majority of the Registrable Securities
being sold in connection therewith and the managing underwriter(s), if any, and
(v) deliver such documents and certificates as may be reasonably requested by
the Holders of a majority of the Registrable Securities being sold in
connection therewith, their counsel and the managing underwriter(s), if any, to
evidence the continued validity of the representations and warranties made
pursuant to clause (i) above and to evidence compliance with any customary
conditions contained in the underwriting agreement or other agreement entered
into by the Company. The above shall be done at each closing under such underwriting
or similar agreement, or as and to the extent required thereunder.


                    (p)
Upon execution of a customary confidentiality agreement, make available for
inspection by a representative of the Selling Holders, the managing underwriter(s),
if any, and any attorneys or accountants retained by such Selling Holders or
managing underwriter(s), at the offices where normally kept, during reasonable
business hours, financial and other records, pertinent corporate documents and
properties of the Company and its Subsidiaries, and cause the officers,
directors and employees of the Company and its Subsidiaries to supply all
information in each case reasonably requested by any such representative,
managing underwriter(s), attorney or accountant in connection with such
Registration Statement. 


                    (q)
Cause its officers to use their reasonable best efforts to support the
marketing of the Registrable Securities covered by the Registration Statement
(including, without limitation, by participation in “road shows” and appearing
before rating agencies) taking into account the Company’s business needs. 


                    (r)
Otherwise use its reasonable best efforts to comply with all applicable rules
and regulations of the SEC and any applicable national securities exchange, and
make available to its security holders, as soon as reasonably practicable (but
not more than 18 months) after the effective date of the registration
statement, an earnings statement which shall satisfy the provisions of Section
11(a) of the Securities Act. 


          Section
2.5 Certain Additional Agreements.


                    (a)
The Company may require each Selling Holder to furnish to the Company in
writing such information required in connection with such registration
regarding such Selling Holder and the distribution of such Registrable
Securities as the Company may, from time to time, reasonably request in writing
and the Company may exclude from such registration the Registrable Securities
of any Selling Holder who fails to furnish such information within a reasonable
time after receiving such request. 


                    (b)
Each Selling Holder agrees that upon receipt of any notice from the Company of
the happening of any event of the kind described in Section 2.4(c)(iii) or
(c)(vi) hereof, such Holder will forthwith discontinue disposition of such
Registrable Securities covered by such Registration Statement or Prospectus
until such Holder’s receipt of the copies of the supplemented or amended
Prospectus contemplated by Section 2.4(k) hereof, or until it is advised in
writing by the Company that the use of the applicable Prospectus may be
resumed, and has received copies of any additional or supplemental filings that
are incorporated or deemed 


Exh. 1.01(j)-14






to be
incorporated by reference in such Prospectus; provided, however, that (i) in no
event shall such discontinuance exceed the time period set forth in Section
2.1(e) hereof, and (ii) the Company shall extend the time periods under Section
2.1 and Section 2.3 with respect to the length of time that the effectiveness
of a Registration Statement must be maintained by the amount of time the Holder
is required to discontinue disposition of such securities. 


                    (c)
The Company covenants and agrees that, so long as any Holder holds any
Registrable Securities in respect of which any registration rights provided for
in this Article II remain in effect, the Company will not, directly or
indirectly, grant to any Person or agree to or otherwise become obligated in
respect of rights of registration in the nature or substantially in the nature
of those set forth in this Article II that would have priority over the
Registrable Securities with respect to the inclusion of such securities in any
registration by the Company (other than rights granted to a new registration
rights holder after the date hereof to exercise a contractual right to demand
registration that have terms no more favorable than the demand registration
rights granted to the Holders in this Agreement), without the prior written
consent of the Holders’ Representative. The Company has not entered into and
will not enter into any agreement that is inconsistent with the rights granted
to the Holders in this Agreement or otherwise conflicts with the provisions
hereof. The rights granted to the Holders hereunder do not in any way conflict
with and are not inconsistent with the rights granted prior to the date hereof
to the holders of any of the Company’s other issued and outstanding securities
under any such agreements.


                    (d)
E ach Holder covenants and agrees that it will comply with the prospectus
delivery requirements of the Securities Act as applicable to it or an exemption
therefrom in connection with sale of Registrable Securities pursuant to the
Registration Statement. 


          Section
2.6 Indemnification.


                    (a)
Indemnification by the Company. The Company shall indemnify and hold
harmless, to the fullest extent permitted by Law, each Selling Holder whose
Registrable Securities are covered by a Registration Statement or Prospectus,
the officers, directors, partners (limited and general), members, managers,
shareholders, accountants, attorneys, agents and employees of each of them,
each Person who controls (within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act) each such Selling Holder and the
officers, directors, partners (limited and general), members, managers,
shareholders, accountants, attorneys, agents and employees of each such
controlling Person, each underwriter (including any Holder that is deemed to be
an underwriter pursuant to any SEC comments or policies), if any, and each
Person who controls (within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act) such underwriter (collectively, “Holder
Indemnitees”), from and against any and all losses, claims,
damages, liabilities, expenses (including, without limitation, costs of
preparation and reasonable attorneys’ fees and any other reasonable fees or
expenses incurred by such party in connection with any investigation or
Action), judgments, fines, penalties, charges and amounts paid in settlement
(collectively, “Losses”),
as incurred, arising out of or based upon any untrue statement (or alleged
untrue statement) of a material fact contained in any applicable Registration
Statement (or in any preliminary or final Prospectus contained therein, any
document incorporated by reference therein or Issuer Free Writing Prospectus
related thereto) amendment of or supplement to any of the foregoing or other 


Exh. 1.01(j)-15






document
incident to any such registration, qualification, or compliance, or based on
any omission (or alleged omission) to state therein (in the case of a final or
preliminary Prospectus, in light of the circumstances under which they were
made) a material fact required to be stated therein or necessary to make the
statements therein not misleading, or any violation by the Company of the
Securities Act or of the Exchange Act in connection with any such registration,
qualification, or compliance; provided, that the Company will not be liable to
a Selling Holder or underwriter, as the case may be, in any such case to the
extent that any such Loss arises out of or is based on any untrue statement or
omission by such Selling Holder or underwriter, as the case may be, but only to
the extent, that such untrue statement (or alleged untrue statement) or
omission (or alleged omission) is made in such Registration Statement (or in
any preliminary or final Prospectus contained therein, any document
incorporated by reference therein or Issuer Free Writing Prospectus related
thereto), amendment of or supplement to any of the foregoing or other document
in reliance upon and in conformity with written information furnished to the
Company by such Selling Holder or underwriter specifically for inclusion in
such document; and provided, further, that the Company will not be liable to
any Person who participates as an underwriter in any underwritten offering or
sale of Registrable Securities, or to any Person who is a Selling Holder in any
non-underwritten offering or sale of Registrable Securities, or any other
Person, if any, who controls such underwriter or Selling Holder within the
meaning of the Securities Act, under the indemnity agreement in this Section
2.6 with respect to any preliminary Prospectus or the final Prospectus
(including any amended or supplemented preliminary or final Prospectus), as the
case may be, to the extent that any such loss, claim, damage or liability of
such underwriter, Selling Holder or controlling Person results from the fact
that such underwriter or Selling Holder sold Registrable Securities to a Person
to whom there was not sent or given, at or prior to the written confirmation of
such sale, a copy of the final Prospectus as then amended or supplemented,
whichever is most recent, if the Company has previously furnished copies
thereof to such underwriter or Selling Holder and such final Prospectus, as
then amended or supplemented, has corrected any such misstatement or omission.
Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of any Holder Indemnitee or any other Holder
and shall survive the transfer of such securities. The foregoing indemnity
agreement is in addition to any liability that the Company may otherwise have
to each Holder Indemnitee. 


                    (b)
Indemnification by Selling Holders. In connection with any Registration
Statement in which a Selling Holder is participating by registering Registrable
Securities, such Selling Holder shall furnish to the Company in writing such
information as the Company reasonably requests specifically for use in
connection with any Registration Statement or Prospectus and agrees, severally
and not jointly with any other Person, to indemnify and hold harmless, to the
fullest extent permitted by Law, the Company, the officers and directors of the
Company, and each Person who controls (within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act) the Company, and each
underwriter, if any, and each Person who controls (within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act) such
underwriter (collectively, “Company
Indemnitees”), from and against all Losses, as incurred, arising
out of or based on any untrue statement (or alleged untrue statement) of a
material fact contained in any such Registration Statement (or in any
preliminary or final Prospectus contained therein, any document incorporated by
reference therein or Issuer Free Writing Prospectus related thereto) or any
amendment of or supplement to any of the foregoing or any other document
incident to such registration, or any omission (or alleged omission) to 


Exh. 1.01(j)-16






state therein
a material fact required to be stated therein or necessary to make the
statements therein (in the case of a final or preliminary Prospectus, in light
of the circumstances under which they were made) not misleading, in each case
solely to the extent that such untrue statement (or alleged untrue statement)
or omission (or alleged omission) is made in such Registration Statement (or in
any preliminary or final Prospectus contained therein, any document
incorporated by reference therein or Issuer Free Writing Prospectus related
thereto), offering circular, or any amendment of or supplement to any of the
foregoing or other document in reliance upon and in conformity with written
information furnished to the Company by such Selling Holder expressly for
inclusion in such document. Such indemnity shall remain in full force and
effect regardless of any investigation made by or on behalf of the Company or
any of its directors, officers or controlling Persons. The Company may require
as a condition to its including Registrable Securities in any Registration
Statement filed hereunder that the holder thereof acknowledge its agreement to
be bound by the provisions of this Agreement (including Section 2.6) applicable
to it. 


                    (c)
Conduct of Indemnification Proceedings. If any Person shall be entitled
to indemnity hereunder (an “indemnified
party”), such indemnified party shall give prompt notice to the
party from which such indemnity is sought (the “indemnifying party”) of any claim or
of the
commencement of any Action with respect to which such indemnified party seeks
indemnification or contribution pursuant hereto; provided, however, that the
delay or failure to so notify the indemnifying party shall not relieve the
indemnifying party from any obligation or liability except to the extent that
the indemnifying party has been actually prejudiced by such delay or failure.
The indemnifying party shall have the right, exercisable by giving written
notice to an indemnified party promptly after the receipt of written notice
from such indemnified party of such claim or Action, to assume, at the
indemnifying party’s expense, the defense of any such Action, with counsel
reasonably satisfactory to such indemnified party; provided, however, that an
indemnified party shall have the right to employ separate counsel in any such
Action and to participate in the defense thereof, but the fees and expenses of
such counsel shall be at the expense of such indemnified party unless: (i) the
indemnifying party agrees to pay such fees and expenses; (ii) the indemnifying
party fails reasonably promptly to assume, or in the event of a conflict of
interest, as determined after receiving written advice from outside counsel,
cannot assume, the defense of such Action or fails to employ counsel reasonably
satisfactory to such indemnified party, in which case the indemnified party
shall also have the right to employ counsel and to assume the defense of such
Action; or (iii) in the indemnified party’s reasonable judgment, after
receiving written advice from outside counsel, a conflict of interest between
such indemnified and indemnifying parties may exist in respect of such Action;
provided, further, however, that the indemnifying party shall not, in connection
with any one such Action or separate but substantially similar or related
Actions in the same jurisdiction, arising out of the same general allegations
or circumstances, be liable for the fees and expenses of more than one firm of
attorneys (together with appropriate local counsel) at any time for all of the
indemnified parties, or for fees and expenses that are not reasonable. Whether
or not such defense is assumed by the indemnifying party, such indemnified
party will not be subject to any liability for any settlement made without its
written consent (but such consent will not be unreasonably withheld or
delayed). No indemnifying party will be subject to any liability for any
settlement made without its written consent (but such consent will not be
unreasonably withheld or delayed). The indemnifying party shall not consent to
entry of any judgment or enter into any settlement that does not include as an
unconditional term thereof the giving by all claimants or plaintiffs to such 


Exh. 1.01(j)-17






indemnified
party of a release, in form and substance reasonably satisfactory to the
indemnified party, from all liability in respect of such claim or litigation. 


                    (d)
Contribution. 


	
 

	
 


	
 

	
          (i)
 If the indemnification provided for in this Section 2.6 is unavailable to an
 indemnified party in respect of any Losses (other than in accordance with its
 terms), then each applicable indemnifying party, in lieu of indemnifying such
 indemnified party, shall contribute to the amount paid or payable by such
 indemnified party as a result of such Losses, in such proportion as is
 appropriate to reflect the relative fault of the indemnifying party, on the
 one hand, and such indemnified party, on the other hand, in connection with
 the actions, statements or omissions that resulted in such Losses as well as
 any other relevant equitable considerations. The relative fault of such
 indemnifying party, on the one hand, and indemnified party, on the other
 hand, shall be determined by reference to, among other things, whether any
 action in question, including any untrue or alleged untrue statement of a
 material fact or omission or alleged omission to state a material fact, has
 been taken by, or relates to information supplied by, such indemnifying party
 or indemnified party, and the parties’ relative intent, knowledge, access to
 information and opportunity to correct or prevent any such action, statement
 or omission. 


	
 

	
 


	
 

	
          (ii)
 The parties hereto agree that it would not be just and equitable if contribution
 pursuant to this Section 2.6(d) were determined by pro rata allocation or by
 any other method of allocation that does not take account of the equitable
 considerations referred to in the immediately preceding paragraph. 


	
 

	
 


	
 

	
          (iii)
 No Person guilty of fraudulent misrepresentation (within the meaning of
 Section 11(f) of the Securities Act) shall be entitled to contribution from
 any Person who was not guilty of such fraudulent misrepresentation. 





                    (e)
Limitation on Holder Liability. Notwithstanding anything to the contrary
contained in this Agreement, an indemnifying party that is a Holder shall not
be required to indemnify or contribute any amount in excess of the amount by
which the net proceeds received by such Holder from the sale of the Registrable
Securities sold by such Holder in the applicable offering exceeds the amount of
any damages that such indemnifying party has otherwise been required to pay by
reason of the applicable untrue or alleged untrue statement or omission or
alleged omission. 


          Section
2.7 Rule 144; Rule 144A. The Company covenants that it will file the
reports required to be filed by it under the Securities Act and the Exchange
Act and the rules and regulations adopted by the SEC thereunder (or, if the
Company is not required to file such reports, it will, upon the request of any
Holder, make publicly available other information so long as necessary to
permit sales pursuant to Rule 144 or 144A under the Securities Act), and it
will take such further action as any Holder may reasonably request, all to the
extent required from time to time to enable such Holder to sell Registrable
Securities without registration under the Securities Act within the limitation
of the exemptions provided by (i) Rule 144 or 144A or Regulation S under the
Securities Act, as such Rules may be amended from time to time, or (ii) any
similar rule or regulation hereafter adopted by the SEC. Upon the request of
any Holder, the 


Exh. 1.01(j)-18






Company will
deliver to such Holder a written statement as to whether it has complied with
such requirements and, if not, the specifics thereof. 


          Section
2.8 Underwritten Registrations. (a) If any offering of Registrable
Securities is an underwritten offering, the Holders’ Representative shall have
the right to select the investment banker or investment bankers and managers to
administer the offering, subject to approval by the Company, not to be
unreasonably withheld or delayed. The Company shall have the right to select the
investment banker or investment bankers and managers to administer any
incidental or piggyback registration. 


                    (b)
No Person may participate in any underwritten registration hereunder unless
such Person (i) agrees to sell the Registrable Securities or Other Securities
it desires to have covered by the registration on the basis provided in any
underwriting arrangements in customary form (including pursuant to the terms of
any over-allotment or “green shoe” option requested by the managing
underwriter, provided that no such Person will be required to sell more than
the number of Registrable Securities that such Person has requested the Company
to include in any registration), and (ii) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents required under the terms of such underwriting arrangements,
provided that such Person (other than the Company) shall not be required to
make any representations or warranties other than those related to title and
ownership of shares and as to the accuracy and completeness of statements made
in a Registration Statement, Prospectus or other document in reliance upon and
in conformity with written information furnished to the Company or the managing
underwriter(s) by such Person and, provided
further, that such Person’s (other than the Company’s) liability in
respect of such representations and warranties shall not exceed such Person’s
net proceeds from the offering. 


          Section
2.9 Registration Expenses. The Company shall pay all reasonable
documented expenses incident to the Company’s performance of or compliance with
its obligations under this Article II, including, without limitation, (i) all
registration and filing fees (including fees and expenses (A) with respect to
filings required to be made with the SEC, all applicable securities exchanges
and/or the Financial Industry Regulatory Authority and (B) of compliance with
securities or Blue Sky laws including any fees and disbursements of counsel for
the underwriter(s) in connection with Blue Sky qualifications of the
Registrable Securities pursuant to Section 2.4(h)), (ii) printing expenses
(including expenses of printing certificates for Registrable Securities in a
form eligible for deposit with The Depository Trust Company and of printing
Prospectuses if the printing of Prospectuses is requested by the managing
underwriter(s), if any, or by the Holders of a majority of the Registrable
Securities included in any Registration Statement), (iii) messenger, telephone
and delivery expenses of the Company, (iv) fees and disbursements of counsel
for the Company, (v) expenses of the Company incurred in connection with any
road show, and (vi) fees and disbursements of all independent certified public
accountants (including, without limitation, the expenses of any “comfort”
letters required by this Agreement) and any other Persons, including special
experts retained by the Company. In addition, the Company shall bear all of its
internal expenses (including all salaries and expenses of its officers and
employees performing legal or accounting duties), the expense of any annual
audit, the fees and expenses incurred in connection with the listing of the
securities to be registered on any securities exchange on which similar
securities issued by the Company are then listed and rating agency fees and the
fees and expenses of any Person, including special experts, 


Exh. 1.01(j)-19






retained by
the Company. In addition, the Company shall pay the reasonable documented fees
and disbursements of one firm of counsel (and, if needed, one firm of local
counsel) for the SCA Shareholder Entity (but no Transferee or any other Person)
in connection with registrations under Article II, but the Company shall not be
obligated to pay any underwriting discounts attributable to sales of
Registrable Securities by any Holder including the SCA Shareholder Entity.


          Section
2.10 Securities Held by the Company or its Subsidiaries. Whenever the
consent or approval of Holders of a specified percentage of Registrable
Securities is required hereunder, in the event that the Company or any of its
Subsidiaries holds Registrable Securities, such Registrable Securities shall
not be counted in determining whether such consent or approval was given by the
Holders of such required percentage. 


ARTICLE III 

MISCELLANEOUS


          Section
3.1 Conflicting Agreements. Each party represents and warrants that it
has not granted and is not a party to any proxy, voting trust or other
agreement that is inconsistent with or conflicts with any provision of this
Agreement. 


          Section
3.2 Termination. This Agreement shall terminate at such time as there
are no Registrable Securities, except for the provisions of Sections 2.6, 2.7,
2.9 and this Article III, which shall survive such termination. 


          Section
3.3 Amendment and Waiver. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the Company and the SCA
Shareholder Entity (or, in the case of an amendment at any time when the SCA
Shareholder Entity is not the sole Holder, signed on behalf of each of (i) the
Company and (ii) the Holders of a majority of the aggregate number of
Registrable Securities then held by all Holders). Any party hereto may waive
any right of such party hereunder by an instrument in writing signed by such
party and delivered to the other parties (or, in the case of a waiver of any
rights of the Holders at any time when the SCA Shareholder Entity is not the
sole Holder, by an instrument in writing signed by the Holders of a majority of
the aggregate number of Registrable Securities then held by all Holders and
delivered to the Company and the Holders’ Representative). The failure of any
party to enforce any of the provisions of this Agreement shall in no way be
construed as a waiver of such provisions and shall not affect the right of such
party thereafter to enforce each and every provision of this Agreement in
accordance with its terms. 


          Section
3.4 Severability. If any provision of this Agreement shall be declared
by any court of competent jurisdiction to be illegal, void or unenforceable,
all other provisions of this Agreement shall not be affected and shall remain
in full force and effect. 


          Section
3.5 Entire Agreement. Except as otherwise expressly set forth herein,
this Agreement and the Master Transaction Agreement, together with the several
agreements and other documents and instruments referred to herein or therein or
annexed hereto or thereto, embody the complete agreement and understanding
among the parties hereto with respect to the subject matter hereof and
supersedes and preempts any prior understandings, agreements or 


Exh. 1.01(j)-20






representations
by or among the parties, written or oral, that may have related to the subject
matter hereof in any way. 


          Section
3.6 Successors and Assigns. Neither this Agreement nor any right or
obligation hereunder is assignable in whole or in part by any party without the
prior written consent of the other party hereto; provided that the SCA
Shareholder Entity may transfer its rights and obligations hereunder (in whole
or in part) to any Transferee (and any Transferee may transfer such rights and
obligations to any subsequent Transferee) without the prior written consent of
the Company. Any such assignment shall be effective upon receipt by the Company
of (x) written notice from the transferring Holder stating the name and address
of any Transferee and identifying the number of shares of Registrable
Securities being acquired by the Transferee and with respect to which the
rights under this Agreement are being transferred and the nature of the rights
so transferred and (y) a written agreement in substantially the form attached
as Exhibit A hereto from such Transferee to be bound by the applicable
terms of this Agreement. 


          Section
3.7 Counterparts; Execution by Facsimile Signature. This Agreement may
be executed in any number of counterparts, each of which shall be an original,
but all of which together shall constitute one instrument. This Agreement may
be executed by facsimile signature(s). 


          Section
3.8 Remedies. (a) Each party hereto acknowledges that monetary damages
would not be an adequate remedy in the event that any of the covenants or
agreements in this Agreement is not performed in accordance with its terms, and
it is therefore agreed that, in addition to and without limiting any other
remedy or right it may have, the non-breaching party will have the right to an
injunction, temporary restraining order or other equitable relief in any court
of competent jurisdiction enjoining any such breach or threatened breach and
enforcing specifically the terms and provisions hereof. Each party hereto
agrees to waive any requirement for the securing or posting of any bond in
connection with such remedy. 


                    (b)
All rights, powers and remedies provided under this Agreement or otherwise
available in respect hereof at law or in equity shall be cumulative and not
alternative, and the exercise or beginning of the exercise of any thereof by
any party shall not preclude the simultaneous or later exercise of any other
such right, power or remedy by such party. 


          Section
3.9 Notices. All notices required or permitted hereunder shall be in
writing and shall be deemed effectively given (i) upon personal delivery to the
party to be notified, (ii) when sent by confirmed facsimile if sent during
normal business hours of the recipient, if not, then on the next Business Day
or (iii) one Business Day after deposit with a nationally recognized overnight
courier, specifying next day delivery, with written verification of receipt.
All communications shall be sent to the addresses set forth below or such other
address or facsimile number as a party may from time to time specify by notice
to the other parties hereto: 


                    If
to the Company: Security Capital Assurance Ltd., 1221 Avenue of the Americas,
New York NY 10020-1001; Attention: General Counsel; Fax: (212) 478-3587; and
with a copy (which shall not constitute notice) to: Weil, Gotshal & Manges
LLP, 767 Fifth Avenue, New York, New York 10153; Attention: Joseph Verdesca;
Fax: (212) 310-8007. 


Exh. 1.01(j)-21






                    If
to the SCA Shareholder Entity: __________, [insert address]; Attention:
__________; Fax: (___) ___-_____; and with a copy (which shall not constitute
notice) to: [insert law firm and address]; Attention: __________; Fax: (___)
____-_____. 


          Section
3.10 Governing Law; Consent to Jurisdiction. (a) This Agreement shall be
governed in all respects by the laws of the State of New York, without regard
to its conflicts of laws principles. 


                    (b)
Each of the parties hereto (i) consents to submit itself to the personal jurisdiction
of any Federal or state court located in the Borough of Manhattan in the City
of New York, New York in the event any dispute arises out of this Agreement,
(ii) agrees that it will not attempt to deny or defeat such personal
jurisdiction by motion or other request for leave from any such court and (iii)
agrees that it will not bring any Action relating to this Agreement in any
court other than a Federal or state court located in the Borough of Manhattan
in the City of New York, New York. 


                    (c)
Each of the parties hereto hereby irrevocably and unconditionally waives trial
by jury in any legal Action or proceeding in relation to this Agreement and for
any counterclaim therein. 


          Section
3.11 Interpretation. In this Agreement, the SCA Shareholder Entity shall
be deemed to be the Trust, the Trustee (or any trustee or trustees of the
Trust) acting in its capacity as such trustee, in each case as the context may
require to be most protective of the interests of the Company. 


[signature page follows]


Exh. 1.01(j)-22






                    IN
WITNESS WHEREOF, the parties hereto have executed this Registration Rights
Agreement as of the date first written above. 


	
 

	
 

	
 


	
 

	
SECURITY
 CAPITAL ASSURANCE LTD. 


	
 

	
 

	
 


	
 

	
By:

	
 


	
 

	
 

	



	
 

	
Name: 


	
 

	
Title: 


	
 

	
 

	
 


	
 

	
[SCA
 SHAREHOLDER ENTITY] 


	
 

	
 

	
 


	
 

	
By:

	
 


	
 

	
 

	



	
 

	
Name: 


	
 

	
Title: 





Exh. 1.01(j)-23






EXHIBIT A


JOINDER


                    Reference
is made to the Registration Rights Agreement dated as of [________], 2008 (as
amended from time to time, the “Registration
Rights Agreement”) among Security Capital Assurance Ltd., a
Bermuda exempted company, ______________ [a Bermuda exempted company [limited
by guarantee]], and each other person who shall have become a party to the
Registration Rights Agreement in accordance with the terms thereof. 


                    By
execution of this Joinder, the undersigned agrees to become a party to the
Registration Rights Agreement and to be bound by the terms, conditions,
restrictions and provisions thereof as a “Holder” thereunder, entitled to all of
the rights available thereto and subject to all of the burdens imposed thereon.



	
 

	
 

	
 


	
Name:

	
 


	
 

	
 


	
Address for
 Notices:

	
With Copies
 to:


	
 

	
 


	
Signature:

	
 

	
 


	
 

	


	
 


	
 

	
 

	
 


	
Date:

	
 

	
 


	
 

	


	
 





Exh. 1.01(j)-24









EXHIBIT 1.01(k)


FORM OF TRANSITION AGREEMENT AMENDMENT


Exhibit 1.01(k)






AMENDMENT NO. 2 TO TRANSITION AGREEMENT


                    AMENDMENT
NO. 2 dated as of [______], 2008 (this “Amendment No. 2”) among XL
Capital Ltd., a Cayman Islands company (“XL Capital”), XL Insurance
(Bermuda) Ltd., a Bermuda company (“XLI”), X.L. America, Inc., a
Delaware corporation (“XLA”), and Security Capital Assurance Ltd., a
Bermuda company (“SCA” and collectively with XL Capital, XLI, and XLA,
the “Parties”).


                    WHEREAS,
on August 4, 2006, the Parties entered into a certain transition
agreement, as amended on May 3, 2007 (the “Transition Agreement”);
and 


                    WHEREAS,
the Parties have entered into that certain Master Commutation, Release and
Restructuring Agreement dated as of July __, 2008 (the “Master
Restructuring Agreement”) among SCA, XL Capital Assurance Inc., XL
Financial Assurance Ltd., XL Financial Administrative Services Inc., SCA
Bermuda Administrative Ltd., XL Capital Assurance (U.K.) Limited and those
Portfolio Trusts a party thereto, XL Capital, XLI, XL Reinsurance America Inc.,
X.L. Global Services Inc., XL Services (Bermuda) Limited and XLA and the
consenting counterparties party thereto, pursuant to which the Parties have agreed
to amend the Transition Agreement. 


                    NOW,
THEREFORE, in consideration of the premises and the covenants and agreements
contained herein and in the Master Restructuring Agreement, and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and intending to be legally bound hereby, the Parties agree as
follows:


                    Section
1. Definitions. Capitalized terms not otherwise defined in this
Amendment No. 1 shall have the meanings ascribed to them in the Transition
Agreement. 


                    Section
2. Amendments. Articles III, VII, and IX of the Transition Agreement are hereby
amended as follows: 


                    2.1
The second and third paragraphs of Section 3.3 shall be stricken and deleted in
their entirety, including any other references to such paragraphs of such
section as it appears in the Transition Agreement. 


                    2.2
Section 7.1 of the Transition Agreement shall be stricken and deleted in its
entirety, including any other references to such section as it appears in the
Transition Agreement.


                    2.3
The second sentence of Section 7.5(b) and the second sentence of Section 7.5(c)
of the Transition Agreement shall be stricken and deleted in their entirety,
including any other references to such sections as it appears in the Transition
Agreement.


                    2.4
Section 7.7 of the Transition Agreement shall be stricken and deleted in its
entirety, including any other references to such section as it appears in the
Transition Agreement. 


                    2.5
Section 7.8 of the Transition Agreement shall be stricken and deleted in its
entirety, including any other references to such section as it appears in the
Transition Agreement. 


Exh. 1.01(k)-1






                    2.6
Section 9.12 of the Transition Agreement shall be stricken and deleted in its
entirety, including any other references to such section as it appears in the
Transition Agreement. 


                    Section
3. Voting Restriction Termination Event. The Parties hereby acknowledge
and agree that upon transfer of all of the SCA common shares owned by the XL
Group to the SCA Shareholder Entity (as defined in the Master Restructuring
Agreement) or upon deposit of certificates evidencing all of the SCA common
shares owned by the XL Group with the Escrow Agent (as defined in the Master
Restructuring Agreement) pursuant to the terms of the Master Restructuring
Agreement, a Voting Restriction Termination Event will be deemed to occur. 


                    Section
4. Miscellaneous.


                    4.1
Except as provided herein, the Transition Agreement shall remain unchanged and
in full force and effect.


                    4.2
This Amendment No. 2 may be executed in any number of counterparts, each of
which shall be an original, but all of which together shall constitute one and
the same amendatory instrument. This Amendment No. 2 may be executed by
facsimile signature(s). 


                    4.3
This Amendment No. 2 shall be governed by, and construed in accordance with,
the laws of the state of New York, without regard to its conflict of laws
principles. The Parties consent to the non-exclusive jurisdiction of the courts
of New York.


                    4.4
The Parties hereby forever waive and release each other and their respective
subsidiaries, affiliates, predecessors, and successors in interest, and all of
their current, past, and future officers, directors, partners, principals,
agents, insurers, servants, employees, representatives, attorneys, and
advisors, acting in their capacities as such, from any and all claims,
liabilities, causes of action, demands, and damages of whatever kind or nature
and whether known or unknown arising under the Transition Agreement prior to
the Closing Date (as defined in the Master Restructuring Agreement). 


[Signature Page to Follow]


Exh. 1.01(k)-2






                    IN
WITNESS HEREOF, the Parties have caused this Amendment No. 2 to the Transition
Agreement to be duly executed and delivered as of the day and year first
written above. 


	
 

	
 

	
 


	
 

	
XL Capital Ltd. 


	
 

	
 

	
 


	
 

	
By:

	
 


	
 

	
 

	



	
 

	
Name: 


	
 

	
Title: 


	
 

	
 

	
 


	
 

	
XL Insurance (Bermuda) Ltd. 


	
 

	
 

	
 


	
 

	
By:

	
 


	
 

	
 

	



	
 

	
Name: 


	
 

	
Title: 


	
 

	
 

	
 


	
 

	
X.L. America, Inc. 


	
 

	
 

	
 


	
 

	
By:

	
 


	
 

	
 

	



	
 

	
Name: 


	
 

	
Title: 


	
 

	
 

	
 


	
 

	
Security Capital Assurance Ltd. 


	
 

	
 

	
 


	
 

	
By:

	
 


	
 

	
 

	



	
 

	
Name: 


	
 

	
Title: 





Exh. 1.01(k)-3








EXHIBIT 2.06


CUSTOMARY SECURITIES LAW REPRESENTATIONS


Exhibit 2.06






CUSTOMARY SECURITIES LAW REPRESENTATIONS


Capitalized
terms used, but not otherwise defined herein, have the same meaning as defined
in the Agreement to which this document is attached as Exhibit 2.06.


                    The
SCA Shareholder Entity represents, warrants and agrees as follows:


                    (a)
Investment Purpose. The SCA Shareholder Entity is obtaining the XL Owned
SCA Common Shares for investment purposes only and not with a view to or for
distributing or reselling such XL Owned SCA Common Shares or any part thereof,
without prejudice, however, to its right, subject to any transfer restrictions,
to sell or otherwise dispose of all or any part of the XL Owned SCA Common
Shares pursuant to an effective registration statement under the Securities Act
or under an exemption from such registration and in compliance with applicable
federal and state securities or “blue sky” laws.


                    (b)
Compliance with Securities Act. The SCA Shareholder Entity agrees that
any sale of the XL Owned SCA Common Shares shall be made in compliance with the
registration requirements of the Securities Act or any applicable exemption
therefrom.


                    (c)
Reliance on Exemptions. The SCA Shareholder Entity understands that the
XL Owned SCA Common Shares are being offered and issued to it in reliance upon
specific exemptions from the registration requirements of United States federal
and state securities or “blue sky” laws, and, assuming that the transfer of the
XL Owned SCA Common Shares to the SCA Shareholder Entity in accordance with the
terms of the Agreement is made in compliance with the Securities Act, the SCA
Shareholder Entity agrees that any subsequent sale of the XL Owned SCA Common
Shares by it will not cause such transfer by the XL Parties to violate the
provisions of the Securities Act.


                    (d)
Authorization; Enforceability. This Agreement has been duly and validly
authorized by the SCA Shareholder Entity. This Agreement has been duly executed
and delivered on behalf of the SCA Shareholder Entity, and constitutes the
valid and binding agreement of the SCA Shareholder Entity enforceable in
accordance with their terms, subject, in each case, to applicable bankruptcy,
insolvency, reorganization or similar laws affecting generally the enforcement
of creditors’ rights and subject to a court’s discretionary authority with
respect to the granting of specific performance or other equitable remedies.


                    (e)
No Conflicts. The execution and performance of this Agreement does not
conflict with any agreement to which the SCA Shareholder Entity is a party or
is bound thereby, any court order or judgment addressed to the SCA Shareholder
Entity, or the constituent documents of the SCA Shareholder Entity.


                    (f)
Interpretation. Any reference to the “SCA Shareholder Entity” for
purposes of this letter shall be deemed to be the relevant trust and/or the
trustee(s) thereof acting in its(their) capacities as such trustee(s), in each
case as the context may require to be most protective of the XL Parties,
including for purposes of such trustee(s)’ representations and warranties as to
their power and authority as trustee(s) and the non-contravention of the
trust’s governing instruments.


Exh. 2.06-1







EXHIBIT 6.18


FORM OF SCA SHAREHOLDER ENTITY TRUST
AGREEMENT


Exhibit 6.18






DATED [___________], 2008


* Subject to further
review and comment by the parties, including by the trustee and its counsel 


[_____________]


[Draft
30/07/2008] 


DEED CONSTITUTING


The [__________] Purpose Trust






THIS DECLARATION OF TRUST dated [__________] 2008 is made BY
[____________], a company incorporated under the laws of
Bermuda whose registered office is at [___________],
Bermuda (“the First Trustee”). 


BACKGROUND 


	
 

	
 


	
(A)

	
The First
 Trustee wishes to create a purpose trust within the meaning of the Trusts
 (Special Provisions) Act 1989, in the terms set out below and wishes to
 declare that it holds the Trust Fund upon the trusts and subject to the
 powers and provisions set out below.


	
 

	
 


	
(B)

	
Further
 money investments or other property may be paid or transferred to the
 Trustees to hold on the trusts set out below.


	
 

	
 


	
(C)

	
Simultaneously
 with the execution of this deed, the Company (as defined below) has entered
 into a deed of covenant and indemnity in favour of the First Trustee in the
 form set out in Schedule D.





OPERATIVE PROVISIONS


	
 

	
 

	
 


	
1.

	
NAME


	
 

	
 

	
 


	
 

	
This Trust
 shall be known as [__________] or by such other title as the Trustees may
 from time to time determine in writing. 


	
 

	
 

	
 


	
2.

	
DEFINITIONS AND CONSTRUCTION


	
 

	
 

	
 


	
 

	
In this
 Trust where the context admits the following definitions and rules of
 construction shall apply:


	
 

	
 

	
 


	
 

	
2.1

	
“affiliate”
 means, with respect to any person, any other person directly or indirectly
 Controlling, Controlled by or under common Control with such person, provided
 that none of the SCA Parties shall be deemed to be an affiliate of any XL
 Party. “Control,” “Controlled,” or “Controlling,” with respect to the
 relationship between or among two or more persons, means the possession,
 directly or indirectly, or as trustee, personal representative or executor,
 of the power to direct or cause the direction of the affairs or management of
 a person, whether through the ownership of voting securities, as trustee, as
 personal representative or executor, by contract, by credit arrangement or
 otherwise.


	
 

	
 

	
 


	
 

	
2.2

	
“assets”
 shall be construed according to the widest generality and any reference in
 this Trust to any asset other than money shall include the proceeds of sale
 of that asset.





Exh. 6.18-1






	
 

	
 

	
 


	
 

	
2.3

	
“charitable
 purposes” means purposes and objects recognised as charitable by the
 Governing Law.


	
 

	
 

	
 


	
 

	
2.4

	
“charity”
 means any trust, foundation, institution, corporation or unincorporated body
 in any part of the world established exclusively for charitable purposes.


	
 

	
 

	
 


	
 

	
2.5

	
“the
 Company” shall mean Security Capital Assurance Ltd, a Bermuda exempted company.


	
 

	
 

	
 


	
 

	
2.6

	
“the
 Consenting Counterparties” means such counterparties to credit default swap
 agreements with affiliates of XLCA that may become party to the Master
 Restructuring Agreement from time to time in accordance with the terms
 thereof.


	
 

	
 

	
 


	
 

	
2.7

	
“the
 Consenting Counterparty Restructuring Agreement” means that certain agreement
 entered into after the date hereof among the SCA Parties and Consenting
 Counterparties representing not less than the Minimum Consenting CDS
 Counterparty Restructuring Threshold (as such term is defined in the Master
 Restructuring Agreement) to give effect to the CDS Counterparty Restructuring
 (as such term is defined in the Master Restructuring Agreement).


	
 

	
 

	
 


	
 

	
2.8

	
“the
 Consenting Counterparties Enforcer” means the Consenting Counterparties or
 the Consenting Counterparties Enforcer for the time being of this Trust as
 appointed in accordance with the provisions of Schedule C.


	
 

	
 

	
 


	
 

	
2.9

	
“corporation”
 or “corporate body” means any body, public or private, incorporated anywhere in
 the world and includes any company or corporation whether limited by shares
 or by guarantee and any other legal entity or organisation, such as without
 limitation, a limited partnership, a general partnership, limited liability
 company or a limited duration company.


	
 

	
 

	
 


	
 

	
2.10

	
“the
 Enforcers” shall be the persons named in Schedule C or such additional or
 other person or persons who is or are for the time being occupying the office
 of Enforcers pursuant to the provisions of Schedule C.


	
 

	
 

	
 


	
 

	
2.11

	
“the Governing
 Law” means, subject to any change effected by clause 9, the law of Bermuda
 which law shall govern all matters of validity, construction, effect and
 administration of this Trust.


	
 

	
 

	
 


	
 

	
2.12

	
“the Master
 Restructuring Agreement” means the Master Commutation, Release and
 Restructuring Agreement dated as of July [     ], 2008 among the Company, XLCA,
 XLI, the Consenting Counterparties and the other parties thereto, as amended,
 supplemented or otherwise modified from time to time.


	
 

	
 

	
 


	
 

	
2.13

	
“person”
 means any individual or corporation and shall be taken to include any charity
 (whether or not incorporated) and any non-charitable unincorporated body.





Exh. 6.18-2






	
 

	
 

	
 

	
 


	
 

	
2.14

	
“proceeds”
 means all assets received upon the sale or other any disposition of an asset comprised
 in the Trust Fund other than new additional or changed number of the Shares
 of the Company received in a transaction described in Clause 7.2.


	
 

	
 

	
 

	
 


	
 

	
2.15

	
“the
 Purposes” means those purposes set out in Clause 3.


	
 

	
 

	
 

	
 


	
 

	
2.16

	
“SCA
 Registration Rights Agreement” means the Registration Rights Agreement dated
 as of the date hereof between the Company and the First Trustee, as amended,
 supplemented or otherwise modified from time to time.


	
 

	
 

	
 

	
 


	
 

	
2.17

	
“the
 Restructuring Effective Time” shall mean such time that the Consenting
 Counterparty Restructuring Agreement shall first become effective.


	
 

	
 

	
 

	
 


	
 

	
2.18

	
“securities”
 includes shares, stocks, bonds, notes, debentures and debenture stock and any
 interest of a member in a corporation (and any options or warrants in respect
 of any of them) and includes securities payable to bearer and otherwise
 transferable by delivery, with or without endorsement.


	
 

	
 

	
 

	
 


	
 

	
2.19

	
“SCA
 Parties” has the meaning set forth in the Master Restructuring Agreement.


	
 

	
 

	
 

	
 


	
 

	
2.20

	
“SCA Shareholder
 Agreement” means the Shareholder Agreement [dated as of the date hereof]
 between the Company and the Trustees, as amended, supplemented or otherwise
 modified from time to time.


	
 

	
 

	
 

	
 


	
 

	
2.21

	
“the Shares”
 means the [     ] common shares of the Company which represent approximately
 [46]% of the outstanding common shares of the Company and all of the common
 shares of the Company beneficially owned by XLI immediately prior to the
 transfer of such common shares to this Trust in accordance with the terms of
 the Master Restructuring Agreement. 


	
 

	
 

	
 

	
 


	
 

	
2.22

	
“taxes”
 means any tax, duty or other fiscal imposition arising anywhere in the world.


	
 

	
 

	
 

	
 


	
 

	
2.23

	
“the
 Termination Date” means the earliest to occur of:


	
 

	
 

	
 

	
 


	
 

	
 

	
2.23.1

	
the
 expiration of the period of five years commencing at the date of this Trust
 (which period shall be the applicable perpetuity period) if the Restructuring
 Effective Time shall not have occurred prior to such time;


	
 

	
 

	
 

	
 


	
 

	
 

	
2.23.2

	
the
 Trustees’ distribution of all proceeds from the sale or other disposition of
 all assets comprised in the Trust Fund to the relevant parties in accordance
 with the provisions of Clause 5.1; and


	
 

	
 

	
 

	
 


	
 

	
 

	
2.23.3

	
from and
 after the Restructuring Effective Time, in accordance with the terms of the
 Consenting Counterparty Restructuring Agreement.


	
 

	
 

	
 

	
 


	
 

	
2.24

	
“this Trust”
 means the trust created by this deed.





Exh. 6.18-3






	
 

	
 

	
 

	
 


	
 

	
2.25

	
“trust
 corporation” has the meaning, if any, given to that term under the Governing
 Law.


	
 

	
 

	
 

	
 


	
 

	
2.26

	
“the
 Trustees” means the First Trustee or the trustee or trustees for the time
 being of this Trust.


	
 

	
 

	
 

	
 


	
 

	
2.27

	
“the Trust
 Fund” means:-


	
 

	
 

	
 

	
 


	
 

	
 

	
2.27.1

	
the Shares;


	
 

	
 

	
 

	
 


	
 

	
 

	
2.27.2

	
all assets
 paid or transferred to, or so as to be under the control of the Trustees as
 additions to the Trust Fund;


	
 

	
 

	
 

	
 


	
 

	
 

	
2.27.3

	
all
 accumulations (if any) of income added to the Trust Fund; and


	
 

	
 

	
 

	
 


	
 

	
 

	
2.27.4

	
the assets
 from time to time representing the above.


	
 

	
 

	
 

	
 


	
 

	
2.28

	
“XLCA” means
 XL Capital Assurance Inc., a New York insurance company.


	
 

	
 

	
 

	
 


	
 

	
2.29

	
The “XLCA
 Enforcer” means XLCA or the XLCA Enforcer for the time being of this Trust as
 appointed in accordance with the provisions of Schedule C.


	
 

	
 

	
 

	
 


	
 

	
2.30

	
“XLI” means
 XL Insurance (Bermuda) Ltd (formerly known as X.L. Insurance Ltd), a Bermuda
 exempted company.


	
 

	
 

	
 

	
 


	
 

	
2.31

	
“XL Party”
 has the meaning set forth in the Master Restructuring Agreement.


	
 

	
 

	
 

	
 


	
 

	
2.32

	
Words
 denoting the singular shall include the plural and vice versa.


	
 

	
 

	
 

	
 


	
 

	
2.33

	
Words
 denoting any gender shall include both the other genders.


	
 

	
 

	
 

	
 


	
 

	
2.34

	
References
 to any statutory provision shall include any statutory modification or re-enactment of such provision.


	
 

	
 

	
 

	
 


	
 

	
2.35

	
Clause
 headings are included for reference and shall not affect the interpretation
 of this deed.


	
 

	
 

	
 

	
 


	
3.

	
PURPOSES


	
 

	
 

	
 

	
 


	
 

	
3.1

	
Subject to the
 provisions of Clause 4 and Clause 5, the Trustees shall hold the Trust Fund
 and the income of the Trust Fund on trust to pay or apply all or any part or
 parts of the Trust Fund and the income of the Trust Fund, at such time or
 times and in such manner, for or towards or in furtherance of the following
 purposes as the Trustees may in their discretion think fit.





Exh. 6.18-4






	
 

	
 

	
 

	
 

	
 


	
 

	
3.2

	
The purposes
 of this Trust are:-


	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
3.2.1

	
To subscribe
 for or otherwise acquire, whether by purchase or receipt of a contribution or
 gift, ownership or effective control of the Shares and to take such actions
 as are necessary or appropriate, consistent with the terms of this Trust as
 determined in the Trustees’ discretion exercised in good faith, to maximise
 the value of the Trust Fund for;


	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
(a)

	
XLCA prior
 to the Restructuring Effective Time; and


	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
(b)

	
the
 Consenting Counterparties in accordance with the Consenting Counterparty
 Restructuring Agreement from and after the Restructuring Effective Time.


	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
3.2.2

	
Without
 limiting the foregoing to engage in the following activities:


	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
(a)

	
to own,
 hold, manage and/or dispose of the Trust Fund in accordance with the terms of
 this Trust;


	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
(b)

	
to pay any
 dividends or distributions arising from the Trust Fund and any proceeds of
 any sale or other disposition of any or all of the Trust Fund to (a) prior to
 the Restructuring Effective Time, XLCA, which dividends, distribution or
 payment to XLCA shall be treated as “SCA Share Sale Proceeds” for purposes of
 Section 6.12 of the Master Restructuring Agreement, or (b) from and after the
 Restructuring Effective Time, as set forth in the Consenting Counterparty
 Restructuring Agreement; and


	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
(c)

	
to perform
 or cause to be performed all of the other obligations of the Trustees under
 this Trust.


	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
3.2.3

	
To exercise
 the Trustees’ rights as shareholder of the Company and provide such support
 and assistance as considered advisable by the Trustees in accordance with
 Clause 1.2.3 of Schedule B and Clause 1.2.4 of Schedule B but otherwise in
 their absolute discretion and any other actions that in the sole judgement
 and absolute discretion of the Trustees are necessary, advisable or desirable
 to accomplish the foregoing or are incidental thereto.


	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
3.2.4

	
To exercise
 the voting rights attaching to the Shares as may be appropriate to carry out
 the purposes of this Trust.


	
 

	
 

	
 

	
 

	
 


	
4.

	
PAYMENT OF DIVIDENDS AND ACCUMULATION OF
 INCOME


	
 

	
 

	
 

	
 

	
 


	
 

	
4.1

	
If the
 Company pays or issues dividends or makes other distributions relating to the
 Trust Fund or if any other income arises from the Trust Fund, the Trustees
 shall accept and receive such dividends, distributions and other income. Upon
 receipt of any such dividends, distributions or other income and subject to
 the provisions of 





Exh. 6.18-5






	
 

	
 

	
 

	
 


	
 

	
 

	
Clause 4.2,
 such dividends, distributions and other income shall be distributed promptly:


	
 

	
 

	
 

	
 


	
 

	
 

	
4.1.1

	
prior to the
 Restructuring Effective Time, to XLCA, which payment or distribution to XLCA
 shall be treated as “SCA Share Sale Proceeds” for purposes of Section 6.12 of
 the Master Restructuring Agreement; and


	
 

	
 

	
 

	
 


	
 

	
 

	
4.1.2

	
from and
 after the Restructuring Effective Time, pursuant to the terms of the
 Consenting Counterparty Restructuring Agreement.


	
 

	
 

	
 

	
 


	
 

	
4.2

	
If the dividend,
 distribution or other income is in securities, such securities shall be held
 in accordance with the terms of this Trust.


	
 

	
 

	
 

	
 


	
5.

	
PROCEEDS OF DISPOSITION


	
 

	
 

	
 

	
 


	
 

	
5.1

	
The proceeds
 of any sale or other disposition of all or any assets comprised in the Trust
 Fund shall be paid promptly and in no event later than two business days
 after such sale, together with any interest earned thereon:


	
 

	
 

	
 

	
 


	
 

	
 

	
5.1.1

	
prior to the
 Restructuring Effective Time, to XLCA, which payment or distribution to XLCA
 shall be treated as “SCA Share Sale Proceeds” for purposes of Section 6.12 of
 the Master Restructuring Agreement; and


	
 

	
 

	
 

	
 


	
 

	
 

	
5.1.2

	
from and
 after the Restructuring Effective Time, pursuant to the terms of the
 Consenting Counterparty Restructuring Agreement.


	
 

	
 

	
 

	
 


	
 

	
5.2

	
Together
 with the proceeds of any disposition as described in Clause 5.1, the Trustees
 shall deliver a notice setting forth the calculation thereof to XLCA and the
 Consenting Counterparties.


	
 

	
 

	
 

	
 


	
6.

	
TERMINATION PROVISIONS


	
 

	
 

	
 

	
 


	
 

	
On the
 Termination Date the Trustees shall cease the application of the capital and
 income of the Trust Fund towards the Purposes and:


	
 

	
 

	
 

	
 


	
 

	
6.1

	
Upon
 termination of this Trust in accordance with Clause 2.23.1 the Trustees shall
 deliver to XLCA a certificate or certificates for the Shares, properly
 endorsed for transfer and any other property constituting the Trust Fund.


	
 

	
 

	
 

	
 


	
 

	
6.2

	
Upon
 termination of the Trust in accordance with Clause 2.23.3, the Trustees shall
 deliver a certificate or certificates for the Shares, properly endorsed for
 transfer and any other property constituting the Trust Fund in accordance
 with the provisions of the Consenting Counterparty Restructuring Agreement.





Exh. 6.18-6






	
 

	
 

	
 

	
 


	
7.

	
BUSINESS COMBINATIONS AND RECAPITALISATIONS


	
 

	
 

	
 

	
 


	
 

	
7.1

	
Any merger,
 consolidation, reorganisation or dissolution of the Company or the sale of
 all or substantially all of the assets of the Company pursuant to which
 common shares or other voting securities of another corporation are to be
 issued in payment or exchange for or upon conversion of the Shares shall
 constitute a disposition of the Shares which shall be subject to the
 provisions of Clause 5.


	
 

	
 

	
 

	
 


	
 

	
7.2

	
In the event
 of an increase in the amount of outstanding common shares of the Company by
 virtue of a stock split or the decrease in the number of common shares of the
 Company because of a contraction of shares or a change in the number of
 outstanding shares as a result of some other capitalisation in which the
 Company receives no consideration for the issuance of the additional or
 reduced amount of common shares, the new additional or changed number of the
 Shares shall be held by the Trustees.


	
 

	
 

	
 

	
 


	
8.

	
ADMINISTRATION AND MANAGEMENT


	
 

	
 

	
 

	
 


	
 

	
8.1

	
Subject to
 the provisions of Clause 1.2.3 of Schedule B and Clause 1.2.4 of Schedule B
 the Trustees shall conduct the affairs of this Trust in such manner as they
 may consider appropriate, and they shall make such arrangements in relation
 to the administration of this Trust as they consider advisable to further the
 purposes of this Trust.


	
 

	
 

	
 

	
 


	
 

	
8.2

	
The Trustees
 shall in addition and without prejudice to all other powers at law have the
 powers and immunities set out in the Schedule to section 17 of The Trusts
 (Special Provisions) Act 1989 (except those contained in Clauses 3(b) and
 4(6) thereof) which shall be incorporated herein by reference to form Clause
 1 of Schedule A hereto and renumbered to follow sequentially without the
 incorporation of the above mentioned excepted clauses provided that all
 references to a beneficiary or beneficiaries in such Schedule shall be deemed
 to refer to the purposes of this Trust and additionally the Trustees shall
 have the powers and provisions set out in Clause 2 of Schedule A provided
 that the Trustees shall not exercise any of their powers other than in
 furtherance of the purposes of this Trust.


	
 

	
 

	
 

	
 


	
 

	
8.3

	
In the event
 that there is any conflict between any one or more of the provisions
 comprised in or incorporated into Schedule A hereto (“the servient
 provisions”) and any provision or provisions of this Trust other than those
 comprised in or incorporated into Schedule A hereto (“the dominant
 provisions”), the dominant provisions shall prevail.


	
 

	
 

	
 

	
 


	
9.

	
POWER TO CHANGE GOVERNING LAW AND FORUM


	
 

	
 

	
 

	
 


	
 

	
9.1

	
The Trustees
 may at any time or times before the Termination Date declare by writing (with
 the written consent of the Enforcers) that from the date of the declaration
 (and subject to any future declaration in exercise of this power) the





Exh. 6.18-7






	
 

	
 

	
 

	
 


	
 

	
 

	
Governing
 Law shall be changed to the law of some other jurisdiction, state or
 territory in any part of the world.


	
 

	
 

	
 

	
 


	
 

	
9.2

	
So often as
 any declaration shall be made the Trustees may make such consequential
 alterations or additions in or to the trusts, powers and provisions of this
 Trust as the Trustees may consider necessary or desirable to ensure that the
 trusts, powers and provisions of this Trust shall (mutatis mutandis) be as
 valid and effective under the new Governing Law as they are under the
 original Governing Law of this Trust.


	
 

	
 

	
 

	
 


	
 

	
9.3

	
Subject to
 the power to change the forum for the administration of this Trust contained
 below, the forum for the administration of this Trust shall be the courts of
 the Governing Law.


	
 

	
 

	
 

	
 


	
 

	
9.4

	
The Trustees
 may at any time or times declare by writing (with the written consent of the
 Enforcers) that from the date of the declaration (and subject to any future
 declaration in exercise of this power) the forum for the administration of
 this Trust shall be the courts of any jurisdiction in the world, whether or
 not such courts are of the jurisdiction which is for the time being the
 Governing Law of this Trust.


	
 

	
 

	
 

	
 


	
 

	
9.5

	
The Trustees
 may carry on the general administration of this Trust in any jurisdiction in
 the world, whether or not the jurisdiction is for the time being the
 Governing Law of this Trust or the courts of the jurisdiction are for the
 time being the forum for the administration of these trusts and whether or
 not the Trustees or any of them are for the time being resident and/or
 domiciled in, or incorporated in and/or carrying on business in, or otherwise
 connected with, the jurisdiction.


	
 

	
 

	
 

	
 


	
10.

	
IRREVOCABLE TRUST AND POWER TO VARY


	
 

	
 

	
 

	
 


	
 

	
This Trust
 is irrevocable provided however that, subject to the provisions of Clause 11,
 the Trustees may in writing (but only with the written consent of the
 Enforcers) vary, add to, alter or amend any or all of the provisions of this
 Trust (including, without limitation, the purposes in clause 3) as the
 Trustees in their absolute discretion think fit.


	
 

	
 

	
 

	
 


	
11.

	
BENEFICIAL OWNERSHIP AND PROHIBITED
 TRANSFERS OR SALES


	
 

	
 

	
 

	
 


	
 

	
11.1

	
Notwithstanding
 any provision of this Trust to the contrary the Trustees shall be obligated
 at all times prior to the Termination Date to retain beneficial ownership of
 the Shares until they are sold or otherwise disposed of in accordance with
 the terms of this Trust.


	
 

	
 

	
 

	
 


	
 

	
11.2

	
Notwithstanding
 any provision of this Trust to the contrary, the Trustees may not, under any
 circumstances, transfer any of the Shares to any SCA party, any Consenting
 Counterparty or any of their respective affiliates prior to the Termination
 Date.





Exh. 6.18-8






	
 

	
 

	
 

	
 


	
 

	
11.3

	
Notwithstanding
 any provision of this Trust to the contrary no sale or other disposition of
 the Shares may be made prior to October 15, 2008, except as set forth in the
 Consenting Counterparty Restructuring Agreement.





IN WITNESS whereof the First
Trustee has executed and delivered this instrument as its deed on the date
shown on page one. 


Exh. 6.18-9







SCHEDULE A


In furtherance
of the Purposes and subject to Clause 8.2 and Clause 8.3 above but not further
or otherwise the Trustees shall have the following additional powers:- 


	
 

	
 

	
 


	
1.

	
Incorporation
by Reference  


	
 

	
 

	
 


	
 

	
Further
 administrative powers incorporated by reference to the Trusts (Special
 Provisions) Act 1989, as amended. 


	
 

	
 

	
 


	
2.

	
Further
Powers  


	
 

	
 

	
 


	
 

	
 2.1

	
to
 construct, maintain, improve or alter any buildings or works (so far as
 necessary for carrying out the purposes of the this Trust) on land comprised
 in the Trust Fund; 


	
 

	
 

	
 


	
 

	
 2.2

	
to sell,
 lease, demise, let, license and generally manage and deal with any land or
 buildings or interest therein in such manner as the Trustees shall think fit;
 


	
 

	
 

	
 


	
 

	
 2.3

	
to borrow
 money subject to such consents as may be required by law on such terms as to
 interest repayment or otherwise as the Trustees may think fit without
 security or (subject as aforesaid) upon the security of the whole or any part
 or parts of the Trust Fund and to use such money so borrowed for any purpose
 for which capital of the Trust Fund may be used; 


	
 

	
 

	
 


	
 

	
 2.4

	
to seek the
 advice of any person who is in the opinion of the Trustees qualified to
 advise on the management of any land comprised in the Trust Fund or the
 making and changing of investments of this Trust; 


	
 

	
 

	
 


	
 

	
 2.5

	
to employ
 any person firm or company not being a Trustee to manage or assist in
 managing the Trust Fund upon such reasonable terms as the Trustees think fit
 and to pay a secretary and other such officials or staff not being a trustee
 as the Trustees may in their discretion from time to time determine and to
 enter into agreements and to fix such reasonable salaries as the Trustees may
 deem proper and to enter into any service agreements which they shall
 consider to be necessary including the power to determine any such employment
 upon such terms as the Trustees may decide and to make all reasonable and
 necessary provisions for the payment of pensions and superannuation to or on
 behalf of employees and their widows or widowers and dependants; 


	
 

	
 

	
 


	
 

	
 2.6

	
to apply
 capital or income in insuring any buildings or other property to their full
 value; 


	
 

	
 

	
 


	
 

	
 2.7

	
when making
 grants of any funds to any charities to accept as a good discharge in respect
 of any such funds the receipt of the treasurer or secretary or other
 authorized officer for the time being of such charities; 





Exh. 6.18-10






	
 

	
 

	
 


	
 

	
2.8

	
in respect
 of any property subject to the trust hereof to vest the same in any
 corporation or any other person or persons (whether or not being one or more
 of the Trustees) as nominee or nominees for the Trustees; 


	
 

	
 

	
 


	
 

	
2.9

	
to make
 contributions as they may think fit or otherwise to assist (and whether out
 of capital or income) towards the purposes of this Trust; 


	
 

	
 

	
 


	
 

	
2.10

	
to pay and discharge
 any rent rates taxes costs of insurance improvements repairs or other
 outgoings payable from time to time in respect of any property held subject
 to these trusts and to pay and discharge all expenses incurred in the
 exercise of any powers conferred upon the Trustees by, or in conformity with,
 the provisions of this deed or by any transfer to the Trustees upon these
 trusts of any freehold leasehold or other property any legal or other
 administrative expenses payable from time to time in connection with these
 trusts or with any property held on such trusts; 


	
 

	
 

	
 


	
 

	
2.11

	
to invest
 any moneys for the time being comprised in the Trust Fund and also in the
 hands of the Trustees and for the time being unapplied in the names or under
 the control of the Trustees in or upon any investments authorised by this
 deed with power to vary or transpose investments for or into others of any
 nature so authorised; 


	
 

	
 

	
 


	
 

	
2.12

	
to do all
 such lawful acts or things as shall further the attainment of the purposes of
 this Trust and so far as may be necessary to do such acts or things in
 collaboration with any person. 





Exh. 6.18-11






SCHEDULE B


Rights and Immunities of the Trustees


	
 

	
 

	
 

	
 


	
1.

	
Width of
 discretions 


	
 

	
 

	
 

	
 


	
 

	
1.1

	
Every power
 by this Trust or by law conferred on the Trustees shall confer an absolute
 discretion. 


	
 

	
 

	
 

	
 


	
 

	
1.2

	
In
 amplification of the foregoing; 


	
 

	
 

	
 

	
 


	
 

	
 

	
1.2.1

	
subject to
 the provisions of Clause 11.3 above, the Trustees shall have the exclusive
 power and authority in their sole discretion, exercised in good faith in
 accordance with the Purposes, to sell (and to determine the terms and
 conditions of such a sale), all or a portion of the Shares in one or more
 private or public transactions in accordance with the applicable laws,
 whether in whole or in part; 


	
 

	
 

	
 

	
 


	
 

	
 

	
1.2.2

	
subject to
 the provisions of Clause 1.2.3 of this Schedule, the Trustees shall have the
 exclusive right and obligation to vote the Shares and at all times prior to
 the Termination Date the Trustees shall have full power and authority, and
 are empowered to vote (or give written consent in person or by proxy, at all
 meetings of shareholders of the Company), the Shares as they in their sole
 judgement, believe to be in accordance with the Purposes and to do any and
 all other things and take any and all other actions as fully as any
 shareholder of the Company might do if personally present at a meeting of the
 shareholders of the Company or otherwise, all to the fullest extent permitted
 by law; 


	
 

	
 

	
 

	
 


	
 

	
 

	
1.2.3

	
if at any
 time the Trustees shall have the right pursuant to the SCA Shareholder
 Agreement to nominate one or more nominees to the Company’s board of
 directors, the Trustees shall nominate such person or persons in accordance
 with the procedures set forth on Schedule E; 


	
 

	
 

	
 

	
 


	
 

	
 

	
1.2.4

	
the Trustees
 shall not amend or modify the SCA Shareholder Agreement or the Registration
 Rights Agreement without the prior written consent of the Enforcers; and 


	
 

	
 

	
 

	
 


	
 

	
 

	
1.2.5

	
subject to
 the above the Trustees shall have the exclusive power and authority in their
 sole discretion exercised in good faith in accordance with the Purposes, to
 exercise, direct and enforce any and all rights that the Trustees may have
 under the SCA Shareholder Agreement (including the determination as to
 whether to assert any claim, commence any action or settle, dismiss or
 continue the prosecution of any such action). 


	
 

	
 

	
 

	
 


	
 

	
1.3

	
The Trustees
 may exercise any power by this Trust or by law conferred by majority. Any
 trustee who is not a member of such majority (including a dissenting 





Exh. 6.18-12






	
 

	
 

	
 

	
 


	
 

	
 

	
trustee)
 shall be obliged to join in any deed or writing made, or act to be done, in
 the name of the Trustees pursuant to a majority decision of the Trustees if
 requested by the majority of the Trustees to do so.


	
 

	
 

	
 

	
 


	
2.

	
Release or
 restriction of powers 


	
 

	
 

	
 

	
 


	
 

	
The Trustees
 may release or restrict the future exercise of any power by this Trust or by
 law conferred on the Trustees notwithstanding the fiduciary nature of such
 power. Any release or restriction shall bind any future trustee unless the
 contrary is expressly stated.


	
 

	
 

	
 

	
 


	
3.

	
Indemnity 


	
 

	
 

	
 

	
 


	
 

	
3.1

	
Each Trustee
 shall be entitled to a full indemnity out of the capital and/or income of the
 Trust Fund in respect of any costs, expenses or any other liabilities of
 whatsoever nature (including any taxes and associated penalties and interest
 for which they are personally liable and any liability which may be payable
 to an Outgoing Trustee (as defined below)) incurred by the trustee in or
 about the professed execution of the trusts and powers of this Trust, but not
 in respect of any costs, expenses or any other liabilities incurred by any
 trustee in acting or omitting to act in a manner in which the trustee is not
 entitled to the protection of the exclusion of liability provisions contained
 in this Trust. 


	
 

	
 

	
 

	
 


	
 

	
3.2

	
Any of the
 Trustees (including an Outgoing Trustee as defined below) shall be entitled
 to assert a lien over any of the capital and/or income of the Trust Fund in
 order to secure his right of indemnity or, at his election, to release any
 capital and/or income of the Trust Fund subject to the recipient and/or the
 continuing trustee (as the case may be) granting to the trustee (and the
 trustee’s successors and assigns) a charge over the released assets securing
 the right of indemnity and/or an express indemnity. 


	
 

	
 

	
 

	
 


	
 

	
3.3

	
Without
 prejudice to the entitlement of a retiring or removed trustee to request that
 the trustee be granted an express indemnity on retirement or removal, the
 rights of indemnity conferred by this Trust shall endure following the
 retirement or removal, death or (as the case may be) liquidation of a trustee
 (an “Outgoing Trustee”) to the intent that an Outgoing Trustee and his
 personal representatives or (as the case may be) its liquidator shall be
 entitled to assert the same rights of indemnity in respect of costs, expenses
 or other liabilities of whatsoever nature (including any taxes for which the
 Outgoing Trustee is personally liable) as the Outgoing Trustee would have
 been entitled to assert had the Outgoing Trustee remained in office as a
 trustee of this Trust at the time when the right of indemnity is asserted. 


	
 

	
 

	
 

	
 


	
4.

	
Exclusion of
 liability 


	
 

	
 

	
 

	
 


	
 

	
4.1

	
In the
 professed execution of the trusts and powers of this Trust, no trustee or
 member or officer or employee of any corporation which is a trustee of this
 Trust shall be liable for any loss to the Trust Fund or the income of the
 Trust Fund arising 





Exh. 6.18-13






	
 

	
 

	
 

	
 


	
 

	
 

	
by reason of
 any improper investment made or retained in good faith, or for the negligence
 or fraud of any agent, nominee, delegate or sub-delegate appointed by or with
 the authority of the Trustees or any of them (notwithstanding that the
 appointment of the agent, nominee, delegate or sub-delegate was not strictly
 necessary or expedient), or by reason of any mistake or omission made in good
 faith by any trustee, or by reason of any other matter or thing whatsoever
 undertaken in good faith, except:


	
 

	
 

	
 

	
 


	
 

	
 

	
4.1.1

	
deliberate
 fraud or other deliberate wrongdoing; 


	
 

	
 

	
 

	
 


	
 

	
 

	
4.1.2

	
wilful
 misconduct or wilful neglect; and 


	
 

	
 

	
 

	
 


	
 

	
 

	
4.1.3

	
in the case
 of a professional trustee or a corporate trustee in business as a trustee,
 reckless misconduct on the part of the particular trustee who it is sought to
 make liable. 


	
 

	
 

	
 

	
 


	
 

	
4.2

	
Without
 prejudice to the generality of the foregoing: 


	
 

	
 

	
 

	
 


	
 

	
 

	
4.2.1

	
in any case
 where the Trustees have appointed and reasonably relied in good faith on a
 person or persons to manage investments, the Trustees shall not be liable for
 any loss arising out of the failure of the investment policy implemented by
 or at the direction of that person or those persons; and 


	
 

	
 

	
 

	
 


	
 

	
 

	
4.2.2

	
the
 exclusion of liability provided for above shall extend to any matter or thing
 arising out of any trustee, or any member or officer or employee of a corporate
 trustee, acting in good faith as a member or officer or employee of any
 corporation incorporated or acquired pursuant to the powers of the Trustees. 


	
 

	
 

	
 

	
 


	
5.

	
Supervision
 of officers of corporations 


	
 

	
 

	
 

	
 


	
 

	
The Trustees
 shall not be bound or required to interfere in the management or conduct of
 the business of any corporation and may waive any requirement for the
 appointment of auditors or for the preparation of accounts even though the
 Trustees control the whole or the majority of the securities of such
 corporation (or of its parent corporation). So long as the Trustees shall
 have no notice of any act of dishonesty or misappropriation of assets or
 other deliberate misconduct on the part of the officers or employees having
 the management of any corporation, the Trustees shall be at liberty to leave
 the conduct of its business (including the payment or non-payment of
 dividends) wholly to its officers or employees. 





Exh. 6.18-14






	
 

	
 

	
 

	
 


	
6.

	
Charging
 clauses 


	
 

	
 

	
 

	
 


	
 

	
6.1

	
Any of the
 Trustees who shall be an individual engaged in any profession or business
 either alone or in partnership: 


	
 

	
 

	
 

	
 


	
 

	
 

	
6.1.1

	
may be
 appointed to act as a trustee on a like charging basis to that provided for
 in relation to corporate trustees below; and 


	
 

	
 

	
 

	
 


	
 

	
 

	
6.1.2

	
subject to
 that, shall be entitled to charge and be paid all professional or other
 proper charges for business done or time spent or services rendered by the
 trustee or his firm in connection with this Trust, whether or not within the
 usual scope of his or his firm’s profession or business and including acts
 which a trustee not being in any profession or business could have done
 personally. 


	
 

	
 

	
 

	
 


	
 

	
6.2

	
Any of the
 Trustees which shall be a trust corporation or other corporate trustee shall
 be entitled to charge and be paid the fees for its services as may be agreed
 at the time of its appointment by the Enforcers and the terms and conditions
 relating to fees may include provision for the subsequent variation of the
 fees from time to time with the agreement of the Enforcers. In the absence of
 an agreement, any trust corporation or corporate trustee shall be entitled to
 charge and be paid fees for its services in accordance with its usual scale
 or schedule of fees from time to time in effect. 


	
 

	
 

	
 

	
 


	
7.

	
Incidental
 profits 


	
 

	
 

	
 

	
 


	
 

	
7.1

	
Any trustee
 or any member or officer or employee of any corporate trustee of this Trust
 may act as an officer or employee of any corporation (or of any subsidiary of
 such corporation) the securities of which are comprised in the Trust Fund and
 may retain any remuneration or other benefits received by virtue of the
 office or employment notwithstanding that any votes or other rights attaching
 to the securities have been instrumental in procuring or maintaining that
 person in the remunerated office or employment. 


	
 

	
 

	
 

	
 


	
 

	
7.2

	
Any trustee
 or any member or officer or employee of any corporate trustee of this Trust
 or any corporation in the same group of corporations as any corporate trustee
 of this Trust shall be entitled to retain any brokerage or commission paid by
 any broker, agent or insurance office to that person (or his firm) in
 connection with the acquisition or dealing with any assets or the effecting
 of, or payment of, any premium on any policy subject or intended to become
 subject to this Trust. 


	
 

	
 

	
 

	
 


	
 

	
7.3

	
Any trustee
 or any firm or corporation of which a trustee is a member or officer or
 employee or any corporation in the same group of corporations as any
 corporate trustee of this Trust which carries on the business of banking or
 providing investment services may act as banker or investment adviser (as the
 case may be) to this Trust on the same terms as are offered to any ordinary
 customer without being liable to account for any profits arising therefrom. 





Exh. 6.18-15






	
 

	
 

	
 

	
 


	
8.

	
Conflicts of
 interest 


	
 

	
 

	
 

	
 


	
 

	
Any of the
 Trustees may join in exercising any of the powers by this Trust or by law
 conferred on the Trustees (whether of a beneficial or administrative nature)
 notwithstanding that he may have some other interest (either personally or in
 some other fiduciary capacity) in the manner or result of exercising the
 power. 


	
 

	
 

	
 

	
 


	
Appointment and Retirement of the Trustees


	
 

	
 

	
 

	
 


	
9.

	
Persons who
 may serve as trustees 


	
 

	
 

	
 

	
 


	
 

	
9.1

	
Any
 individual or corporation may be appointed and serve as a trustee notwithstanding
 that the individual or corporation is resident and/or domiciled, or
 incorporated and/or carrying on business, outside the jurisdiction of the
 Governing Law and that as a result of the appointment (and any retirement
 occurring in connection with the appointment) all, or a majority, of the
 Trustees are resident and/or domiciled, or incorporated and/or carrying on
 business, outside the jurisdiction of the Governing Law and carrying on the
 administration of this Trust outside the jurisdiction of the Governing Law
 and notwithstanding that all or any of the assets subject to the trusts of
 this Trust are situated in the jurisdiction of the Governing Law. 


	
 

	
 

	
 

	
 


	
 

	
9.2

	
The power of
 appointing new trustees shall not be exercisable solely by virtue of a
 trustee remaining outside the jurisdiction of the Governing Law for any
 period. 


	
 

	
 

	
 

	
 


	
10.

	
Number of
 trustees 


	
 

	
 

	
 

	
 


	
 

	
Subject to
 any express provision of this Trust to the contrary and without prejudice to
 any restriction under the Governing Law on the number of trustees necessary
 to give a receipt for capital money or otherwise, a single trustee (whether
 or not being a trust corporation) may act for all the purposes of this Trust.


	
 

	
 

	
 

	
 


	
11.

	
Power of
 appointment and removal of new trustees 


	
 

	
 

	
 

	
 


	
 

	
The power of
 appointing new trustees and the power to remove trustees of this Trust shall
 be exercisable by writing and shall be vested in the Enforcers.


	
 

	
 

	
 

	
 


	
12.

	
Retirement
 of trustees 


	
 

	
 

	
 

	
 


	
 

	
12.1

	
Any trustee
 may retire from the office of trustee either forthwith or at some specified
 future date or event by writing (which may be in counterparts) to which the
 trustee retiring and the other trustees of this Trust are party and written
 notice and a copy of which shall be given to the Enforcers. 





Exh. 6.18-16






	
 

	
 

	
 

	
 


	
 

	
12.2

	
No
 retirement shall take effect unless following the retirement there will be at
 least one trustee (or the greater number of trustees as may be required by
 any mandatory provision of the Governing Law) remaining in office. 


	
 

	
 

	
 

	
 


	
Separate Bodies Of Trustees


	
 

	
 

	
 

	
 


	
13.

	
Appointment
 of separate bodies of trustees 


	
 

	
 

	
 

	
 


	
 

	
13.1

	
A separate
 person or body of persons may be appointed to act as the Trustees in relation
 to any specified share or part of the Trust Fund and the income of the Trust
 Fund. 


	
 

	
 

	
 

	
 


	
 

	
13.2

	
If and so
 long as one or more shares or parts of the Trust Fund and the income of the
 Trust Fund have a separate person or body of persons acting as the Trustees
 in relation to such assets, the provisions of this schedule shall apply to
 each such person or body of persons as if references to the share or part of
 the Trust Fund and the income of the Trust Fund in question were substituted
 for references to the Trust Fund and the income of the Trust Fund. 





Exh. 6.18-17






SCHEDULE C


	
 

	
 

	
 

	
 


	
1.

	
Initial
 Enforcers and Unanimity 


	
 

	
 

	
 

	
 


	
 

	
1.1

	
Subject to
 the provisions of Clauses 2, 3, 5 and 6 of this Schedule, the Enforcers shall
 be XLCA and the Consenting Counterparties (together “the First Enforcers”). 


	
 

	
 

	
 

	
 


	
 

	
1.2

	
All actions
 of the Enforcers shall only be effective if they are the result of a
 unanimous decision of the XLCA Enforcer and the Consenting Counterparties
 Enforcer. 


	
 

	
 

	
 

	
 


	
2.

	
Appointment
 and Resignation of the XLCA Enforcer 


	
 

	
 

	
 

	
 


	
 

	
2.1

	
The XLCA
 Enforcer shall have the power, by writing:- 


	
 

	
 

	
 

	
 


	
 

	
 

	
2.1.1

	
to add to
 the number of persons then serving as the XLCA Enforcer; 


	
 

	
 

	
 

	
 


	
 

	
 

	
2.1.2

	
to appoint a
 person or persons to serve as the XLCA Enforcer in the event all other
 persons cease to serve as the XLCA Enforcer and that appointment may be made
 irrevocably or may be made so as to be revocable up until the time it takes
 effect; and 


	
 

	
 

	
 

	
 


	
 

	
 

	
2.1.3

	
to make
 provisions concerning how any two or more persons entitled to exercise the
 powers of the XLCA Enforcer at a given time shall exercise those powers. 


	
 

	
 

	
 

	
 


	
 

	
2.2

	
Any person
 other than XLCA appointed to serve as the XLCA Enforcer shall accept that
 appointment in writing. Copies of any appointment and acceptance shall be
 supplied to the Trustees and all other Enforcers in office at that time as
 soon as is practicable. 


	
 

	
 

	
 

	
 


	
3.

	
Persons who
 may serve as XLCA Enforcers 


	
 

	
 

	
 

	
 


	
 

	
Any
 individual or corporation may be appointed and serve as an XLCA Enforcer
 notwithstanding that the individual or corporation is resident and/or
 domiciled, or incorporated and/or carrying on business, outside the
 jurisdiction of the Governing Law.


	
 

	
 

	
 

	
 


	
4.

	
XLCA
 Enforcers acting together 


	
 

	
 

	
 

	
 


	
 

	
Subject to
 the exercise of the power contained in Clause 2.1.3 of this Schedule, in any
 case where there are two or more persons entitled to exercise the powers of
 the XLCA Enforcer at a given time, the powers shall be exercisable by
 majority.





Exh. 6.18-18






	
 

	
 

	
 

	
 


	
5.

	
Resignation
 of the XLCA Enforcer 


	
 

	
 

	
 

	
 


	
 

	
5.1

	
Subject to
 the provisions of Clause 5.2 of this Schedule, any person serving as an XLCA
 Enforcer or appointed to be an XLCA Enforcer: 


	
 

	
 

	
 

	
 


	
 

	
 

	
5.1.1

	
may resign
 by writing to that effect which may be signed in advance of assuming office
 as an XLCA Enforcer; 


	
 

	
 

	
 

	
 


	
 

	
 

	
5.1.2

	
shall, as
 soon as is practicable, supply the Trustees and all other Enforcers in office
 at that time with a copy of the resignation; 


	
 

	
 

	
 

	
 


	
 

	
 

	
5.1.3

	
shall, in
 the case of any prospective resignation, as soon as is practicable supply the
 Trustees and all other Enforcers in office at that time with a copy of the
 resignation. 


	
 

	
 

	
 

	
 


	
 

	
5.2

	
No XLCA
 Enforcer may resign if as a consequence there would be no XLCA Enforcer. 


	
 

	
 

	
 

	
 


	
6.

	
The
 Consenting Counterparties Enforcer 


	
 

	
 

	
 

	
 


	
 

	
The
 provisions of Clauses 2 to 5 of this Schedule shall apply to the Consenting
 Counterparties Enforcer as if those clauses had been repeated verbatim herein
 provided that all references to the XLCA Enforcer or the XLCA Enforcers shall
 be deemed to refer to the Consenting Counterparties Enforcer or the
 Consenting Counterparties Enforcers respectively. 


	
 

	
 

	
 

	
 


	
Rights and Immunities of the Enforcer


	
 

	
 

	
 

	
 


	
7.

	
Width of
 discretions 


	
 

	
 

	
 

	
 


	
 

	
Every power
 conferred on the Enforcers shall confer an absolute and non-fiduciary
 discretion and no person shall be entitled to compel control or otherwise
 interfere with the exercise by the Enforcers of any such power.


	
 

	
 

	
 

	
 


	
8.

	
Statutory
 Power to Enforce 


	
 

	
 

	
 

	
 


	
 

	
The
 Enforcers, XLCA and any person appointed by a majority of the Consenting
 Counterparties are each appointed by this Trust as a person entitled to make
 application to the Supreme Court for an order relating to the enforcement of
 this Trust in accordance with the provisions of Section 12B of the Trusts
 (Special Provisions) Act 1989.


	
 

	
 

	
 

	
 


	
9.

	
Release or
 restriction of powers 


	
 

	
 

	
 

	
 


	
 

	
9.1

	
The
 Enforcers may by writing release or restrict the future exercise of any power
 conferred on the Enforcer. Any release or restriction shall bind any persons
 appointed in the future to be Enforcers unless the contrary is expressly
 stated. 





Exh. 6.18-19






	
 

	
 

	
 

	
 


	
 

	
9.2

	
The
 Enforcers shall, as soon as is practicable, supply the Trustees with any
 release or restriction of power. 


	
 

	
 

	
 

	
 


	
10.

	
Indemnity 


	
 

	
 

	
 

	
 


	
 

	
Each
 Enforcer other than the First Enforcers and any of their respective
 affiliates shall be entitled to a full indemnity out of the Trust Fund and/or
 the income of the Trust Fund in respect of any costs, expenses or any other
 liabilities of whatsoever nature incurred in or about the professed execution
 of powers under this Trust, but not in respect of any costs, expenses or any
 other liabilities incurred by any such Enforcer in acting or omitting to act
 in a manner in which that person is not entitled to the protection of the
 exclusion of liability provisions contained in this Trust.


	
 

	
 

	
 

	
 


	
11.

	
Exclusion of
 liability 


	
 

	
 

	
 

	
 


	
 

	
In the
 professed execution of powers under this Trust no Enforcer or member or
 officer or employee of any corporation which is an Enforcer of this Trust
 shall be liable for any loss to the Trust Fund or the income of the Trust
 Fund arising by reason of any mistake or omission made in good faith by any
 such Enforcer or by reason of any other matter or thing whatsoever undertaken
 in good faith except:


	
 

	
 

	
 

	
 


	
 

	
11.1

	
deliberate
 fraud or other deliberate wrongdoing; and 


	
 

	
 

	
 

	
 


	
 

	
11.2

	
in the case
 of a professional Enforcer or a corporation in business as an Enforcer,
 reckless misconduct on the part of the particular Enforcer who it is sought
 to make liable. 


	
 

	
 

	
 

	
 


	
12.

	
Charging
 clauses 


	
 

	
 

	
 

	
 


	
 

	
12.1

	
Any Enforcer
 other than the First Enforcers and any of their respective affiliates who
 shall be an individual engaged in any profession or business either alone or
 in partnership: 


	
 

	
 

	
 

	
 


	
 

	
 

	
12.1.1

	
may be
 appointed to act as an Enforcer on a like charging basis to that provided for
 in relation to corporate Enforcers below; and 


	
 

	
 

	
 

	
 


	
 

	
 

	
12.1.2

	
subject to
 that, shall be entitled to charge and be paid all professional or other
 proper charges for business done or time spent or services rendered by the
 Enforcer or his firm in connection with this Trust, whether or not within the
 usual scope of his or his firm’s profession or business and including acts
 which an Enforcer not being in any profession or business could have done
 personally. 


	
 

	
 

	
 

	
 


	
 

	
12.2

	
Any
 corporation which is an Enforcer shall be entitled to charge and be paid the
 fees for its services as may be agreed at the time of its appointment by the
 Trustees. The terms and conditions relating to its appointment may include
 provision for the subsequent variation of such fees from time to time with
 the agreement of the 





Exh. 6.18-20






	
 

	
 

	
 

	
 


	
 

	
 

	
Trustees as
 may be specified in those terms and conditions for the purpose of approving
 any variation. In the absence of agreement, it shall be entitled to charge
 and be paid fees for its services in accordance with its usual scale or
 schedule of fees from time to time in effect.


	
 

	
 

	
 

	
 


	
13.

	
Incidental
 profits 


	
 

	
 

	
 

	
 


	
 

	
13.1

	
Any Enforcer
 or any member or officer or employee of any corporate Enforcer of this Trust
 may act as an officer or employee of any corporation (or of any subsidiary of
 such corporation) the securities of which are comprised in the Trust Fund and
 may retain any remuneration or other benefit which is received by virtue of
 such office or employment notwithstanding that any votes or other rights
 attaching to the securities have been instrumental in procuring or maintaining
 that person in such remunerated office or employment. 


	
 

	
 

	
 

	
 


	
 

	
13.2

	
Any Enforcer
 or any member or officer or employee of any corporate Enforcer of this Trust
 or any corporation in the same group of corporations as any corporate
 Enforcer of this Trust shall be entitled to retain any brokerage or
 commission paid by any broker, agent or insurance office to that person (or
 his firm) in connection with the acquisition or dealing with any assets or
 the effecting of, or payment of, any premium on any policy subject or
 intended to become subject to this Trust. 


	
 

	
 

	
 

	
 


	
 

	
13.3

	
Any Enforcer
 or any firm or corporation of which an Enforcer is a member or officer or
 employee or any corporation in the same group of corporations as any
 corporate Enforcer of this Trust which carries on the business of banking or
 providing investment services may act as banker or investment adviser (as the
 case may be) to this Trust on the same terms as are offered to any ordinary
 customer without being liable to account for any profits arising therefrom. 


	
 

	
 

	
 

	
 


	
14.

	
Conflicts of
 interest 


	
 

	
 

	
 

	
 


	
 

	
Any Enforcer
 may join in exercising any of the powers by this Trust or by law conferred on
 the Enforcers notwithstanding that he or it may have some other interest
 (either personally or in some fiduciary capacity) in the manner or result of
 exercising the power.


	
 

	
 

	
 

	
 


	
All Incidental Powers


	
 

	
 

	
 

	
 


	
15.

	
All
 incidental powers 


	
 

	
 

	
 

	
 


	
 

	
15.1

	
The
 Enforcers shall have and be entitled to exercise all powers otherwise enjoyed
 by an absolute beneficial owner which the Enforcers consider necessary or
 expedient in order to carry out the functions of the office of the Enforcers
 under this Trust including (without prejudice to the generality of the
 foregoing) similar powers to those conferred on the Trustees by Schedule A concerning
 agents and disputes. 





Exh. 6.18-21






	
 

	
 

	
 

	
 


	
 

	
15.2

	
The
 provisions in Schedule A concerning confidentiality shall apply to the
 Enforcers as if references to the Enforcers had been substituted for
 references to the Trustees therein.





Exh. 6.18-22







SCHEDULE D


Form of Covenant and Indemnity


THIS DEED OF COVENANT AND INDEMNITY dated
[__________], 2008 (“the Commencement Date”) is made by [_______________] (“the
Company”) in favour of [______________], a Bermuda exempted company (“the
Trustee”). 


BACKGROUND


	
 

	
 

	
 

	
 

	
 

	
 


	
(A)

	
This deed is
 supplemental to a trust (“the Trust”) established by a Declaration of Trust
 made by the Trustee of even date herewith (the “Trust Deed”) and known as The

[                      ]
 Purpose Trust. 


	
 

	
 


	
(B)

	
The Trustee
 is the present trustee of the Trust. 


	
 

	
 


	
(C)

	
The Company
 has agreed to covenant with and indemnify the Trustee, its successors in
 title, the officers and employees of the Trustee and the officers and
 employees of its successors in title (together “the Covenantees”) in the
 terms set out below. 


	
 

	
 


	
OPERATIVE
 PROVISIONS


	
 


	
1.

	
DEFINITIONS


	
 

	
 


	
 

	
In this
 Deed, where the context admits, the following definitions shall apply and
 subject thereto the definitions and rules of construction contained in the
 Trust shall apply:


	
 

	
 


	
 

	
1.1

	
“The Agreed
 Fee” means [a single payment/monthly payments of/quarterly payments of/annual
 payments of] US$[     ]. 


	
 

	
 

	
 


	
 

	
1.2

	
“Excepted
 Liabilities” means any loss to any of the Covenantees, the Trust Fund or the
 income of the Trust Fund arising by reason of any act or omission of any
 Covenantee that amounts to 


	
 

	
 

	
 


	
 

	
 

	
1.2.1

	
deliberate
 fraud or deliberate wrongdoing; 


	
 

	
 

	
 

	
 


	
 

	
 

	
1.2.2

	
wilful
 misconduct or wilful neglect; or 


	
 

	
 

	
 

	
 


	
 

	
 

	
1.2.3

	
in the case
 of a professional trustee or a corporate trustee in business as a trustee,
 reckless misconduct on the part of the particular trustee who it is sought to
 make liable. 


	
 

	
 

	
 

	
 


	
 

	
1.3

	
“The
 Liabilities” means all liabilities, actions, proceedings, claims, demands,
 taxes and duties and all associated interest, penalties and costs, and all
 other costs and expenses whatever (including but not limited to costs and
 expenses incurred by or 





Exh. 6.18-23






	
 

	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
payable by
 the Covenantees or any of them in connection with the Trustee’s role as
 trustee of the Trust) other than Excepted Liabilities.


	
 

	
 

	
 

	
 

	
 

	
 


	
2.

	
COVENANT AND INDEMNITY


	
 

	
 


	
 

	
The Company
 hereby covenants with the Covenantees:


	
 

	
 


	
 

	
2.1

	
To pay the
 Agreed Fee to the Trustee [on the Commencement Date in consideration of the
 Trustee providing the service of acting as trustee of the Trust for the
 period beginning with the Commencement Date and ending on the Termination
 Date/on the Commencement date and monthly/quarterly/annually thereafter in
 advance for the period commencing on the date when payment is due and ending one
 month/one quarter/one year after that date]. 


	
 

	
 

	
 


	
 

	
2.2

	
At all times
 fully and effectually to indemnify the Covenantees in respect of any
 Liabilities which are not otherwise paid to the Covenantees from the property
 of the Trust pursuant to the provisions of the Trust Deed.. 


	
 

	
 

	
 


	
3.

	
GOVERNING LAW


	
 

	
 


	
 

	
This Deed
 shall be governed by the law of Bermuda and the Company submits to the
 exclusive jurisdiction of the Courts of Bermuda.





Exh. 6.18-24






IN WITNESS
whereof the Company has executed and delivered this instrument as its deed on
the date shown above. 


THE COMMON SEAL OF THE COMPANY) was hereunto
affixed in the presence of: ) 


	
 

	
 

	
 


	
 

	
 

	



	
 

	
 

	
Director


	
 

	
 

	
 


	
 

	
 

	



	
 

	
 

	
Director/Officer


	
 

	
 

	
 


	
The COMMON
 SEAL of

	
)

	
 


	
 

	
 

	
 


	
[            ]

	
)

	
 


	
 

	
 

	
 


	
was hereunto
 affixed in the presence of

	
)

	



	
 

	
 

	
Director


	
 

	
 

	
 


	
 

	
 

	



	
 

	
 

	
Director /
 Officer





Exh. 6.18-25






SCHEDULE E


SCA Shareholder Entity Nominee Nomination
Procedures


If at any time
the Trustees shall have the right pursuant to the SCA Shareholder Agreement to
nominate one or more SCA Shareholder Entity Nominees (as such term is defined
in the SCA Shareholder Agreement) to the Company’s board of directors, the
Trustees shall nominate such person or persons in accordance with the following
procedures: 


	
 

	
 

	
 

	
 

	
 

	
 


	
1.

	
With respect
 to each open board seat for which the Trustees shall have the right to
 nominate an SCA Shareholder Entity Nominee, the XLCA Enforcer and the
 Consenting Counterparties Enforcer or their respective designees shall each
 have the right to submit the names of up to two individuals as candidates to
 fill such board seat (each, a “Proposed Nominee”). 


	
 

	
 


	
2.

	
The XLCA
 Enforcer and the Consenting Counterparties Enforcer shall upon the Trustees
 request, jointly submit within a reasonable period of time requested by the
 Trustees a single consolidated list of their respective Proposed Nominees.
 The consolidated list shall be a “blind” written submission containing no
 information regarding which Enforcer has submitted a particular name. 


	
 

	
 


	
3.

	
Each written
 submission with respect to a Proposed Nominee: 


	
 

	
 


	
 

	
(a)

	
shall set
 forth the following information:


	
 

	
 

	
 


	
 

	
 

	
(i)

	
the name,
 age, business address and residence address of such Proposed Nominee; 


	
 

	
 

	
 

	
 


	
 

	
 

	
(ii)

	
the
 principal occupation or employment of such Proposed Nominee, and such other
 biographical information regarding the Proposed Nominee as the submitting
 enforcer deems relevant; 


	
 

	
 

	
 

	
 


	
 

	
 

	
(iii)

	
the number
 of shares of capital stock of the Company or any Consenting Counterparty
 which are owned of record and beneficially by such Proposed Nominee; and 


	
 

	
 

	
 

	
 


	
 

	
(b)

	
shall
 include a completed and signed written director questionnaire (in the form
 provided by the Secretary of the Company) with respect to the background,
 independence and qualification of such Proposed Nominee. 


	
 

	
 

	
 


	
4.

	
The
 Enforcers shall, upon the Trustees request, endeavor to provide the Trustees
 with such other information reasonably requested by the Trustees with respect
 to any Proposed Nominee, which information shall be made available to the
 Trustees in the same “blind” manner as the initial written submissions are
 submitted to the Trustees. 


	
 

	
 


	
5.

	
With respect
 to each open board seat for which the Trustees shall have the right to
 nominate an SCA Shareholder Entity Nominee, the Trustees shall then choose
 among the 





Exh. 6.18-26






	
 

	
 

	
 

	
 

	
 

	
 


	
 

	
Proposed
 Nominees the person the Trustees deem, in their sole and absolute discretion,
 to be the most qualified director of the Company.


	
 

	
 


	
6.

	
The Trustees
 shall submit the name of each Proposed Nominee selected in accordance with
 paragraph 5 above to the Company’s Nominating & Corporate Governance
 Committee in accordance with Section 2(b)(vi) of the SCA Shareholder
 Agreement, but only to the extent such Proposed Nominee first executes a
 written representation and agreement (in the form provided by the Secretary
 of the Company) stating that he or she (A) meets the criteria set forth in
 the definition of “Independent” in the SCA Shareholder Agreement and (B) is
 not and will not become a party to any agreement, arrangement or understanding
 that would violate the last sentence of Section 2(b)(iii) of the SCA
 Shareholder Agreement. [Confirmation from the Consenting Counterparties
 Enforcer under discussion] 


	
 

	
 


	
7.

	
If the
 Company’s Nominating & Corporate Governance Committee does not object to
 the Proposed Nominee submitted to such committee solely on the basis provided
 for in Section 2(b)(vi) of the SCA Shareholder Agreement within 10 business
 days after submission of such Proposed Nominee’s name to such committee, such
 Proposed Nominee shall become an SCA Shareholder Entity Nominee in accordance
 with the SCA Shareholder Agreement. If the Company’s Nominating &
 Corporate Governance Committee objects to the Proposed Nominee, the Trustees
 may select another Proposed Nominee from the submitted list of Proposed
 Nominees or, at its option, request that the Enforcers submit additional
 names for consideration in accordance with the procedures described above. 


	
 

	
 


	
8.

	
In
 performing the Trustees’ duties hereunder, the Trustees shall be entitled to rely
 upon any document submitted in connection with the written submissions
 described above including the completed and signed written director
 questionnaires and the signed written representation and agreements, and the
 Trustees shall not be required to investigate the truth or accuracy of any
 statement contained in any such document. 


	
 

	
 


	
9.

	
The Trustees
 shall not be liable for any error of judgment, or any action taken, in
 selecting the SCA Shareholder Entity Nominees so long as the SCA Shareholder
 Entity Nominees are selected by the Trustees from among the Proposed Nominees
 in good faith. 





Exh. 6.18-27






SCHEDULE 1.01(a)


MLI ABS CDO CREDIT DEFAULT SWAP AGREEMENTS


	
 

	
 


	
1.

	
West Trade
 Funding CDO II Ltd., executed on January 25, 2007, between MLI and Portfolio
 CDS Trust 138; 


	
 

	
 


	
2.

	
Silver
 Marlin CDO I Ltd., executed on April 11, 2007, between MLI and Portfolio CDS
 Trust 153; 


	
 

	
 


	
3.

	
Tazlina
 Funding CDO II, Ltd., executed on June 4, 2007, between MLI and Portfolio CDS
 Trust 164; 


	
 

	
 


	
4.

	
West Trade
 Funding CDO III Ltd., executed on June 4, 2007, between MLI and Portfolio CDS
 Trust 165; 


	
 

	
 


	
5.

	
Jupiter
 High-Grade CDO VI, Ltd., executed on June 15, 2007, between MLI and Portfolio
 CDS Trust 170; 


	
 

	
 


	
6.

	
Robeco High
 Grade CDO I, Ltd., executed on June 29, 2007, between MLI and Portfolio CDS
 Trust 172; 


	
 

	
 


	
7.

	
Biltmore CDO
 2007-1, Ltd., executed on August 10, 2007, between MLI and Portfolio CDS
 Trust 186; and 


	
 

	
 


	
8.

	
Ipswich
 Street CDO Ltd., executed on December 14, 2006, between MLI and Portfolio CDS
 Trust 129. 





Sch. 1.01(a)-1






SCHEDULE 1.01(b) 


OTHER TERMINATED AGREEMENTS


Part I 


	
 

	
 


	
1.

	
Indemnification
 Agreement, dated August 4, 2006, between XLCA and XLA; 


	
 

	
 


	
2.

	
Master
 Services Agreement, dated August 4, 2006, between XLA and XLFAS; 


	
 

	
 


	
3.

	
Master
 Services Agreement, dated August 4, 2006, between XL and SCAB; 


	
 

	
 


	
4.

	
Master
 Services Agreement, dated August 4, 2006, between XLGS and XLFAS; and 


	
 

	
 


	
5.

	
Master
 Services Agreement, dated August 4, 2006, between XLBS and SCAB. 


	
 

	
 


	
Part II 


	
 


	
1.

	
Master
 Services Agreement, dated July 1, 2006, between XLCAUK, in respect of its
 Spanish Branch and XL Services UK Limited, in respect of its Spanish Branch; 


	
 

	
 


	
2.

	
Master
 Services Agreement, dated August 4, 2006, between XLCAUK and XL Services UK
 Limited; and 


	
 

	
 


	
3.

	
General Services
 Agreement, dated as of October 22, 2004, between XLCA and XL Financial
 Products Ltd., a company formed under the laws of England. 





Sch. 1.01(b)-1






SCHEDULE 1.01(c) 


KNOWLEDGE OF SCA


Paul Giordano:
President and Chief Executive Officer, SCA 


Elizabeth
Keys: Senior Vice President and Chief Financial Officer, SCA 


Claude
LeBlanc: Executive Vice President, Corporate Development and Strategy, SCA


Susan
Comparato: General Counsel, SCA; Senior Vice President, General Counsel, XLCA


Edward
Hubbard: President and Chief Operating Officer, XLCA


Michael Rego:
Executive Vice President and Chief Operating Officer, XLFA 


Sch. 1.01(c)-1






SCHEDULE 1.01(d) 


TERMS OF ESCROW AGREEMENT


	
 

	
 


	
•

	
Certificates
 evidencing all of the XL Owned SCA Common Shares free and clear of any Liens,
 together with a stock power duly endorsed in blank will be deposited with the
 Escrow Agent and held by the Escrow Agent until release in accordance with
 the Escrow Agreement. 


	
 

	
 


	
•

	
If the
 Escrow Agent receives a certificate signed by the Secretaries of SCA and XLCA
 stating that the SCA Shareholder Entity Formation Conditions have been
 satisfied and directing the Escrow Agent to deliver the XL Owned SCA Common
 Shares (together with the related certificates and stock powers) to the SCA
 Shareholder Entity, then the Escrow Agent shall immediately deliver all of
 the XL Owned SCA Common Shares (together with the related certificates and
 stock powers) to the SCA Shareholder Entity. 


	
 

	
 


	
•

	
The Escrow
 Agreement will be otherwise drafted to meet applicable regulatory
 requirements. 





Sch. 1.01(d)-1






SCHEDULE 2.01 


COMMUTED REINSURANCE AGREEMENTS


[Intentionally omitted—superseded by

Amendment No. 1 to Master Transaction Agreement]


Schedule 2.01






SCHEDULE 2.04 


REINSURANCE AGREEMENTS WITH THIRD PARTIES

THAT MAY BE COMMUTED


Master
Facultative Retrocession Agreement, effective as of September 15, 2003, between
XLFA and RAM Reinsurance Company Limited; and Amended and Restated Variable
Comprehensive Automatic Treaty, effective as of January 1, 2006, between XLFA
and RAM Reinsurance Company Ltd. 


Master
Facultative Retrocession Agreement, effective as of December 1, 2004, between
XLFA and BluePoint Re, Limited; and Variable Comprehensive Automatic Treaty
Retrocession Agreement, effective as of January 1, 2006, between XLFA and
BluePoint Re. 


Master
Facultative Retrocession Agreement, effective as of January 1, 2003, between
XLFA and ACE Capital Re International Ltd. 


Variable
Comprehensive Automatic Treaty Retrocession Agreement, effective as of January
1, 2007, between XLFA and Assured Guaranty Re Ltd. 


Master
Facultative Retrocession Agreement, effective as of December 19, 2000, between
XLFA and Radian Reinsurance Inc. 


Master
Facultative Retrocession Agreement, effective as of October 25, 2002, between
XLFA and CDC IXIS Financial Guaranty North America, Inc. 


Master
Facultative Retrocession Agreement, effective as of May 1, 2003, between XLFA
and AMBAC Assurance Corporation. 


Master
Facultative Retrocession Agreement, effective as of June 1, 2001, between XLFA
and Partner Reinsurance Company, Ltd., Zurich Branch. 


Sch. 2.04-1






SCHEDULE 2.05 


SCHEDULE 2.05 AGREEMENTS


	
 

	
 

	
 

	
 

	
 

	
 


	
1.

	
Facultative
 Quota Share Reinsurance Treaty, dated December 31, 1999, as amended, between
 XLFA and XLI, which was terminated by agreement of the parties, dated July
 20, 2006. 


	
 

	
 


	
2.

	
Underwriting
 Agreement, dated July 28, 2006, between XLI, SCA and the Underwriters (as
 defined therein). 


	
 

	
 


	
3.

	
Underwriting
 Agreement, dated May 15, 2007, between XLI, SCA and the Underwriters (as
 defined therein). 


	
 

	
 


	
4.

	
General
 Services Agreement, dated as of August 4, 2006, between XLFAS and XLI
 (surveillance). 


	
 

	
 


	
5.

	
The
 following agreements relating to third-party payment undertaking agreements
 entered into by certain Affiliate(s) of XL: 


	
 

	
 


	
 

	
(a)

	
Fixed and
 Floating Charge Agreement, dated December 31, 2001, between XLI and XLFA. 


	
 

	
 

	
 


	
 

	
(b)

	
Reimbursement
 Agreement, dated December 31, 2001, between XLI and XLFA. 


	
 

	
 

	
 


	
 

	
(c)

	
Fixed and
 Floating Charge Agreement, dated September 30, 2002, between XLI and XLFA. 


	
 

	
 

	
 


	
 

	
(d)

	
Reimbursement
 Agreement, dated September 30, 2002, between XLI and XLFA. 


	
 

	
 

	
 


	
 

	
(e)

	
Fixed and
 Floating Charge Agreement, dated December 18, 2003, between XLI and XLFA. 


	
 

	
 

	
 


	
 

	
(f)

	
Reimbursement
 Agreement, dated December 18, 2003, between XLI and XLFA. 


	
 

	
 

	
 


	
6.

	
The
 following agreements relating to third-party guaranteed investment contracts
 entered into by certain Affiliate(s) of XL: 


	
 

	
 


	
 

	
(a)

	
Securities
 Account Control Agreement, dated July 20, 2006, among XL Asset Funding
 Company I LLC, XLCA and Mellon Bank, N.A. 


	
 

	
 

	
 


	
 

	
(b)

	
Insurance
 and Indemnity Agreement, dated October 13, 2006, among XLCA, XL Asset Funding
 Company I LLC, and XL Life and Annuity Holding Company. 


	
 

	
 

	
 


	
 

	
(c)

	
Premium
 Letter Agreement, dated October 13, 2006, among XLCA, XL Asset Funding
 Company I LLC, and XL Life and Annuity Holding Company. 





Sch. 2.05-1






	
 

	
 

	
 

	
 

	
 

	
 


	
 

	
(d)

	
Collateral
 Pledge, Security and Management Agreement, dated October 13, 2006, between
 XLCA, XL Asset Funding Company I LLC, XL Life and Annuity Holding Company,
 and Mellon Bank, N.A. 


	
 

	
 

	
 


	
 

	
(e)

	
Omnibus
 Amendment Agreement, dated November 30, 2007, between XLCA, XL Asset Funding
 Company I LLC, and XL Life and Annuity Holding Company. 


	
 

	
 

	
 


	
 

	
(f)

	
UCC
 Financing Statement, dated October 13, 2006 between XL Asset Funding Company
 I LLC (as debtor) and XLCA (as secured party). 


	
 

	
 

	
 


	
7.

	
Transition
 Agreement, dated August 4, 2006, among XL, XLI, XLA and SCA, as amended on
 May 3, 2007, and as further amended as of the Closing Date. 


	
 

	
 


	
8.

	
The
 following agreements relating to total return swaps: 


	
 

	
 


	
 

	
(a)

	
Detroit
 Metropolitan Wayne County Airport


	
 

	
 

	
 


	
 

	
 

	
(i)

	
Insurance
 and Indemnity Agreement between XLCA and XL Asset Funding Company I LLC,
 dated October 12, 2005. 


	
 

	
 

	
 

	
 


	
 

	
 

	
(ii)

	
Premium
 letter between XLCA and XL Asset Funding Company I LLC, dated October 12,
 2005. 


	
 

	
 

	
 

	
 


	
 

	
 

	
(iii)

	
Letter of
 Agreement between XLCA and XL Asset Funding Company I LLC for Economic Risk
 of Loss, dated October 18, 2005. 


	
 

	
 

	
 

	
 


	
 

	
(b)

	
Raleigh-Durham,
 NC Airport 


	
 

	
 

	
 


	
 

	
 

	
(i)

	
Insurance
 and Indemnity Agreement between XLCA and XL Asset Funding Company I LLC,
 dated October 12, 2005. 


	
 

	
 

	
 

	
 


	
 

	
 

	
(ii)

	
Premium
 letter between XLCA and XL Asset Funding Company I LLC, dated October 12,
 2005. 


	
 

	
 

	
 

	
 


	
 

	
 

	
(iii)

	
Letter of
 Agreement between XLCA and XL Asset Funding Company I LLC for Economic Risk
 of Loss, dated October 18, 2005. 


	
 

	
 

	
 

	
 


	
 

	
(c)

	
Metropolitan
 Washington Airports Authority 


	
 

	
 

	
 


	
 

	
 

	
(i)

	
Insurance
 and Indemnity Agreement between XLCA and XL Asset Funding Company I LLC,
 dated October 12, 2005. 


	
 

	
 

	
 

	
 


	
 

	
 

	
(ii)

	
Premium
 letter between XLCA and XL Asset Funding Company I LLC, dated October 12,
 2005. 


	
 

	
 

	
 

	
 


	
 

	
 

	
(iii)

	
Letter of
 Agreement between XLCA and XL Asset Funding Company I LLC for Economic Risk
 of Loss, dated October 18, 2005. 





Sch. 2.05-2






	
 

	
 

	
 

	
 

	
 

	
 


	
 

	
(d)

	
San Diego
 County Regional Airport Authority 


	
 

	
 

	
 


	
 

	
 

	
(i)

	
Insurance
 and Indemnity Agreement between XLCA and XL Asset Funding Company I LLC,
 dated December 6, 2005. 


	
 

	
 

	
 

	
 


	
 

	
 

	
(ii)

	
Premium
 letter between XLCA and XL Asset Funding Company I LLC, dated December 6,
 2005. 


	
 

	
 

	
 

	
 


	
 

	
 

	
(iii)

	
Letter of
 Agreement between XLCA and XL Asset Funding Company I LLC for Economic Risk
 of Loss, dated December 6, 2005. 


	
 

	
 

	
 

	
 


	
 

	
(e)

	
City of
 Chicago - Chicago Midway Airport 


	
 

	
 

	
 


	
 

	
 

	
(i)

	
Insurance
 and Indemnity Agreement between XLCA and XL Asset Funding Company I LLC,
 dated December 6, 2005. 


	
 

	
 

	
 

	
 


	
 

	
 

	
(ii)

	
Premium
 letter between XLCA and XL Asset Funding Company I LLC, dated December 6,
 2005. 


	
 

	
 

	
 

	
 


	
 

	
 

	
(iii)

	
Letter of
 Agreement between XLCA and XL Asset Funding Company I LLC for Economic Risk
 of Loss, dated December 6, 2005. 


	
 

	
 

	
 

	
 


	
 

	
(f)

	
City of
 Chicago - Chicago O’Hare International Airport 


	
 

	
 

	
 


	
 

	
 

	
(i)

	
Insurance
 and Indemnity Agreement between XLCA and XL Asset Funding Company I LLC,
 dated December 6, 2005. 


	
 

	
 

	
 

	
 


	
 

	
 

	
(ii)

	
Premium
 letter between XLCA and XL Asset Funding Company I LLC, dated December 6,
 2005. 


	
 

	
 

	
 

	
 


	
 

	
 

	
(iii)

	
Letter of
 Agreement between XLCA and XL Asset Funding Company I LLC for Economic Risk
 of Loss, dated December 6, 2005. 


	
 

	
 

	
 

	
 


	
 

	
(g)

	
Dallas Fort
 Worth International Airport 


	
 

	
 

	
 


	
 

	
 

	
(i)

	
Insurance
 and Indemnity Agreement between XLCA and XL Asset Funding Company I LLC,
 dated January 13, 2006. 


	
 

	
 

	
 

	
 


	
 

	
 

	
(ii)

	
Premium
 letter between XLCA and XL Asset Funding Company I LLC, dated January 13,
 2006. 


	
 

	
 

	
 

	
 


	
 

	
 

	
(iii)

	
Letter of
 Agreement between XLCA and XL Asset Funding Company I LLC for Economic Risk
 of Loss, dated January 13, 2006. 


	
 

	
 

	
 

	
 


	
 

	
(h)

	
Milwaukee
 County Wisconsin 


	
 

	
 

	
 


	
 

	
 

	
(i)

	
Insurance
 and Indemnity Agreement between XLCA and XL Asset Funding Company I LLC,
 dated January 13, 2006. 





Sch. 2.05-3






	
 

	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
(ii)

	
Premium
 letter between XLCA and XL Asset Funding Company I LLC, dated January 13,
 2006. 


	
 

	
 

	
 

	
 


	
 

	
 

	
(iii)

	
Letter of
 Agreement between XLCA and XL Asset Funding Company I LLC for Economic Risk
 of Loss, dated January 13, 2006. 


	
 

	
 

	
 

	
 


	
 

	
(i)

	
State of
 Alaska International Airports System 


	
 

	
 

	
 


	
 

	
 

	
(i)

	
Insurance
 and Indemnity Agreement between XLCA and XL Asset Funding Company I LLC,
 dated January 13, 2006. 


	
 

	
 

	
 

	
 


	
 

	
 

	
(ii)

	
Premium
 letter between XLCA and XL Asset Funding Company I LLC, dated January 13,
 2006. 


	
 

	
 

	
 

	
 


	
 

	
 

	
(iii)

	
Letter of
 Agreement between XLCA and XL Asset Funding Company I LLC for Economic Risk
 of Loss, dated January 13, 2006. 


	
 

	
 

	
 

	
 


	
 

	
(j)

	
Rhode Island
 Economic Development Corp Airport 


	
 

	
 

	
 


	
 

	
 

	
(i)

	
Insurance
 and Indemnity Agreement between XLCA and XL Asset Funding Company I LLC,
 dated January 13, 2006. 


	
 

	
 

	
 

	
 


	
 

	
 

	
(ii)

	
Premium
 letter between XLCA and XL Asset Funding Company I LLC, dated January 13,
 2006. 


	
 

	
 

	
 

	
 


	
 

	
 

	
(iii)

	
Letter of
 Agreement between XLCA and XL Asset Funding Company I LLC for Economic Risk
 of Loss, dated January 13, 2006. 





Sch. 2.05-4







SCHEDULE 2.06(a)


SCA PARTIES RECEIVING A PORTION OF THE CASH
CONSIDERATION AMOUNT


[Intentionally omitted—superseded by

Amendment No. 1 to Master Transaction Agreement]


Sch. 2.06(a)-1






SCHEDULE 2.06(b)


SCA PARTIES RECEIVING A PORTION OF THE STOCK
CONSIDERATION


[Intentionally omitted—superseded by

Amendment No. 1 to Master Transaction Agreement]


Sch. 2.06(b)-1






SCHEDULE 9.02


ADDRESSES FOR THE CDS COUNTERPARTIES


	
 

	
 

	
 

	
 

	
 


	
Australia and New Zealand Banking Group Limited


	
 

	
 

	
Address:

	
 

	
40 Bank Street, Canary Wharf


	
 

	
 

	
 

	
 

	
London El4 5EJ


	
 

	
 

	
Phone:

	
 

	
+44-20-3229-2816


	
 

	
 

	
Fax:

	
 

	
+44-20-3229-2378


	
 

	
 

	
Email:

	
 

	
bill.holmes@anz.com


	
 

	
 

	
Attention:

	
 

	
William Holmes, Credit Executive


	
 

	
 

	
 

	
 

	
 


	
 

	
With a copy to:

	
 

	
 


	
 

	
 

	
 

	
 


	
 

	
 

	
Address:

	
 

	
Australia and New Zealand Banking Group Limited


	
 

	
 

	
 

	
 

	
1177 Avenue of the Americas


	
 

	
 

	
 

	
 

	
New York, NY 10036


	
 

	
 

	
Phone:

	
 

	
(212) 801-9769


	
 

	
 

	
Fax:

	
 

	
(212) 536-9299


	
 

	
 

	
Email:

	
 

	
wendy.tso@anz.com


	
 

	
 

	
Attention:

	
 

	
Wendy Tso, Vice President


	
 

	
 

	
 

	
 

	
 


	
Bank of America, N.A.


	
 

	
 

	
Address:

	
 

	
901 Main
 Street, 66th Floor


	
 

	
 

	
 

	
 

	
Dallas, TX
 75202 


	
 

	
 

	
Fax:

	
 

	
(214)
 290-8314 


	
 

	
 

	
Attention:

	
 

	
John W.
 Woodiel, Senior Vice President 


	
 

	
 

	
 

	
 

	
 


	
Barclays Bank PLC


	
 

	
 

	
Address:

	
 

	
200 Park
 Avenue


	
 

	
 

	
 

	
 

	
New York, NY
 10166


	
 

	
 

	
Email:

	
 

	
mark.manski@barcap.com


	
 

	
 

	
Attention:

	
 

	
Mark Manski


	
 

	
 

	
 

	
 

	
 


	
Calyon


	
 

	
 

	
Address:

	
 

	
1301 Avenue
 of the Americas


	
 

	
 

	
 

	
 

	
New York, NY
 10019


	
 

	
 

	
Fax:

	
 

	
(212)
 261-3431


	
 

	
 

	
Email:

	
 

	
david.perl@us.calyon.com


	
 

	
 

	
 

	
 

	
vanessche@us.calyon.com


	
 

	
 

	
Attention:

	
 

	
Capital
 Markets Legal – David Perl


	
 

	
 

	
 

	
 

	
DAS –
 John-Charles van Essche





Sch. 9.02-1






	
 

	
 

	
 

	
 

	
 


	
 

	
With a copy to: 

	
 

	
 


	
 

	
 

	
 

	
 


	
 

	
 

	
Address:

	
 

	
Calyon London Branch, Head of Legal


	
 

	
 

	
 

	
 

	
5 Appold
 Street


	
 

	
 

	
 

	
 

	
London EC2A
 2DA


	
 

	
 

	
Fax:

	
 

	
+44 20 7214
 6670


	
 


	
Canadian Imperial Bank of Commerce


	
 

	
 

	
Address:

	
 

	
199 Bay
 Street, Commerce Court West, 6th floor


	
 

	
 

	
 

	
 

	
Toronto,
 Ontario, M5L 1A2, Canada 


	
 

	
 

	
Fax:

	
 

	
(416)
 214-8749 


	
 

	
 

	
Attention:

	
 

	
Frank
 deVries, Vice-President 


	
 

	
 

	
 

	
 


	
 

	
With a copy to: 

	
 

	
 


	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
Address:

	
 

	
199 Bay Street, Commerce Court West, 11th floor


	
 

	
 

	
 

	
 

	
Toronto, Ontario, M5L 1A2, Canada 


	
 

	
 

	
Fax:

	
 

	
(416) 304-4573


	
 

	
 

	
Attention:

	
 

	
Frank Vivacqua, Assistant General Counsel


	
 


	
Deutsche Bank AG London Branch


	
 

	
 

	
Address:

	
 

	
60 Wall
 Street, 11th Floor


	
 

	
 

	
 

	
 

	
New York, NY
 10005


	
 

	
 

	
Fax:

	
 

	
(212)
 797-5695 


	
 

	
 

	
Attention:

	
 

	
Keith Braun,
 Managing Director, Workout


	
 

	
 

	
 

	
 


	
 

	
With a copy to: 

	
 

	
 


	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
Fax:

	
 

	
(732) 578-5271


	
 

	
 

	
Attention:

	
 

	
Robert Lee, Director, Legal


	
 


	
Dexia Bank Belgium SA 


	
 

	
 

	
Address:

	
 

	
44 boulevard Pacheco


	
 

	
 

	
 

	
 

	
1000 Brussels


	
 

	
 

	
Email:

	
 

	
Geert.Gielens@dexia.com


	
 

	
 

	
Attention:

	
 

	
Geert Gielens


	
 

	
 

	
 

	
 


	
 

	
With a copy to: 

	
 

	
 


	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
Address:

	
 

	
Legal Department - Securities & Financial Markets 


	
 

	
 

	
Fax:

	
 

	
+32 2 222 2568


	
 

	
 

	
Email:

	
 

	
Heidi.Wynants@dexia.com


	
 

	
 

	
 

	
 

	
Bernhard.Ardaen@dexia.com


	
 

	
 

	
Attention:

	
 

	
Heidi Wynants 


	
 

	
 

	
 

	
 

	
Bernhard Ardaen





Sch. 9.02-2






	
 

	
 

	
 

	
 

	
 


	
Dresdner Bank AG, London Branch


	
 

	
 

	
Address:

	
 

	
30 Gresham Street


	
 

	
 

	
 

	
 

	
London EC2P 2XY, England  


	
 

	
 

	
Fax:

	
 

	
+44 870 889 6904


	
 

	
 

	
Attention:

	
 

	
Transaction Legal Team


	
 

	
 

	
 

	
 


	
 

	
With a copy to: 

	
 

	
 


	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
Fax:

	
 

	
(212) 969-7944


	
 

	
 

	
Attention:

	
 

	
Ivor Wolk


	
 


	
Hypo Public Finance Bank AG 


	
 

	
 

	
Address:

	
 

	
3 Harbourmaster Place, IFSC


	
 

	
 

	
 

	
 

	
Dublin 1, Ireland 


	
 

	
 

	
Fax:

	
 

	
+353 1 611 6183


	
 

	
 

	
Attention:

	
 

	
Heather Nesbitt


	
 

	
 

	
 

	
 


	
 

	
With a copy to: 

	
 

	
 


	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
Fax:

	
 

	
(212) 905-4700 


	
 

	
 

	
Attention:

	
 

	
Nancy Henderson, NY, USA 


	
 

	
 

	
 

	
 


	
 

	
and:

	
 

	
 


	
 

	
 

	
 

	
 


	
 

	
 

	
Fax:

	
 

	
+49 89 20 30 07 772


	
 

	
 

	
Attention:

	
 

	
Tom Glynn, Munich, Germany


	
 


	
Lehman Brothers Inc. 


	
 

	
 

	
Address:

	
 

	
745 Seventh Avenue, 8th Floor


	
 

	
 

	
 

	
 

	
New York, NY 10019 


	
 

	
 

	
Fax:

	
 

	
(646) 758-2211


	
 

	
 

	
Attention:

	
 

	
Daniel J. Sullivan


	
 


	
Natixis


	
 

	
 

	
Address:

	
 

	
810 Seventh Avenue


	
 

	
 

	
 

	
 

	
New York, New York 10019


	
 

	
 

	
Fax:

	
 

	
(212) 299-0030


	
 

	
 

	
Attention:

	
 

	
Joshua Laterman


	
 

	
 

	
 

	
 


	
 

	
With a copy to: 

	
 

	
 


	
 

	
 

	
 

	
 


	
 

	
 

	
Fax:

	
 

	
(212) 299-0030


	
 

	
 

	
Attention:

	
 

	
Jeremy Newel1





Sch. 9.02-3






	
 

	
 

	
 

	
 

	
 


	
Nomura International plc


	
 

	
 

	
Address:

	
 

	
1 St Martin’s le-Grand


	
 

	
 

	
 

	
 

	
London EC1A 4NP, England 


	
 

	
 

	
Fax:

	
 

	
+44 207 521 2391 


	
 

	
 

	
Attention:

	
 

	
Matthew Wadhams/Robert Eveleigh, Transaction Legal Derivatives 


	
 

	
 

	
 

	
 


	
 

	
With a copy to: 

	
 

	
 


	
 

	
 

	
 

	
 


	
 

	
 

	
Address:

	
 

	
Shearman & Sterling LLP 


	
 

	
 

	
Fax:

	
 

	
(212) 848-7179


	
 

	
 

	
Attention:

	
 

	
Douglas Bartner


	
 


	
Royal Bank of Canada 


	
 

	
 

	
Address:

	
 

	
200 Royal Bank Plaza


	
 

	
 

	
 

	
 

	
200 Bay St., 2nd Floor, Toronto


	
 

	
 

	
 

	
 

	
Ontario, Canada M5J 2W7


	
 

	
 

	
Fax:

	
 

	
(416) 842-4334


	
 

	
 

	
Email:

	
 

	
matthew.gilchrist@rbccm.com


	
 

	
 

	
Attention:

	
 

	
Matthew Gilchrist


	
 


	
The Royal Bank of Scotland 


	
 

	
 

	
Address:

	
 

	
The Royal Bank of Scotland plc


	
 

	
 

	
 

	
 

	
c/o Greenwich Capital Markets, Inc.


	
 

	
 

	
 

	
 

	
600 Steamboat Road


	
 

	
 

	
 

	
 

	
Greenwich, CT 06830


	
 

	
 

	
Fax:

	
 

	
(203) 422-4096 


	
 

	
 

	
Attention:

	
 

	
Legal Department (Andrew Kwok)


	
 


	
Société Générale


	
 

	
 

	
Address:

	
 

	
1221 Avenue of the Americas


	
 

	
 

	
 

	
 

	
New York, New York 10020


	
 

	
 

	
Fax:

	
 

	
(212) 278-7614


	
 

	
 

	
Attention:

	
 

	
Edith Hornick


	
 

	
 

	
 

	
 


	
 

	
With a copy to: 

	
 

	
 


	
 

	
 

	
 

	
 


	
 

	
 

	
Address:

	
 

	
Luskin, Stern & Eisler LLP


	
 

	
 

	
Fax:

	
 

	
(212) 293-2705 


	
 

	
 

	
Attention:

	
 

	
Richard Stern


	
 


	
UBS AG, London branch


	
 

	
 

	
Address:

	
 

	
677 Washington Boulevard


	
 

	
 

	
 

	
 

	
Stamford, Connecticut 06901


	
 

	
 

	
Fax:

	
 

	
(203) 719-0680


	
 

	
 

	
Attention:

	
 

	
Bryan Murtagh





Sch. 9.02-4






	
 

	
 

	
 

	
 

	
 


	
 

	
With a copy to: 

	
 

	
 


	
 

	
 

	
 

	
 


	
 

	
 

	
Address:

	
 

	
1285 Avenue of the Americas, 11th Floor


	
 

	
 

	
 

	
 

	
New York, NY 10019-6031


	
 

	
 

	
Fax:

	
 

	
(212) 713-1153


	
 

	
 

	
Attention:

	
 

	
Jamie Tramontana


	
 

	
 

	
 

	
 


	
 

	
and:

	
 

	
 


	
 

	
 

	
 

	
 


	
 

	
 

	
Address:

	
 

	
Pillsbury Winthrop Shaw Pittman LLP


	
 

	
 

	
 

	
 

	
1540 Broadway


	
 

	
 

	
 

	
 

	
New York, NY 10036-4039


	
 

	
 

	
Fax:

	
 

	
(212) 858-1500


	
 

	
 

	
Attention:

	
 

	
Rick B. Antonoff


	
 


	
Wachovia Bank, National Association 


	
 

	
 

	
Fax:

	
 

	
(267) 321-6903


	
 

	
 

	
Attention:

	
 

	
Helen Wessling


	
 

	
 

	
 

	
 


	
 

	
With a copy to: 

	
 

	
 


	
 

	
 

	
 

	
 


	
 

	
 

	
Fax:

	
 

	
(704) 374-4881


	
 

	
 

	
Attention:

	
 

	
Gene Wood


	
 

	
 

	
 

	
 


	
 

	
and:

	
 

	
 


	
 

	
 

	
 

	
 


	
 

	
 

	
Fax:

	
 

	
(704) 383-1383


	
 

	
 

	
Attention::

	
 

	
Doug Mundell





Sch. 9.02-5






SCA PARTIES’ DISCLOSURE SCHEDULE


          This
document (the “SCA Parties’ Disclosure Schedule”) has been delivered by
the SCA Parties to the XL Parties and the CDS Counterparties concurrently with
the execution of the Master Commutation, Release and Restructuring Agreement
(the “Agreement”), dated as of July 28, 2008, by and among the XL
Parties, the SCA Parties and the CDS Counterparties. Capitalized terms used, but not otherwise defined, in the SCA
Parties’ Disclosure Schedule shall have the meanings set forth in the
Agreement.


          Any
matter that is disclosed in any section of the SCA Parties’ Disclosure Schedule
will be deemed to be a disclosure for all purposes of the Agreement to the
extent that the relevance of such matter to other sections of the Agreement is
reasonably apparent.


          The
disclosure of any matter in any section of the SCA Parties’ Disclosure Schedule
will expressly not be deemed to constitute an admission by any Party to the
Agreement, or to otherwise imply, that any such matter is material for the
purposes of the Agreement or otherwise, or that any such matter is required to
be disclosed pursuant to the Agreement or otherwise.


          The
heading and title references in the SCA Parties’ Disclosure Schedule are for
convenience purposes only, do not constitute a part of the SCA Parties’
Disclosure Schedule and shall not be deemed to limit or affect anything
contained herein.


SCA PARTIES’ DISCLOSURE SCHEDULE






SECTION 3.02


CONFLICTS


Financial
Guaranty Facultative Reinsurance Agreement, effective October 24, 2007,
between MBIA Insurance Corporation, Armonk, New York, and XLCA. 


Comprehensive
Automatic Treaty Reinsurance Agreement, effective July 1, 2003, as amended
by Amendment No. 1 to the Comprehensive Automatic Treaty Reinsurance Agreement,
effective July 1, 2003, between MBIA Insurance Corporation, Armonk, New
York; and/or MBIA Assurance S.A., Paris France; and/or any other monoline
insurance or reinsurance company subsidiary of MBIA Inc. listed in
Exhibit 1 attached thereto and XLFA. 


Facultative
Reinsurance Agreement, dated as of December 1, 2006, between Financial
Guaranty Insurance Company and XLFA. 


Financial
Guaranty Master Facultative Reinsurance Agreement, effective January 1,
2005, between MBIA Insurance Corporation, Armonk, New York; and/or MBIA
Assurance S.A., Paris, France; and/or MBIA UK Insurance Limited, London,
England; and/or any other insurance or reinsurance company subsidiary of MBIA
Inc. listed in Exhibit 1 attached thereto and XLFA. 


Credit
Agreement, dated as of August 1, 2006, among SCA, XLCA, XLFA, the various
lenders from time to time party thereto and Citibank, N.A., as administrative
agent (as the same may be amended, supplemented or otherwise modified from time
to time in accordance with the terms thereof).


Section 3.02-1






SECTION 3.03


GOVERNMENTAL CONSENTS AND APPROVALS


Approval of
the New York Insurance Department


Approval of
the Bermuda Monetary Authority


Approval of
the United Kingdom Financial Services Authority


Approval of
the Delaware Insurance Department


Section 3.03-1






SECTION 3.05


COMPLIANCE WITH LAWS


An Undertaking
of XLFA, dated as of April 11, 2008, addressed to the Bermuda Monetary
Authority.


A letter,
dated as of May 20, 2008, from XLCAUK to Financial Services Authority, Re:
XL Capital Assurance (U.K.) Limited.


Section 3.05-1






XL PARTIES’ DISCLOSURE SCHEDULE


          This
document (the “XL Parties’ Disclosure Schedule”) has been delivered by
the XL Parties to the SCA Parties and the CDS Counterparties concurrently with
the execution of the Master Commutation, Release and Restructuring Agreement
(the “Agreement”), dated as of July 28, 2008, by and among the XL
Parties, the SCA Parties and the CDS Counterparties. Capitalized terms used, but not otherwise defined, in the XL
Parties’ Disclosure Schedule shall have the meanings set forth in the
Agreement.


          Any
matter that is disclosed in any section of the XL Parties’ Disclosure Schedule
will be deemed to be a disclosure for all purposes of the Agreement to the
extent that the relevance of such matter to other sections of the Agreement is
reasonably apparent.


          The
disclosure of any matter in any section of the XL Parties’ Disclosure Schedule
will expressly not be deemed to constitute an admission by any Party to the
Agreement, or to otherwise imply, that any such matter is material for the
purposes of the Agreement or otherwise, or that any such matter is required to
be disclosed pursuant to the Agreement or otherwise.


          The
heading and title references in the XL Parties’ Disclosure Schedule are for
convenience purposes only, do not constitute a part of the XL Parties’
Disclosure Schedule and shall not be deemed to limit or affect anything
contained herein.


XL PARTIES’ DISCLOSURE SCHEDULE






SECTION 4.02


CONFLICTS


	
 

	
 


	
1.

	
Credit
 Agreement among XL, XLA, XLI,
 and XL RE LTD (collectively, the “Account Parties”); JPMORGAN CHASE
 BANK, N.A., as administrative agent (in such capacity, the “Administrative
 Agent”); and the Lenders party thereto, with respect to the Credit
 Agreement, dated as of June 21, 2007, (as may be amended, supplemented
 or otherwise modified from time to time, the “Credit Agreement”)
 entered into among the Account Parties, the Administrative Agent and the
 other institutions from time to time party thereto as Lenders. 


	
 

	
 


	
2.

	
Credit
 Agreement among XL, XLA, XLI,
 and XL RE LTD (collectively, the “Obligors”); JPMORGAN CHASE BANK,
 N.A. (as successor to Bear Stearns Corporate Lending Inc.), as administrative
 agent (in such capacity, the “Administrative Agent”); and the Lenders
 party thereto, with respect to the Credit Agreement, dated as of August 3,
 2005, (as may be amended, supplemented or otherwise modified from time to
 time, the “Credit Agreement”) entered into among the Obligors, the
 Administrative Agent and the other institutions from time to time party
 thereto as Lenders.


	
 

	
 


	
3.

	
Five-Year Credit
 Agreement among XL, XLA, XLI,
 and XL RE LTD (collectively, the “Account Parties”); JPMORGAN CHASE
 BANK, N.A., as administrative agent (in such capacity, the “Administrative
 Agent”); and the Lenders party thereto, with respect to the Credit
 Agreement, dated as of June 22, 2005, (as may be amended, supplemented
 or otherwise modified from time to time, the “Credit Agreement”)
 entered into among the Account Parties, the Administrative Agent and the
 other institutions from time to time party thereto as Lenders.


	
 

	
 


	
4.

	
Letter of
 Credit Facility among XL (the “Account
 Party”), the Guarantors (collectively, with the Account Party, the “Obligors”),
 and CITIBANK INTERNATIONAL PLC, as agent and trustee for the Lenders (in such
 capacity, the “Agent”), with respect to the Letter of Credit Facility
 and Reimbursement Agreement, dated November 14, 2007, (as may be
 amended, supplemented or otherwise modified from time to time, the “Facility
 Agreement”) entered into among the Obligors, the Agent and the other
 institutions from time to time party thereto as Lenders.


	
 

	
 


	
5.

	
Note
 Purchase Agreement, dated April 12, 2001, among XL, XLA, XLI, XL RE LTD,
 and each of the Purchasers named therein.





Section 4.02-1






SECTION 4.03


GOVERNMENTAL CONSENTS AND APPROVALS


Approval of the New York State
Insurance Department


Section 4.03-1







SECTION 4.04(a)


XL CAPITALIZATION


XL has
authorized 999,990,000 Ordinary Shares. As of July 25, 2008, there were
179,059,101 outstanding Class A Ordinary Shares, $0.01 par value per share.


XL has
outstanding options to purchase 12,027,578 Class A Ordinary Shares, $0.01 par
value per share.


1,000,000
Series E Preference Ordinary Shares are issued and outstanding.


Section 4.04(a)-1






AMENDMENT
NO. 1 TO MASTER COMMUTATION, RELEASE AND

RESTRUCTURING AGREEMENT


Dated
as of August 1, 2008






AMENDMENT NO. 1 TO MASTER COMMUTATION,
RELEASE AND

RESTRUCTURING AGREEMENT


                    AMENDMENT
NO. 1 dated as of August 1, 2008 (this “Amendment No. 1”) among XL
CAPITAL LTD, an exempted limited company incorporated under the Laws of Cayman
Islands, XL INSURANCE (BERMUDA) LTD (formerly known as X.L. Insurance Ltd), a
Bermuda exempted company, XL REINSURANCE AMERICA INC., a New York insurance
corporation, X.L. GLOBAL SERVICES, INC., a service company incorporated under
the Laws of Delaware, XL SERVICES (BERMUDA) LTD, a service company incorporated
under the Laws of Bermuda, X.L. AMERICA, INC., a company incorporated under the
Laws of Delaware, SECURITY CAPITAL ASSURANCE LTD, a Bermuda exempted company,
XL FINANCIAL ASSURANCE LTD., a Bermuda exempted company, XL CAPITAL ASSURANCE
INC., a New York insurance company, XL FINANCIAL ADMINISTRATIVE SERVICES INC.,
a company incorporated under the Laws of Delaware, SCA BERMUDA ADMINISTRATIVE
LTD., a company incorporated under the Laws of Bermuda, XL CAPITAL ASSURANCE
(U.K.) LIMITED, an insurance company regulated by the Financial Services
Authority and incorporated under the Laws of England and Wales, and those
portfolio trusts that are Affiliates of XLCA and become a Party to the Master
Agreement from time to time pursuant to the execution of a joinder agreement. 


                    WHEREAS,
on July 28, 2008, the parties hereto (the “Parties”) entered into a
certain Master Commutation, Release and Restructuring Agreement (the “Master
Agreement”);


                    WHEREAS,
the Parties wish to reallocate the Stock Consideration and the Cash
Consideration Amount pursuant to Schedule 2.01; and 


                    WHEREAS,
the Parties wish to take such actions necessary to give effect to such
reallocation;


                    NOW,
THEREFORE, in consideration of the premises and the covenants and agreements
contained herein and in the Master Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
and intending to be legally bound hereby, the Parties agree as follows:


                    Section
1. Definitions. Capitalized terms not otherwise defined in this
Amendment No. 1 shall have the meanings ascribed to them in the Master
Agreement.


                    Section
2. Amendments. Articles I and II, Exhibits 1.01(e), 1.01(f),
1.01(g), and 1.01(h) and Schedules 2.01, 2.06(a)
and 2.06(b) of the Master Agreement are hereby amended as follows:


                    2.1
The definition of “Subscription Agreement” in Section 1.01 of the Master
Agreement will be stricken and deleted in its entirety and replaced with the
following text:


	
 

	
 


	
 

	
“Subscription
 Agreements” means the subscription agreement to be executed by XLFA and
 XL and delivered at the Closing, in the form of Exhibit 1.01(g-1), and
 the subscription agreement to be executed by 












	
 

	
 


	
 

	
XLCA and XL
 and delivered at the Closing in the form of Exhibit 1.01(g-2).





                    2.2
Section 2.08(ii) of the Master Agreement will be stricken and deleted in its
entirety and replaced with the following text:


	
 

	
 


	
 

	
the
 Subscription Agreements executed by each SCA Party which is a party thereto;





                    2.3
Section 2.09(iii) of the Master Agreement will be stricken and deleted in its
entirety and replaced with the following text: 


	
 

	
 


	
 

	
the Subscription
 Agreements executed by each XL Party which is a party thereto;





                    2.4
The contents of Exhibit 1.01(e) to the Master Agreement shall be
stricken and deleted in their entirety and replaced with the contents of Exhibit
1.01(e-1) attached hereto.


                    2.5
The contents of Exhibit 1.01(f) to the Master Agreement shall be
stricken and deleted in their entirety and replaced with the contents of Exhibit
1.01(f-1) attached hereto.


                    2.6
The contents of Exhibit 1.01(g) to the Master Agreement shall be
stricken and deleted in their entirety and replaced with the contents of Exhibits
1.01(g-1) attached hereto.


                    2.7
The contents of Exhibit 1.01(g-2) attached hereto will be added as Exhibit
1.01(g-2) to the Master Agreement.


                    2.8
The contents of Exhibit 1.01(h) to the Master Agreement shall be
stricken and deleted in their entirety and replaced with Exhibits 1.01(h-1)
attached hereto.


                    2.9
The contents of Schedule 2.01 to the Master Agreement shall be stricken
and deleted in their entirety and replaced with the contents of Schedule
2.01-1 attached hereto.


                    2.10
The contents of Schedule 2.06(a) to the Master Agreement shall be
stricken and deleted in their entirety and replaced with the contents of Schedule
2.06(a)-1 attached hereto.


                    2.11
The contents of Schedule 2.06(b) to the Master Agreement shall be
stricken and deleted in their entirety and replaced with the contents of Schedule
2.06(b)-1 attached hereto.


                    Section
3. Miscellaneous. 


                    3.1
This Amendment No. 1 may be executed and delivered in multiple counterparts,
each of which, when so executed and delivered, shall be an original, but such
counterparts shall together constitute but one and the same instrument and
agreement. A facsimile or Portable Document Format copy of a signature shall
have the same force and effect as an original signature.


-2-






                    3.2
This Amendment No. 1 is to be interpreted under and governed by the Laws of the
State of New York without giving effect to conflicts of law provisions thereof.
In the event that there is a dispute between or among the Parties arising under
this Amendment No. 1, the Parties (i) agree that the exclusive forum to seek
remedy shall be to institute a legal proceeding in the courts of the State of
New York located in the City and County of New York, (ii) hereby expressly
submit to the personal jurisdiction and venue of such courts for the purposes
thereof and expressly waive any claim of lack of personal jurisdiction and
improper venue and any claim that such courts are an inconvenient forum and
(iii) agree that the prevailing Parties shall be entitled to recover their reasonable
attorneys’ fees, costs and disbursements from the other Parties (in addition to
any other relief to which the prevailing Parties may be entitled). Each Party
hereby irrevo cably consents to the service of process of any of the
aforementioned courts in any such suit, action or proceeding by the mailing of
copies thereof by registered or certified mail, postage prepaid, to the address
provided to the Parties in accordance with Section 9.02, of the Master
Agreement, such service to become effective ten (10) days after such mailing.


                    3.3
Each of the Parties hereby waives to the fullest extent permitted by applicable
Law any right it may have to a trial by jury with respect to any litigation
directly or indirectly arising out of, under, or in connection with this
Amendment No. 1. Each of the Parties hereby (i) 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 (ii) acknowledges that it has been induced
to enter into this Amendment No. 1 by, among other things, the mutual waivers
and certifications in this Section 3.3. 


                    3.4
Each Party has had the opportunity to negotiate the terms, consult with
counsel, and modify the provisions of this Amendment No. 1. Therefore, the
terms of this Amendment No. 1 will be considered and interpreted without any
presumption, inference or rule requiring construction or interpretation of any
provision of this Amendment No. 1 against the interests of the drafter of this
Amendment No. 1.


[Signature Page to Follow]


-3-






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


	
 

	
 

	
 


	
 

	
XL CAPITAL
 LTD 


	
 

	
 

	
 


	
 

	
By: 

	
/s/ Fiona
 Luck


	
 

	
 

	



	
 

	
 

	
Name: Fiona
 Luck


	
 

	
 

	
Title:
 Executive Vice President and Chief of Staff





[AMENDMENT NO. 1 TO THE MASTER COMMUTATION, RELEASE AND RESTRUCTURING AGREEMENT]






	
 

	
 

	
 


	
 

	
XL INSURANCE
 (BERMUDA) LTD


	
 

	
 

	
 


	
 

	
By: 

	
/s/ Fiona
 Luck


	
 

	
 

	



	
 

	
 

	
Name: Fiona
 Luck


	
 

	
 

	
Title:
 Director





[AMENDMENT NO. 1 TO THE MASTER COMMUTATION, RELEASE AND RESTRUCTURING AGREEMENT]






	
 

	
 

	
 


	
 

	
XL
 REINSURANCE AMERICA INC.


	
 

	
 

	
 


	
 

	
By: 

	
/s/ Steven
 P. Agosta


	
 

	
 

	



	
 

	
 

	
Name: Steven
 P. Agosta


	
 

	
 

	
Title: Vice
 President, General Counsel and Secretary





[AMENDMENT NO. 1 TO THE MASTER COMMUTATION, RELEASE AND RESTRUCTURING AGREEMENT]






	
 

	
 

	
 


	
 

	
X.L. GLOBAL
 SERVICES, INC.


	
 

	
 

	
 


	
 

	
By: 

	
/s/ Kenneth
 P. Meagher


	
 

	
 

	



	
 

	
 

	
Name:
 Kenneth P. Meagher


	
 

	
 

	
Title:
 Assistant Secretary





[AMENDMENT NO. 1 TO THE MASTER COMMUTATION, RELEASE AND RESTRUCTURING AGREEMENT]






	
 

	
 

	
 


	
 

	
XL SERVICES
 (BERMUDA) LTD


	
 

	
 

	
 


	
 

	
By: 

	
/s/ Fiona
 Luck


	
 

	
 

	



	
 

	
 

	
Name: Fiona
 Luck


	
 

	
 

	
Title:
 Deputy Chairman





[AMENDMENT NO. 1 TO THE MASTER COMMUTATION, RELEASE AND RESTRUCTURING AGREEMENT]






	
 

	
 

	
 


	
 

	
X.L.
 AMERICA, INC.


	
 

	
 

	
 


	
 

	
By: 

	
/s/ Richard
 G. McCarty


	
 

	
 

	



	
 

	
 

	
Name:
 Richard G. McCarty


	
 

	
 

	
Title:
 Senior Vice President, General Counsel and Secretary





[AMENDMENT NO. 1 TO THE MASTER COMMUTATION, RELEASE AND RESTRUCTURING AGREEMENT]






	
 

	
 

	
 


	
 

	
SECURITY
 CAPITAL ASSURANCE LTD


	
 

	
 

	
 


	
 

	
By: 

	
/s/ Claude
 Le Blanc


	
 

	
 

	



	
 

	
 

	
Name: Claude
 Le Blanc


	
 

	
 

	
Title: EVP





[AMENDMENT NO. 1 TO THE MASTER COMMUTATION, RELEASE AND RESTRUCTURING AGREEMENT]






	
 

	
 

	
 


	
 

	
XL FINANCIAL
 ASSURANCE LTD.


	
 

	
 

	
 


	
 

	
By: 

	
/s/ Tom Cume


	
 

	
 

	



	
 

	
 

	
Name: Tom
 Cume


	
 

	
 

	
Title: SVP





[AMENDMENT NO. 1 TO THE MASTER COMMUTATION, RELEASE AND RESTRUCTURING AGREEMENT]






	
 

	
 

	
 


	
 

	
XL CAPITAL
 ASSURANCE INC.


	
 

	
 

	
 


	
 

	
By: 

	
/s/ Susan
 Comparato


	
 

	
 

	



	
 

	
 

	
Name: Susan
 Comparato


	
 

	
 

	
Title: SVP
 & General Counsel





[AMENDMENT NO. 1 TO THE MASTER COMMUTATION, RELEASE AND RESTRUCTURING AGREEMENT]






	
 

	
 

	
 


	
 

	
XL FINANCIAL
 ADMINISTRATIVE SERVICES INC.


	
 

	
 

	
 


	
 

	
By: 

	
/s/ Susan
 Comparato


	
 

	
 

	



	
 

	
 

	
Name: Susan
 Comparato


	
 

	
 

	
Title:
 Managing Director & Secretary





[AMENDMENT NO. 1 TO THE MASTER COMMUTATION, RELEASE AND RESTRUCTURING AGREEMENT]






	
 

	
 

	
 


	
 

	
SCA BERMUDA
 ADMINISTRATIVE LTD.


	
 

	
 

	
 


	
 

	
By: 

	
/s/ Tom Cume


	
 

	
 

	



	
 

	
 

	
Name: Tom
 Cume


	
 

	
 

	
Title: SVP





[AMENDMENT NO. 1 TO THE MASTER COMMUTATION, RELEASE AND RESTRUCTURING AGREEMENT]






	
 

	
 

	
 

	
 


	
 

	
XL CAPITAL
 ASSURANCE (U.K.) LIMITED


	
 

	
 

	
 


	
 

	
By: 

	
/s/ Fredrick
 B. Hnat


	
 

	
 

	



	
 

	
 

	
Name:

	
Fredrick B.
 Hnat


	
 

	
 

	
Title:

	
Managing
 Director & Chief Operating Officer





[AMENDMENT NO. 1 TO THE MASTER COMMUTATION, RELEASE AND RESTRUCTURING AGREEMENT]







EXHIBIT 1.01(e-1) 


FORM OF FACULTATIVE MASTER CERTIFICATE
COMMUTATION AGREEMENT


Exhibit 1.01(e-1)






COMMUTATION AND RELEASE AGREEMENT


                    This
Commutation and Release Agreement (the “Agreement”) dated as of
August 5, 2008, is made by and between Syncora Guarantee Inc. (formerly
known as XL Capital Assurance Inc.), a company domiciled in New York (the “Company”)
and XL Reinsurance America Inc., a company also domiciled in New York (the “Reinsurer”).
The Reinsurer and the Company are hereinafter referred to collectively as the “Parties.”



RECITALS


                    WHEREAS,
the Parties previously entered
into a Facultative Master Certificate effective as of November 1, 2002, which
was amended and restated pursuant to the First Amended and Restated Facultative
Master Certificate, effective as of August 4, 2006, and which was further
amended and restated pursuant to the Second Amended and Restated Facultative
Master Certificate, effective as of March 1, 2007, pursuant to which the
Reinsurer agreed to reinsure certain liabilities of the Company (together, the
“Reinsurance Agreement”); and 


                    WHEREAS,
the Parties are parties to that
certain Master Commutation, Release and Restructuring Agreement, dated as of
July 28, 2008, by and among the Company, the Reinsurer, Security Capital
Assurance Ltd and the other parties thereto (the “Master Transaction
Agreement”), pursuant to which the Company and the Reinsurer have agreed to
enter into this Agreement; and 


                    WHEREAS,
the Parties agree that it is in
each of their best interests to freely and voluntarily enter into this
Agreement and to fully and forever release and discharge each other from their
respective existing and future liabilities and obligations, including contingent
and uncertain liabilities, both known and unknown, under the Reinsurance
Agreement and the individual risk cessions thereunder and to compromise,
resolve and settle all amounts due, or which may become due, between each other
arising out of, in respect of, or relating to the Reinsurance Agreement and/or
the individual risk cessions thereunder; and 


                    WHEREAS,
Company and Reinsurer, or their
affiliates, may be parties to agreements other than the Reinsurance Agreement,
and it is the intent of the Parties that this Agreement will not have any
effect upon such other agreements. 


                    NOW,
THEREFORE, in consideration of the
covenants, conditions, promises and releases contained herein, and for other
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the Parties agree as follows: 


ARTICLE I


PAYMENT


                    (a)
XL Capital Ltd shall, on behalf of the Reinsurer, issue to the Company Five
Million, Seven Hundred and Seventy-Six Thousand, Six Hundred and Twenty-One
(5,776,621) of Class A Ordinary Shares of XL Capital Ltd (the “Commutation
Amount”) on the 


Exh. 1.01(e-1)-1






Closing Date
(as such term is defined in the Master Transaction Agreement). The date on
which the Commutation Amount is paid and received shall be referred to
hereinafter as the “Effective Date.” 


                    (b)
The Company shall accept the Commutation Amount in full satisfaction of all of
the Reinsurer’s liabilities and obligations under the Reinsurance Agreement
and/or the individual risk cessions thereunder. 


ARTICLE II


RELEASE


                    (a)
Upon the Reinsurer’s payment of the Commutation Amount to the Company, the
Company, on behalf of itself and its shareholders, parents, affiliates and
subsidiaries, and their respective officers, directors, and employees, hereby
irrevocably and unconditionally releases and forever discharges the Reinsurer,
its parents, subsidiaries and affiliates, and their respective predecessors,
successors, assigns, officers, directors, agents, employees, shareholders,
representatives, and attorneys from any and all present and future actions,
causes of action, suits, debts, liens, contracts, rights, agreements,
obligations, promises, liabilities, claims, counterclaims, demands, damages,
controversies, losses, costs and expenses (including attorneys’ fees and costs
actually incurred) of any kind, character, description or nature whatsoever,
known or unknown to either or both Parties, suspected or unsuspected, reported
or unreported, fixed or contingent, which the Company now has, owns or holds or
claims to have, own, or hold, or at any time heretofore had, owned, or held or
claimed to have had, owned, or held, or may hereafter have, own, or hold or
claim to have, own, or hold, arising out of conduct or matters occurring on,
prior to or subsequent to the Effective Date, against the Reinsurer, arising
directly or indirectly out of, based upon, or in any way related to or in
connection with the Reinsurance Agreement and/or the individual risk cessions
thereunder, whether grounded in law or equity, or sounding in tort or contract
or otherwise; provided, however, that the provisions of this Article
II(a) shall not discharge obligations of the Reinsurer, which have been
undertaken or imposed by the express terms of this Agreement or the Master
Transaction Agreement (including the Ancillary Agreements). 


                    (b)
Contemporaneous with the payment of the Commutation Amount to the Company, the
Reinsurer, on behalf of itself and its shareholders, parents, affiliates and
subsidiaries, and their respective officers, directors and employees, hereby
irrevocably and unconditionally releases and forever discharges the Company,
its shareholders, parents, subsidiaries and affiliates, and their respective
predecessors, successors, assigns, officers, directors, agents, employees,
shareholders, representatives, and attorneys from any and all present and
future actions, causes of action, suits, debts, liens, contracts, rights,
agreements, obligations, promises, liabilities, claims, counterclaims, demands,
damages, controversies, losses, costs and expenses (including attorneys’ fees
and costs actually incurred) of any kind, character, description or nature
whatsoever, known or unknown to either or both Parties, suspected or
unsuspected, reported or unreported, fixed or contingent, which the Reinsurer
now has, owns, holds or claims to have, own, or hold, or at any time heretofore
had, owned, or held or claimed to have had, owned, or held, or may hereafter
have, own, or hold or claim to have, own, or hold, arising out of conduct or
matters occurring on, prior to or subsequent to the Effective 


Exh. 1.01(e-1)-2






Date, against
the Company, arising directly or indirectly out of, based upon, or in any way
related to or in connection with the Reinsurance Agreement and/or the
individual risk cessions thereunder, whether grounded in law or equity or
sounding in tort or contract or otherwise; provided, however,
that the provisions of this Article II(b) shall not discharge
obligations of the Company, which have been undertaken or imposed by the
express terms of this Agreement or the Master Transaction Agreement (including
the Ancillary Agreements). 


                    (c)
The Parties understand that it is possible that unknown losses or claims may
exist, or that present or future losses or claims may be underestimated in
amounts or severity. Furthermore, the Parties expressly accept and assume the
risk that the factual or legal assumptions made by any Party in connection with
this Agreement may be found hereafter to be different from the true facts or
law, and the Parties agree that this Agreement shall be and shall remain in
full force and effect notwithstanding such differences in facts or law. Each
Party expressly takes all of the foregoing into account in determining the
amount of consideration to be given and paid for the giving of this Agreement,
and a portion of the said consideration, having been bargained for between the
Parties with the knowledge of the possibility of such unknown losses and
claims, is given in exchange for the full accord, satisfaction and discharge of
all such losses and claims. 


                    (d)
Full payment of the Commutation Amount shall be in complete accord, satisfaction,
settlement and commutation of any and all past, current and future liabilities
and obligations that each Party owes or may owe to the other arising directly
or indirectly out of or related to or in connection with the Reinsurance
Agreement and/or the individual risk cessions thereunder and that upon payment
of the Commutation Amount, the Reinsurance Agreement shall be terminated as of
the Effective Date and neither Party shall have any further obligation or
liability to the other Party under the Reinsurance Agreement and/or the
individual risk cessions thereunder. 


ARTICLE III


NON-RELIANCE


                    (a)
This Agreement fully and finally resolves the rights, duties and obligations of
the Company and the Reinsurer under the Reinsurance Agreement, and neither
Party shall: 


	
 

	
 


	
 

	
          (i)
 have any remedy in respect of any representation, warranty or undertaking of
 the other that is not specifically set forth in this Agreement, the Master
 Transaction Agreement, or the Ancillary Agreements commuting the reinsurance
 agreements listed in Part I of Schedule 2.01 of the Master Transaction
 Agreement, whether or not relied upon by the other Party; or 


	
 

	
 


	
 

	
          (ii)
 seek to reopen or set aside this Agreement or the Reinsurance Agreement on
 any basis whatsoever, including, without limitation, that this Agreement or
 the Reinsurance Agreement is void or voidable due to a mistake or change in
 law or a unilateral or mutual mistake of fact in any way related to this
 Agreement or the Reinsurance Agreement. 





Exh. 1.01(e-1)-3






                    (b)
The Company and the Reinsurer have voluntarily entered into this Agreement
based: (i) upon their own independent assessment of the relevant facts and
their rights and obligations under the Reinsurance Agreement and (ii) except as
expressly set forth in Article III and Article IV of the Master
Transaction Agreement, not upon any representations that were made or
disclosures that were made by the other Party, their affiliates, officers,
directors, shareholders, employees, representatives, agents, attorneys or their
respective heirs, administrators, predecessors, successors and assigns. Each
Party acknowledges that it has carefully read, and that it understands the
scope and effect of this Agreement and has had a full and fair opportunity to
consult with, and seek the advice and recommendations of its attorneys,
actuaries and other professional advisors prior to its execution of this
Agreement. 


                    (c)
This Agreement and the negotiations and proceedings leading to this Agreement
shall not form the basis of any claim by either Party against the other Party
or against any officer, director, consultant, professional or shareholder of
the other Party, except with respect to an action for enforcement of this Agreement
or the Master Transaction Agreement (including the Ancillary Agreements). 


ARTICLE IV


EXCLUSIVE BENEFIT OF THE PARTIES AND BINDING
EFFECT


                    The
rights, duties and obligations set forth herein shall inure to the benefit of
and be binding upon the Company and the Reinsurer as they are identified in
this Agreement and their parents, subsidiaries and affiliates, and their
respective predecessors, successors, assigns, officers, directors, agents,
employees, shareholders, representatives, and attorneys and this Agreement is
not intended to confer any rights or benefits upon persons or entities other
than the foregoing parties. 


ARTICLE V


COMPROMISE


                    This
Agreement sets forth a compromise and shall never at any time for any purpose
be considered as an admission of liability or responsibility on the part of any
party hereto regarding any aspect of the Reinsurance Agreement. Neither this
Agreement nor any of its terms shall be admissible in any action, arbitration,
or proceeding other than one to enforce the terms of this Agreement or the
Master Transaction Agreement (including the Ancillary Agreements), including,
but not limited to, the releases provided in Article II. 


ARTICLE VI


FURTHER ASSURANCES


                    The
Parties, without further consideration, shall execute and deliver such other
documents and take such other action as may be necessary to effect this
Agreement. 


Exh. 1.01(e-1)-4






ARTICLE VII


MISCELLANEOUS


                    (a)
Should any part, term or provision of this Agreement, except Article I
or Article II, be declared or determined to be illegal or invalid
pursuant to a final and unappealable order of a court of competent
jurisdiction, the validity of the remaining parts, terms and provisions shall
not be affected thereby and such illegal or invalid part, term or provision
shall be deemed not to be part of this Agreement. If either Article I or
Article II is determined by a court of competent jurisdiction or
regulatory authority to be unenforceable, either Party, at its option, shall be
entitled to rescind this Agreement, and the Reinsurer shall be entitled to
repayment of the Commutation Amount immediately upon such rescission. Upon such
rescission, the Reinsurance Agreement and all rights, obligations and
liabilities of the Parties under the Reinsurance Agreement shall be reinstated
as if this Agreement had never been executed. Notwithstanding the foregoing,
the releases given pursuant to Article II shall remain in full force and
effect as to the Parties’ officers, directors, agents, employees, shareholders,
representatives, advisors and attorneys. 


                    (b)
This Agreement and the Master Transaction Agreement (including the Ancillary
Agreements) set forth the entire agreement between the Parties with respect to
the subject matter hereof and supersedes all prior agreements or understanding
between them pertaining to the subject matter hereof. A facsimile copy of a
signature shall have the same force and effect as an original signature. 


                    (c)
This Agreement may not be amended, altered, supplemented or modified, except by
written agreement signed by the Parties. 


                    (d)
This Agreement may be executed and delivered in multiple counterparts, each of
which, when so executed and delivered, shall be an original, but such
counterparts shall together constitute but one and the same instrument and
agreement. 


                    (e)
For purposes of this Agreement, a “Business Day” is any day other than a
Saturday, Sunday or a public holiday in New York. 


                    (f)
This Agreement shall be governed by and construed in accordance with the laws
of New York without regard to principles of conflicts of law or choice of law
and the Parties submit to the exclusive jurisdiction of the Supreme Court of
the State of New York in respect of all disputes arising out of or in
connection with this Agreement. 


                    (g)
All notices under this Agreement shall be in writing and shall be deemed to be
duly given and received (i) upon delivery if delivered by certified mail; or
(ii) on the next Business Day if sent by overnight courier (iii) on the date
sent by facsimile if sent during the recipient’s normal business hours or, if
sent by facsimile outside such hours, on the next Business Day; provided, that
such notices are sent to a Party to its Address for Notices set forth on Schedule
B hereto or to such other address as either Party may have furnished to the
other in writing. 


Exh. 1.01(e-1)-5






                    (h)
For all purposes this Agreement shall be deemed to have been drafted jointly by
the Parties. 


                    (i)
This Agreement is an agreement solely between the Company and the Reinsurer. No
right of action against the Reinsurer shall accrue to any insured,
policyholder, or other contracting party of the Company unless granted herein
by virtue of this Agreement. 


[Signature
Page to follow]


Exh. 1.01(e-1)-6






                    IN WITNESS WHEREOF, the
Parties have
executed this Agreement by their respective authorized officers as of the day
and year first written below. 


	
 

	
 

	
 

	
 


	
Dated:

	
 

	
SYNCORA GUARANTEE INC.


	
 

	


	
FORMERLY KNOWN AS


	
 

	
 

	
XL CAPITAL ASSURANCE INC.


	
 

	
 

	
 

	
 


	
 

	
 

	
By:

	
 


	
 

	
 

	
 

	



	
 

	
 

	
 

	
Name:


	
 

	
 

	
 

	
Title:





[SIGNATURE PAGE – FACULTATIVE MASTER CERTIFICATE COMMUTATION
AGREEMENT]






	
 

	
 

	
 

	
 


	
Dated:

	
 

	
XL REINSURANCE AMERICA INC.


	
 

	


	
 

	
 


	
 

	
 

	
By:

	
 


	
 

	
 

	
 

	



	
 

	
 

	
 

	
Name:


	
 

	
 

	
 

	
Title:





[SIGNATURE PAGE – FACULTATIVE MASTER CERTIFICATE COMMUTATION
AGREEMENT]






SCHEDULE A


WIRE TRANSFER INSTRUCTIONS


Transfer instructions for remitting funds to
Syncora Guarantee Inc. (formerly known as XL Capital Assurance Inc.)


[Intentionally
omitted]


Please send e-mail / fax containing details
of the transfer to:


[Intentionally
omitted]


Rebecca
O’Connell (VP & Assistant Treasurer) at SCA 

Phone: (212) 478-3629 

Fax: (212) 478-3587 

E-mail: rebecca.oconnell@scafg.com 






SCHEDULE B


ADDRESS FOR NOTICE


TO THE COMPANY:


Syncora
Guarantee Inc. 

1221 Avenue of the Americas

New York, New York 10022 

Attn: General Counsel 

Facsimile: 212-478-3579 


TO THE REINSURER:


XL Reinsurance
America Inc.

Seaview House 

70 Seaview Avenue

Stamford, CT 06902-6040

Attention: General Counsel 

Facsimile: 203-964-5309 








EXHIBIT 1.01(f-1) 


FORM OF QUOTA SHARE TREATY COMMUTATION
AGREEMENT


Exhibit 1.01(f-1)






COMMUTATION AND RELEASE AGREEMENT


                    This
Commutation and Release Agreement (the “Agreement”) dated as of August
5, 2008, is made by and between Syncora Guarantee Inc., a company domiciled in
New York formerly known as XL Capital Assurance Inc. (the “Company”),
and Syncora Guarantee Re Ltd., a company organized in Delaware, formerly
domiciled in Bermuda and known as XL Financial Assurance Ltd (the “Reinsurer”).
The Reinsurer and the Company are hereinafter referred to collectively as the “Parties.”



RECITALS


                    WHEREAS,
the Parties previously entered
into a Facultative Quota Share Reinsurance Treaty dated as of October 6, 1999
as amended and restated by an Amended and Restated Facultative Quota Share
Reinsurance Treaty dated as of June 22, 2001, as further amended and restated
by a Second Amended and Restated Facultative Quota Share Reinsurance Treaty
dated as of May 1, 2004, and as further amended and restated by a Third Amended
and Restated Facultative Quota Share Reinsurance Treaty dated as of June 29,
2006 (together, the “Reinsurance Agreement”); and 


                    WHEREAS,
XL Insurance (Bermuda) Ltd,
formerly known as XL Insurance Ltd, a company domiciled in Bermuda (“XLIB”)
guarantees the obligations of the Reinsurer to the Company under the Second
Amended and Restated Facultative Quota Share Reinsurance Treaty; 


                    WHEREAS,
XLIB reinsures the Reinsurer
pursuant to an Excess of Loss Reinsurance Agreement executed on October 3, 2001
(the “Excess of Loss Reinsurance Agreement”) that covers certain
business assumed by the Reinsurer under the Reinsurance Agreement; and 


                    WHEREAS,
the Parties and XLIB are parties
to that certain Master Commutation, Release and Restructuring Agreement, dated
as of July 28, 2008, by and among the Company, the Reinsurer, Security Capital
Assurance Ltd and other parties thereto (the “Master Transaction Agreement”),
pursuant to which (a) the Company and the Reinsurer have agreed to enter into
this Agreement; and (b) XLIB and the Reinsurer have agreed to commute the
Excess of Loss Reinsurance Agreement and fully and finally extinguish all of
the parties’ rights and obligations under the Excess of Loss Reinsurance
Agreement (the “Excess of Loss Commutation”); 


                    WHEREAS,
XL Capital Ltd (“XL Capital”)
is the ultimate parent of XLIB;


                    WHEREAS,
XLIB has agreed pursuant to the
Master Transaction Agreement to pay the sum of One Billion, Five Hundred and
Eighty-Four Million, Seven Hundred Thousand Dollars ($1,584,700,000.00) to the
Reinsurer and XL Capital has agreed to issue and transfer to the Reinsurer
2,223,379 of its Class A Ordinary Shares (together, the “XL Consideration”)
on the express condition that the Company and the Reinsurer commute the
Reinsurance Agreement and the individual risk cessions thereunder and fully and
finally extinguish the parties’ rights and obligations under the Reinsurance
Agreement and/or the individual risk cessions thereunder; and 


Exh. 1.01(f-1)-1






                    WHEREAS,
the Reinsurer has agreed that it
will pay the Commutation Amount (as that term is defined in the Excess of Loss
Commutation) it received under the Excess of Loss Commutation as part of the
consideration it pays to the Company under this Agreement; 


                    WHEREAS,
the Parties agree that it is in
each of their best interests to freely and voluntarily enter into this
Agreement and to fully and forever release and discharge each other from their
respective existing and future liabilities and obligations, including
contingent and uncertain liabilities, both known and unknown, under the
Reinsurance Agreement and the individual risk cessions thereunder and to
compromise, resolve and settle all amounts due, or which may become due,
between each other arising out of, in respect of, or relating to the
Reinsurance Agreement and/or the individual risk cessions thereunder; and 


                    WHEREAS,
Company and Reinsurer, or their
affiliates, may be parties to agreements other than the Reinsurance Agreement,
and it is the intent of the Parties that this Agreement will not have any
effect upon such other agreements. 


                    NOW,
THEREFORE, in consideration of the
covenants, conditions, promises and releases contained herein, and for other
valuable consideration including but not limited to the XL Consideration that
XLIB and XL Capital agreed to pay on the express condition that Company and
Reinsurer commute the Reinsurance Agreement and the individual risk cessions
thereunder, the receipt and sufficiency of which is hereby acknowledged, the
Parties agree as follows: 


ARTICLE I

PAYMENT


                    
(a) The Reinsurer shall on the Closing Date (as such term is defined in the
Master Transaction Agreement): transfer to the Company the following, having an
aggregate value of Three Billion, Nine Hundred and Twenty-Six Million Dollars
($3,926,000,000.00) (i) the XL Capital shares it received as part of the XL
Consideration, valued at market value as of market close on the immediately
preceding trading day, (ii) withdrawal by the Company and retention for its own
account of all assets from the trust account established pursuant to the
Reinsurance Agreement, such assets to be valued at market value as of market
close on August 1, 2008, and (iii) the balance in cash via direct wire
transfer, in immediately available funds, in accordance with the payment
instructions set forth on Schedule A hereto (collectively, the “Commutation
Amount”). The date on which the Commutation Amount is paid and received
shall be referred to hereinafter as the “Effective Date.”


                    
(b) The Company shall accept the Commutation Amount in full satisfaction of all
of the Reinsurer’s liabilities and obligations under the Reinsurance Agreement
and/or the individual risk cessions thereunder. 


ARTICLE II

RELEASE


                    
(a) Upon the Reinsurer’s payment of the Commutation Amount to the Company, the
Company, on behalf of itself and its shareholders, parents, affiliates and 


Exh. 1.01(f-1)-2






subsidiaries,
and their respective officers, directors, and employees, hereby irrevocably and
unconditionally releases and forever discharges the Reinsurer, its parents,
subsidiaries and affiliates, and their respective predecessors, successors,
assigns, officers, directors, agents, employees, shareholders, representatives,
and attorneys from any and all present and future actions, causes of action,
suits, debts, liens, contracts, rights, agreements, obligations, promises,
liabilities, claims, counterclaims, demands, damages, controversies, losses,
costs and expenses (including attorneys’ fees and costs actually incurred) of
any kind, character, description or nature whatsoever, known or unknown to
either or both Parties, suspected or unsuspected, reported or unreported, fixed
or contingent, which the Company now has, owns or holds or claims to have, own,
or hold, or at any time heretofore had, owned, or held or claimed to have had,
owned, or held, or may hereafter have, own, or hold or claim to have, own, or
hold, arising out of conduct or matters occurring on, prior to or subsequent to
the Effective Date, against the Reinsurer, arising directly or indirectly out
of, based upon, or in any way related to or in connection with the Reinsurance
Agreement and/or the individual risk cessions thereunder, whether grounded in
law or equity, or sounding in tort or contract or otherwise; provided, however,
that the provisions of this Article II(a) shall not discharge
obligations of the Reinsurer, which have been undertaken or imposed by the
express terms of this Agreement or the Master Transaction Agreement (including
the Ancillary Agreements). 


                    (b)
Contemporaneous with the payment of the Commutation Amount to the Company, the
Reinsurer, on behalf of itself and its shareholders, parents, affiliates and
subsidiaries, and their respective officers, directors and employees, hereby
irrevocably and unconditionally releases and forever discharges the Company,
its shareholders, parents, subsidiaries and affiliates, and their respective
predecessors, successors, assigns, officers, directors, agents, employees,
shareholders, representatives, and attorneys from any and all present and
future actions, causes of action, suits, debts, liens, contracts, rights,
agreements, obligations, promises, liabilities, claims, counterclaims, demands,
damages, controversies, losses, costs and expenses (including attorneys’ fees
and costs actually incurred) of any kind, character, description or nature
whatsoever, known or unknown to either or both Parties, suspected or
unsuspected, reported or unreported, fixed or contingent, which the Reinsurer
now has, owns, holds or claims to have, own, or hold, or at any time heretofore
had, owned, or held or claimed to have had, owned, or held, or may hereafter
have, own, or hold or claim to have, own, or hold, arising out of conduct or
matters occurring on, prior to or subsequent to the Effective Date, against the
Company, arising directly or indirectly out of, based upon, or in any way
related to or in connection with the Reinsurance Agreement and/or the
individual risk cessions thereunder, whether grounded in law or equity or sounding
in tort or contract or otherwise; provided, however, that the
provisions of this Article II(b) shall not discharge obligations of the
Company, which have been undertaken or imposed by the express terms of this
Agreement or the Master Transaction Agreement (including the Ancillary
Agreements). 


                    (c)
The Parties understand that it is possible that unknown losses or claims may
exist, or that present or future losses or claims may be underestimated in
amounts or severity. Furthermore, the Parties expressly accept and assume the
risk that the factual or legal assumptions made by any Party in connection with
this Agreement may be found hereafter to be different from the true facts or
law, and the Parties agree that this Agreement shall be and shall remain in
full force and effect notwithstanding such differences in facts or law. Each
Party expressly takes all of the foregoing into account in determining the
amount of consideration to be 


Exh. 1.01(f-1)-3






given and paid
for the giving of this Agreement, and a portion of the said consideration,
having been bargained for between the Parties with the knowledge of the
possibility of such unknown losses and claims, is given in exchange for the
full accord, satisfaction and discharge of all such losses and claims. 


                    (d)
Full payment of the Commutation Amount shall be in complete accord,
satisfaction, settlement and commutation of any and all past, current and
future liabilities and obligations that each Party owes or may owe to the other
arising directly or indirectly out of or related to or in connection with the
Reinsurance Agreement and/or the individual risk cessions thereunder and that
upon payment of the Commutation Amount, the Reinsurance Agreement shall be
terminated as of the Effective Date and neither Party shall have any further
obligation or liability to the other Party under the Reinsurance Agreement
and/or the individual risk cessions thereunder. 


ARTICLE III 

NON-RELIANCE


                   
(a) This Agreement fully and finally resolves the rights, duties and
obligations of the Company and the Reinsurer under the Reinsurance Agreement,
and neither Party shall: 


	
 

	
 


	
 

	
         (i)
 have any remedy in respect of any representation, warranty or undertaking of
 the other that is not specifically set forth in this Agreement, the Master
 Transaction Agreement, or the Ancillary Agreements commuting the reinsurance
 agreements listed in Part I of Schedule 2.01 of the Master Transaction
 Agreement, whether or not relied upon by the other Party; or 


	
 

	
 


	
 

	
         (ii)
 seek to reopen or set aside this Agreement or the Reinsurance Agreement on
 any basis whatsoever, including, without limitation, that this Agreement or
 the Reinsurance Agreement is void or voidable due to a mistake or change in
 law or a unilateral or mutual mistake of fact in any way related to this
 Agreement or the Reinsurance Agreement. 





                    (b)
The Company and the Reinsurer have voluntarily entered into this Agreement
based: (i) upon their own independent assessment of the relevant facts and
their rights and obligations under the Reinsurance Agreement and (ii) except as
expressly set forth in Article III and Article IV of the Master
Transaction Agreement, not upon any representations that were made or
disclosures that were made by the other Party, their affiliates, officers,
directors, shareholders, employees, representatives, agents, attorneys or their
respective heirs, administrators, predecessors, successors and assigns. Each
Party acknowledges that it has carefully read, and that it understands the
scope and effect of this Agreement and has had a full and fair opportunity to
consult with, and seek the advice and recommendations of its attorneys,
actuaries and other professional advisors prior to its execution of this
Agreement. 


                    (c)
This Agreement and the negotiations and proceedings leading to this Agreement
shall not form the basis of any claim by either Party against the other Party
or against any officer, director, consultant, professional or shareholder of
the other Party, except with 


Exh. 1.01(f-1)-4






respect to an
action for enforcement of this Agreement or the Master Transaction Agreement
(including the Ancillary Agreements). 


ARTICLE IV 

COMPROMISE


                    This
Agreement sets forth a compromise and shall never at any time for any purpose
be considered as an admission of liability or responsibility on the part of any
party hereto regarding any aspect of the Reinsurance Agreement. Neither this Agreement
nor any of its terms shall be admissible in any action, arbitration, or
proceeding other than one to enforce the terms of this Agreement or the Master
Transaction Agreement (including the Ancillary Agreements), including, but not
limited to, the releases provided in Article II. 


ARTICLE V

FURTHER ASSURANCES


                    The
Parties, without further consideration, shall execute and deliver such other
documents and take such other action as may be necessary to effect this
Agreement. 


ARTICLE VI 

MISCELLANEOUS


                    (a)
This Agreement and the Master Transaction Agreement (including the Ancillary
Agreements) set forth the entire agreement between the Parties with respect to
the subject matter hereof and supersedes all prior agreements or understanding
between them pertaining to the subject matter hereof. A facsimile copy of a
signature shall have the same force and effect as an original signature. 


                    (b)
This Agreement may not be amended, altered, supplemented or modified, except by
written agreement signed by the Parties. 


                    (c)
This Agreement may be executed and delivered in multiple counterparts, each of
which, when so executed and delivered, shall be an original, but such
counterparts shall together constitute but one and the same instrument and
agreement. 


                    (d)
For purposes of this Agreement, a “Business Day” is any day other than a
Saturday, Sunday or a public holiday in New York. 


                    (e)
This Agreement shall be governed by and construed in accordance with the laws
of New York without regard to principles of conflicts of law or choice of law
and the Parties submit to the exclusive jurisdiction of the Supreme Court of
the State of New York in respect of all disputes arising out of or in
connection with this Agreement. 


                    
(f) All notices under this Agreement shall be in writing and shall be deemed to
be duly given and received (i) upon delivery if delivered by certified mail; or
(ii) on the next Business Day if sent by overnight courier (iii) on the date
sent by facsimile if sent during the recipient’s normal business hours or, if
sent by facsimile outside such hours, on the next 


Exh. 1.01(f-1)-5






Business Day;
provided, that such notices are sent to a Party to its Address for Notices set
forth on Schedule B hereto or to such other address as either Party may
have furnished to the other in writing. 


                    (g)
For all purposes this Agreement shall be deemed to have been drafted jointly by
the Parties. 


                    (h)
This Agreement is an agreement solely between the Company and the Reinsurer. No
right of action against the Reinsurer shall accrue to any insured or
policyholder of the Company. 


[Signature
Page to follow]


Exh. 1.01(f-1)-6






                    IN
WITNESS WHEREOF, the Parties have
executed this Agreement by their respective authorized officers as of the day
and year first written below. 


	
 

	
 

	
 

	
 


	
Dated:

	
 

	
 

	
SYNCORA GUARANTEE INC. 


	
 

	


	
 

	
FORMERLY KNOWN AS 


	
 

	
 

	
 

	
XL CAPITAL ASSURANCE INC.








	
 

	
 

	
 


	
 

	
By:

	
 


	
 

	
 

	



	
 

	
 

	
Name:


	
 

	
 

	
Title:





[SIGNATURE PAGE – QUOTA SHARE TREATY
COMMUTATION AGREEMENT]






	
 

	
 

	
 

	
 


	
Dated:

	
 

	
 

	
SYNCORA GUARANTEE RE LTD.


	
 

	


	
 

	
FORMERLY KNOWN AS 


	
 

	
 

	
 

	
XL FINANCIAL ASSURANCE LTD








	
 

	
 

	
 


	
 

	
By:

	
 


	
 

	
 

	



	
 

	
 

	
Name:


	
 

	
 

	
Title:





[SIGNATURE PAGE – QUOTA SHARE TREATY COMMUTATION
AGREEMENT]






SCHEDULE A


WIRE TRANSFER INSTRUCTIONS


Transfer instructions for remitting funds to
Syncora Guarantee Inc. (formerly known as XL Capital Assurance Inc.)


[Intentionally
omitted]


Please send e-mail / fax containing details
of the transfer to:


[Intentionally
omitted]


Rebecca
O’Connell (VP & Assistant Treasurer) at SCA

Phone: (212) 478-3629

Fax: (212) 478-3587

E-mail: rebecca.oconnell@scafg.com 






SCHEDULE B


ADDRESS FOR NOTICE


TO THE COMPANY:


Syncora
Guarantee Inc. 

1221 Avenue of the Americas

New York, New York 10022 

Attn: General Counsel 

Facsimile: 212-478-3579 


TO THE REINSURER:


Syncora
Guarantee Re Ltd. 

A.S. Cooper Building 

26 Reid Street, 4th Floor 

Hamilton, Bermuda HM 11

Attn: President 

Facsimile: 441-296-4351










EXHIBIT 1.01(g-1)


FORM OF XLFA SUBSCRIPTION AGREEMENT


Exhibit 1.01(g-1)






XL CAPITAL LTD


SUBSCRIPTION AGREEMENT


This
SUBSCRIPTION AGREEMENT (this “Agreement”), dated as of August 5, 2008,
by and between XL Capital Ltd, a Cayman Islands exempted limited company (the “Company”),
and Syncora Guarantee Re Ltd. (formerly known as XL Financial Assurance Ltd), a
Bermuda exempted company (the “Subscriber”). 


          WHEREAS,
the Company and the Subscriber are executing and delivering this Agreement in
reliance upon the exemption from securities registration afforded by Section
4(2) of the Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder (the “Securities Act”); 


          WHEREAS,
this Agreement is being entered into for the purpose of setting forth the
terms, conditions and agreements between the Company and the Subscriber in
connection with the Company’s issuance to the Subscriber of 2,223,379 shares
(the “Shares”) of its Class A Ordinary Shares, par value $0.01 per share
(“Common Stock”), pursuant to the Master Commutation, Release and
Restructuring Agreement dated as of July 28, 2008 among the Company, Security
Capital Assurance Ltd, XL Financial Assurance Ltd, XL Capital Assurance Inc.
and the other parties thereto (the “Master Agreement”); and 


          WHEREAS,
on the Closing Date (as defined below), the parties hereto and Syncora
Guarantee Inc. (formerly known as XL Capital Assurance Inc.) will execute and
deliver a Registration Rights Agreement (the “Registration Rights Agreement”),
substantially in the form attached hereto as Exhibit A, pursuant to
which the Company has agreed to provide certain registration rights under the
Securities Act and the rules and regulations promulgated thereunder, and
applicable state securities laws. 


NOW
THEREFORE, in consideration of the mutual covenants and agreements herein
contained and intending to be legally bound, the Company and the Subscriber
hereby agree as follows: 


          1.
SUBSCRIPTION FOR SHARES; CLOSING.


                    (a)
Subject to the terms and conditions herein and in reliance upon the respective
representations, warranties and covenants contained herein, the Subscriber
hereby subscribes for the Shares and the Company hereby agrees to issue the
Shares as consideration for the Subscriber and certain of its affiliates
entering into the Master Agreement and related transactions contemplated
thereby, as set forth therein. 


                    (b)
The issuance of the Shares shall be effected on the Closing Date (defined
below) by the Company executing and delivering to the Subscriber, duly
registered in its name, a duly executed stock certificate evidencing the Shares
being purchased by it. The closing of the purchase and sale of the Shares
pursuant to this Section 1(b) will take place at the time and location
set forth for the closing in Section 2.07 of the Master Agreement or at such
other time 


Exh. 1.01(g-1)-1






and location
as the Company and the Subscriber shall otherwise mutually agree (the “Closing
Date”). 


          2.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY.


                    The
Company represents and warrants, as of the date hereof and as of the Closing
Date, that: 


                    (a)
Incorporation and Good Standing. The Company is duly organized, validly
existing and in good standing under the laws of the Cayman Islands and has all
requisite power and authority to carry on its business as now conducted and as
proposed to be conducted.


                    (b)
Authorization. The board of directors of the Company (the “Board”)
has authorized the execution, delivery and performance of this Agreement and
the transactions contemplated hereby and the Company has the requisite power,
authority and legal capacity to execute, deliver and perform this Agreement and
the transactions contemplated hereby. No other corporate action is necessary to
authorize such execution, delivery and performance, and upon such execution and
delivery by the Company, this Agreement shall constitute a valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms except as enforceability may be (i) limited by bankruptcy, insolvency
or other similar laws affecting the enforcement of creditor’s rights, or (ii)
subject to general principles of equity. The Board has authorized the issuance
and delivery of the Shares in accordance with this Agreement.


                    (c)
Authorization of Shares. The Shares to be issued and sold by the Company
pursuant to this Agreement, when issued and paid for in accordance with the
provisions hereof, will be duly authorized, validly issued, fully paid and
nonassessable shares of Common Stock free and clear of all liens and the
issuance of the Shares will not be subject to any preemptive or similar rights.



                    (d)
Non-Contravention. Except as set forth on Schedule 2(d) and except with
respect to any filings made in connection with exemptions from registration
under state or federal securities laws, the creation, authorization, issuance,
offer and sale of the Shares do not require any consent, approval or
authorization of, or filing, registration or qualification with, any
governmental authority on the part of the Company or the vote, consent or
approval in any manner of the holders of any security of the Company as a
condition to the execution and delivery of this Agreement or the creation,
authorization, issuance, offer and sale of the Shares. Except as set forth on
Schedule 2(d), the execution and delivery by the Company of this Agreement and
the performance by the Company of its obligations hereunder will not violate
(i) the terms and conditions of the Memorandum and Articles of Association of
the Company, or any material agreement to which the Company is a party or by
which it is bound or (ii) subject to the accuracy of the Subscriber’s
representations and warranties contained in Section 3 hereof, any
federal or state securities law. 


                    (e)
No General Solicitation. The Company has not engaged in a general solicitation
of the public for sale of the Shares in violation of the Securities Act, and
the offering and sale of the Shares are exempt from registration under the
Securities Act. 


Exh. 1.01(g-1)-2






                    (f)
Capitalization. As of December 31, 2007, the Company had the authorized
capitalization as set forth in the Company’s Annual Report on Form 10-K for its
most recent fiscal year, and all of the issued shares of capital stock of the
Company have been duly authorized and validly issued, are fully paid and
non-assessable, and were issued in compliance with federal and state securities
laws and not in violation of any preemptive right, resale right, right of first
refusal or similar right. All of the Company’s options, warrants and other rights
to purchase or exchange any securities for shares of the Company’s capital
stock have been duly authorized and validly issued and were issued in
compliance with federal and state securities laws. The Company has not, in the
twelve months preceding the date hereof, received notice (written or oral) from
the NYSE to the effect that the Company is not in compliance with its listing
or maintenance requirements. 


                    (g)
No Integration. There has been no sale, offer for sale, solicitation of
an offer to buy or negotiation by the Company or any of its subsidiaries in
respect of any security that would be integrated with the Shares issued
pursuant to this Agreement in a manner that would require the registration of
the Shares under the Securities Act. 


                    (h)
Listing. The Common Stock is registered pursuant to Section 12(b) of the
Securities Exchange Act of 1934 and prior to the Closing Date, the Shares will
be approved for listing on the NYSE, subject to official notice of issuance. 


                    (i)
No Registration. Assuming the accuracy of the representations and
warranties of the Subscriber contained in Section 3 and its compliance
with the agreements set forth herein, it is not necessary, in connection with
the issuance and sale of the Shares to the Subscriber in the manner
contemplated by this Agreement, to register the Shares under the Securities
Act. 


          3.
REPRESENTATIONS AND WARRANTIES OF THE SUBSCRIBER.


                    The
Subscriber represents and warrants, as of the date hereof and as of the Closing
Date, that: 


                    (a)
Investment Purpose. The Subscriber is obtaining the Shares for
investment purposes only and not with a view to or for distributing or
reselling such Shares or any part thereof, without prejudice, however, to the
Subscriber’s right, subject to the provisions of this Agreement (including,
without limitation, Section 5), to sell or otherwise dispose of all or
any part of the Shares pursuant to an effective registration statement under
the Securities Act or under an exemption from such registration and in
compliance with applicable federal and state securities or “blue sky” laws. The
Subscriber understands that it may bear the economic risk of this investment
indefinitely. 


                    (b)
Institutional Accredited Investor Status. The Subscriber was at the time
it was first offered the Shares, and at the date hereof is, an institutional
“accredited investor” as defined in Rule 501(a) under the Securities Act. 


                    (c)
Reliance on Exemptions. The Subscriber understands that the Shares are
being offered and issued to it in reliance upon specific exemptions from the
registration 


Exh. 1.01(g-1)-3






requirements
of United States federal and state securities or “blue sky” laws, including
Section 4(2) of the Securities Act and that the Company is relying upon the
truth and accuracy of, and the Subscriber’s compliance with, the
representations, warranties, agreements, acknowledgments and understandings of
the Subscriber set forth herein in order to determine the availability of such
exemptions and the eligibility of the Subscriber to acquire the Shares. 


                    (d)
Knowledge. The Subscriber has, either alone or together with its
representatives, such knowledge, sophistication and experience in business and
financial matters so as to be capable of evaluating the merits and risks of the
ownership of the Shares, and has so evaluated the merits and risks of such
investment. The Subscriber understands that ownership of the Shares involves a
high degree of risk, is able to bear the economic risk of ownership of the
Shares and, at the present time, is able to afford a complete loss with respect
to such ownership. 


                    (e)
Access to Information. The Subscriber acknowledges that it has access to
and has reviewed the Company’s disclosures about its Common Stock made in its
filings with the SEC including the Company’s Annual Report on Form 10-K for its
latest fiscal year, the Company’s Quarterly Report on Form 10-Q for its latest
fiscal quarter, and any Current Report on Form 8-K filed by the Company since
the date of such Quarterly Report on Form 10-Q and has access to information
about the Company and its subsidiaries and their respective financial condition,
results of operations, business, properties, management and prospects contained
in the Company’s public filings with the SEC, and acknowledges that such
information is sufficient to enable it to evaluate its investment. 


                    (f)
No Reliance. In connection with its acceptance of the Shares, the
Subscriber has not relied upon any representations made by, or other
information (whether oral or written) furnished by or on behalf of, the Company
other than as set forth in this Agreement, the Master Agreement or any
Ancillary Agreements (as defined in the Master Agreement). 


                    (g)
No General Solicitation. The Subscriber acknowledges that the Shares
were offered and will be issued to the Subscriber without any general solicitation
or general advertising, including, but not limited to, any advertisement,
article, notice or other communication published in any newspaper, magazine or
similar media or broadcast over television or radio, or any seminar or meeting
whose attendees have been invited by any general solicitation or general
advertising.


                    (h)
No Advice Provided. The Subscriber understands that nothing in this
Agreement or any other materials presented by or on behalf of the Company to
the Subscriber in connection with the issuance of the Shares constitutes legal,
tax or investment advice. The Subscriber has consulted such legal, tax and
investment advisors as it, in its sole discretion, has deemed necessary or
appropriate in connection with its receipt of the Shares. 


                    (i)
Authorization; Enforceability. This Agreement has been duly and validly
authorized by the Subscriber. This Agreement has been duly executed and
delivered on behalf of the Subscriber, and constitutes the valid and binding
agreement of the Subscriber enforceable in accordance with their terms,
subject, in each case, to applicable bankruptcy, insolvency, reorganization or
similar laws affecting generally the enforcement of creditors’ rights and
subject 


Exh. 1.01(g-1)-4






to a court’s
discretionary authority with respect to the granting of specific performance or
other equitable remedies. 


                    (j)
No Conflicts. The execution and performance of this Agreement does not
conflict with any agreement to which the Subscriber is a party or is bound
thereby, any court order or judgment addressed to the Subscriber, or the
constituent documents of the Subscriber. 


          4.
TRANSFER RESTRICTIONS


                    (a)
Restrictions. The Subscriber recognizes and agrees that (i) the Shares
will be subject to a Holding Period (as defined in the Registration Rights
Agreement) and other restrictions on transferability pursuant to this Agreement
and the Registration Rights Agreement and (ii) as a result of the foregoing,
the marketability of the Shares will be severely limited. The Subscriber agrees
that it will not Transfer (as such term is defined in the Registration Rights
Agreement) the Shares in any manner that will violate such restrictions under
this Agreement, the Registration Rights Agreement, the Securities Act or any
state securities laws, the rules and regulations of the SEC or any other state
or municipality having jurisdiction thereof. 


                    (b)
Legends. The Subscriber understands and agrees that the Shares will bear
a restrictive legend in substantially the following form (and a stop-transfer
order may be placed against the transfer of the certificates for the Shares):


THIS SECURITY HAS BEEN ACQUIRED FOR
INVESTMENT AND WITHOUT A VIEW TO DISTRIBUTION AND HAS NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933 (THE “ACT”), OR UNDER STATE SECURITIES LAWS.
NO TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION OF
THIS SECURITY OR ANY INTEREST OR PARTICIPATION THEREIN MAY BE MADE EXCEPT (A)
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR (B) PURSUANT
TO AN EXEMPTION FROM REGISTRATION UNDER THE ACT AND APPLICABLE STATE SECURITIES
LAWS AND, IN THE CASE OF CLAUSE (B), IF REQUESTED BY THE ISSUER, UNLESS THE
ISSUER RECEIVES AN OPINION OF COUNSEL IN FORM AND SUBSTANCE REASONABLY
SATISFACTORY TO THE ISSUER TO THE EFFECT THAT REGISTRATION IS NOT REQUIRED
UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS. THIS SECURITY IS ALSO
SUBJECT TO SIGNIFICANT RESTRICTIONS ON TRANSFER (WHICH INCLUDES A RIGHT OF
FIRST OFFER) PURSUANT TO THE TERMS OF A REGISTRATION RIGHTS AGREEMENT AMONG THE
ISSUER, THE HOLDER AND SYNCORA GUARANTEE INC. (FORMERLY KNOWN AS XL CAPITAL
ASSURANCE INC.) DATED AUGUST 5, 2008 AND MAY NOT BE TRANSFERRED EXCEPT IN
COMPLIANCE WITH SUCH AGREEMENT.


          5.
MISCELLANEOUS


                    (a)
Headings. The headings of the sections and subsections of this Agreement
are inserted for convenience only and shall not be deemed to constitute a part
thereof. 


Exh. 1.01(g-1)-5






                    (b)
Notices. All communications under this Agreement shall be in writing and
shall be delivered by hand or facsimile or mailed by overnight courier or by
registered mail or certified mail, postage prepaid: 


	
 

	
 


	
 

	
          (i)
 if to the Company, XL Capital Ltd, One Bermudiana Road, Hamilton HM 11,
 Bermuda, Attention: General Counsel, Fax: 441-295-2840 or at such other
 address or facsimile number as may have been furnished in writing. 


	
 

	
 


	
 

	
          (ii)
 if to the Subscriber, c/o Syncora Guarantee Inc., 1221 Avenue of the
 Americas, New York, New York 10020-1001, Fax: 212-478-3579; Attention: Susan
 Comparato, General Counsel; or at such other address or facsimile number as
 may have been furnished in writing. 





Any notice so
addressed shall be deemed to be given: if delivered by hand or facsimile, on
the date of such delivery, if a business day and delivered during regular
business hours, otherwise the first business day thereafter; if mailed by
courier, on the first business day following the date of such mailing; and if
mailed by registered or certified mail, on the third business day after the
date of such mailing. 


                    (c)
Survival. All representations, warranties and covenants made by the
Subscriber and the Company herein shall be considered to have been relied upon
by the Company or the Subscriber, as the case may be, and shall survive all
deliveries to you of the Shares, or regardless of any investigation made by the
Company or the Subscriber, as the case may be, or on the Company’s or the
Subscriber’s behalf. 


                    (d)
Assignment; No Third Party Beneficiaries. This Agreement shall inure to
the benefit of and be binding upon the successors and assigns of each of the
parties. It is understood that the Subscriber may assign this Agreement or any
of their rights or obligations hereunder to any affiliate, provided, however,
that any assignment of the obligations under this Agreement shall not release
the assignor from any of its obligations under this Agreement. Nothing in this
Agreement shall confer upon any person not a party to this Agreement any rights
or remedies of any nature or kind whatsoever under or by reason of this
Agreement. 


                    (e)
Entire Agreement. This Agreement, the Master Agreement and the
Registration Rights Agreement constitute the entire understandings of the
parties hereto and supersede all prior agreements or understandings with
respect to the subject matter hereof among such parties. This Agreement may be
amended, and the observance of any term of this Agreement may be waived, with
(and only with) the written consent of each of the parties hereto.


                    (f)
Severability. In the event that any part or parts of this Agreement
shall be held illegal or unenforceable by any court or administrative body of
competent jurisdiction, such determination shall not effect the remaining
provisions of this Agreement which shall remain in full force and effect. 


                    (g)
Counterparts. This Agreement may be executed in any number of
counterparts (including by facsimile), each of which shall be deemed an
original and all of which together shall be considered one and the same
agreement. 


Exh. 1.01(g-1)-6






                    (h)
Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York applicable to contracts made
and to be performed entirely within such State. 


                    (i)
Jurisdiction. The parties to this Agreement irrevocably submit to the
non-exclusive jurisdiction of any New York State or federal court sitting in
the Borough of Manhattan, The City of New York, over any suit, action or
proceeding arising out of or relating to this Agreement. To the fullest extent permitted by applicable law, the
parties to this Agreement irrevocably waive and agree not to assert, by way of
motion, as a defense or otherwise, any claim that it is not subject to the
jurisdiction of any such court, any objection that it may now or hereafter have
to the laying of the venue of any such suit, action or proceeding brought in
any such court and any claim that any such suit, action or proceeding brought
in any such court has been brought in an inconvenient forum.


                    (j)
Specific Performance. The Company and the Subscriber hereby declare that
it is impossible to measure in money the damages which will accrue to the
parties hereto by reason of the failure of any party hereto to perform any of
its obligations set forth in this Agreement. Therefore, the Company and the
Subscriber shall have the right to specific performance of such obligations,
and if any party hereto shall institute any action or proceeding to enforce the
provisions hereof, the Company and the Subscriber hereby waive the claim or defense
that the party instituting such action or proceeding has an adequate remedy at
law. 


[Signature Page to Follow]


Exh. 1.01(g-1)-7






                    IN
WITNESS WHEREOF, the Subscriber and the Company have caused this Agreement to
be duly executed as of the date first written above. 


	
 

	
 

	
 


	
 

	
SYNCORA
 GUARANTEE RE LTD. 


	
 

	
FORMERLY
 KNOWN AS 


	
 

	
XL FINANCIAL
 ASSURANCE LTD 


	
 

	
 

	
 


	
 

	
By:

	
 


	
 

	
 

	



	
 

	
 

	
Name:


	
 

	
 

	
Title:





[SIGNATURE PAGE TO SUBSCRIPTION
AGREEMENT]






	
 

	
 


	
Accepted and
 Agreed 


	
as of the
 date first written above: 


	
 

	
 


	
XL CAPITAL
 LTD 


	
 

	
 


	
By:

	
 


	
 

	



	
 

	
Name: 


	
 

	
Title: 





[SIGNATURE PAGE TO SUBSCRIPTION
AGREEMENT]






Schedule 2(d) – Non-Contravention


1. Credit
Agreement among XL CAPITAL LTD, X.L. AMERICA, INC., XL INSURANCE (BERMUDA) LTD,
XL RE LTD (together with XL, XLA and XLI, the “Account Parties”), JPMORGAN CHASE BANK, N.A., as
administrative agent (in such capacity, the “Administrative
Agent”), and the Lenders party thereto, with respect to the Credit
Agreement, dated as of June 21, 2007, (as may be amended, supplemented or
otherwise modified from time to time, the “Credit
Agreement”) entered into among the Account Parties, the
Administrative Agent and the other institutions from time to time party thereto
as Lenders.


2. Credit
Agreement among XL CAPITAL LTD (“XL”),
X.L. AMERICA, INC. (“XLA”), XL
INSURANCE (BERMUDA) LTD (“XLI”),
XL RE LTD (together with XL, XLA and XLI, the “Obligors”), JPMORGAN CHASE BANK, N.A. (as successor to Bear
Stearns Corporate Lending Inc.), as administrative agent (in such capacity, the
“Administrative Agent”) and the
Lenders party thereto, with respect to the Credit Agreement, dated as of August
3, 2005, (as may be amended, supplemented or otherwise modified from time to
time, the “Credit Agreement”)
entered into among the Obligors, the Administrative Agent and the other
institutions from time to time party thereto as Lenders. 


3. Credit
Agreement among XL CAPITAL LTD (“XL”),
X.L. AMERICA, INC. (“XLA”), XL
INSURANCE (BERMUDA) LTD (“XLI”),
XL RE LTD (together with XL, XLA and XLI, the “Account Parties”), JPMORGAN CHASE BANK, N.A., as
administrative agent (in such capacity, the “Administrative
Agent”) and the Lenders party thereto, with respect to the Credit
Agreement, dated as of June 22, 2005, (as may be amended, supplemented or
otherwise modified from time to time, the “Credit
Agreement”) entered into among the Account Parties, the
Administrative Agent and the other institutions from time to time party thereto
as Lenders. 


4. Credit
Agreement among XL CAPITAL LTD (“XL”)
(the “Account Party”), the
Guarantors (collectively, with the Account Party, the “Obligors”), and CITIBANK INTERNATIONAL PLC,
as agent and trustee for the Lenders (in such capacity, the “Agent”), with respect to the Letter of
Credit Facility and Reimbursement Agreement, dated November 14, 2007, (as may
be amended, supplemented or otherwise modified from time to time, the “Facility Agreement”) entered into among the
Obligors, the Agent and the other institutions from time to time party thereto
as Lenders. 


5.
Note purchase agreement dated April 12, 2001 among X.L. America, Inc., XL
Capital Ltd, XL Insurance Ltd, XL Re Ltd and each of the purchasers listed
therein. Such notes will be defeased on the Closing Date.








EXHIBIT 1.01(g-2) 


FORM OF XLCA SUBSCRIPTION AGREEMENT


Exhibit 1.01(g-2)






XL CAPITAL LTD


SUBSCRIPTION AGREEMENT


This
SUBSCRIPTION AGREEMENT (this “Agreement”), dated as of August 5, 2008,
by and between XL Capital Ltd, a Cayman Islands exempted limited company (the “Company”),
and Syncora Guarantee Inc. (formerly known as XL Capital Assurance Inc.), a New
York insurance company (the “Subscriber”). 


          WHEREAS,
the Company and the Subscriber are executing and delivering this Agreement in
reliance upon the exemption from securities registration afforded by Section
4(2) of the Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder (the “Securities Act”); 


          WHEREAS,
this Agreement is being entered into for the purpose of setting forth the
terms, conditions and agreements between the Company and the Subscriber in
connection with the Company’s issuance to the Subscriber of 5,776,621 shares
(the “Shares”) of its Class A Ordinary Shares, par value $0.01 per share
(“Common Stock”), pursuant to the Master Commutation, Release and
Restructuring Agreement dated as of July 28, 2008 among the Company, Security
Capital Assurance Ltd, XL Financial Assurance Ltd, XL Capital Assurance Inc.
and the other parties thereto (the “Master Agreement”); and 


          WHEREAS,
on the Closing Date (as defined below), the parties hereto and Syncora
Guarantee Re Ltd. (formerly known as XL Financial Assurance Ltd) will execute
and deliver a Registration Rights Agreement (the “Registration Rights
Agreement”), substantially in the form attached hereto as Exhibit A,
pursuant to which the Company has agreed to provide certain registration rights
under the Securities Act and the rules and regulations promulgated thereunder,
and applicable state securities laws. 


NOW THEREFORE,
in consideration of the mutual covenants and agreements herein contained and
intending to be legally bound, the Company and the Subscriber hereby agree as
follows: 


          1.
SUBSCRIPTION FOR SHARES; CLOSING. 


                    (a)
Subject to the terms and conditions herein and in reliance upon the respective
representations, warranties and covenants contained herein, the Subscriber
hereby subscribes for the Shares and the Company hereby agrees to issue the
Shares as consideration for the Subscriber and certain of its affiliates
entering into the Master Agreement and related transactions contemplated
thereby, as set forth therein. 


                    (b)
The issuance of the Shares shall be effected on the Closing Date (defined
below) by the Company executing and delivering to the Subscriber, duly
registered in its name, a duly executed stock certificate evidencing the Shares
being purchased by it. The closing of the purchase and sale of the Shares
pursuant to this Section 1(b) will take place at the time and location
set forth for the closing in Section 2.07 of the Master Agreement or at such
other time 


Exh. 1.01(g-2)-1






and location
as the Company and the Subscriber shall otherwise mutually agree (the “Closing
Date”). 


          2.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY. 


                    The
Company represents and warrants, as of the date hereof and as of the Closing
Date, that: 


                    (a)
Incorporation and Good Standing. The Company is duly organized, validly
existing and in good standing under the laws of the Cayman Islands and has all
requisite power and authority to carry on its business as now conducted and as
proposed to be conducted. 


                    (b)
Authorization. The board of directors of the Company (the “Board”)
has authorized the execution, delivery and performance of this Agreement and
the transactions contemplated hereby and the Company has the requisite power,
authority and legal capacity to execute, deliver and perform this Agreement and
the transactions contemplated hereby. No other corporate action is necessary to
authorize such execution, delivery and performance, and upon such execution and
delivery by the Company, this Agreement shall constitute a valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms except as enforceability may be (i) limited by bankruptcy, insolvency
or other similar laws affecting the enforcement of creditor’s rights, or (ii)
subject to general principles of equity. The Board has authorized the issuance
and delivery of the Shares in accordance with this Agreement. 


                    (c)
Authorization of Shares. The Shares to be issued and sold by the Company
pursuant to this Agreement, when issued and paid for in accordance with the
provisions hereof, will be duly authorized, validly issued, fully paid and
nonassessable shares of Common Stock free and clear of all liens and the
issuance of the Shares will not be subject to any preemptive or similar rights.



                    (d)
Non-Contravention. Except as set forth on Schedule 2(d) and except with
respect to any filings made in connection with exemptions from registration
under state or federal securities laws, the creation, authorization, issuance,
offer and sale of the Shares do not require any consent, approval or
authorization of, or filing, registration or qualification with, any
governmental authority on the part of the Company or the vote, consent or
approval in any manner of the holders of any security of the Company as a
condition to the execution and delivery of this Agreement or the creation,
authorization, issuance, offer and sale of the Shares. Except as set forth on
Schedule 2(d), the execution and delivery by the Company of this Agreement and
the performance by the Company of its obligations hereunder will not violate
(i) the terms and conditions of the Memorandum and Articles of Association of
the Company, or any material agreement to which the Company is a party or by
which it is bound or (ii) subject to the accuracy of the Subscriber’s
representations and warranties contained in Section 3 hereof, any
federal or state securities law. 


                    (e)
No General Solicitation. The Company has not engaged in a general
solicitation of the public for sale of the Shares in violation of the
Securities Act, and the offering and sale of the Shares are exempt from
registration under the Securities Act. 


Exh. 1.01(g-2)-2






                    (f)
Capitalization. As of December 31, 2007, the Company had the authorized
capitalization as set forth in the Company’s Annual Report on Form 10-K for its
most recent fiscal year, and all of the issued shares of capital stock of the
Company have been duly authorized and validly issued, are fully paid and
non-assessable, and were issued in compliance with federal and state securities
laws and not in violation of any preemptive right, resale right, right of first
refusal or similar right. All of the Company’s options, warrants and other
rights to purchase or exchange any securities for shares of the Company’s
capital stock have been duly authorized and validly issued and were issued in
compliance with federal and state securities laws. The Company has not, in the
twelve months preceding the date hereof, received notice (written or oral) from
the NYSE to the effect that the Company is not in compliance with its listing
or maintenance requirements. 


                    (g)
No Integration. There has been no sale, offer for sale, solicitation of
an offer to buy or negotiation by the Company or any of its subsidiaries in
respect of any security that would be integrated with the Shares issued
pursuant to this Agreement in a manner that would require the registration of
the Shares under the Securities Act. 


                    (h)
Listing. The Common Stock is registered pursuant to Section 12(b) of the
Securities Exchange Act of 1934 and prior to the Closing Date, the Shares will
be approved for listing on the NYSE, subject to official notice of issuance. 


                    (i)
No Registration. Assuming the accuracy of the representations and
warranties of the Subscriber contained in Section 3 and its compliance
with the agreements set forth herein, it is not necessary, in connection with
the issuance and sale of the Shares to the Subscriber in the manner
contemplated by this Agreement, to register the Shares under the Securities
Act. 


          3.
REPRESENTATIONS AND WARRANTIES OF THE SUBSCRIBER. 


                    The
Subscriber represents and warrants, as of the date hereof and as of the Closing
Date, that: 


                    (a)
Investment Purpose. The Subscriber is obtaining the Shares for
investment purposes only and not with a view to or for distributing or
reselling such Shares or any part thereof, without prejudice, however, to the
Subscriber’s right, subject to the provisions of this Agreement (including,
without limitation, Section 5), to sell or otherwise dispose of all or
any part of the Shares pursuant to an effective registration statement under
the Securities Act or under an exemption from such registration and in
compliance with applicable federal and state securities or “blue sky” laws. The
Subscriber understands that it may bear the economic risk of this investment
indefinitely. 


                    (b)
Institutional Accredited Investor Status. The Subscriber was at the time
it was first offered the Shares, and at the date hereof is, an institutional
“accredited investor” as defined in Rule 501(a) under the Securities Act. 


                    (c)
Reliance on Exemptions. The Subscriber understands that the Shares are
being offered and issued to it in reliance upon specific exemptions from the
registration 


Exh. 1.01(g-2)-3






requirements
of United States federal and state securities or “blue sky” laws, including
Section 4(2) of the Securities Act and that the Company is relying upon the
truth and accuracy of, and the Subscriber’s compliance with, the
representations, warranties, agreements, acknowledgments and understandings of
the Subscriber set forth herein in order to determine the availability of such
exemptions and the eligibility of the Subscriber to acquire the Shares. 


                    (d)
Knowledge. The Subscriber has, either alone or together with its
representatives, such knowledge, sophistication and experience in business and
financial matters so as to be capable of evaluating the merits and risks of the
ownership of the Shares, and has so evaluated the merits and risks of such
investment. The Subscriber understands that ownership of the Shares involves a
high degree of risk, is able to bear the economic risk of ownership of the
Shares and, at the present time, is able to afford a complete loss with respect
to such ownership. 


                    (e)
Access to Information. The Subscriber acknowledges that it has access to
and has reviewed the Company’s disclosures about its Common Stock made in its
filings with the SEC including the Company’s Annual Report on Form 10-K for its
latest fiscal year, the Company’s Quarterly Report on Form 10-Q for its latest
fiscal quarter, and any Current Report on Form 8-K filed by the Company since
the date of such Quarterly Report on Form 10-Q and has access to information
about the Company and its subsidiaries and their respective financial
condition, results of operations, business, properties, management and
prospects contained in the Company’s public filings with the SEC, and
acknowledges that such information is sufficient to enable it to evaluate its
investment. 



                    (f)
No Reliance. In connection with its acceptance of the Shares, the Subscriber
has not relied upon any representations made by, or other information (whether
oral or written) furnished by or on behalf of, the Company other than as set
forth in this Agreement, the Master Agreement or any Ancillary Agreements (as
defined in the Master Agreement).  


                    (g)
No General Solicitation. The Subscriber acknowledges that the Shares
were offered and will be issued to the Subscriber without any general
solicitation or general advertising, including, but not limited to, any
advertisement, article, notice or other communication published in any
newspaper, magazine or similar media or broadcast over television or radio, or
any seminar or meeting whose attendees have been invited by any general
solicitation or general advertising. 


                    (h)
No Advice Provided. The Subscriber understands that nothing in this
Agreement or any other materials presented by or on behalf of the Company to
the Subscriber in connection with the issuance of the Shares constitutes legal,
tax or investment advice. The Subscriber has consulted such legal, tax and
investment advisors as it, in its sole discretion, has deemed necessary or
appropriate in connection with its receipt of the Shares. 


                    (i)
Authorization; Enforceability. This Agreement has been duly and validly
authorized by the Subscriber. This Agreement has been duly executed and
delivered on behalf of the Subscriber, and constitutes the valid and binding
agreement of the Subscriber enforceable in accordance with their terms,
subject, in each case, to applicable bankruptcy, insolvency, reorganization or
similar laws affecting generally the enforcement of creditors’ rights and
subject 


Exh.
1.01(g-2)-4 






to a court’s
discretionary authority with respect to the granting of specific performance or
other equitable remedies. 


                    (j)
No Conflicts. The execution and performance of this Agreement does not
conflict with any agreement to which the Subscriber is a party or is bound
thereby, any court order or judgment addressed to the Subscriber, or the
constituent documents of the Subscriber. 


          4.
TRANSFER RESTRICTIONS


                    (a)
Restrictions. The Subscriber recognizes and agrees that (i) the Shares
will be subject to a Holding Period (as defined in the Registration Rights
Agreement) and other restrictions on transferability pursuant to this Agreement
and the Registration Rights Agreement and (ii) as a result of the foregoing,
the marketability of the Shares will be severely limited. The Subscriber agrees
that it will not Transfer (as such term is defined in the Registration Rights
Agreement) the Shares in any manner that will violate such restrictions under
this Agreement, the Registration Rights Agreement, the Securities Act or any
state securities laws, the rules and regulations of the SEC or any other state
or municipality having jurisdiction thereof. 


                    (b)
Legends. The Subscriber understands and agrees that the Shares will bear
a restrictive legend in substantially the following form (and a stop-transfer
order may be placed against the transfer of the certificates for the Shares). 


THIS SECURITY HAS BEEN ACQUIRED FOR
INVESTMENT AND WITHOUT A VIEW TO DISTRIBUTION AND HAS NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933 (THE “ACT”), OR UNDER STATE SECURITIES LAWS.
NO TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION OF
THIS SECURITY OR ANY INTEREST OR PARTICIPATION THEREIN MAY BE MADE EXCEPT (A)
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR (B) PURSUANT
TO AN EXEMPTION FROM REGISTRATION UNDER THE ACT AND APPLICABLE STATE SECURITIES
LAWS AND, IN THE CASE OF CLAUSE (B), IF REQUESTED BY THE ISSUER, UNLESS THE
ISSUER RECEIVES AN OPINION OF COUNSEL IN FORM AND SUBSTANCE REASONABLY
SATISFACTORY TO THE ISSUER TO THE EFFECT THAT REGISTRATION IS NOT REQUIRED
UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS. THIS SECURITY IS ALSO
SUBJECT TO SIGNIFICANT RESTRICTIONS ON TRANSFER (WHICH INCLUDES A RIGHT OF
FIRST OFFER) PURSUANT TO THE TERMS OF A REGISTRATION RIGHTS AGREEMENT AMONG THE
ISSUER, THE HOLDER AND SYNCORA GUARANTEE RE LTD. (FORMERLY KNOWN AS XL
FINANCIAL ASSURANCE LTD) DATED AUGUST 5, 2008 AND MAY NOT BE TRANSFERRED EXCEPT
IN COMPLIANCE WITH SUCH AGREEMENT. 


          5.
MISCELLANEOUS


                    (a)
Headings. The headings of the sections and subsections of this Agreement
are inserted for convenience only and shall not be deemed to constitute a part
thereof. 


Exh. 1.01(g-2)-5






                    (b)
Notices. All communications under this Agreement shall be in writing and
shall be delivered by hand or facsimile or mailed by overnight courier or by
registered mail or certified mail, postage prepaid: 


	
 

	
 


	
 

	
          (i)
 if to the Company, XL Capital Ltd, One Bermudiana Road, Hamilton HM 11,
 Bermuda, Attention: General Counsel, Fax: 441-295-2840 or at such other
 address or facsimile number as may have been furnished in writing. 


	
 

	
 


	
 

	
          (ii)
 if to the Subscriber, Syncora Guarantee Inc., 1221 Avenue of the Americas,
 New York, New York 10020-1001, Fax: 212-478-3579; Attention: Susan Comparato,
 General Counsel; or at such other address or facsimile number as may have
 been furnished in writing. 





Any notice so
addressed shall be deemed to be given: if delivered by hand or facsimile, on
the date of such delivery, if a business day and delivered during regular
business hours, otherwise the first business day thereafter; if mailed by
courier, on the first business day following the date of such mailing; and if
mailed by registered or certified mail, on the third business day after the
date of such mailing. 


                    (c)
Survival. All representations, warranties and covenants made by the
Subscriber and the Company herein shall be considered to have been relied upon
by the Company or the Subscriber, as the case may be, and shall survive all
deliveries to you of the Shares, or regardless of any investigation made by the
Company or the Subscriber, as the case may be, or on the Company’s or the
Subscriber’s behalf. 


                    (d)
Assignment; No Third Party Beneficiaries. This Agreement shall inure to
the benefit of and be binding upon the successors and assigns of each of the
parties. It is understood that the Subscriber may assign this Agreement or any
of their rights or obligations hereunder to any affiliate, provided, however,
that any assignment of the obligations under this Agreement shall not release
the assignor from any of its obligations under this Agreement. Nothing in this
Agreement shall confer upon any person not a party to this Agreement any rights
or remedies of any nature or kind whatsoever under or by reason of this
Agreement. 


                    (e)
Entire Agreement. This Agreement, the Master Agreement and the
Registration Rights Agreement constitute the entire understandings of the
parties hereto and supersede all prior agreements or understandings with
respect to the subject matter hereof among such parties. This Agreement may be
amended, and the observance of any term of this Agreement may be waived, with
(and only with) the written consent of each of the parties hereto. 


                    (f)
Severability. In the event that any part or parts of this Agreement
shall be held illegal or unenforceable by any court or administrative body of
competent jurisdiction, such determination shall not effect the remaining
provisions of this Agreement which shall remain in full force and effect. 


                    (g)
Counterparts. This Agreement may be executed in any number of
counterparts (including by facsimile), each of which shall be deemed an
original and all of which together shall be considered one and the same
agreement. 


Exh. 1.01(g-2)-6






                    (h)
Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York applicable to contracts made
and to be performed entirely within such State. 


                    
(i) Jurisdiction. The parties to this Agreement irrevocably submit to the
non-exclusive jurisdiction of any New York State or federal court sitting in
the Borough of Manhattan, The City of New York, over any suit, action or
proceeding arising out of or relating to this Agreement. To the fullest extent permitted by applicable law, the
parties to this Agreement irrevocably waive and agree not to assert, by way of
motion, as a defense or otherwise, any claim that it is not subject to the
jurisdiction of any such court, any objection that it may now or hereafter have
to the laying of the venue of any such suit, action or proceeding brought in
any such court and any claim that any such suit, action or proceeding brought
in any such court has been brought in an inconvenient forum.


                    (j)
Specific Performance. The Company and the Subscriber hereby declare that
it is impossible to measure in money the damages which will accrue to the
parties hereto by reason of the failure of any party hereto to perform any of
its obligations set forth in this Agreement. Therefore, the Company and the
Subscriber shall have the right to specific performance of such obligations,
and if any party hereto shall institute any action or proceeding to enforce the
provisions hereof, the Company and the Subscriber hereby waive the claim or
defense that the party instituting such action or proceeding has an adequate
remedy at law. 


[Signature Page to Follow]


Exh. 1.01(g-2)-7






                    IN
WITNESS WHEREOF, the Subscriber and the Company have caused this Agreement to
be duly executed as of the date first written above. 


	
 

	
 

	
 


	
 

	
SYNCORA
 GUARANTEE INC.


	
 

	
FORMERLY
 KNOWN AS


	
 

	
XL CAPITAL
 ASSURANCE INC.


	
 

	
 

	
 


	
 

	
By: 

	
 


	
 

	
 

	



	
 

	
 

	
Name:


	
 

	
 

	
Title:





[SIGNATURE PAGE TO SUBSCRIPTION AGREEMENT]






Accepted and
Agreed

as of the date first written above: 


	
 

	
 


	
XL CAPITAL
 LTD 


	
 

	
 


	
By: 

	
 


	
 

	



	
 

	
Name:


	
 

	
Title:





[SIGNATURE PAGE TO SUBSCRIPTION AGREEMENT]






Schedule 2(d) – Non-Contravention


1. Credit
Agreement among XL CAPITAL LTD, X.L. AMERICA, INC., XL INSURANCE (BERMUDA) LTD,
XL RE LTD (together with XL, XLA and XLI, the “Account Parties”), JPMORGAN CHASE BANK, N.A., as
administrative agent (in such capacity, the “Administrative
Agent”), and the Lenders party thereto, with respect to the Credit
Agreement, dated as of June 21, 2007, (as may be amended, supplemented or
otherwise modified from time to time, the “Credit
Agreement”) entered into among the Account Parties, the
Administrative Agent and the other institutions from time to time party thereto
as Lenders. 


2. Credit
Agreement among XL CAPITAL LTD (“XL”),
X.L. AMERICA, INC. (“XLA”), XL
INSURANCE (BERMUDA) LTD (“XLI”),
XL RE LTD (together with XL, XLA and XLI, the “Obligors”), JPMORGAN CHASE BANK, N.A. (as successor to Bear
Stearns Corporate Lending Inc.), as administrative agent (in such capacity, the
“Administrative Agent”) and the
Lenders party thereto, with respect to the Credit Agreement, dated as of August
3, 2005, (as may be amended, supplemented or otherwise modified from time to
time, the “Credit Agreement”)
entered into among the Obligors, the Administrative Agent and the other
institutions from time to time party thereto as Lenders. 


3. Credit
Agreement among XL CAPITAL LTD (“XL”),
X.L. AMERICA, INC. (“XLA”), XL
INSURANCE (BERMUDA) LTD (“XLI”),
XL RE LTD (together with XL, XLA and XLI, the “Account Parties”), JPMORGAN CHASE BANK, N.A., as
administrative agent (in such capacity, the “Administrative
Agent”) and the Lenders party thereto, with respect to the Credit
Agreement, dated as of June 22, 2005, (as may be amended, supplemented or
otherwise modified from time to time, the “Credit
Agreement”) entered into among the Account Parties, the
Administrative Agent and the other institutions from time to time party thereto
as Lenders. 


4. Credit
Agreement among XL CAPITAL LTD (“XL”)
(the “Account Party”), the
Guarantors (collectively, with the Account Party, the “Obligors”), and CITIBANK INTERNATIONAL PLC,
as agent and trustee for the Lenders (in such capacity, the “Agent”), with respect to the Letter of
Credit Facility and Reimbursement Agreement, dated November 14, 2007, (as may
be amended, supplemented or otherwise modified from time to time, the “Facility Agreement”) entered into among the
Obligors, the Agent and the other institutions from time to time party thereto
as Lenders. 


5. Note purchase agreement
dated April 12, 2001 among X.L. America, Inc., XL Capital Ltd, XL Insurance
Ltd, XL Re Ltd and each of the purchasers listed therein. Such notes will be
defeased on the Closing Date.








EXHIBIT 1.01(h-1)


XL STOCK RESALE AND REGISTRATION RIGHTS
AGREEMENT


[Intentionally omitted—superseded by

the Amended and Restated Registration Rights Agreement 

dated as of August 5, 2008]


Exhibit 1.01(h-1)






SCHEDULE 2.01-1


COMMUTED REINSURANCE AGREEMENTS


Part I


	
 

	
 

	
 


	
Agreement

	
 

	
Commutation
 Amount (pursuant to

 applicable commutation agreement)


	


	
 

	



	
2001
 Facultative Quota Share Treaty

	
 

	
$25,000,000


	
Excess of
 Loss Agreement

	
 

	
$100,000,000


	
Adverse
 Development Cover

	
 

	
$65,300,000


	
Facultative
 Master Certificate

	
 

	
5,776,621 of
 XL’s Class A Ordinary Shares





Part II


	
 

	
 

	
 

	
 

	
 


	
Agreement

	
 

	
Portion of
 Commutation Amount Under

 Quota Share Treaty Commutation

 Agreement Paid By The XL Parties

	
 

	
Total
 Commutation

 Amount Under

 Quota Share Treaty


	


	
 

	


	
 

	



	
Quota Share
 Treaty

	
 

	
$1,584,700,000,
 plus 2,223,379 of XL’s Class A Ordinary Shares received by XLFA from XL as
 part of the consideration for commuting, terminating or settling the Quota
 Share Treaty

	
 

	
$3,926,000,000





Sch. 2.01-1-1






SCHEDULE 2.06(a-1)


SCA PARTIES RECEIVING A PORTION OF THE CASH
CONSIDERATION AMOUNT


	
 

	
 

	
 

	
 


	
Allocation of Cash Proceeds

	
 

	
 

	
 


	


	


	


	



	
 

	
 

	
 

	
 


	
Total cash received by XLFA:

	
 

	
$

	
1,768,000,000


	
 

	
 

	
 

	
 


	
Transfer instructions for remitting funds to XLFA:

	
 

	
 

	
 


	
[Intentionally omitted]

	
 

	
 

	
 


	
 

	
 

	
 

	
 


	
Please send email/fax containing details of the transfer
to:

	
 

	
 

	
 


	
[Intentionally omitted]

	
 

	
 

	
 


	
 

	
 

	
 

	
 


	
Rebecca O’Connell (VP & Assistant
 Treasurer) at SCA 

	
 

	
 

	
 


	
Phone:   (212) 478-3629

	
 

	
 

	
 


	
Fax:       (212)
 478-3587

	
 

	
 

	
 


	
E-mail: rebecca.oconnell@scafg.com

	
 

	
 

	
 


	
 

	
 

	
 

	
 


	


	


	


	



	
 

	
 

	
 

	
 


	
Total cash received by XLCA:

	
 

	
$

	
7,000,000


	
 

	
 

	
 

	
 


	
Transfer instructions for remitting funds to XLCA:
 

	
 

	
 

	
 


	
[Intentionally omitted]

	
 

	
 

	
 


	
 

	
 

	
 

	
 


	
Please send email/fax containing details of the transfer
to:

	
 

	
 

	
 


	
[Intentionally omitted]

	
 

	
 

	
 


	
 

	
 

	
 

	
 


	
Rebecca O’Connell (VP & Assistant
 Treasurer) at SCA 

	
 

	
 

	
 


	
Phone:   (212) 478-3629

	
 

	
 

	
 


	
Fax:       (212)
 478-3587

	
 

	
 

	
 


	
E-mail: rebecca.oconnell@scafg.com

	
 

	
 

	
 





Sch. 2.06(a-1)-1






SCHEDULE 2.06(b-1)


SCA PARTIES RECEIVING A PORTION OF THE STOCK
CONSIDERATION


	
 

	
 


	
XLFA:

	
2,223,379
 shares of XL’s Class A Ordinary Shares, par value $0.01 per share


	
 

	
 


	
XLCA:

	
5,776,621
 shares of XL’s Class A Ordinary Shares, par value $0.01 per share





Sch. 2.06(b-1)-1






AMENDED
AND RESTATED REGISTRATION RIGHTS AGREEMENT


by and among


XL Capital Ltd.,


Syncora Guarantee Re Ltd.


and


Syncora Guarantee Inc.


Dated as of August 5, 2008






EXECUTION
COPY


AMENDED
AND RESTATED REGISTRATION RIGHTS AGREEMENT


                    AMENDED
AND RESTATED REGISTRATION RIGHTS AGREEMENT, dated as of August 5, 2008, by and
between XL Capital Ltd., an exempted limited company incorporated under the
laws of the Cayman Islands (the “Company”), Syncora Guarantee Re
Ltd. (formerly known as, XL Financial Assurance Ltd., a company domiciled in
Bermuda) (“XLFA”)
and Syncora Guarantee Inc. (formerly known as, XL Capital Assurance Inc., a New
York insurance company) (“XLCA”). 


                    WHEREAS,
the Company, XLFA and XLCA are parties to that certain Master Commutation,
Release and Restructuring Agreement, dated as of July 28, 2008, by and
among Syncora Holdings Ltd (formerly known as Security Capital Assurance Ltd),
XLFA, XLCA, the Company and the other parties thereto (the “Master Transaction Agreement”);


                    WHEREAS,
the Closing (as defined in the Master Transaction Agreement) has occurred; and


                    WHEREAS,
the Company, XLFA and XLCA previously entered into a Registration Rights
Agreement, dated as of August 5, 2008 (the “Registration Rights Agreement”);
and


                    WHEREAS,
the Company, XLFA and XLCA now wish to amend and restate in its entirety the
Registration Rights Agreement;


                    NOW,
THEREFORE, in consideration of the premises and of the mutual covenants and
obligations hereinafter set forth (and for other good and valuable consideration
the receipt and sufficiency of which are hereby acknowledged by the Company),
the parties hereto hereby agree as follows:


ARTICLE
I

DEFINITIONS; HOLDING PERIOD AND RIGHT OF FIRST REFUSAL


          Section
1.1 Certain Defined Terms. As used herein, the following terms shall
have the following meanings:


          “Action”
means any legal, administrative, regulatory or other suit, action, claim,
audit, assessment, arbitration or other proceeding, investigation or inquiry.


          “Affiliate”
shall mean, with respect to any Person, any other Person directly or indirectly
controlling, controlled by or under common control with, such Person. For
purposes of this definition, “control” (including its correlative meanings,
“controlled by” and “under common control with”) when used with respect to any
Person, means the possession, directly or indirectly, of the power to cause the
direction of management and/or policies of such Person, whether through the
ownership of voting securities, by contract or otherwise.


          “Agreement”
means this Amended and Restated Registration Rights Agreement as it may be
amended, supplemented, restated or modified from time to time.






          “Beneficial
Ownership” by a Person of any securities includes
ownership by any Person who, directly or indirectly, through any contract,
arrangement, understanding, relationship or otherwise, has or shares (i) voting
power which includes the power to vote, or to direct the voting of, such
security; and/or (ii) investment power which includes the power to dispose, or
to direct the disposition, of such security; and shall otherwise be interpreted
in accordance with the term “beneficial ownership” as defined in
Rule 13d-3 adopted by the SEC under the Exchange Act. The term “Beneficially
Own” shall have a correlative meaning.


          “Business
Day” means any day, other than a Saturday, Sunday
or a day on which banking institutions in New York, New York are authorized or
obligated to close.


          “Class
A Ordinary Shares” means the Class A Ordinary
Shares, par value $0.01 per share, of the Company.


          “Exchange
Act” means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated by the SEC from time to time
thereunder.


          “Form S-3”
means such form under the Securities Act as is in effect on the date hereof or
any successor registration form under the Securities Act subsequently adopted
by the SEC which permits inclusion or incorporation of substantial information
by reference to other documents filed by the Company with the SEC.


          “Governmental
Entity” shall mean any court, administrative
agency or commission or other governmental authority or instrumentality,
whether federal, state, local or foreign and any applicable industry self-regulatory
organization.


          “Holders”
means XLFA, XLCA and the Permitted Transferees that hold Registrable Securities
from time to time (and “Holder” means any of such Persons).


          “Holders’
Representative” means XLFA or any other Holder
designated in writing by XLFA and XLCA as the Holders’ Representative.


          “Holding
Period” means the period from the date of this Agreement until
the six-month anniversary of this Agreement.


          “Issuer
Free Writing Prospectus” means an issuer free writing
prospectus, as defined in Rule 433 under the Securities Act, relating to
an offer of the Registrable Securities.


          “Law”
means any statute, law, code, ordinance, rule or regulation of any Governmental
Entity.


          “Other
Securities” means Class A Ordinary Shares other
than Registrable Securities.


          “Permitted
Transferee” has the meaning set forth in Section 3.6.


          “Person”
means any individual, corporation, limited liability company, limited or
general partnership, joint venture, association, joint stock company, trust,
unincorporated organization, government or any agency or political subdivisions
thereof or any group (within 


2






the meaning of
Section 13(d)(3) of the Exchange Act) comprised of two or more of the
foregoing.


          “Prospectus”
means the prospectus included in any Registration Statement (including a
prospectus that discloses information previously omitted from a prospectus
filed as part of an effective Registration Statement in reliance upon
Rule 430A or Rule 430B promulgated under the Securities Act), as
amended or supplemented by any prospectus supplement with respect to the terms
of the offering of any portion of the Registrable Securities covered by such
Registration Statement, any Issuer Free Writing Prospectus related thereto, and
all other amendments and supplements to such prospectus, including
post-effective amendments, and all material incorporated by reference or deemed
to be incorporated by reference in such prospectus.


          “Registrable
Securities” means (a) all 8,000,000 Class A
Ordinary Shares issued to XLFA and XLCA as of the date of this Agreement, and
(b) any securities issued directly or indirectly with respect to such shares
described in clause (a) because of stock splits, stock dividends,
reclassifications, recapitalizations, mergers, consolidations, or similar
events. As to any particular Registrable Securities, such Registrable
Securities shall cease to be Registrable Securities when (i) a Registration
Statement with respect to the sale of such securities shall have become
effective under the Securities Act and such securities shall have been disposed
of in accordance with such Registration Statement, (ii) such securities shall
have been disposed of pursuant to Rule 144 or (iii) such securities are at
such time eligible to be sold to the public without volume limitations pursuant
to Rule 144, it being understood that in the event that such securities
cease to be eligible to be sold to the public without volume limitations pursuant
to Rule 144, then subject to clauses (i) and (ii) above such securities
will again be Registrable Securities hereunder until such time as such
securities are eligible to be sold to the public without volume limitations
pursuant to Rule 144, and it being further agreed and understood that if
such securities are at such time ineligible to be sold without volume
limitations under Rule 144 because the Company does not satisfy the
condition set forth in Rule 144(c)(1) and such ineligibility is due solely
to the failure of Syncora Holdings Ltd after the date hereof to file with the
SEC in a timely manner its Annual Report on Form 10-K under the Exchange
Act, then until such time as such Annual Report on Form 10-K is filed by
Syncora Holdings Ltd with the SEC such securities shall not be deemed to be
Registrable Securities and the Company’s obligations under Sections 2.1,
2.2, 2.3, 2.4 and 2.7 hereof with respect to such
securities shall be suspended during such period.


          “Registration
Statement” means any registration statement of the
Company under the Securities Act which permits the public offering of any of
the Registrable Securities pursuant to the provisions of this Agreement,
including the Prospectus, amendments and supplements to such registration statement,
including post-effective amendments, all exhibits and all material incorporated
by reference or deemed to be incorporated by reference in such registration
statement.


          “Rule 144”
means Rule 144 under the Securities Act (or any successor provision).


          “SEC”
means the United States Securities and Exchange Commission.


3






          “Securities
Act” means the Securities Act of 1933, as amended,
and the rules and regulations promulgated by the SEC from time to time
thereunder.


          “Selling
Holder” means each Holder of Registrable
Securities included in a registration pursuant to Article II.


          “Shelf Registration Statement”
means a
Registration Statement of the Company filed with the SEC on either (a)
Form S-3 or (b) if the Company is not permitted to file a Registration
Statement on Form S-3, a Registration Statement on Form S-1 (or any
successor form or other appropriate form under the Securities Act), in each
case for an offering to be made on a continuous or delayed basis pursuant to
Rule 415 under the Securities Act covering Registrable Securities. To the
extent the Company is a well-known seasoned issuer (as defined in Rule 405
under the Securities Act), a “Shelf Registration Statement” shall be
deemed to refer to an automatic shelf registration statement (as defined in
Rule 405 under the Securities Act) on Form S-3.


          A
“Subsidiary”
of any person means another person, an amount of the voting securities, other
voting ownership or voting partnership interests of which is sufficient to
elect at least a majority of its board of directors or other governing body
(or, if there are no such voting interests, 50% or more of the equity interests
of which is owned directly or indirectly by such first person).


          “Transfer”
means, with respect to a given security, any transaction whereby a given Person
(a) offers, pledges, sells, contract to sells, sells any option or contract to
purchase, purchases any option or contract to sell, grants any option, right or
warrant to purchase, lends, or otherwise transfers or disposes of, directly or
indirectly, such given security or any securities convertible into or
exercisable or exchangeable for any or all of such given security or (b) enters
into any swap or any other arrangement that transfers to another, in whole or
in part, any of the economic consequences of ownership of any or all of the
given security, whether any such transaction described in clause (a) or (b) is
to be settled by delivery of any or all of the given security or any other
securities, in cash or otherwise.


          Section
1.2 Terms Generally. The definitions in Section 1.1 shall
apply equally to both 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”,
unless the context expressly provides otherwise. All references herein to
Articles, Sections, paragraphs, subparagraphs, clauses or Exhibits shall be
deemed references to Articles, Sections, paragraphs, subparagraphs or clauses
of, or Exhibits to, this Agreement, unless the context requires otherwise.
Unless otherwise expressly defined, terms defined in this Agreement have the
same meanings when used in any Exhibit hereto. Unless otherwise specified, the
words “this Agreement”, “herein”, “hereof”, “hereto” and “hereunder” and other
words of similar import refer to this Agreement as a whole (including the
Exhibits) and not to any particular provision of this Agreement. The term “or”
is not exclusive. The word “extent” in the phrase “to the extent” shall mean
the degree to which a subject or other thing extends, and such phrase shall not
mean simply “if”. Unless expressly stated otherwise, any Law defined or
referred to herein means such Law as from time to time amended, modified or
supplemented, including by 


4






succession of
comparable successor Laws and references to all attachments thereto and
instruments incorporated therein. References to a Person are also to its
permitted successors and assigns. The headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.


          Section
1.3 Holding Period. 


                    (a)
The Holders agree that until the end of the Holding Period, they will not
Transfer any of the Registrable Securities to any Person other than a Permitted
Transferee. 


                    (b)
The Holders further agree that they will not publicly disclose the intention to
make any Transfer referred to in Section 1.3(a) above prior to the
end of the Holding Period. In furtherance of the foregoing, the Company and its
transfer agent and registrar are hereby authorized to decline to make any
transfer that would constitute a violation or breach of this Agreement. 


          Section
1.4 Right of First Offer. 


                    (a)
Offering Notice. Prior to exercising any rights under Article II
or otherwise effecting any Transfer of any Class A Ordinary Shares, any Holder
who desires to Transfer any number of Class A Ordinary Shares (such Holder
being, a “Transferring
Party”) shall first offer to the Company the option to purchase
from such Holder such number of the Class A Ordinary Shares that such Holder
desires to Transfer by giving written notice (the “Offering Notice”) to
the Company stating the number of Class A Ordinary Shares that such Holder
proposes to sell (the “Offered Stock”) and the proposed
purchase price per share to be paid for such Class A Ordinary Shares (the “Offer
Price”). An Offering Notice shall constitute an irrevocable
offer from the Holder to the Company to sell to the Company the Offered Stock
on the terms and conditions set forth in the Offering Notice for an amount of
cash consideration per share equal to the Offer Price, and such irrevocable
offer, if not accepted by the Company prior to the expiration of the Election
Period (as defined below) in accordance with Section 1.4(b), shall
expire at the expiration of the Election Period.


                    (b)
Company Option. The Company shall be entitled to irrevocably commit to
purchase all of the Offered Stock upon the terms and conditions and for the
cash consideration per share equal to the Offer Price, by giving written notice
of such election to the Transferring Party (the “Election Notice”), no
later than 5 p.m. (New York time) on the fifth Business Day after the date on
which the Offering Notice has been given to the Company (the “Election
Period”). 


                    (c)
Permitted Transfer. 


	
 

	
 


	
 

	
          (i)
 If the Company does not elect to irrevocably commit to purchase all of the
 Offered Stock prior to the expiration of the Election Period as set forth in Section 1.4(b),
 then the Transferring Party may Transfer all, but not less than all, of the
 Offered Stock to any Person at a price no less than the Offering Price and on
 terms and conditions no more favorable to the transferee than those specified
 in the Offering Notice for a period of up to thirty-five (35) days from the
 expiration of the Election Period including, if such Class A Ordinary Shares
 are at such time Registrable Securities, pursuant to Article II. The 





5






	
 

	
 


	
 

	
Offered Stock so Transferred to
 any Person within such period shall cease to be subject to the provisions of
 this Section 1.4, and any Offered Stock not so Transferred within
 such period shall continue to be subject to the provisions of this Section 1.4
 in connection with any subsequent proposed Transfer.


	
 

	
 


	
 

	
          (ii)
 If the Company elects to purchase all of the Offered Stock, then the closing
 of the purchase of such Offered Stock from such Transferring Party shall be
 held at the offices of Cadwalader, Wickersham & Taft LLP, One World Financial
 Center, New York, New York, or at such other location as shall be mutually
 agreed, at a mutually agreed upon time on a mutually agreed upon Business Day
 during the 10 day period immediately following the date on which the Election
 Notice was delivered to the Transferring Party or at such other time and
 place as the parties to the transaction may agree. At such closing, (x) the
 Transferring Party will deliver stock certificates evidencing the Offered
 Stock duly endorsed in blank (or accompanied by duly executed stock powers in
 blank) and such other instruments as the Company may reasonably require to
 consummate the purchase of such Offered Stock, (y) the Company shall deliver
 an amount equal to the product of (1) the Offered Stock and (2) the Offering
 Price, by wire transfer in immediately available funds to a bank account or
 bank accounts designated by the Transferring Party in writing to the Company
 at least two days prior to such closing.





                    (d)
Failure to Elect. The failure of the Company to give any written notice
specified in this Section 1.4 within the time period specified
herein shall be deemed to be a waiver of its rights under this Section 1.4
to purchase the Offered Stock pursuant to such Offering Notice (but not any
subsequent Offering Notice).


                    (e)
Transfer to Permitted Transferee. Notwithstanding the foregoing, it is
agreed and understood that the provisions of this Section 1.4 shall
not apply to any Transfer of Class A Ordinary Shares to a Permitted Transferee
in accordance with Section 3.6.


ARTICLE
II

REGISTRATION RIGHTS


          Section
2.1 Demand Registrations. (a) Subject to Section 2.1(h), at
any time and from time to time following the last day of the Holding Period,
the Holders’ Representative shall have the right by delivering a written notice
to the Company (a “Demand Notice”) to require the Company
to, pursuant to the terms of this Agreement, register under and in accordance
with the provisions of the Securities Act the number of Registrable Securities
Beneficially Owned by Holders and requested by such Demand Notice to be so
registered (a “Demand Registration”); provided, however,
that a Demand Notice may only be made if the amount of Registrable Securities
requested to be registered is reasonably expected to generate aggregate gross
proceeds on sale (prior to deducting underwriting discounts and commissions and
offering expenses) of at least $35 million. A Demand Notice shall also specify
the expected method or methods of disposition of the applicable Registrable
Securities. Following receipt of a Demand Notice, the Company shall use its
reasonable best efforts to file, as promptly as reasonably practicable, but not
later than, 60 days with respect to any underwritten offering, or 30 days with
respect to any other offering, after receipt by the Company of such Demand
Notice (subject to paragraph (e) of


6






this Section 2.1)
(provided, however, that with respect to a Demand Notice
delivered to the Company following the Company’s failure or decline to exercise
its option to purchase the Offered Stock pursuant to Section 1.4(b),
such 60 or 30 day period, as applicable, shall commence from the date on which
the Offering Notice was delivered to the Company), a Registration Statement
relating to the offer and sale of the Registrable Securities requested to be
included therein by the Holders thereof in accordance with the methods of
distribution elected by such Holders (a “Demand Registration Statement”) and
shall use its reasonable best efforts to cause such Registration Statement to
be declared effective under the Securities Act as promptly as practicable after
the filing thereof.


                    (b)
If any of the Registrable Securities to be registered pursuant to a Demand
Registration are to be sold in a firm commitment underwritten offering, and the
managing underwriter(s) of such underwritten offering advise the Company and
Holders in writing that it is their good faith opinion that the total number or
dollar amount of Registrable Securities proposed to be sold in such offering,
together with any Other Securities proposed to be included by holders thereof
which are entitled to include securities in such Registration Statement,
exceeds the total number or dollar amount of such securities that can be sold
without having an adverse effect on the price, timing or distribution of the
Registrable Securities to be so included together with all such Other
Securities, then there shall be included in such firm commitment underwritten
offering the number or dollar amount of Registrable Securities and such Other
Securities that in the opinion of such managing underwriter(s) can be sold
without so adversely affecting such offering, and such number of Registrable
Securities and Other Securities shall be allocated for inclusion as follows:


	
 

	
 


	
 

	
          (i)
 first, the Registrable Securities for which inclusion in such demand offering
 was requested by the Holders, pro rata (if applicable), based on the
 number of Registrable Securities Beneficially Owned by each such Holder; and


	
 

	
 


	
 

	
          (ii)
 second, among any holders of Other Securities, pro rata, based on the
 number of Other Securities Beneficially Owned by each such holder.





                    (c)
The Holders collectively shall be entitled to request no more than two Demand
Registrations pursuant to this Section 2.1; provided, that
in no event shall the Company be required to effect more than one Demand
Registration in any three month period.


                    (d)
In the event of a Demand Registration, the Company shall use its reasonable
best efforts to maintain the continuous effectiveness of the applicable
Registration Statement for a period of at least 180 days after the effective
date thereof or such shorter period in which all Registrable Securities included
in such Registration Statement have actually been sold. For the avoidance of
doubt, the foregoing sentence is not intended to limit the obligation of the
Company to maintain the continuous effectiveness of the Short-Form Registration
contemplated by Section 2.2 as required by Section 2.2.


                    (e)
The Company shall be entitled to postpone (but not more than once in any
six-month period), for a reasonable period of time, together with any
postponement under Section 2.2(c), not in excess of 60
days (and not for periods exceeding, in the aggregate, 90 days during any
twelve-month period), the filing or initial effectiveness of, or suspend the
use of, a 


7






Demand
Registration Statement if the Company delivers to the Holders’ Representative a
certificate signed by both the Chief Executive Officer and Chief Financial
Officer of the Company certifying that, in their good faith judgment, such
registration, offering or use would reasonably be expected to materially
adversely affect or materially interfere with any bona fide and imminent
material financing of the Company or any imminent material transaction under
consideration by the Company or would require the disclosure of information
that has not been, and is not otherwise required to be, disclosed to the
public, the premature disclosure of which would materially adversely affect the
Company. The Company shall have no obligation to include in any such
certificate any reference to or description of the facts based upon which the
Company is delivering such certificate. If the Company so postpones the filing
of a Registration Statement, the Holders’ Representative will have the right to
withdraw the request for registration by giving written notice to the Company
within ten days of the anticipated termination date of the postponement period,
as provided in the notice delivered to the Holders’ Representative and such
withdrawn registration will not count as a Demand Registration.


                    (f)
The Holders’ Representative shall have the right to notify the Company that it
has determined that the Registration Statement relating to a Demand
Registration be abandoned or withdrawn, in which event the Company shall
promptly abandon or withdraw such Registration Statement.


                    (g)
No request for registration will count for the purposes of the limitations in Section 2.1(c)
if: (A) the Holders’ Representative determines in good faith to withdraw
the proposed registration prior to the effectiveness of the Registration
Statement relating to such request due to marketing conditions or regulatory
reasons relating to the Company, (B) the Registration Statement relating
to such request is not declared effective within 60 days of the date such
Registration Statement is first filed with the SEC (other than solely by reason
of the applicable Holders having refused to proceed), (C) the Registration
Statement is not maintained effective for the period required pursuant to this Section 2.1(d),
(D) prior to the sale of at least 90% of the Registrable Securities included in
the applicable registration relating to such request, such registration is
adversely affected by any stop order, injunction or other order or requirement
of the SEC or other Governmental Entity or court, (E) more than 10% of the Registrable
Securities requested by the Holders to be included in the registration are not
so included pursuant to Section 2.1(b), or (F) the conditions to
closing specified in any underwriting agreement or purchase agreement entered
into in connection with the registration relating to such request are not
satisfied (other than as a result of a default or breach thereunder by the
applicable Holders). Notwithstanding anything to the contrary, the Company will
pay all expenses (in accordance with Section 2.9) in connection
with any request for registration pursuant to this Agreement regardless of
whether or not such request counts toward the limitation set forth above.


                    (h)
Notwithstanding anything else to the contrary in this Section 2.1,
if, prior to any request for registration pursuant to this Section 2.1,
(i) the Company shall have filed a Shelf Registration Statement covering all of
the Registrable Securities, (ii) the plan of distribution set forth in such
Shelf Registration Statement includes underwritten offerings and (iii) the
Shelf Registration Statement is effective when the Holders’ Representative
would otherwise make a request for registration under this Section 2.1,
the Company shall not be required to separately register any Registrable
Securities in response to such request, and such request shall be deemed to be
a request that the Company cooperate in effecting a Takedown (as 


8






defined below)
of the Registrable Securities pursuant to such Shelf Registration Statement.
The Company may also register Other Securities on any such Shelf Registration
Statement.


          Section
2.2 Shelf Registration. (a) Subject to the second to last sentence of
this Section 2.2(a), within 5 days following the end of the Holding
Period, the Company shall file with the SEC a Shelf Registration Statement
providing for the registration and sale of all of the Registrable Securities by
the Holders and shall use its reasonable best efforts to cause such Shelf
Registration Statement to be declared effective under the Securities Act as
soon as reasonably practicable thereafter. Notwithstanding the foregoing, the
Company shall have no obligation to file, or keep effective a Shelf
Registration if all Class A Ordinary Shares held by the Holders are no longer
Registrable Securities. In the event that Class A Ordinary Shares which are no
longer Registrable Securities (other than pursuant to clause (i) or (ii) of the
definition of Registrable Securities) become Registrable Securities, the
Company shall file or update a Shelf Registration Statement with respect to
such Registrable Securities within five Business Days of receiving notification
of such event and use its reasonable best efforts to cause such Shelf
Registration Statement to be declared effective under the Securities Act as
soon as reasonably practicable thereafter.


                    (b)
The Company shall use its reasonable best efforts to keep such Shelf
Registration Statement continuously effective under the Securities Act in order
to permit the Prospectus forming a part thereof to be usable by Holders until
the earlier of the date as of which all Registrable Securities have been sold
pursuant to the Shelf Registration Statement or another Registration Statement
filed under the Securities Act (but in no event prior to the applicable period
referred to in Section 4(3) of the Securities Act and Rule 174
thereunder) (such period of effectiveness, the “Shelf Period”).
Subject to Section 2.2(c), the Company shall not be deemed to have
used its reasonable best efforts to keep the Shelf Registration Statement
effective during the Shelf Period if the Company voluntarily takes any action
or omits to take any action that would result in Holders of Registrable
Securities covered thereby not being able to offer and sell any Registrable
Securities pursuant to such Shelf Registration Statement during the Shelf
Period, unless such action or omission is required by applicable Law. The
Company shall use its reasonable best efforts to remain a well-known seasoned
issuer (as defined in Rule 405 under the Securities Act) and to not become
an ineligible issuer (as defined in Rule 405 under the Securities Act)
during the Shelf Period.


                    (c)
The Company shall be entitled to postpone (but not more than once in any
six-month period), for a reasonable period of time, together with any
postponement under Section 2.1(e), not in excess of 60 days (and
not for periods exceeding, in the aggregate, 90 days during any twelve-month
period), the filing or initial effectiveness of, or suspend the use of, a Shelf
Registration Statement if the Company delivers to the Holders’ Representative a
certificate signed by both the Chief Executive Officer and Chief Financial
Officer of the Company certifying that, in their good faith judgment, such
registration, offering or use would reasonably be expected to materially
adversely affect or materially interfere with any bona fide material financing
of the Company or any material transaction under consideration by the Company
or would require the disclosure of information that has not been, and is not
otherwise required to be, disclosed to the public, the premature disclosure of
which would materially adversely affect the Company. The Company shall have no
obligation to include in any such certificate any 


9






reference to
or description of the facts based upon which the Company is delivering such
certificate. 


                    (d)
Upon a written request from any Holder (an “Initiating Holder”) to
effect an offering under the Shelf Registration Statement (a “Takedown”),
the Company will, as soon as practicable, (x) deliver a written notice relating
to the proposed Takedown to all other Holders and (y) promptly (and in any
event not later than twenty days after receiving such Initiating Holder’s
request) supplement the Prospectus included in the Shelf Registration Statement
as would permit or facilitate the sale and distribution of all or such portion
of such Initiating Holder’s Registrable Securities as are specified in such
request together with the Registrable Securities requested to be included in
such Takedown by any other Holders who notify the Company in writing within ten
business days after receipt of such written notice from the Company. If the
Company and/or the holders of any Other Securities request inclusion of Other
Securities in a Takedown, such Other Securities shall be included in the
Takedown if, and only if, inclusion of such Other Securities would not be
reasonably likely to delay in any material respect the timely effectuation of
the Takedown or the sale of Registrable Securities pursuant to the Takedown. In
the case of a request for or effectuation of a Takedown, all references in this
Agreement to the effective date of a Registration Statement shall be deemed to
refer to the date of pricing of such Takedown and all references to
registration shall be deemed to refer to the Takedown.


                    (e)
If any of the Registrable Securities to be sold pursuant to a Shelf
Registration Statement are to be sold in a firm commitment underwritten
offering, and the managing underwriter(s) of such underwritten offering advise
the Holders in writing that it is their good faith opinion that the total
number or dollar amount of Registrable Securities proposed to be sold in such offering,
together with any Other Securities proposed to be included by holders thereof
which are entitled to include securities in such Registration Statement,
exceeds the total number or dollar amount of such securities that can be sold
without having an adverse effect on the price, timing or distribution of the
Registrable Securities to be so included together with all such Other
Securities, then there shall be included in such firm commitment underwritten
offering the number or dollar amount of Registrable Securities and such Other
Securities that in the opinion of such managing underwriter(s) can be sold
without so adversely affecting such offering, and such number of Registrable
Securities and Other Securities shall be allocated for inclusion as follows:


	
 

	
 


	
 

	
          (i)
 first, the Registrable Securities for which inclusion in such underwritten
 offering requested by the Holders, pro rata (if applicable), based on the
 number of Registrable Securities Beneficially Owned by each such Holder; and


	
 

	
 


	
 

	
          (ii)
 second, among any holders of Other Securities, pro rata, based on the
 number of Other Securities Beneficially Owned by each such holder of Other
 Securities.





          Section
2.3 Piggyback Registrations. (a) If, other than pursuant to Section 2.1
or Section 2.2, the Company proposes or is required to file a
registration statement under the Securities Act with respect to an offering of
Class A Ordinary Shares, whether or not for sale for its own account (other
than a registration statement (i) on Form S-4, Form S-8 or any
successor forms thereto, (ii) filed solely in connection with any employee
benefit or dividend reinvestment 


10






plan, or (iii)
so long as a Shelf Registration Statement is effective and available pursuant
to Section 2.2 hereof, filed solely in connection with the issuance
or resale of Class A Ordinary Shares issuable upon conversion, exercise or
exchange of any securities of the Company or any of its Subsidiaries, where
such convertible, exercisable or exchangeable securities were issued in, or as
part of, a financing transaction), in a manner that would permit registration
of Registrable Securities for sale to the public under the Securities Act, then
the Company shall give prompt written notice of such proposed filing at least 30
days before the anticipated filing date (the “Piggyback Notice”) to
the Holders. The Piggyback Notice shall offer the Holders the opportunity to
include in such registration statement the number of Registrable Securities as
they may request (a “Piggyback Registration”). Subject
to Section 2.3(b) hereof, the Company shall include in each such
Piggyback Registration all Registrable Securities with respect to which the
Company has received written requests for inclusion therein within 15 days
after notice has been given to the Holders, to permit the distribution of such
Registrable Securities in accordance with the methods of distribution elected
by such Holders. The Holders shall be permitted to withdraw all or part of the
Registrable Securities from a Piggyback Registration at any time at least two
Business Days prior to the effective date of the Registration Statement
relating to such Piggyback Registration. The Company shall use its reasonable
best efforts to maintain the effectiveness of the Registration Statement for a
Piggyback Registration for a period of at least 180 days after the effective
date thereof or such shorter period in which all Registrable Securities
included in such Registration Statement have actually been sold. No Piggyback
Registration shall count towards registrations required under Section 2.1.


                    (b)
If any of the securities to be registered pursuant to the registration giving
rise to the Holders’ rights under this Section 2.3 are to be sold
in an underwritten offering, the Holders shall be permitted to include all
Registrable Securities requested to be included in such registration in such
offering on the same terms and conditions as any Other Securities included
therein; provided, however, that if such offering involves a firm
commitment underwritten offering and the managing underwriter(s) of such
underwritten offering advise the Company in writing that it is their good faith
opinion that the total amount of Registrable Securities requested to be so
included, together with all Other Securities that the Company and any other
Persons having rights to participate in such registration intend to include in
such offering, exceeds the total number or dollar amount of such securities
that can be sold without having an adverse effect on the price, timing or
distribution of the Registrable Securities to be so included together with all
Other Securities, then there shall be included in such firm commitment
underwritten offering the number or dollar amount of Registrable Securities and
such Other Securities that in the opinion of such managing underwriter(s) can
be sold without so adversely affecting such offering, and such number of
Registrable Securities and Other Securities shall be allocated for inclusion as
follows:


	
 

	
 


	
 

	
          (i)
 first, all Other Securities being sold by the Company for its own account or
 by any Person (other than a Holder) exercising a contractual right to demand
 registration;


	
 

	
 


	
 

	
          (ii)
 second, all Registrable Securities requested to be included by the Holders, pro rata
 (if applicable), based on the number of Registrable Securities Beneficially
 Owned by each such Holder; and





11






	
 

	
 


	
 

	
          (iii)
 third, among any other holders of Other Securities requesting such
 registration, pro rata, based on the number of Other Securities
 Beneficially Owned by each such holder of Other Securities.





          Section
2.4 Registration Procedures. If and whenever the Company is required to
use its reasonable best efforts to effect the registration of any Registrable
Securities under the Securities Act as provided in Article II, the
Company shall effect such registration to permit the sale of such Registrable
Securities in accordance with the intended method or methods of disposition
thereof, and pursuant thereto the Company shall cooperate in the sale of the
securities and shall, as expeditiously as possible (to the extent applicable,
in the case of a Takedown):


                    (a)
Prepare and file with the SEC a Registration Statement or Registration Statements
on such form which shall be available for the sale of the Registrable
Securities by the Holders or the Company in accordance with the intended method
or methods of distribution thereof, and use its reasonable best efforts to
cause such Registration Statement to become effective and to remain effective
as provided herein; provided, however, that before filing a
Registration Statement or Prospectus or any amendments or supplements thereto
(excluding documents that would be incorporated or deemed to be incorporated
therein by reference), the Company shall furnish or otherwise make available to
the Selling Holders, their counsel and the managing underwriter(s), if any,
copies of all such documents proposed to be filed, which documents will be
subject to the reasonable review and comment of such counsel, and such other
documents reasonably requested by such counsel, including any comment letter
from the SEC, and, if requested by such counsel, provide such counsel
reasonable opportunity to participate in the preparation of such Registration
Statement and each Prospectus included therein and such other opportunities to
conduct a reasonable investigation within the meaning of the Securities Act,
including reasonable access to the Company’s books and records, officers,
accountants and other advisors. The Company shall not file any such
Registration Statement or Prospectus or any amendments or supplements thereto
(excluding such documents that, upon filing, would be incorporated or deemed to
be incorporated by reference therein) with respect to any registration pursuant
to Section 2.1, 2.2 or 2.3 to which any Holder (if
such Registration Statement includes Registrable Securities of such Holder),
its counsel, or the managing underwriter(s), if any, shall reasonably object,
in writing, on a timely basis, unless, in the opinion of the Company, such
filing is necessary to comply with applicable Law.


                    (b)
Prepare and file with the SEC such amendments and post-effective amendments to
each Registration Statement as may be necessary to keep such Registration
Statement continuously effective during the period provided herein and comply
in all material respects with the provisions of the Securities Act with respect
to the disposition of all securities covered by such Registration Statement,
and cause the related Prospectus to be supplemented by any Prospectus
supplement or Issuer Free Writing Prospectus as may be necessary to comply with
the provisions of the Securities Act with respect to the disposition of the
securities covered by such Registration Statement, and as so supplemented to be
filed pursuant to Rule 424 (or any similar provisions then in force) under
the Securities Act.


                    (c)
Notify each Selling Holder and the managing underwriter(s), if any, promptly,
and (if requested by any such Person) confirm such notice in writing, (i) when
a Prospectus or any Prospectus supplement, Issuer Free Writing Prospectus or
post-effective


12






amendment has been filed, and, with respect to a Registration Statement
or any post-effective amendment,
when the same has become effective, (ii) of any request by the SEC or any other
Governmental Entity for amendments or supplements to a Registration Statement
or related Prospectus or Issuer Free Writing Prospectus or for additional
information, (iii) of the issuance by the SEC of any stop order suspending the
effectiveness of a Registration Statement or the initiation of any proceedings
for that purpose, (iv) if at any time the representations and warranties of the
Company contained in any agreement (including any underwriting agreement
contemplated by Section 2.4(o) below) cease to be true and correct,
(v) of the receipt by the Company of any notification with respect to the
suspension of the qualification or exemption from qualification of any of the
Registrable Securities for sale in any jurisdiction, or the initiation or
threatening of any proceeding for such purpose, and (vi) of the happening of
any event that makes any statement made in such Registration Statement or
related Prospectus or any document incorporated or deemed to be incorporated
therein by reference or any Issuer Free Writing Prospectus related thereto
untrue in any material respect or that requires the making of any changes in
such Registration Statement, Prospectus, documents or Issuer Free Writing
Prospectus so that, in the case of the Registration Statement, it will not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
not misleading, and that in the case of any Prospectus or Issuer Free Writing
Prospectus, it will not contain any untrue statement of a material fact or omit
to state any material fact necessary in order to make the statements therein,
in light of the circumstances under which they were made, not misleading.


                    (d)
Use its reasonable best efforts to avoid the issuance of any order suspending
the effectiveness of a Registration Statement or any suspension of the
qualification (or exemption from qualification) of any of the Registrable
Securities for sale in any jurisdiction, or, if issued, to obtain the
withdrawal or lifting of any such order or suspension at the reasonably
earliest practicable date.


                    (e)
If requested by the managing underwriter(s), if any, or the Holders of a
majority of the Registrable Securities being sold in connection with an
underwritten offering, promptly include in a Prospectus supplement,
post-effective amendment or Issuer Free Writing Prospectus such information as
the managing underwriter(s), if any, or such Holders may reasonably request in
order to permit the intended method of distribution of such securities and make
all required filings of such Prospectus supplement, such post-effective
amendment or Issuer Free Writing Prospectus as soon as reasonably practicable
after the Company has received such request.


                    (f)
Furnish or make available to each Selling Holder, and each managing underwriter,
if any, without charge, such number of conformed copies of the Registration
Statement and each post-effective amendment thereto, including financial
statements (but excluding schedules, all documents incorporated or deemed to be
incorporated therein by reference, and all exhibits, unless requested in
writing by such Holder, counsel or managing underwriter(s)), and such other
documents, as such Holders or such managing underwriter(s) may reasonably
request, and upon request a copy of any and all transmittal letters or other
correspondence to or received from, the SEC or any other Governmental Entity
relating to such offering. 


13






                    (g)
Deliver to each Selling Holder, and the managing underwriter(s), if any,
without charge, as many copies of the Prospectus or Prospectuses (including
each form of Prospectus and any Issuer Free Writing Prospectus related to any
such Prospectuses) and each amendment or supplement thereto as such Persons may
reasonably request in connection with the distribution of the Registrable
Securities; and the Company, subject to Section 2.5(b), hereby
consents to the use of such Prospectus and each amendment or supplement thereto
by each of the Selling Holders and the managing underwriter(s), if any, in
connection with the offering and sale of the Registrable Securities covered by
such Prospectus and any such amendment or supplement thereto.


                    (h)
Prior to any public offering of Registrable Securities, use its reasonable best
efforts to register or qualify or cooperate with the Selling Holders, the
managing underwriter(s), if any, and their respective counsel in connection
with the registration or qualification (or exemption from such registration or
qualification) of such Registrable Securities for offer and sale under the
securities or “Blue Sky” laws of such jurisdictions within the United States as
any Selling Holder or managing underwriter(s) reasonably requests in writing
and to keep each such registration or qualification (or exemption therefrom) effective
during the period such Registration Statement is required to be kept effective
and to take any other action that may be necessary or advisable to enable such
Selling Holders to consummate the disposition of such Registrable Securities in
such jurisdiction; provided, however, that the Company will not
be required to (i) qualify generally to do business in any jurisdiction where
it is not then so qualified, (ii) subject itself to material taxation in any
such jurisdiction where it is not then so subject, or (iii) take any action
that would subject it to general service of process in any such jurisdiction
where it is not then so subject.


                    (i)
Cooperate with the Selling Holders and the managing underwriter(s), if any, to
facilitate the timely preparation and delivery of certificates (not bearing any
legends) representing Registrable Securities to be sold after receiving written
representations from each Selling Holder that the Registrable Securities
represented by the certificates so delivered by such Selling Holder will be
transferred in accordance with the Registration Statement, and enable such
Registrable Securities to be in such denominations and registered in such names
as the managing underwriter(s), if any, or the Selling Holders may request at
least two Business Days prior to any sale of Registrable Securities.


                    (j)
Upon the occurrence of any event contemplated by Section 2.4(c)(ii),
(c)(iii), (c)(iv), (c)(v) or (c)(vi) above, prepare
a supplement or post-effective amendment to the Registration Statement or a
supplement to the related Prospectus or any document incorporated or deemed to
be incorporated therein by reference or an Issuer Free Writing Prospectus
related thereto, or file any other required document so that, as thereafter
delivered to the Selling Holders, such Prospectus will not contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading.


                    (k)
Prior to the effective date of the Registration Statement relating to the
Registrable Securities, provide a CUSIP number for the Registrable Securities.


14






                    (l)
Provide and cause to be maintained a transfer agent and registrar for all
Registrable Securities covered by such Registration Statement from and after a
date not later than the effective date of such Registration Statement.


                    (m)
Use its reasonable best efforts to cause all Registrable Securities covered by
such Registration Statement to be authorized to be listed on each national
securities exchange, if any, on which similar securities issued by the Company
are then listed.


                    (n)
Enter into such agreements (including an underwriting agreement in form, scope
and substance as is customary in underwritten offerings) and take all such
other actions reasonably requested by the Holders of a majority of the
Registrable Securities being sold in connection therewith or by the managing
underwriter(s), if any, to expedite or facilitate the disposition of such
Registrable Securities, and in connection therewith, whether or not an
underwriting agreement is entered into and whether or not the registration is
an underwritten registration, (i) make such representations and warranties to
the Selling Holders and the managing underwriter(s), if any, with respect to
the business of the Company and its Subsidiaries, and the Registration Statement,
Prospectus and documents, if any, incorporated or deemed to be incorporated by
reference therein, in each case, in form, substance and scope as are
customarily made by issuers in underwritten offerings, and, if true, confirm
the same if and when requested, (ii) use its reasonable best efforts to furnish
to the Selling Holders of such Registrable Securities opinions of counsel to
the Company and updates thereof (which counsel and opinions (in form, scope and
substance) shall be reasonably satisfactory to the managing underwriter(s), if
any, and counsels to the Selling Holders of the Registrable Securities),
addressed to each Selling Holder of Registrable Securities and each of the
managing underwriter(s), if any, covering the matters customarily covered in
opinions requested in underwritten offerings and such other matters as may be
reasonably requested by such counsel and managing underwriter(s), (iii) use its
reasonable best efforts to obtain “comfort” letters and updates thereof from
the independent certified public accountants of the Company (and, if necessary,
any other independent certified public accountants of any Subsidiary of the
Company or of any business acquired by the Company for which financial
statements and financial data are, or are required to be, included in the
Registration Statement) who have certified the financial statements included in
such Registration Statement, addressed to each Selling Holder of Registrable
Securities (unless such accountants shall be prohibited from so addressing such
letters by applicable standards of the accounting profession or such action is
otherwise inconsistent with the then current practice in the accounting
profession) and each of the managing underwriter(s), if any, such letters to be
in customary form and covering matters of the type customarily covered in
“comfort” letters in connection with underwritten offerings, (iv) if an
underwriting agreement is entered into, the same shall contain customary
indemnification provisions and procedures, except as otherwise agreed by the
Company and Holders of a majority of the Registrable Securities being sold in
connection therewith and the managing underwriter(s), if any, and (v) deliver
such documents and certificates as may be reasonably requested by the Holders
of a majority of the Registrable Securities being sold in connection therewith,
their counsel and the managing underwriter(s), if any, to evidence the
continued validity of the representations and warranties made pursuant to
clause (i) above and to evidence compliance with any customary conditions
contained in the underwriting agreement or other agreement entered into by the
Company. The above shall be done at each closing under such underwriting or
similar agreement, or as and to the extent required thereunder.


15






                    (o)
Upon execution of a customary confidentiality agreement, make available for
inspection by a representative of the Selling Holders, the managing
underwriter(s), if any, and any attorneys or accountants retained by such
Selling Holders or managing underwriter(s), at the offices where normally kept,
during reasonable business hours, financial and other records, pertinent
corporate documents and properties of the Company and its Subsidiaries, and
cause the officers, directors and employees of the Company and its Subsidiaries
to supply all information in each case reasonably requested by any such
representative, managing underwriter(s), attorney or accountant in connection
with such Registration Statement. 


                    (p)
Otherwise use its reasonable best efforts to comply with all applicable rules
and regulations of the SEC and any applicable national securities exchange, and
make available to its security holders, as soon as reasonably practicable (but
not more than 18 months) after the effective date of the registration
statement, an earnings statement which shall satisfy the provisions of Section
11(a) of the Securities Act. 


          Section
2.5 Certain Additional Agreements. 


                    (a)
The Company may require each Selling Holder to furnish to the Company in
writing such information required in connection with such registration
regarding such Selling Holder and the distribution of such Registrable
Securities as the Company may, from time to time, reasonably request in writing
and the Company may exclude from such registration the Registrable Securities
of any Selling Holder who fails to furnish such information within a reasonable
time after receiving such request. 


                    (b)
Each Selling Holder agrees that upon receipt of any notice from the Company of
the happening of any event of the kind described in Section 2.4(c)(iii)
or (c)(vi) hereof, such Holder will forthwith discontinue disposition of
such Registrable Securities covered by such Registration Statement or
Prospectus until such Holder’s receipt of the copies of the supplemented or
amended Prospectus contemplated by Section 2.4(k) hereof, or until it is
advised in writing by the Company that the use of the applicable Prospectus may
be resumed, and has received copies of any additional or supplemental filings
that are incorporated or deemed to be incorporated by reference in such
Prospectus; provided, however, that (i) in no event shall such discontinuance
exceed the time period set forth in Section 2.1(e) hereof, and (ii) the
Company shall extend the time periods under Section 2.1 and Section
2.3 with respect to the length of time that the effectiveness of a
Registration Statement must be maintained by the amount of time the Holder is
required to discontinue disposition of such securities. 


                    (c)
The Company covenants and agrees that, so long as any Holder holds any
Registrable Securities in respect of which any registration rights provided for
in this Article II remain in effect, the Company will not, directly or
indirectly, grant to any Person or agree to or otherwise become obligated in
respect of rights of registration in the nature or substantially in the nature
of those set forth in this Article II that would have priority over the
Registrable Securities with respect to the inclusion of such securities in any
registration by the Company (other than rights granted to a new registration
rights holder after the date hereof to exercise a contractual right to demand
registration that have terms no more favorable than the demand registration
rights granted to the Holders in this Agreement), without the prior written
consent of the Holder’s Representative. The rights granted to the Holders
hereunder do not in any way conflict 


16






with and are
not inconsistent with the rights granted prior to the date hereof to the
holders of any of the Company’s other issued and outstanding securities under
any such agreements. 


                    (d)
Each Holder covenants and agrees that it will comply with the prospectus
delivery requirements of the Securities Act as applicable to it or an exemption
therefrom in connection with sale of Registrable Securities pursuant to the
Registration Statement. 


          Section
2.6 Indemnification. 


                    (a)
Indemnification by the Company. The Company shall indemnify and hold
harmless, to the fullest extent permitted by Law, each Selling Holder whose
Registrable Securities are covered by a Registration Statement or Prospectus,
the officers, directors, partners (limited and general), members, managers and
shareholders of each of them, each Person who controls (within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act) each such
Selling Holder and the officers, directors, partners (limited and general),
members, managers and shareholders of each such controlling Person, each
underwriter (including any Holder that is deemed to be an underwriter pursuant
to any SEC comments or policies), if any, and each Person who controls (within
the meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act) such underwriter (collectively, “Holder
Indemnitees”), from and against any and all losses, claims,
damages, liabilities, expenses (including, without limitation, costs of
preparation and reasonable attorneys’ fees and any other reasonable fees or
expenses incurred by such party in connection with any investigation or
Action), judgments, fines, penalties, charges and amounts paid in settlement
(collectively, “Losses”),
as incurred, arising out of or based upon any untrue statement (or alleged
untrue statement) of a material fact contained in any applicable Registration
Statement (or in any preliminary or final Prospectus contained therein, any
document incorporated by reference therein or Issuer Free Writing Prospectus
related thereto), amendment of or supplement to any of the foregoing or other
document incident to any such registration, qualification, or compliance, or
based on any omission (or alleged omission) to state therein (in the case of a
final or preliminary Prospectus, in light of the circumstances under which they
were made) a material fact required to be stated therein or necessary to make
the statements therein not misleading, or any violation by the Company of the
Securities Act or of the Exchange Act in connection with any such registration,
qualification or compliance; provided, that the Company will not be liable to a
Selling Holder or underwriter, as the case may be, in any such case to the
extent that any such Loss arises out of or is based on any untrue statement or
omission by such Selling Holder or underwriter, as the case may be, but only to
the extent, that such untrue statement (or alleged untrue statement) or
omission (or alleged omission) is made in such Registration Statement (or in
any preliminary or final Prospectus contained therein, any document
incorporated by reference therein or Issuer Free Writing Prospectus related
thereto), amendment of or supplement to any of the foregoing or other document
in reliance upon and in conformity with written information furnished to the
Company by such Selling Holder or underwriter specifically for inclusion in
such document; and provided, further, that the Company will not be liable to
any Person who participates as an underwriter in any underwritten offering or
sale of Registrable Securities, or to any Person who is a Selling Holder in any
non-underwritten offering or sale of Registrable Securities, or any other
Person, if any, who controls such underwriter or Selling Holder within the
meaning of the Securities Act, under the indemnity agreement in this Section 2.6
with respect to any preliminary Prospectus or the final Prospectus
(including any amended or supplemented 


17






preliminary or
final Prospectus), as the case may be, to the extent that any such loss, claim,
damage or liability of such underwriter, Selling Holder or controlling Person
results from the fact that such underwriter or Selling Holder sold Registrable
Securities to a Person to whom there was not sent or given, at or prior to the
written confirmation of such sale, a copy of the final Prospectus as then
amended or supplemented, whichever is most recent, if the Company has
previously furnished copies thereof to such underwriter or Selling Holder and
such final Prospectus, as then amended or supplemented, has corrected any such
misstatement or omission. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of any Holder Indemnitee
or any other Holder and shall survive the transfer of such securities. The
foregoing indemnity agreement is in addition to any liability that the Company
may otherwise have to each Holder Indemnitee. 


                    (b)
Indemnification by Selling Holders. In connection with any Registration
Statement in which a Selling Holder is participating by registering Registrable
Securities, such Selling Holder shall furnish to the Company in writing such
information as the Company reasonably requests specifically for use in
connection with any Registration Statement or Prospectus and agrees, severally
and not jointly with any other Person, to indemnify and hold harmless, to the
fullest extent permitted by Law, the Company, the officers and directors of the
Company, and each Person who controls (within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act) the Company, and each
underwriter, if any, and each Person who controls (within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act) such
underwriter (collectively, “Company
Indemnitees”), from and against all Losses, as incurred, arising
out of or based on any untrue statement (or alleged untrue statement) of a
material fact contained in any such Registration Statement (or in any
preliminary or final Prospectus contained therein, any document incorporated by
reference therein or Issuer Free Writing Prospectus related thereto) or any
amendment of or supplement to any of the foregoing or any other document
incident to such registration, or any omission (or alleged omission) to state
therein a material fact required to be stated therein or necessary to make the
statements therein (in the case of a final or preliminary Prospectus, in light
of the circumstances under which they were made) not misleading, in each case
solely to the extent that such untrue statement (or alleged untrue statement)
or omission (or alleged omission) is made in such Registration Statement (or in
any preliminary or final Prospectus contained therein, any document
incorporated by reference therein or Issuer Free Writing Prospectus related
thereto), offering circular, or any amendment of or supplement to any of the
foregoing or other document in reliance upon and in conformity with written
information furnished to the Company by such Selling Holder expressly for
inclusion in such document. Such indemnity shall remain in full force and
effect regardless of any investigation made by or on behalf of the Company or
any of its directors, officers or controlling Persons. The Company may require
as a condition to its including Registrable Securities in any Registration
Statement filed hereunder that the holder thereof acknowledge its agreement to
be bound by the provisions of this Agreement (including Section 2.6)
applicable to it. 


                    (c)
Conduct of Indemnification Proceedings. If any Person shall be entitled
to indemnity hereunder (an “indemnified
party”), such indemnified party shall give prompt notice to the
party from which such indemnity is sought (the “indemnifying party”) of any claim or of the
commencement of any Action with respect to which such indemnified party seeks
indemnification or contribution pursuant hereto; provided, however, that the
delay or failure to 


18






so notify the
indemnifying party shall not relieve the indemnifying party from any obligation
or liability except to the extent that the indemnifying party has been actually
prejudiced by such delay or failure. The indemnifying party shall have the
right, exercisable by giving written notice to an indemnified party promptly
after the receipt of written notice from such indemnified party of such claim
or Action, to assume, at the indemnifying party’s expense, the defense of any
such Action, with counsel reasonably satisfactory to such indemnified party;
provided, however, that an indemnified party shall have the right to employ
separate counsel in any such Action and to participate in the defense thereof,
but the fees and expenses of such counsel shall be at the expense of such
indemnified party unless: (i) the indemnifying party agrees to pay such fees
and expenses; (ii) the indemnifying party fails reasonably promptly to assume,
or in the event of a conflict of interest, as determined after receiving
written advice from outside counsel, cannot assume, the defense of such Action
or fails to employ counsel reasonably satisfactory to such indemnified party,
in which case the indemnified party shall also have the right to employ counsel
and to assume the defense of such Action; or (iii) in the indemnified party’s
reasonable judgment, after receiving written advice from outside counsel, a
conflict of interest between such indemnified and indemnifying parties may
exist in respect of such Action; provided, further, however, that the
indemnifying party shall not, in connection with any one such Action or
separate but substantially similar or related Actions in the same jurisdiction,
arising out of the same general allegations or circumstances, be liable for the
fees and expenses of more than one firm of attorneys (together with appropriate
local counsel) at any time for all of the indemnified parties, or for fees and
expenses that are not reasonable. Whether or not such defense is assumed by the
indemnifying party, such indemnified party will not be subject to any liability
for any settlement made without its written consent (but such consent will not
be unreasonably withheld or delayed). No indemnifying party will be subject to
any liability for any settlement made without its written consent (but such
consent will not be unreasonably withheld or delayed). The indemnifying party
shall not consent to entry of any judgment or enter into any settlement that
does not include as an unconditional term thereof the giving by all claimants or
plaintiffs to such indemnified party of a release, in form and substance
reasonably satisfactory to the indemnified party, from all liability in respect
of such claim or litigation. 


                    (d)
Contribution. (i) If the indemnification provided for in this Section
2.6 is unavailable to an indemnified party in respect of any Losses (other
than in accordance with its terms), then each applicable indemnifying party, in
lieu of indemnifying such indemnified party, shall contribute to the amount paid
or payable by such indemnified party as a result of such Losses, in such
proportion as is appropriate to reflect the relative fault of the indemnifying
party, on the one hand, and such indemnified party, on the other hand, in
connection with the actions, statements or omissions that resulted in such
Losses as well as any other relevant equitable considerations. The relative
fault of such indemnifying party, on the one hand, and indemnified party, on
the other hand, shall be determined by reference to, among other things,
whether any action in question, including any untrue or alleged untrue
statement of a material fact or omission or alleged omission to state a
material fact, has been taken by, or relates to information supplied by, such
indemnifying party or indemnified party, and the parties’ relative intent,
knowledge, access to information and opportunity to correct or prevent any such
action, statement or omission. 


	
 

	
 


	
 

	
          (ii)
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 2.6(d) were determined by pro rata
allocation or by  





19






	
 

	
 


	
 

	
any other
 method of allocation that does not take account of the equitable
 considerations referred to in the immediately preceding paragraph.


	
 

	
 


	
 

	
          (iii)
 No Person guilty of fraudulent misrepresentation (within the meaning of
 Section 11(f) of the Securities Act) shall be entitled to contribution from
 any Person who was not guilty of such fraudulent misrepresentation. 





                    (e)
Limitation on Holder Liability. Notwithstanding anything to the contrary
contained in this Agreement, an indemnifying party that is a Holder shall not
be required to indemnify or contribute any amount in excess of the amount by
which the net proceeds received by such Holder from the sale of the Registrable
Securities sold by such Holder in the applicable offering exceeds the amount of
any damages that such indemnifying party has otherwise been required to pay by
reason of the applicable untrue or alleged untrue statement or omission or
alleged omission. 


          Section
2.7 Rule 144; Rule 144A. The Company covenants that it will file the
reports required to be filed by it under the Securities Act and the Exchange
Act and the rules and regulations adopted by the SEC thereunder (or, if the
Company is not required to file such reports, it will, upon the request of any
Holder, make publicly available other information so long as necessary to
permit sales pursuant to Rule 144 or 144A under the Securities Act), and it
will take such further action as any Holder may reasonably request, all to the
extent required from time to time to enable such Holder to sell Registrable
Securities without registration under the Securities Act within the limitation
of the exemptions provided by (i) Rule 144 or 144A or Regulation S under the
Securities Act, as such Rules may be amended from time to time, or (ii) any
similar rule or regulation hereafter adopted by the SEC. Upon the request of
any Holder, the Company will deliver to such Holder a written statement as to
whether it has complied with such requirements and, if not, the specifics
thereof. 


          Section
2.8 Underwritten Registrations. (a) If any offering of Registrable
Securities is an underwritten offering, the Holders’ Representative shall have
the right to select the investment banker or investment bankers and managers to
administer the offering, subject to approval by the Company, not to be
unreasonably withheld or delayed. The Company shall have the right to select
the investment banker or investment bankers and managers to administer any
incidental or piggyback registration. 


                    (b)
No Person may participate in any underwritten registration hereunder unless
such Person (i) agrees to sell the Registrable Securities or Other Securities
it desires to have covered by the registration on the basis provided in any
underwriting arrangements in customary form (including pursuant to the terms of
any over-allotment or “green shoe” option requested by the managing underwriter,
provided that no such Person will be required to sell more than the number of
Registrable Securities that such Person has requested the Company to include in
any registration), and (ii) completes and executes all questionnaires, powers
of attorney, indemnities, underwriting agreements and other documents required
under the terms of such underwriting arrangements, provided that such Person
(other than the Company) shall not be required to make any representations or
warranties other than those related to title and ownership of shares and as to
the accuracy and completeness of statements made in a Registration Statement,
Prospectus or other document in reliance upon and in conformity with 


20






written
information furnished to the Company or the managing underwriter(s) by such
Person and, provided further,
that such Person’s (other than the Company’s) liability in respect of such
representations and warranties shall not exceed such Person’s net proceeds from
the offering. 


          Section
2.9 Registration Expenses. The Company shall pay all reasonable
documented expenses incident to the Company’s performance of or compliance with
its obligations under this Article II, including, without limitation,
(i) all registration and filing fees (including fees and expenses (A) with
respect to filings required to be made with the SEC, all applicable securities
exchanges and/or the Financial Industry Regulatory Authority and (B) of
compliance with securities or Blue Sky laws including any fees and disbursements
of counsel for the underwriter(s) in connection with Blue Sky qualifications of
the Registrable Securities pursuant to Section 2.4(h)), (ii) printing
expenses (including expenses of printing certificates for Registrable
Securities in a form eligible for deposit with The Depository Trust Company and
of printing Prospectuses if the printing of Prospectuses is requested by the
managing underwriter(s), if any, or by the Holders of a majority of the
Registrable Securities included in any Registration Statement), (iii)
messenger, telephone and delivery expenses of the Company, (iv) fees and
disbursements of counsel for the Company, (v) expenses of the Company incurred
in connection with any road show, and (vi) fees and disbursements of all
independent certified public accountants (including, without limitation, the
expenses of any “comfort” letters required by this Agreement) and any other
Persons, including special experts retained by the Company. In addition, the
Company shall bear all of its internal expenses (including all salaries and
expenses of its officers and employees performing legal or accounting duties),
the expense of any annual audit, the fees and expenses incurred in connection
with the listing of the securities to be registered on any securities exchange
on which similar securities issued by the Company are then listed and rating
agency fees and the fees and expenses of any Person, including special experts,
retained by the Company. The Company shall not be obligated to pay any
underwriting discounts attributable to sales of Registrable Securities by
Holders thereof or the fees and disbursements of any counsel to the Holders. 


ARTICLE III

MISCELLANEOUS


          Section
3.1 Conflicting Agreements. Each party represents and warrants that it
has not granted and is not a party to any proxy, voting trust or other
agreement that is inconsistent with or conflicts with any provision of this
Agreement. 


          Section
3.2 Termination. This Agreement shall terminate at such time as there
are no Registrable Securities, except for the provisions of Sections 2.6,
2.7, 2.9 and this Article III, which shall survive such
termination. 


          Section
3.3 Amendment and Waiver. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the Company, XLFA and XLCA
(or, in the case of an amendment at any time when XLFA and XLCA are not the
sole Holders, signed on behalf of each of (i) the Company and (ii) the Holders
of a majority of the aggregate number of Registrable Securities then held by
all Holders). Any party hereto may waive any right of such party hereunder by
an instrument in writing signed by such party and delivered to the other
parties (or, in the case of a waiver of any rights of the Holders at any time
when XLFA and 


21






XLCA are not
the sole Holders, by an instrument in writing signed by the Holders of a
majority of the aggregate number of Registrable Securities then held by all
Holders and delivered to the Company and the Holders’ Representative). The
failure of any party to enforce any of the provisions of this Agreement shall
in no way be construed as a waiver of such provisions and shall not affect the
right of such party thereafter to enforce each and every provision of this
Agreement in accordance with its terms. 


          Section
3.4 Severability. If any provision of this Agreement shall be declared
by any court of competent jurisdiction to be illegal, void or unenforceable,
all other provisions of this Agreement shall not be affected and shall remain
in full force and effect. 


          Section
3.5 Entire Agreement. Except as otherwise expressly set forth herein,
this Agreement and the Master Transaction Agreement, together with the several
agreements and other documents and instruments referred to herein or therein or
annexed hereto or thereto, embody the complete agreement and understanding
among the parties hereto with respect to the subject matter hereof and
supersedes and preempts any prior understandings, agreements or representations
by or among the parties, written or oral, that may have related to the subject
matter hereof in any way. 


          Section
3.6 Successors and Assigns. Neither this Agreement nor any right or
obligation hereunder is assignable in whole or in part by any party without the
prior written consent of the other party hereto; provided that XLFA and XLCA
may transfer their respective rights and obligations hereunder (in whole or in
part) to Syncora Holdings Ltd or any of its Subsidiaries (each, a “Permitted Transferee”) without the prior
written consent of the Company. Any such assignment shall be effective upon
receipt by the Company of (x) written notice from the transferring Holder
stating the name and address of the Permitted Transferee and identifying the
number of shares of Registrable Securities with respect to which the rights
under this Agreement are being transferred and the nature of the rights so
transferred and (y) a written agreement in substantially the form attached as Exhibit
A hereto from such Permitted Transferee to be bound by the applicable terms
of this Agreement. 


          Section
3.7 Counterparts; Execution by Facsimile Signature. This Agreement may
be executed in any number of counterparts, each of which shall be an original,
but all of which together shall constitute one instrument. This Agreement may
be executed by facsimile signature(s). 


          Section 3.8 Remedies.
(a) Each party hereto acknowledges that monetary damages would not be an
adequate remedy in the event that any of the covenants or agreements in this Agreement
is not performed in accordance with its terms, and it is therefore agreed that,
in addition to and without limiting any other remedy or right it may have, the
non-breaching party will have the right to an injunction, temporary restraining
order or other equitable relief in any court of competent jurisdiction
enjoining any such breach or threatened breach and enforcing specifically the
terms and provisions hereof. Each party hereto agrees to waive any requirement
for the securing or posting of any bond in connection with such remedy. 


                    (b)
All rights, powers and remedies provided under this Agreement or otherwise
available in respect hereof at law or in equity shall be cumulative and not
alternative, 


22






and the
exercise or beginning of the exercise of any thereof by any party shall not
preclude the simultaneous or later exercise of any other such right, power or
remedy by such party. 


          Section
3.9 Notices. All notices required or permitted hereunder shall be in
writing and shall be deemed effectively given (i) upon personal delivery to the
party to be notified, (ii) when sent by confirmed facsimile if sent during
normal business hours of the recipient, if not, then on the next Business Day
or (iii) one Business Day after deposit with a nationally recognized overnight
courier, specifying next day delivery, with written verification of receipt.
All communications shall be sent to the addresses set forth below or such other
address or facsimile number as a party may from time to time specify by notice
to the other parties hereto: 


          If
to the Company: XL Capital Ltd, One Bermudiana Road, Hamilton HM 11, Bermuda,
Attention: General Counsel, Fax: (441) 295-2840; and with a copy (which shall
not constitute notice) to: Cadwalader, Wickersham & Taft, LLP, 1201 F
Street, NW, Washington, DC 20004; Attention: Mark C. Ellenberg; Fax (202)
862-2400. 


          If
to Syncora Guarantee Inc. or to Syncora Guarantee Re Ltd.: 1221 Avenue of the
Americas, New York NY 10020-1001; Attention: General Counsel; Fax: (212)
478-3587; and with a copy (which shall not constitute notice) to: Weil, Gotshal
& Manges LLP, 767 Fifth Avenue, New York, New York 10153; Attention: Joseph
Verdesca; Fax: (212) 310-8007 


          Section
3.10 Governing Law; Consent to Jurisdiction. (a) This Agreement shall be
governed in all respects by the laws of the State of New York, without regard
to its conflicts of laws principles. 


                    (b)
Each of the parties hereto (i) consents to submit itself to the personal
jurisdiction of any Federal or state court located in the Borough of Manhattan
in the City of New York, New York in the event any dispute arises out of this
Agreement, (ii) agrees that it will not attempt to deny or defeat such personal
jurisdiction by motion or other request for leave from any such court and (iii)
agrees that it will not bring any Action relating to this Agreement in any
court other than a Federal or state court located in the Borough of Manhattan
in the City of New York, New York. 


                    (c)
Each of the parties hereto hereby irrevocably and unconditionally waives trial
by jury in any legal Action or proceeding in relation to this Agreement and for
any counterclaim therein. 


[signature page follows]


23






          IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date
first written above. 


	
 

	
 

	
 


	
 

	
XL CAPITAL
 LTD


	
 

	
 

	
 


	
 

	
By: 

	
/s/ Robert
 Kuzloski


	
 

	
 

	



	
 

	
 

	
Name: Robert
 Kuzloski


	
 

	
 

	
Title:
 Senior Vice President





[SIGNATURE PAGE TO AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT]






	
 

	
 

	
 


	
 

	
SYNCORA
 GUARANTEE RE LTD.


	
 

	
formerly
 known as XL Financial Assurance Ltd.


	
 

	
 

	
 


	
 

	
By: 

	
/s/ Tom
 Currie


	
 

	
 

	



	
 

	
 

	
Name: Tom
 Currie


	
 

	
 

	
Title: SVP





[SIGNATURE PAGE TO AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT]






	
 

	
 

	
 


	
 

	
SYNCORA
 GUARANTEE INC.


	
 

	
(formerly
 known as XL Capital Assurance Inc.


	
 

	
 

	
 


	
 

	
By: 

	
/s/ Susan
 Comparato


	
 

	
 

	



	
 

	
 

	
Name: Susan
 Comparato


	
 

	
 

	
Title: SVP
 and GC





[SIGNATURE PAGE TO AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT]






EXHIBIT A 


JOINDER


          Reference
is made to the Registration Rights Agreement dated as of August 5, 2008 (as
amended from time to time, the “Registration
Rights Agreement”) among XL Capital Ltd, a Cayman Island
corporation, Syncora Guarantee Re Ltd. (formerly known as, XL Financial
Assurance Ltd, a company domiciled in Bermuda) and Syncora Guarantee Inc.
(formerly known as, XL Capital Assurance Inc., a New York insurance company),
and each other person who shall have become a party to the Registration Rights
Agreement in accordance with the terms thereof. 


          By
execution of this Joinder, the undersigned agrees to become a party to the
Registration Rights Agreement and to be bound by the terms, conditions,
restrictions and provisions thereof as a “Holder” thereunder, entitled to all
of the rights available thereto and subject to all of the burdens imposed
thereon. 


	
 

	
 

	
 

	
 


	
Name:

	
 

	
 

	
 


	
 

	
 

	
 

	
 


	


	


	
 

	
 


	
 

	
 

	
 

	
 


	
Address for
 Notices:

	
 

	
 

	
With Copies
 to:


	
 

	
 

	
 

	
 


	


	
 

	
 

	



	
 

	
 

	
 

	
 


	


	
 

	
 

	



	
 

	
 

	
 

	
 


	


	
 

	
 

	



	
 

	
 

	
 

	
 


	


	
 

	
 

	



	
 

	
 

	
 

	
 


	


	
 

	
 

	



	
 

	
 

	
 

	
 


	
Signature:

	
 

	
 

	
 


	
 

	
 

	
 

	
 


	


	


	
 

	
 


	
Date:

	
 

	
 

	
 


	
 

	
 

	
 

	
 


	


	


	
 

	
 





EXHIBIT A-1






AMENDMENT NO. 2 TO MASTER COMMUTATION,
RELEASE AND

RESTRUCTURING AGREEMENT


Dated as of October 15, 2008






AMENDMENT NO. 2 TO MASTER COMMUTATION,
RELEASE AND

RESTRUCTURING AGREEMENT


                    AMENDMENT
NO. 2 effective as of October 15, 2008 (this “Amendment No. 2”) among XL
CAPITAL LTD, an exempted limited company incorporated under the Laws of Cayman
Islands, XL INSURANCE (BERMUDA) LTD (formerly known as X.L. Insurance Ltd), a
Bermuda exempted company, XL REINSURANCE AMERICA INC., a New York insurance
corporation, X.L. GLOBAL SERVICES, INC., a service company incorporated under
the Laws of Delaware, XL SERVICES (BERMUDA) LTD, a service company incorporated
under the Laws of Bermuda, X.L. AMERICA, INC., a company incorporated under the
Laws of Delaware, SYNCORA HOLDINGS LTD (formerly known as Security Capital
Assurance Ltd), a Bermuda exempted company, SYNCORA GUARANTEE INC. (formerly
known as XL Capital Assurance Inc., and successor by merger to Syncora
Guarantee Re Ltd. (formerly known as XL Financial Assurance Ltd) “SGI”),
a New York insurance company, SYNCORA GUARANTEE SERVICES INC. (formerly known
as XL Financial Administrative Services Inc.), a company incorporated under the
Laws of Delaware, SYNCORA BERMUDA ADMINISTRATIVE LTD (formerly known as SCA
Bermuda Administrative Ltd.), a company incorporated under the Laws of Bermuda,
SYNCORA GUARANTEE (U.K.) LTD (formerly known as XL Capital Assurance (U.K.)
Limited), an insurance company regulated by the Financial Services Authority
and incorporated under the Laws of England and Wales, those portfolio trusts
that are Affiliates of SGI that are a Party to the Master Agreement (as defined
below) pursuant to the execution of a joinder agreement, and the CDS Counterparties.



                    WHEREAS,
the parties hereto (the “Parties”) entered into a certain Master
Commutation, Release and Restructuring Agreement dated as of July 28, 2008, and
certain of the Parties amended such agreement as of August 1, 2008 (such
agreement as amended, the “Master Agreement”); 


                    WHEREAS,
the Parties wish to change certain dates set forth in the Master Agreement; and



                    WHEREAS,
the Parties wish to take such actions necessary to give effect to such changes;



                    NOW,
THEREFORE, in consideration of the premises and the covenants and agreements
contained herein and in the Master Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
and intending to be legally bound hereby, the Parties agree as follows: 


                    Section
1. Definitions. Capitalized terms not otherwise defined in this
Amendment No. 2 shall have the meanings ascribed to them in the Master Agreement.



                    Section
2. Amendments. Sections 2.04(a), 6.10(b), 6.12, 6.13,
6.14, and 9.07 of the Master Agreement are hereby amended as
follows: 


                    2.1
Section 2.04(a) of the Master Agreement is hereby amended by replacing
the date “October 15, 2008” with the date “October 31, 2008.” 






                    2.2
Clause (i) of the first sentence of Section 6.10(b) of the Master
Agreement is hereby amended by replacing the date “October 15, 2008” with the
date “October 31, 2008.” 


                    2.3
Clause (ii) of the first sentence of Section 6.12 of the Master
Agreement is hereby amended by replacing the date “October 15, 2008” with the
date “October 31, 2008.” 


                    2.4
The last sentence of Section 6.12 of the Master Agreement is hereby
amended by replacing the date “October 15, 2008” with the date “October 31,
2008.” 


                    2.5
Section 6.13 of the Master Agreement is hereby amended by replacing the
date “October 15, 2008”, in each instance in which it appears in such section,
with the date “October 31, 2008.” 


                    2.6
The last sentence of Section 6.14 of the Master Agreement is hereby
amended by replacing the date “October 15, 2008” with the date “October 31,
2008.” 


                    2.7
The Master Agreement is hereby amended by adding the following sentence to the
end of Section 9.07: 


	
 

	
 


	
 

	
“Notwithstanding
 anything herein to the contrary, in no event shall the consent of any of the
 XL Parties be necessary to extend or otherwise alter any of the dates
 referenced in Sections 2.04(a), 6.10(b), 6.12, 6.13,
 or 6.14.” 





                    Section
3. Substitution of Lehman Entity. (a) Lehman Brothers Special Financing
Inc. (“LBSF”) has provided to the SCA Parties a written list (reflecting
the best belief of an authorized signatory of LBSF) of (A) those credit default
swap agreements with SGI or Affiliates of SGI to which LBSF was party, and of
which LBSF was a beneficial owner, as of July 28, 2008 and (B) the notional
amount of each such credit default swap agreement. For an abundance of clarity,
the foregoing representations and warranties contained in this Section 3 only
reflect the best belief of the authorized signatory of LBSF. LBSF is not making
any representation or warranty that is not qualified by the best belief of such
authorized signatory, and it will not be bound by or subject to liability based
on any inaccuracy contained in any such list that ultimately results from such
authorized signatory’s best belief being inadvertently inaccurate. 


                    (b)
LBSF hereby agrees to be bound by the terms and conditions of the Master
Agreement and this Amendment No. 2. Each Party hereto hereby agrees that,
effective as of July 28, 2008, LBSF is substituted for Lehman Brothers Inc. (“LBI”)
as a Party to the Master Agreement for all purposes and is hereby substituted
for LBI as the Party executing that certain joinder agreement to the Master
Agreement dated as of July 28, 2008. LBSF has executed a joinder agreement to
the Master Agreement pursuant to Section 9.04 thereof, effective as of July 28,
2008. 


                    (c)
Each Party hereby agrees that, for purposes of Section 2 of the joinder
agreement to the Master Agreement executed and delivered by LBSF in connection
herewith, the representations and warranties made by LBSF pursuant to Section
5.08 of the Master Agreement shall be deemed to be, and shall be replaced by,
the representations and warranties set forth above in Section 3(a) hereof and,
notwithstanding the provisions, and the date of effectiveness, 


-2-






of the joinder
agreement, such representations and warranties are made by LBSF on the date
hereof with respect to factual matters as existing on July 28, 2008. 


                    Section
4. Miscellaneous. 


                    4.1
Except as specifically set forth herein, the terms of this Amendment No. 2
shall not be deemed to be a consent, waiver or modification with respect to any
term, condition or obligation of any of the Parties in the Master Agreement and
shall not obligate any of the Parties to agree to any other amendment to the
Master Agreement, including a further extension or alteration of the dates
referenced in the Master Agreement. 


                    4.2
This Amendment No. 2 may be executed and delivered in multiple counterparts,
each of which, when so executed and delivered, shall be an original, but such
counterparts shall together constitute but one and the same instrument and
agreement. A facsimile or Portable Document Format copy of a signature shall
have the same force and effect as an original signature. 


                    4.3
This Amendment No. 2 is to be interpreted under and governed by the Laws of the
State of New York without giving effect to conflicts of law provisions thereof.
In the event that there is a dispute between or among the Parties arising under
this Amendment No. 2, the Parties (i) agree that the exclusive forum to seek
remedy shall be to institute a legal proceeding in the courts of the State of
New York located in the City and County of New York, (ii) hereby expressly
submit to the personal jurisdiction and venue of such courts for the purposes
thereof and expressly waive any claim of lack of personal jurisdiction and
improper venue and any claim that such courts are an inconvenient forum and
(iii) agree that the prevailing Parties shall be entitled to recover their
reasonable attorneys’ fees, costs and disbursements from the other Parties (in
addition to any other relief to which the prevailing Parties may be entitled).
Each Party hereby irrevocably consents to the service of process of any of the
aforementioned courts in any such suit, action or proceeding by the mailing of
copies thereof by registered or certified mail, postage prepaid, to the address
provided to the Parties in accordance with Section 9.02, of the Master
Agreement, such service to become effective ten (10) days after such mailing. 


                    4.4
Each of the Parties hereby waives to the fullest extent permitted by applicable
Law any right it may have to a trial by jury with respect to any litigation
directly or indirectly arising out of, under, or in connection with this
Amendment No. 2. Each of the Parties hereby (i) 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 (ii) acknowledges that it has been induced
to enter into this Amendment No. 2 by, among other things, the mutual waivers
and certifications in this Section 4.4. 


                    4.5
Each Party has had the opportunity to negotiate the terms, consult with
counsel, and modify the provisions of this Amendment No. 2. Therefore, the
terms of this Amendment No. 2 will be considered and interpreted without any
presumption, inference or rule requiring construction or interpretation of any
provision of this Amendment No. 2 against the interests of the drafter of this
Amendment No. 2. 


-3-






                    Section
5. Effectiveness. Notwithstanding any provision to the contrary
contained in this Amendment No. 2 or the Master Agreement, including, without
limitation, the failure of the amendments thereto contained herein to become
effective pursuant to Sections 9.07 and 9.08 of the Master Agreement, in the
event such amendments fail to become effective solely as a result of the fact
that LBI has not executed this Amendment No. 2, the Parties hereto agree that
they shall be bound by all of the terms and conditions set forth in the Master
Agreement as though the amendments thereto contained herein were in full force
and effect. 


[Signature Page Follows]


-4-






                    IN
WITNESS HEREOF, the Parties have caused this Amendment No. 2 to be duly
executed and delivered as of the day and year first written above. 


	
 

	
 

	
 


	
 

	
XL CAPITAL
 LTD


	
 

	
 

	
 


	
 

	
By: 

	
/s/ Brian W.
 Nocco


	
 

	
 

	



	
 

	
 

	
Name: Brian
 Nocco


	
 

	
 

	
Title: EVP
 & CFO





[AMENDMENT NO. 2 TO THE MASTER COMMUTATION, RELEASE AND RESTRUCTURING AGREEMENT]






	
 

	
 

	
 


	
 

	
XL SERVICES
 (BERMUDA) LTD


	
 

	
 

	
 


	
 

	
By: 

	
/s/ Brian W.
 Nocco


	
 

	
 

	



	
 

	
 

	
Name: Brian
 Nocco


	
 

	
 

	
Title:





[AMENDMENT NO. 2 TO THE MASTER COMMUTATION, RELEASE AND RESTRUCTURING AGREEMENT]






	
 

	
 

	
 


	
 

	
X.L.
 AMERICA, INC.


	
 

	
 

	
 


	
 

	
By: 

	
/s/ Richard
 G. McCarty


	
 

	
 

	



	
 

	
 

	
Name: Richard
 G. McCarty


	
 

	
 

	
Title:
 Senior Vice President, 

 General Counsel and Secretary





[AMENDMENT NO. 2 TO THE MASTER COMMUTATION, RELEASE AND RESTRUCTURING AGREEMENT]






	
 

	
 

	
 


	
 

	
X.L. GLOBAL
 SERVICES, INC.


	
 

	
 

	
 


	
 

	
By: 

	
/s/ Toni A.
 Perkins


	
 

	
 

	



	
 

	
 

	
Name: Toni
 A. Perkins


	
 

	
 

	
Title:
 Assistant Secretary





[AMENDMENT NO. 2 TO THE MASTER COMMUTATION, RELEASE AND RESTRUCTURING AGREEMENT]






	
 

	
 

	
 


	
 

	
XL
 REINSURANCE AMERICA INC.


	
 

	
 

	
 


	
 

	
By: 

	
/s/ Richard
 G. McCarty


	
 

	
 

	



	
 

	
 

	
Name:
 Richard G. McCarty


	
 

	
 

	
Title: Vice
 President





[AMENDMENT NO. 2 TO THE MASTER COMMUTATION, RELEASE AND RESTRUCTURING AGREEMENT]






	
 

	
 

	
 


	
 

	
SYNCORA
 HOLDINGS LTD 


	
 

	
(formerly
 known as Security Capital Assurance Ltd)


	
 

	
 

	
 


	
 

	
By: 

	
/s/ Tom
 Currie


	
 

	
 

	



	
 

	
 

	
Name: Tom
 Currie


	
 

	
 

	
Title: SVP





[AMENDMENT NO. 2 TO THE MASTER COMMUTATION, RELEASE AND RESTRUCTURING AGREEMENT]






	
 

	
 

	
 


	
 

	
SYNCORA
 GUARANTEE INC. 


	
 

	
(formerly
 known as XL Capital Assurance Inc.)


	
 

	
 

	
 


	
 

	
By: 

	
/s/ Susan
 Comparato


	
 

	
 

	



	
 

	
 

	
Name: Susan
 Comparato


	
 

	
 

	
Title: SVP,
 GC & Sec





[AMENDMENT NO. 2 TO THE MASTER COMMUTATION, RELEASE AND RESTRUCTURING AGREEMENT]






	
 

	
 

	
 


	
 

	
SYNCORA
 GUARANTEE INC., as successor 
by merger to SYNCORA GUARANTEE RE LTD 
(formerly
 known as XL Financial Assurance Ltd.)


	
 

	
 

	
 


	
 

	
By: 

	
/s/ Susan
 Comparato


	
 

	
 

	



	
 

	
 

	
Name: Susan
 Comparato


	
 

	
 

	
Title: SVP,
 GC & Secretary





[AMENDMENT NO. 2 TO THE MASTER COMMUTATION, RELEASE AND RESTRUCTURING AGREEMENT]






	
 

	
 

	
 


	
 

	
SYNCORA
 GUARANTEE SERVICES INC. 


	
 

	
(formerly
 known as XL Financial


	
 

	
Administrative
 Services Inc.)


	
 

	
 

	
 


	
 

	
By: 

	
/s/ Susan
 Comparato


	
 

	
 

	



	
 

	
 

	
Name: Susan
 Comparato


	
 

	
 

	
Title: MD
 & Secretary





[AMENDMENT NO. 2 TO THE MASTER COMMUTATION, RELEASE AND RESTRUCTURING AGREEMENT]






	
 

	
 

	
 


	
 

	
SYNCORA
 BERMUDA 
ADMINISTRATIVE 
LTD (formerly known as SCA 
Bermuda Administrative Ltd)


	
 

	
 

	
 


	
 

	
By: 

	
/s/ Tom
 Currie


	
 

	
 

	



	
 

	
 

	
Name: Tom
 Currie


	
 

	
 

	
Title: SVP





[AMENDMENT NO. 2 TO THE MASTER COMMUTATION, RELEASE AND RESTRUCTURING AGREEMENT]






	
 

	
 

	
 


	
 

	
SYNCORA
 GUARANTEE (U.K.) LTD


	
 

	
(formerly
 known as XL Capital


	
 

	
Assurance
 (U.K.) Limited)


	
 

	
 

	
 


	
 

	
By: 

	
/s/ Susan
 Comparato


	
 

	
 

	



	
 

	
 

	
Name: Susan
 Comparato


	
 

	
 

	
Title:
 Acting CEO & GC





[AMENDMENT NO. 2 TO THE MASTER COMMUTATION, RELEASE AND RESTRUCTURING AGREEMENT]






	
 

	
 

	
 

	
 


	
FF Trust 1

	
Portfolio CDS Trust 63

	
Portfolio CDS Trust 120

	
Portfolio CDS Trust 195


	
FF Trust 3

	
Portfolio CDS Trust 64

	
Portfolio CDS Trust 121

	
Portfolio CDS Trust 196


	
JPY Trust 3

	
Portfolio CDS Trust 65

	
Portfolio CDS Trust 122

	
Portfolio CDS Trust 197


	
Portfolio CDS Trust 1

	
Portfolio CDS Trust 66

	
Portfolio CDS Trust 123

	
Portfolio CDS Trust 198


	
Portfolio CDS Trust 2

	
Portfolio CDS Trust 67

	
Portfolio CDS Trust 124

	
Portfolio CDS Trust 199


	
Portfolio CDS Trust 3

	
Portfolio CDS Trust 68

	
Portfolio CDS Trust 128

	
Portfolio CDS Trust 208


	
Portfolio CDS Trust 4

	
Portfolio CDS Trust 70

	
Portfolio CDS Trust 130

	
Portfolio CDS Trust 209


	
Portfolio CDS Trust 6

	
Portfolio CDS Trust 71

	
Portfolio CDS Trust 132

	
Portfolio CDS Trust 210


	
Portfolio CDS Trust 7

	
Portfolio CDS Trust 72

	
Portfolio CDS Trust 133

	
Portfolio CDS Trust 211


	
Portfolio CDS Trust 8

	
Portfolio CDS Trust 73

	
Portfolio CDS Trust 135

	
Portfolio CDS Trust 212


	
Portfolio CDS Trust 10

	
Portfolio CDS Trust 74

	
Portfolio CDS Trust 136

	
Portfolio CDS Trust 213


	
Portfolio CDS Trust 11

	
Portfolio CDS Trust 75

	
Portfolio CDS Trust 139

	
Portfolio CDS Trust 214


	
Portfolio CDS Trust 12

	
Portfolio CDS Trust 76

	
Portfolio CDS Trust 141

	
Portfolio CDS Trust 215


	
Portfolio CDS Trust 13

	
Portfolio CDS Trust 77

	
Portfolio CDS Trust 142

	
Portfolio CDS Trust 216


	
Portfolio CDS Trust 15

	
Portfolio CDS Trust 78

	
Portfolio CDS Trust 144

	
Portfolio CDS Trust 219


	
Portfolio CDS Trust 16

	
Portfolio CDS Trust 80

	
Portfolio CDS Trust 145

	
Portfolio CDS Trust 222


	
Portfolio CDS Trust 17

	
Portfolio CDS Trust 81

	
Portfolio CDS Trust 146

	
Portfolio CDS Trust 224


	
Portfolio CDS Trust 18

	
Portfolio CDS Trust 82

	
Portfolio CDS Trust 147

	
Portfolio CDS Trust 229


	
Portfolio CDS Trust 22

	
Portfolio CDS Trust 83

	
Portfolio CDS Trust 150

	
Portfolio CDS Trust 230


	
Portfolio CDS Trust 24

	
Portfolio CDS Trust 84

	
Portfolio CDS Trust 151

	
Portfolio CDS Trust 231


	
Portfolio CDS Trust 25

	
Portfolio CDS Trust 86

	
Portfolio CDS Trust 154

	
Portfolio CDS Trust 232


	
Portfolio CDS Trust 26

	
Portfolio CDS Trust 88

	
Portfolio CDS Trust 155

	
Portfolio CDS Trust 234


	
Portfolio CDS Trust 27

	
Portfolio CDS Trust 89

	
Portfolio CDS Trust 158

	
Portfolio CDS Trust 235


	
Portfolio CDS Trust 28

	
Portfolio CDS Trust 92

	
Portfolio CDS Trust 159

	
Portfolio CDS Trust 236


	
Portfolio CDS Trust 30

	
Portfolio CDS Trust 93

	
Portfolio CDS Trust 160

	
Portfolio CDS Trust 237


	
Portfolio CDS Trust 31

	
Portfolio CDS Trust 94

	
Portfolio CDS Trust 161

	
Portfolio CDS Trust 238


	
Portfolio CDS Trust 32

	
Portfolio CDS Trust 96

	
Portfolio CDS Trust 162

	
Portfolio CDS Trust 239


	
Portfolio CDS Trust 33

	
Portfolio CDS Trust 97

	
Portfolio CDS Trust 166

	
Portfolio CDS Trust 240


	
Portfolio CDS Trust 34

	
Portfolio CDS Trust 99

	
Portfolio CDS Trust 167

	
Portfolio CDS Trust 241


	
Portfolio CDS Trust 35

	
Portfolio CDS Trust 100

	
Portfolio CDS Trust 168

	
Portfolio CDS Trust 242


	
Portfolio CDS Trust 36

	
Portfolio CDS Trust 101

	
Portfolio CDS Trust 171

	
Portfolio CDS Trust 243


	
Portfolio CDS Trust 40

	
Portfolio CDS Trust 103

	
Portfolio CDS Trust 174

	
Portfolio CDS Trust 244


	
Portfolio CDS Trust 41

	
Portfolio CDS Trust 104

	
Portfolio CDS Trust 175

	
Portfolio CDS Trust 248


	
Portfolio CDS Trust 42

	
Portfolio CDS Trust 105

	
Portfolio CDS Trust 178

	
Portfolio CDS Trust 249


	
Portfolio CDS Trust 43

	
Portfolio CDS Trust 106

	
Portfolio CDS Trust 179

	
Portfolio CDS Trust 250


	
Portfolio CDS Trust 49

	
Portfolio CDS Trust 107

	
Portfolio CDS Trust 180

	
Portfolio CDS Trust 251


	
Portfolio CDS Trust 50

	
Portfolio CDS Trust 108

	
Portfolio CDS Trust 181

	
Portfolio CDS Trust 252


	
Portfolio CDS Trust 51

	
Portfolio CDS Trust 110

	
Portfolio CDS Trust 182

	
Portfolio CDS Trust 253


	
Portfolio CDS Trust 54

	
Portfolio CDS Trust 111

	
Portfolio CDS Trust 187

	
Portfolio CDS Trust 24A


	
Portfolio CDS Trust 55

	
Portfolio CDS Trust 112

	
Portfolio CDS Trust 188

	
Portfolio CDS Trust 25A


	
Portfolio CDS Trust 56

	
Portfolio CDS Trust 113

	
Portfolio CDS Trust 189

	
Portfolio CDS Trust 29A


	
Portfolio CDS Trust 57

	
Portfolio CDS Trust 114

	
Portfolio CDS Trust 190

	
Portfolio CDS Trust 29B


	
Portfolio CDS Trust 58

	
Portfolio CDS Trust 115

	
Portfolio CDS Trust 191

	
Portfolio CDS Trust 4A


	
Portfolio CDS Trust 59

	
Portfolio CDS Trust 116

	
Portfolio CDS Trust 192

	
 


	
Portfolio CDS Trust 60

	
Portfolio CDS Trust 118

	
Portfolio CDS Trust 193

	
 


	
Portfolio CDS Trust 62

	
Portfolio CDS Trust 119

	
Portfolio CDS Trust 194

	
 








	
 

	
 

	
 


	
 

	
By: SYNCORA ADMIN LLC
 (formerly known as XLCA Admin, 
LLC) acting through Syncora Admin LLC
 (formerly known as 
XLCA Admin, LLC), as Trustee


	
 

	
 

	
 


	
 

	
By: 

	
/s/ Susan Comparato


	
 

	
 

	



	
 

	
 

	
Name: Susan Comparato


	
 

	
 

	
Title: Managing Director
 & Secretary





[AMENDMENT NO. 2 TO THE MASTER COMMUTATION, RELEASE AND RESTRUCTURING AGREEMENT]






	
 

	
 

	
 


	
 

	
AUSTRALIA
 AND NEW ZEALAND 


	
 

	
BANKING
 GROUP LIMITED


	
 

	
 

	
 


	
 

	
By: 

	
/s/ Frank
 Bonavita


	
 

	
 

	



	
 

	
 

	
Name: F.
 Bonavita


	
 

	
 

	
Title:
 Director





[AMENDMENT NO. 2 TO THE MASTER COMMUTATION, RELEASE AND RESTRUCTURING AGREEMENT]






	
 

	
 

	
 


	
 

	
BANK OF
 AMERICA, N.A.


	
 

	
 

	
 


	
 

	
By: 

	
/s/ John W.
 Woodiel III


	
 

	
 

	



	
 

	
 

	
Name: John W.
 Woodiel III


	
 

	
 

	
Title:
 Senior Vice President





[AMENDMENT NO. 2 TO THE MASTER COMMUTATION, RELEASE AND RESTRUCTURING AGREEMENT]






	
 

	
 

	
 


	
 

	
BARCLAYS
 BANK PLC


	
 

	
 

	
 


	
 

	
By: 

	
/s/ Kelly
 Smith


	
 

	
 

	



	
 

	
 

	
Name: Kelly
 Smith


	
 

	
 

	
Title:
 Director





[AMENDMENT NO. 2 TO THE MASTER COMMUTATION, RELEASE AND RESTRUCTURING AGREEMENT]






	
 

	
 

	
 


	
 

	
CALYON


	
 

	
 

	
 


	
 

	
By: 

	
/s/ Alan
 Sidrane


	
 

	
 

	



	
 

	
 

	
Name: Alan
 Sidrane


	
 

	
 

	
Title:
 Managing Director


	
 

	
 

	
 


	
 

	
By: 

	
/s/
 John-Charles van Essche


	
 

	
 

	



	
 

	
 

	
Name:
 John-Charles van Essche


	
 

	
 

	
Title:
 Managing Director





[AMENDMENT NO. 2 TO THE MASTER COMMUTATION, RELEASE AND RESTRUCTURING AGREEMENT]






	
 

	
 

	
 


	
 

	
CANADIAN
 IMPERIAL BANK OF COMMERCE


	
 

	
 

	
 


	
 

	
By: 

	
/s/ Brian
 McDonough


	
 

	
 

	



	
 

	
 

	
Name: B. T.
 McDonough


	
 

	
 

	
Title:
 Executive Vice-President





[AMENDMENT NO. 2 TO THE MASTER COMMUTATION, RELEASE AND RESTRUCTURING AGREEMENT]






	
 

	
 

	
 


	
 

	
DEUTSCHE
 BANK AG, LONDON BRANCH


	
 

	
 

	
 


	
 

	
By: 

	
/s/ Steven
 Kessler


	
 

	
 

	



	
 

	
 

	
Name: Steven
 Kessler


	
 

	
 

	
Title:
 Director


	
 

	
 

	
 


	
 

	
By: 

	
/s/ David N.
 Santore


	
 

	
 

	



	
 

	
 

	
Name: David
 N. Santore


	
 

	
 

	
Title: Vice
 President





[AMENDMENT NO. 2 TO THE MASTER COMMUTATION, RELEASE AND RESTRUCTURING AGREEMENT]






	
 

	
 

	
 


	
 

	
DEXIA BANK
 BELGIUM SA


	
 

	
 

	
 


	
 

	
By: 

	
/s/ Bernhard
 Ardaen


	
 

	
 

	



	
 

	
 

	
Name: Bernhard
 Ardaen


	
 

	
 

	
Title:
 Proxyholder


	
 

	
 

	
 


	
 

	
By: 

	
/s/ Joris
 Laenen


	
 

	
 

	



	
 

	
 

	
Name: Joris
 Laenen


	
 

	
 

	
Title: Head
 of Dealing Room





[AMENDMENT NO. 2 TO THE MASTER COMMUTATION, RELEASE AND RESTRUCTURING AGREEMENT]






	
 

	
 

	
 


	
 

	
DRESDNER
 BANK AG, LONDON BRANCH


	
 

	
 

	
 


	
 

	
By: 

	
/s/ Ronald
 G. Raffan


	
 

	
 

	



	
 

	
 

	
Name: Ronald
 G. Raffan


	
 

	
 

	
Title:
 Authorised Signatory


	
 

	
 

	
 


	
 

	
By: 

	
/s/
 Christopher Croft


	
 

	
 

	



	
 

	
 

	
Name:
 Christopher Croft


	
 

	
 

	
Title:
 Authorised Signatory





[AMENDMENT NO. 2 TO THE MASTER COMMUTATION, RELEASE AND RESTRUCTURING AGREEMENT]






	
 

	
 

	
 

	
 


	
 

	
 

	
HYPO PUBLIC
 FINANCE BANK


	
 

	
 

	
 

	
 


	
 

	
By: 

	
 /s/ Tom
 Glynn

	
/s/ Shampa
 Lahiri


	
 

	
 

	


	



	
 

	
 

	
Name: Tom
 Glynn

	
Name: Shampa
 Lahiri


	
 

	
 

	
Title:
 Authorized Signatories





[AMENDMENT NO. 2 TO THE MASTER COMMUTATION, RELEASE AND RESTRUCTURING AGREEMENT]






	
 

	
 

	
 


	
 

	
LEHMAN
 BROTHERS SPECIAL FINANCING INC.


	
 

	
 

	
 


	
 

	
By: 

	
/s/ David J.
 Colet


	
 

	
 

	



	
 

	
 

	
Name: David
 J. Colet


	
 

	
 

	
Title:
 Director





[AMENDMENT NO. 2 TO THE MASTER COMMUTATION, RELEASE AND RESTRUCTURING AGREEMENT]






	
 

	
 

	
 


	
 

	
NATIXIS


	
 

	
 

	
 


	
 

	
By: 

	
/s/ Joshua
 Laterman


	
 

	
 

	



	
 

	
 

	
Name: Joshua
 Laterman


	
 

	
 

	
Title:





[AMENDMENT NO. 2 TO THE MASTER COMMUTATION, RELEASE AND RESTRUCTURING AGREEMENT]






	
 

	
 

	
 


	
 

	
NOMURA
 INTERNATIONAL PLC


	
 

	
 

	
 


	
 

	
By: 

	
/s/ Clare
 Jarrett


	
 

	
 

	



	
 

	
 

	
Name: Clare
 Jarrett


	
 

	
 

	
Title: Head
 Transaction Legal





[AMENDMENT NO. 2 TO THE MASTER COMMUTATION, RELEASE AND RESTRUCTURING AGREEMENT]






	
 

	
 

	
 


	
 

	
ROYAL BANK
 OF CANADA


	
 

	
 

	
 


	
 

	
By: 

	
/s/ Matthew
 Gilchrist


	
 

	
 

	



	
 

	
 

	
Name:
 Matthew Gilchrist


	
 

	
 

	
Title:
 Authorized Signatory





[AMENDMENT NO. 2 TO THE MASTER COMMUTATION, RELEASE AND RESTRUCTURING AGREEMENT]






	
 

	
 

	
 


	
 

	
THE ROYAL
 BANK OF SCOTLAND PLC


	
 

	
By:
 Greenwich Capital Markets, Inc., its agent


	
 

	
 

	
 


	
 

	
By: 

	
/s/
 Nadir-Benoit Elhied


	
 

	
 

	



	
 

	
 

	
Name:
 Nadir-Benoit Elhied


	
 

	
 

	
Title: SVP





[AMENDMENT NO. 2 TO THE MASTER COMMUTATION, RELEASE AND RESTRUCTURING AGREEMENT]






	
 

	
 

	
 


	
 

	
SOCIÉTÉ
 GÉNÉRALE


	
 

	
 

	
 


	
 

	
By: 

	
/s/ Edith L.
 Hormick


	
 

	
 

	



	
 

	
 

	
Name: Edith
 L. Hormick


	
 

	
 

	
Title:
 Managing Director





[AMENDMENT NO. 2 TO THE MASTER COMMUTATION, RELEASE AND RESTRUCTURING AGREEMENT]






	
 

	
 

	
 


	
 

	
UBS AG,
 LONDON BRANCH


	
 

	
 

	
 


	
 

	
By: 

	
/s/ Bryan M.
 Murtagh


	
 

	
 

	



	
 

	
 

	
Name: Bryan
 M. Murtagh


	
 

	
 

	
Title:
 Attorney-in-Fact


	
 

	
 

	
 


	
 

	
 

	
 


	
 

	
By: 

	
/s/ Thomas
 D. Prangley


	
 

	
 

	



	
 

	
 

	
Name: Thomas
 D. Prangley


	
 

	
 

	
Title:
 Attorney in Fact





[AMENDMENT NO. 2 TO THE MASTER COMMUTATION, RELEASE AND RESTRUCTURING AGREEMENT]






	
 

	
 

	
 


	
 

	
WACHOVIA
 BANK, NATIONAL ASSOCIATION


	
 

	
 

	
 


	
 

	
By: 

	
/s/ Helen F.
 Wessling


	
 

	
 

	



	
 

	
 

	
Name: Helen
 F. Wessling


	
 

	
 

	
Title:
 Managing Director





[AMENDMENT NO. 2 TO THE MASTER COMMUTATION, RELEASE AND RESTRUCTURING AGREEMENT]