FORM OF

                              PRIMUS GUARANTY, LTD.

                          REGISTRATION RIGHTS AGREEMENT















                                TABLE OF CONTENTS


1.           [Intentionally Deleted]....................................................................1

2.           REGISTRATION RIGHTS........................................................................1

     (a)              Definitions.......................................................................1

     (b)              Demand Registration...............................................................3

     (c)              Piggyback Registration............................................................5

     (d)              Expenses of Registration..........................................................7

     (e)              Registration Procedures...........................................................7

     (f)              Indemnification..................................................................11

     (g)              Information by the Initial Holders...............................................14

     (h)              Rule 144 Reporting...............................................................14

     (i)              "Market Stand-off" Agreement.....................................................15

     (j)              Assignability....................................................................15

     (k)              Termination......................................................................15

3.           [Intentionally Deleted]...................................................................15

4.           DEFINITIONS...............................................................................15

     (a)              Terms Defined....................................................................15

5.           MISCELLANEOUS.............................................................................17

     (a)              Legends..........................................................................17

     (b)              Waiver; Amendments...............................................................18

     (c)              Amendment of Schedule I to this Agreement........................................18

     (d)              Recapitalization, Exchanges, Etc.................................................18

     (e)              Specific Performance.............................................................19

     (f)              Notices..........................................................................19

     (g)              Successors and Assigns...........................................................19

     (h)              Counterparts.....................................................................19

     (i)              Entire Agreement.................................................................19

     (j)              Applicable Law, Etc..............................................................19

     (k)              Section Headings.................................................................20

     (l)              Invalid Provisions...............................................................20



                                       i



                      FORM OF REGISTRATION RIGHTS AGREEMENT

     Registration Rights Agreement, dated as of the date of the Qualified Public
Offering (this "Agreement" and formerly known as the Shareholders' Agreement (as
defined below)), among Primus Guaranty, Ltd., a company with limited liability
organized under the laws of Bermuda (the "Company"), and each of the persons
whose names and addresses appear on Schedule I hereto, as such Schedule I may be
amended from time to time in accordance with the terms hereof (the "Holders").
Each of the foregoing defined terms shall include such persons' transferees,
successors and assigns as permitted by this Agreement. Certain capitalized terms
used in this Agreement have the meanings set forth in Section 4 of this
Agreement.

                                    RECITALS

     WHEREAS, the Company has issued an aggregate of (i) 6,212,000 Series A
Convertible Voting Preferred Shares, par value $.01 per share, of the Company
("Series A Preferred Shares"), (ii) 19,300,000 Common Shares (the "Outstanding
Common Shares"), (iii) the XL Warrant and (iv) the Radian Warrants (the Series A
Preferred Shares, the Outstanding Common Shares, the XL Warrant, the Radian
Warrants, Common Shares issuable upon conversion of the Series A Preferred
Shares or exercise of the XL Warrant and the Radian Warrants and any other
shares of the Company or securities which are convertible into or exercisable or
exchangeable for shares of the Company which may be issued and sold or granted
by the Company from time to time are referred to herein as "Company
Securities"); and

     WHEREAS, pursuant to the terms of the Subscription Agreement, dated as of
March 14, 2002, as amended (the "Subscription Agreement"), certain investors
named therein purchased the Series A Preferred Shares, the XL Warrant and the
Radian Warrants; and

     WHEREAS, in connection with the matters contemplated by the Subscription
Agreement, the Holders and the Company entered into a Shareholders' Agreement,
originally dated as of March 14, 2002, as amended and restated as of January 27,
2003, and as amended on April 6, 2004 (the "Shareholders' Agreement"), with
respect to certain matters relating to, among other things, the operations of
the Company and the disposition of Company Securities.

     NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the parties hereto hereby agree to amend and restate this
Agreement to provide as follows:

1.   [Intentionally Deleted]

2.   REGISTRATION RIGHTS

     The Initial Holders shall have the right to have their Registrable
Securities registered under the Securities Act and applicable United States
state securities laws in accordance with the following provisions.

     (a) Definitions. As used in this Section 2:


         (i) "Commission" shall mean the Securities and Exchange Commission or
any other United States of America federal agency at the time administering the
Securities Act;

         (ii) the term "Initial Holder" shall mean, at any time that such Person
is a Holder of Company Securities, each of E. Capital, Primus Capital, PCG,
Radian, Transamerica, XL, XL Capital, their respective successors and permitted
assigns, and the Employees;

         (iii) the term "Initiating Holder" shall mean, any Initial Holder or
Initial Holders who in the aggregate hold more than 75% of the Registrable
Securities; provided, however, that from and after a Qualified Public Offering,
the term "Initiating Holder" shall mean any Initial Holder or Initial Holders
who in the aggregate hold more than 15% of the Registrable Securities; and
provided, further, that notwithstanding the foregoing the Employees shall be
excluded from this definition of "Initiating Holder";

         (iv) the terms "register," "registered" and "registration" refer to a
registration effected by preparing and filing a registration statement with the
Commission in compliance with the Securities Act (and any pre- and
post-effective amendments filed or required to be filed) and the declaration or
ordering of effectiveness of such registration statement by the Commission;

         (v) the term "Registrable Securities" shall mean all Common Shares held
by the Initial Holders, whether now owned or hereafter acquired, including,
without limitation, Common Shares issued or issuable upon the conversion of the
Series A Preferred Shares or exercise of the XL Warrant or, to the extent
vested, the Radian Warrants;

        (vi) "Registration Expenses" shall mean all expenses incident to a
registration effected pursuant to Sections 2(b) and (c) hereof, including,
without limitation, all Commission, National Association of Securities Dealers
("NASD") and stock exchange or Nasdaq registration and filing fees and expenses,
fees and expenses of compliance with applicable state securities or "blue sky"
laws (including, without limitation, reasonable fees and disbursements of
counsel for the underwriters in connection with "blue sky" qualifications of the
Registrable Securities), printing expenses, messenger and delivery expenses, the
fees and expenses incurred in connection with the listing of such securities to
be registered on each securities exchange or national market system on which
such securities are listed, fees and disbursements of counsel for the Company
and all independent certified public accountants (including the expenses of any
annual audit and "cold comfort" letters required by or incident to such
performance and compliance), the fees and disbursements of underwriters
customarily paid by issuers or sellers of securities (including the fees and
expenses of any "qualified independent underwriter" required by the NASD) other
than Selling Expenses, the reasonable fees and disbursements of one counsel
retained in connection with each such registration by the holders of a majority
of the Registrable Securities being registered, the reasonable fees and expenses
of any special experts retained by the Company in connection with such
registration, and reasonable fees and expenses of other Persons retained by the
Company (but not including any underwriting discounts or commission or transfer
taxes, if any, attributable to the sale of Registrable Securities by holders of
such Registrable Securities other than the Company); and

        (vii) "Selling Expenses" shall mean all underwriting discounts and
selling commissions applicable to the sale of Registrable Securities.

                                        2


     (b) Demand Registration.

        (i) Request for Registration. Subject to Section 2(b)(ii) hereof, if the
Company shall receive, at any time after the earlier of (i) the fifth
anniversary of the original date of this Agreement and (ii) ninety (90) days
following a Qualified Public Offering, a written request (x) from an Initiating
Holder that the Company effect any registration with respect to all or a part of
the Registrable Securities of such Initiating Holder or (y) from any Initial
Holder that the Company effect a shelf registration with respect to all or a
part of such Initial Holder's Registrable Securities, the Company will:

        (A) promptly give written notice of the proposed registration to all
other Initial Holders; and

        (B) as soon as practicable, use its best efforts to effect such
registration under the Securities Act in accordance with Section 2(e) hereof (x)
in the case such registration is requested by an Initiating Holder pursuant to
Section 2(b)(i)(x), (1) on Form S-1 or any similar long-form registration
statement (a "Long-Form Registration") or (2) on Form S-3 or any similar
short-form registration statement (a "Short-Form Registration") if the Company
qualifies to effect a Short-Form Registration, and (y) in the case such
registration is requested by an Initial Holder pursuant to Section 2(b)(i)(y),
on a Short-Form Registration and, in each case, will include in such
registration, all or such portion of such Registrable Securities of the
Initiating Holder or the Initial Holder, as the case may be, as are specified in
such request in accordance with such request, together with all or such portion
of the Registrable Securities of any Initial Holder or Initial Holders joining
in such request as are specified in a written request received by the Company
within twenty (20) days after written notice from the Company is deemed given
(as provided in Section 5(f) herein) under Section 2(b)(i)(A) above.

     Any registration statement filed pursuant to a request under this Section
2(b)(i) may, subject to the provisions of Section 2(b)(iii) below, include other
securities of the Company which are held by Persons other than Initial Holders
who, by virtue of agreements with the Company, are entitled to include their
securities in such registration, but the right of such Persons to include any of
their securities in any registration requested by an Initiating Holder pursuant
to Section 2(b)(i)(x) hereof shall be subject to the limitations set forth in
Section 2(b)(iii) below.

     The Initial Holder(s) who requested a registration under this Section
2(b)(i) may, at any time prior to the effective date of the registration
statement relating to such registration, revoke such request, without liability
to any of the other Initial Holders or the Other Shareholders (as defined
below), by providing a written notice to the Company revoking such request, and
such registration request will not count towards the limitation set forth in
Section 2(b)(ii)(E) hereof.

        (ii) Limitations on Demand Registrations. The Company shall not be
obligated to effect any registration pursuant to this Section 2(b):

        (A) within one hundred and eighty (180) days following the effective
date of any underwritten public offering of the Company's securities;

                                       3


        (B) for a period of one hundred and eighty (180) days following the date
of the Board resolution described in this clause (B), if the Company furnishes
to the Initial Holders requesting the filing of a registration statement
pursuant to this Section 2(b) a certificate signed by the President or Chief
Executive Officer of the Company stating that the Board has passed a resolution
authorizing the Company to register any of its equity securities for its own
account and the Company is in the process of effecting such registration (it
being understood that the limitation described in this clause (B) shall not
affect any Initial Holder's rights with respect to a registration effected
pursuant to Section 2(c));

        (C) in any particular jurisdiction in which the Company would be
required as a result of such registration to (x) qualify generally to do
business in any jurisdiction where it would not otherwise be required to qualify
but for this clause (C), (y) subject itself to taxation or regulation of its
insurance business in any such jurisdiction other than Bermuda or (z) consent to
service of process in such jurisdiction;

        (D) if, with respect to a registration requested by an Initiating Holder
pursuant to Section 2(b)(i)(x) hereof, the Registrable Securities requested by
the Initiating Holder to be registered pursuant to such request do not have an
anticipated aggregate public offering price (net of underwriting discounts and
commissions) of (1) in the case of a request made after the fifth anniversary of
the date of this Agreement and before a Qualified Public Offering, at least
US$150,000,000 and (2) in the case of a request made after a Qualified Public
Offering, at least US$25,000,000;

        (E) if (x) with respect to a Long-Form Registration requested by an
Initiating Holder pursuant to Section 2(b)(i)(x) hereof, one (1) prior Long-Form
Registration has been effected pursuant to a request by any Initiating Holder
pursuant to Section 2(b)(i)(x) hereof, (y) with respect to a Short-Form
Registration requested by an Initiating Holder pursuant to Section 2(b)(i)(x)
hereof, two (2) prior Short-Form Registrations have been effected pursuant to
requests by any Initiating Holders pursuant to Section 2(b)(i)(x) hereof, and
(z) with respect to a shelf registration requested by an Initial Holder pursuant
to Section 2(b)(i)(y) hereof, any prior shelf registrations have been effected
pursuant to a request by such Initial Holder pursuant to Section 2(b)(i)(y)
hereof.

        (iii) Underwriting. The Initiating Holders may distribute the
Registrable Securities covered by their request for a registration pursuant to
Section 2(b)(i)(x) hereof by means of an underwriting managed by an underwriter
which shall be selected by the Company and reasonably acceptable to the
Initiating Holders.

     If holders of Common Shares other than Registrable Securities who are
entitled, by virtue of agreements with the Company, to have Common Shares
included in such an underwritten registration (the "Other Shareholders") request
such inclusion, the securities of such Other Shareholders shall be included in
the underwritten registration subject to the applicable provisions of this
Section 2. The Initial Holders whose shares are to be included in such
registration and the Company shall (together with all Other Shareholders
proposing to distribute their securities through such registration) enter into
an underwriting agreement in customary form with the representative of the
underwriter or underwriters selected for such underwriting by the Company and
reasonably acceptable to the Initiating Holders. Notwithstanding any other

                                       4


provision of this Section 2(b), if the representative for the underwriters
advises the Initial Holders or the Company in writing that (i) in the
representative's best judgment, marketing factors require a limitation on the
number of shares to be underwritten or (ii) the inclusion of shares held by
Other Shareholders and, as the case may be, officers, other employees and/or
directors of the Company in the offering could, in the representative's best
judgment, reduce the offering price per share or otherwise adversely affect the
proposed public offering, then, in the case of the preceding clause (i), the
Common Shares held by Other Shareholders shall be excluded from such
underwriting to the extent so required by such limitations and, in the case of
the preceding clause (ii), the Common Shares held by Other Shareholders and, as
the case may be, officers, other employees and/or directors of the Company shall
be excluded from such underwriting to the extent advised by the representative.
If, after the exclusion of such shares, further reductions are required to meet
the limitation on the number of shares to be underwritten as advised by the
representative, the number of shares that may be included in the underwriting by
each Initial Holder requesting inclusion in the registration shall be reduced on
a pro rata basis (based on the number of shares requested by each Initial Holder
to be included in such registration) by such minimum number of shares as is
necessary to comply with such limitation. If any Other Shareholder who has
requested inclusion in such registration as provided above disapproves of the
terms of the underwriting, such person may elect to withdraw therefrom by
written notice to the Company, the underwriter and the Initiating Holders. If
the underwriter has not limited the number of Registrable Securities or other
securities to be underwritten, the Company may include its securities for its
own account in such registration if the representative so agrees and if the
number of Registrable Securities and other securities which would otherwise have
been included in such registration and underwriting will not thereby be limited.
Any Registrable Securities or other securities excluded or withdrawn from such
underwriting shall not be included in such registration.

        (iv) Notwithstanding the foregoing, if the Company shall furnish to
Initial Holders requesting the filing of a registration statement pursuant to
this Section 2(b) a certificate signed by the President or Chief Executive
Officer of the Company stating that, in the good faith judgment of the Board, it
would be materially detrimental to the Company and its members for such
registration statement to be filed and it is therefore essential to defer the
filing of such registration statement, then the Company shall have the right to
defer such filing for a period of not more than ninety (90) days after receipt
of the request for such filing; provided, however, that the Company may not
utilize this right more than once in any twelve (12) month period.

     (c) Piggyback Registration.

        (i) If the Company shall determine to register any of its Common Shares
either for its own account or for the account of a holder or holders of Common
Shares (other than a registration on Form S-8 (or similar or successor form)
relating solely to share option, share purchase or other employee benefit plans,
or a registration on Form S-4 (or similar or successor form) relating solely to
a transaction under Rule 145 of the Securities Act, or a registration on any
registration form which does not permit secondary sales or does not include
substantially the same information as would be required to be included in a
registration statement covering the sale of Registrable Securities), the Company
will:

                                       5


        (A) promptly give to each of the Initial Holders a written notice
thereof (which shall include a list of the jurisdictions in which the Company
intends to attempt to qualify such securities under the applicable blue sky or
other state securities laws); and

        (B) include in such registration (and any related qualification under
blue sky laws or other compliance), and in any underwriting involved therein,
all the Registrable Securities specified in a written request or requests made
by the Initial Holders within twenty (20) days after the date written notice
described in clause (i)(A) above is deemed given (as provided in Section 5(f)
herein) by the Company except as set forth in Section 2(c)(ii) below. Such
written request may specify all or a part of the Initial Holders' Registrable
Securities.

        (ii) Underwriting. If the registration of which the Company gives notice
is for a registered public offering involving an underwriting, the Company shall
so advise each of the Initial Holders as a part of the written notice given
pursuant to Section 2(c)(i)(A). In such event, the right of each of the Initial
Holders to registration pursuant to this Section 2(c) shall be conditioned upon
such Initial Holders' participation in such underwriting and the inclusion of
such Initial Holders' Registrable Securities in the underwriting to the extent
provided herein. The Initial Holders whose shares are to be included in such
registration shall (together with the Company and the Other Shareholders
distributing their Common Shares through such underwriting) enter into an
underwriting agreement in customary form with the representative(s) of the
underwriter or underwriters selected for underwriting by the Company.
Notwithstanding any other provision of this Section 2(c), if the representative
advises the Initial Holders or the Company in writing that (i) marketing factors
require a limitation on the number of shares to be underwritten or (ii) the
inclusion of shares held by Other Shareholders and, as the case may be, the
officers, other employees and/or directors of the Company in the offering could,
in the representative's best judgment, materially reduce the offering price per
share or otherwise adversely affect the proposed public offering in any material
respect, then, in the case of the preceding clause (i), the Common Shares held
by Other Shareholders shall be excluded from such underwriting to the extent so
required by such limitations and, in the case of the preceding clause (ii), the
Common Shares held by Other Shareholders and, as the case may be, officers,
other employees and/or directors of the Company shall be excluded from such
underwriting to the extent so advised by the representative. If, after exclusion
of such shares, further reductions are required to meet the limitation on the
number of shares to be underwritten as advised by the representative, the number
of shares that may be included in the underwriting by each Initial Holder
requesting inclusion in such registration shall be reduced, on a pro rata basis
(based on the number of shares requested by each Initial Holder to be included
in such registration), by such minimum number of shares as is necessary to
comply with such limitation (it is hereby understood that the foregoing shall
not be a limitation on the number of Common Shares to be registered by the
Company). If any of the Initial Holders or any officer, director or Other
Shareholder disapproves of the terms of any such underwriting, he may elect to
withdraw therefrom by written notice to the Company and the underwriter. Any
Registrable Securities or other securities excluded or withdrawn from such
underwriting shall not be included in such registration.

        (iii) Number. Each of the Initial Holders shall be entitled to have its
shares included in an unlimited number of registrations pursuant to this Section
2(c).

                                       6


     (d) Expenses of Registration. Upon the exercise of registration rights set
forth in Section 2(b) or 2(c) hereof, the Company shall pay all Registration
Expenses incurred in connection with any registration, qualification or
compliance pursuant thereto, provided that, in either case, the Company shall in
no event be responsible for Selling Expenses, which shall be borne by the
holders of the securities so registered, pro rata on the basis of the number of
their shares so registered; provided, however, that the Company shall not
otherwise be required to pay any Registration Expenses if, as a result of the
withdrawal of a request for registration by any of the Initial Holders, as
applicable, including, without limitation, as provided in the last paragraph of
Section 2(b)(i) hereof, the registration statement does not become effective, in
which case each Initial Holder requesting registration and thereafter
withdrawing such request for registration shall bear such Registration Expenses
pro rata on the basis of the number of its shares so included in the
registration request and shall promptly reimburse such Registration Expenses to
the Company. It is further acknowledged and agreed that the Company shall not be
responsible for or required to pay any Registration Expenses directly
attributable to, including, without limitation, the fees and expenses of legal
counsel retained by the Company on behalf of, any Initial Holder that has
withdrawn its request for registration of its Registrable Securities pursuant to
Section 2(c) hereof and such Initial Holder shall promptly reimburse such
Registration Expenses to the Company following the withdrawal of such Initial
Holder's request for registration pursuant to Section 2(c) hereof.

     (e) Registration Procedures. In the case of each registration effected by
the Company pursuant to Section 2, the Company will promptly advise each Initial
Holder in writing as to the initiation of each registration and as to the
completion thereof. In connection with any offering of Registrable Securities
registered pursuant to subsection (b) or (c) of this Section 2, the Company
shall use its best efforts to obtain at its expense all necessary permissions
from the Bermuda governmental authorities and, upon obtaining such permission,
at its expense, and subject to the terms and conditions of Sections 2(b) and
2(c) hereof, the Company shall:

        (i) prepare and file with the Commission, as promptly as practical after
receipt of a request for registration pursuant to this Section 2, a registration
statement on any form for which the Company then qualifies, and which form shall
be available for the sale of the Registrable Securities in accordance with the
intended methods of distribution thereof, and use its commercially reasonable
best efforts to cause such registration statement to become and remain effective
as provided herein; provided that (A) at least five (5) Business Days before
filing with the Commission a registration statement or prospectus or any
amendments or supplements thereto, the Company will furnish to one counsel
selected by the Initial Holders of a majority of the Registrable Securities
requested to be registered, copies of all such documents proposed to be filed
for said counsel's review and comment and (B) the Company shall not file with
the Commission a registration statement or prospectus or any amendments or
supplements thereto to which the Initial Holders of a majority of the
Registrable Securities or their counsel shall reasonably object on a timely
basis;

        (ii) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration effective for a period
of one hundred and eighty (180) days or until the Initial Holders have completed
the distribution described in the registration statement relating thereto,
whichever first occurs (but not before the time periods referred to in Section
4(3)


                                       7


of the Securities Act and Rule 174 promulgated thereunder, or any successor
provisions, if applicable); cause the related prospectus to be amended or
supplemented by any required prospectus supplement and to be filed as so amended
or supplemented with the Commission pursuant to Rule 424; respond as promptly as
practicable to any comments received from the Commission with respect to such
registration statement or any amendment or supplement thereto and provide as
promptly as practicable to each Initial Holder of Registrable Securities covered
by such registration statement copies of all correspondence with the Commission
relating to such registration statement or any amendment or supplement thereto;
and comply with the provisions of the Securities Act and the Exchange Act with
respect to the disposition of securities covered by such registration statement
during such period in accordance with the intended method of disposition by
sellers thereof set forth in such registration statement as amended or
supplemented; provided, however, that (A) such 180-day period shall be extended
for a period of time equal to the period, if any, during which the Initial
Holders refrain from selling any securities included in such registration in
accordance with provisions of the last paragraph of this Section 2(e) and (B) in
the case of any registration of Registrable Securities pursuant to a Short-Form
Registration which are intended to be offered on a continuous or delayed basis,
such 180-day period shall be extended until all such Registrable Securities are
sold, provided that (x) Rule 415, or any successor rule under the Securities
Act, permits an offering on a continuous or delayed basis, and (y) the
applicable rules under the Securities Act governing the obligation to file a
post-effective amendment permit, in lieu of filing a post-effective amendment
which (1) includes any prospectus required by Section 10(a)(3) of the Securities
Act or (2) reflects facts or events representing a material or fundamental
change in the information set forth in the registration statement, the
incorporation in the registration statement by reference to periodic reports
filed pursuant to Section 13 or 15(d) of the Exchange Act of the information
specified in clauses (1) and (2) above, and (z) in no event shall the Company be
required to maintain the effectiveness of such Registration Statement for a
period exceeding 2 years;

        (iii) furnish to each underwriter, if any, and each Initial Holder of
Registrable Securities covered by such registration statement such number of
copies of such registration statement, and the prospectus included in such
registration statement (including each preliminary prospectus), each amendment
and supplement thereto (in each case including all exhibits thereto and any
documents incorporated by reference therein), and such other documents incident
thereto as each of the Initial Holders from time to time may reasonably request
in order to facilitate the disposition of the Registrable Securities owned by
such Initial Holder in accordance with the intended method of disposition (it
being understood that, subject to the terms hereof relating to the obligations
of the Initial Holders, the Company consents to the use of such prospectus and
each such amendment and supplement thereto by each underwriter, if any, and such
Initial Holder in connection with such disposition);

        (iv) use its best efforts to register or qualify such Registrable
Securities under such other state securities or "blue sky" laws of such
jurisdictions as any Initial Holder, and underwriter, if any, of Registrable
Securities covered by such registration statement reasonably requests and do any
and all other acts and things that may be reasonably necessary or advisable to
enable such Initial Holder and each underwriter, if any, to consummate the
disposition in such jurisdictions of the Registrable Securities owned by such
Initial Holder; provided that the Company will not be required as a result
thereof to (A) qualify generally to do business in any jurisdiction where it
would not otherwise be required to qualify but for this clause (iv), (B)

                                       8


subject itself to taxation or regulation of its insurance business in any such
jurisdiction other than Bermuda or (C) consent to general service of process in
any such jurisdiction;

        (v) use its best efforts to cause the Registrable Securities covered by
such registration statement to be registered with or approved by such other
governmental agencies or authorities as may be necessary by virtue of the
business and operations of the Company to enable the Initial Holder or Initial
Holders thereof to consummate the disposition of such Registrable Securities in
accordance with the intended method of disposition;

        (vi) immediately notify each underwriter, if any, and each Initial
Holder of such Registrable Securities at any time when a prospectus relating
thereto is required to be delivered under the Securities Act of the happening of
any event that comes to the Company's attention if as a result of such event the
prospectus included in such registration statement contains an untrue statement
of a material fact or omits to state any material fact required to be stated
therein or necessary to make the statements therein not misleading; and the
Company will promptly prepare and furnish to such Initial Holder a supplement or
amendment to such prospectus so that, as thereafter delivered to the purchasers
of such Registrable Securities, such prospectus will not contain an 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;

        (vii) use its best efforts to cause all such Registrable Securities to
be listed or quoted on (x) any national securities exchange or market in the
United States on which the Common Shares may then be listed or quoted and (y)
each securities exchange or market on which similar securities issued by the
Company may then be listed or quoted, and enter into such customary agreements
including a listing application and indemnification agreement in customary form,
in each case by the date of the first sale of such Registrable Securities, and,
subject to Bermuda law, to provide a transfer agent and registrar for such
Registrable Securities covered by such registration statement no later than the
effective date of such registration statement;

        (viii) enter into such customary agreements (including an underwriting
agreement or qualified independent underwriting agreement, in each case, in
customary form) and take all such other actions (including, without limitation,
making members of its senior management available to participate in "road show"
and other customary marketing activities and causing to be delivered customary
opinions of its counsel) as the Initial Holders of a majority of the Registrable
Securities being covered by such registration statement or the underwriters
retained by such Initial Holders, if any, reasonably request in order to
expedite or facilitate the disposition of such Registrable Securities, including
customary representations, warranties, indemnities and agreements;

        (ix) make available for inspection, during business hours of the
Company, by any Initial Holder of Registrable Securities covered by such
registration statement, any underwriter participating in any disposition
pursuant to such registration statement, and any attorney, accountant or other
agent retained by any such Initial Holder or underwriter, all financial and
other records, pertinent corporate documents and properties of the Company and
its subsidiaries, if any, as shall be reasonably necessary to enable them to
exercise their due diligence responsibility, and cause the Company's officers,
directors and employees, and those

                                       9


of the Company's affiliates, if any, to supply all information and respond to
all inquiries reasonably requested by any such Inspector in connection with such
registration statement;

        (x) use its best efforts to obtain a "cold comfort" letter from the
Company's appointed auditors in customary form and covering such matters of the
type customarily covered by "cold comfort" letters as the Initial Holders of a
majority in interest of the Registrable Securities being sold or any underwriter
retained by such Initial Holders reasonably request;

        (xi) (A) promptly notify each Initial Holder of Registrable Securities
covered or to be covered by such registration statement of any stop order issued
or threatened by the Commission and of the receipt by the Company of any
notification with respect to the suspension of the qualification (or exemption
from qualification) of any such Registrable Securities under the applicable
securities or "blue sky" laws of any jurisdiction and (B) use its best efforts
to prevent the entry or issuance of, or if entered or issued, obtain the
withdrawal of such stop order or such suspension at the earliest possible
moment;

        (xii) if requested by any underwriter or Initial Holder of Registrable
Securities covered by such registration statement, promptly incorporate in a
prospectus supplement or, subject to subsection (ii)(B)(y) of this Section 2(e),
post-effective amendment such information as such underwriter or Initial Holder
reasonably requests to be included therein, including, without limitation, with
respect to the number of shares being sold by such Initial Holder to such
underwriter, the purchase price being paid therefor by such underwriter and with
respect to any term of the underwritten offering of the securities to be sold in
such offering; and make all required filings of such prospectus supplement or,
subject to subsection (ii)(B)(y) of this Section 2(e), post-effective amendment
as soon as practicable after being notified of the matters to be incorporated in
such prospectus supplement or post-effective amendment;

        (xiii) as promptly as practical after filing with the Commission any
document which is incorporated by reference into such registration statement,
deliver a copy of such document to each underwriter, if any, and each Initial
Holder of Registrable Securities covered by such registration statement;

        (xiv) cooperate with each underwriter, if any, and each Initial Holder
of Registrable Securities covered by such registration statement to facilitate
the timely preparation and delivery of certificates (not bearing any restrictive
legends) representing securities to be sold under such registration statement,
and enable such securities to be in such denominations and registered in such
names as such underwriter, if any, or such Initial Holder requests; and

        (xv) otherwise comply with all applicable rules and regulations of the
Commission and all conditions imposed by Bermuda governmental authorities or
under Bermuda law, including, without limitation, under the Bermuda Companies
Act 1981, and make available to the Initial Holders, as soon as reasonably
practicable, an earnings statement covering a period of at least twelve months
beginning after the effective date of the registration statement (as the term
"effective date" is defined in Rule 158(c) under the Securities Act) which
earnings statement shall satisfy the provisions of Section 11(a) of the
Securities Act and Rule 158 thereunder.

                                       10


     It shall be a condition precedent to the obligation of the Company to take
any action with respect to any Registrable Securities that the Initial Holder
thereof shall furnish to the Company in writing such information regarding the
Initial Holder and the Registrable Securities and any other Company Securities
held by such Initial Holder and the intended method of disposition of the
Registrable Securities held by such Initial Holder as the Company shall
reasonably request and as shall be required in connection with the action taken
by the Company and the Initial Holder shall enter into such customary agreements
(including, without limitation, custody agreements) and cause to be delivered on
its behalf such customary certificates and legal opinions as the Company may
reasonably request.

     Each Initial Holder of Registrable Securities agrees that, upon receipt of
any notice from the Company of the happening of any event of the kind described
in Section 2(e)(vi) hereof, such Initial Holder will forthwith discontinue
disposition of Registrable Securities and shall not deliver to any person any
copies of the registration statement or prospectus relating to such disposition
until such Initial Holder's receipt of the copies of the supplemented or amended
prospectus contemplated by Section 2(e)(vi) hereof, and, if so directed by the
Company (at the Company's expense), such Initial Holder will deliver to the
Company all copies (including, without limitation, any and all drafts), other
than permanent file copies, then in such Initial Holder's possession, of the
prospectus covering such Registrable Securities current at the time of receipt
of such notice.

     (f) Indemnification.

        (i) In the event of any registration of any Registrable Securities under
the Securities Act pursuant to this Agreement, the Company will indemnify and
hold harmless each of the Initial Holders of Registrable Securities covered by
such registration statement, their respective directors, officers, managers and
general partners, limited partners, members, and managing directors and each
other Person, if any, who controls, is controlled by or is under common control
with any such Initial Holder within the meaning of the Securities Act (and
directors, officers, managers and partners, members, and managing directors and
controlling Persons of any of the foregoing) against any and all losses, claims,
damages and liabilities (or actions or proceedings in respect thereto), joint or
several, and costs and expenses (including any amounts paid in any settlement
effected with the Company's consent, which consent will not be unreasonably
withheld, delayed or conditioned) to which such Initial Holder, any such
director, officer, or general or limited partner, member or managing director or
any such controlling Person may become subject under the Securities Act, United
States state securities or "blue sky" laws, common law or otherwise, insofar as
such losses, claims, damages or liabilities (or actions or proceedings in
respect thereof) or costs or expenses arise out of or are based upon (A) any
untrue statement (or alleged untrue statement) of any material fact contained in
any registration statement under which such securities were registered under the
Securities Act, any preliminary, final or summary prospectus contained therein,
or any amendment or supplement thereto, or (B) any omission (or alleged
omission) to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading. The Company will
reimburse each such Initial Holder, director, officer, general partner, limited
partner, member, managing director or controlling Person (and directors,
officers, managers, partners, members, and managing directors and controlling
Persons of any of the foregoing) for any legal and any other expenses reasonably
incurred in connection with investigating or defending such claim, loss, damage,

                                       11


liability or action; provided, however, that the Company shall not be liable in
any such case to the extent that any such claim, loss, damage, liability (or
action or proceeding in respect thereof) or expense arises out of or is based on
any untrue statement (or alleged untrue statement) or omission (or alleged
omission) made in such registration statement or amendment or supplement thereto
or in any such preliminary, final or summary prospectus in reliance upon and in
conformity with written information furnished to the Company by or on behalf of
such Initial Holder in its capacity as a Holder or any such director, officer,
manager, general or limited partner, member, managing director, or controlling
Person specifically stating that it is for use therein; provided further,
however, that the Company shall not be liable to any Initial Holder pursuant to
this Section 2(f) with respect to any untrue statement or omission or alleged
untrue statement or omission made in any preliminary prospectus or the final
prospectus or the final prospectus as amended or supplemented, as the case may
be, to the extent that any such loss, claim, damage or liability of such Initial
Holder results from the fact that such Initial Holder or its underwriter 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
or of the final prospectus as then amended or supplemented, whichever is most
recent, if the Company has previously furnished copies thereof to such Initial
Holder or underwriter and such final prospectus, as then amended or
supplemented, had corrected any such misstatement or omission.

     The indemnity provided for herein shall remain in full force and effect
regardless of any investigation made by or on behalf of such Initial Holder or
any such director, officer, manager, general partner, limited partner, member,
managing director, or controlling Person and shall survive the transfer of such
securities by such Initial Holder.

        (ii) Each of the Initial Holders will, if Registrable Securities held by
it are included in any registration statement filed in accordance with the
provisions hereof, (x) indemnify, on a several and not joint basis, the Company
and its directors, officers, controlling Persons and all other prospective
sellers and their respective directors, officers, general and limited partners,
managing directors, and their respective controlling Persons against all claims,
losses, damages and liabilities (or actions in respect thereof) and expenses to
which any such Person may become subject under the Securities Act, United States
state securities "blue sky" laws, common law or otherwise, insofar as such
losses, claims, damages or liabilities (or actions or proceedings in respect
thereof) or expenses arise out of or are based upon (A) any untrue statement (or
alleged untrue statement) of a material fact with respect to such Initial Holder
contained in any such registration statement, preliminary, final or summary
prospectus contained therein, or any amendment or supplement thereto, or (B) any
omission (or alleged omission) to state therein a material fact with respect to
such Initial Holder required to be stated therein or necessary to make the
statements made by such Initial Holder therein not misleading and (y) reimburse
the Company and its directors, officers, controlling Persons and all other
prospective sellers and their respective directors, officers, general and
limited partners, managing directors, and their respective controlling Persons
for any legal or any other expenses reasonably incurred in connection with
investigating or defending any such claim, loss, damage, liability or action, in
the case of both clause (x) and clause (y), to the extent, and only to the
extent, that such untrue statement (or alleged untrue statement) or omission (or
alleged omission) is made in such registration statement, preliminary, final or
summary prospectus contained therein, or any amendment or supplement thereto in
reliance upon and in conformity with written information furnished to the
Company by such Initial Holder with respect to such Initial Holder and stated to

                                       12


be specifically for use therein; provided, however, that the obligations of each
of the Initial Holders hereunder shall be limited to an amount equal to the net
proceeds received by such Initial Holder from securities sold by such Initial
Holder pursuant to such registration statement or prospectus.

     The indemnity provided for herein shall remain in full force and effect
regardless of any investigation made by or on behalf of the Company or any of
the Initial Holders, underwriters or any of their respective directors,
officers, general or limited partners, managing directors or controlling Persons
and shall survive the transfer of such securities by such Initial Holder.

        (iii) Each party entitled to indemnification under this Section 2(f)
(the "Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom provided that counsel for the Indemnifying Party,
who shall conduct the defense of such claim or any litigation resulting
therefrom, shall be approved by the Indemnified Party (whose approval shall not
unreasonably be withheld, delayed or conditioned) and the Indemnified Party may
participate in such defense at such party's expense (unless the Indemnified
Party shall have reasonably concluded that (A) the Indemnifying Party has failed
to promptly assume such defense or vigorously defend such claim or litigation or
(B) there may be a conflict of interest between the Indemnifying Party and the
Indemnified Party in such action, in which case the reasonable fees and expenses
of the Indemnified Party's counsel, which counsel shall have been reasonably
agreed to by the Indemnifying Party) shall be at the expense of the Indemnifying
Party and shall be reimbursed as they are incurred); and provided, further, that
the failure of any Indemnified Party to give notice as provided herein shall not
relieve the Indemnifying Party of its obligations under this Section 2 except to
the extent the Indemnifying Party is actually materially prejudiced thereby. No
Indemnifying Party, in the defense of any such claim or litigation, shall,
except with the written consent of each Indemnified Party, consent to entry of
any judgment or enter into any settlement which does not include as a term
thereof the giving by the claimant or plaintiff to such Indemnified Party of an
unconditional release from all liability with respect to such claim or
litigation or which includes any statement as to an admission of fault,
culpability or failure to act by or on behalf of the Indemnified Party. Each
Indemnified Party shall promptly furnish such information regarding itself or
the claim in question as an Indemnifying Party may reasonably request in writing
and as shall be reasonably required in connection with the defense of such claim
and litigation resulting therefrom.

        (iv) In order to provide for a just and equitable contribution in
circumstances in which any of the foregoing indemnity agreements provided for in
this Section 2(f) is for any reason held to be unavailable to an Indemnified
Party, the Company and the Initial Holders, as the case may be, shall contribute
to the aggregate losses, liabilities, claims, damages and expenses of the nature
contemplated by such indemnity agreement in such proportion as shall be
appropriate to reflect (A) the relative benefits received by the Company, on the
one hand, and the Initial Holders of the Registrable Securities included in the
offering on the other hand, and (B) the relative fault of the Company, on the
one hand, and the Initial Holders of the securities included in the offering, on
the other, with respect to the statements or omissions that resulted in such
loss, liability, claim, damage or expense, or action in respect thereof, as well
as any other

                                       13


relevant equitable considerations; provided, however, that no Person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to a contribution from any Person who was not
guilty of such fraudulent misrepresentation. The relative fault shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or omission or alleged omission to state a
material fact relates to information supplied by the Company or the Initial
Holders, the intent of the parties and their relative knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company and the Initial Holders agree that it would not be just and
equitable if a contribution pursuant to this Section 2(f) were to be determined
by pro rata allocation or by any other method of allocation that does not take
into account the equitable considerations referred to herein. Notwithstanding
anything to the contrary contained herein, the Company and the Initial Holders
agree that any contribution required to be made by a Holder pursuant to this
Section 2(f) shall not exceed the net proceeds from the offering of securities
received by such Initial Holder with respect to such offering. For purposes of
this Section 2(f), each Person, if any, who controls a Holder within the meaning
of Section 15 of the Securities Act shall have the same rights to contribution
as such Initial Holder, and each director of the Company, each officer of the
Company who signed the registration statement, and each Person, if any, who
controls the Company within the meaning of Section 15 of the Securities Act
shall have the same rights to contribution as the Company.

     (g) Information by the Initial Holders. Each of the Initial Holders
included in any registration shall furnish to the Company such information
regarding such Initial Holder and the distribution proposed by such Initial
Holder as the Company may reasonably request in writing and as shall be
reasonably required in connection with any registration, qualification or
compliance referred to in this Section 2.

     (h) Rule 144 Reporting. With a view to making available the benefits of
certain rules and regulations of the Commission which may permit the sale of
restricted securities to the public without registration, the Company agrees to:

        (A) make and keep public information available as those terms are
understood and defined in Rule 144 under the Securities Act, at all times from
and after the effective date of the first registration statement under the
Securities Act filed by the Company for an offering of its securities to the
general public;

        (B) file with the Commission in a timely manner all reports and other
documents required of the Company under the Securities Act and the Exchange Act
at any time after it has become subject to such reporting requirements; and

        (C) so long as any Holder owns any Company Securities, furnish to such
Holder upon request a written statement by the Company as to its compliance with
the reporting requirements of Rule 144 under the Securities Act (at any time
from and after the effective date of the first registration statement filed by
the Company for an offering of its securities to the general public), and of the
Securities Act and the Exchange Act (at any time after it has become subject to
such reporting requirements).

                                       14


     (i) "Market Stand-off" Agreement. If any registration of Common Shares (or
other securities) of the Company shall be in connection with an underwritten
public offering, each Holder agrees not to effect any sale or distribution,
including any private placement or any sale pursuant to Rule 144A under the
Securities Act (or any successor provision) or otherwise or any sale pursuant to
Rule 144 under the Securities Act (or any successor provision) of any Common
Shares, other than (x) to one or more of its Permitted Transferees who agree to
be bound by this Section 2(i) or (y) by pro-rata distribution to its
shareholders, partners or other beneficial holders who agree to be bound by this
Section 2(i), and not to effect any such sale or distribution of any other
equity security of the Company or of any security convertible into or
exchangeable or exercisable for any equity security of the Company (in each
case, other than as part of such underwritten public offering) during the ten
calendar days prior to, and during the ninety (90) calendar day period (or such
other period as may be agreed upon between such Holder and the representative of
the underwriters of such offering) that begins on the effective date of such
registration statement (except as part of such registration), without the
consent of the representative of the underwriters of such offerings; provided,
that (A) written notice of such registration has been deemed given (as provided
in Section 5(f) herein) to each Holder at least two Business Days prior to the
anticipated beginning of the ten calendar day period referred to above and (B)
all directors and executive officers of the Company also agree not to effect any
such sale or distribution (other than as part of such underwritten offering)
during such period. If requested by the representative of the underwriters, the
Holders shall execute a separate agreement to the foregoing effect. The Company
may impose stop-transfer instructions with respect to the shares (or securities)
subject to the foregoing restriction until the end of said 90-day period. The
provisions of this Section 2(i) shall be binding upon any transferee who
acquires Common Shares, including, without limitation, any Holder's
shareholders, partners or other beneficial holders, whether or not such
transferee is entitled to the registration rights provided hereunder. The
obligations described in this Section 2(i) shall not apply to a registration
relating solely to employee benefit plans on Form S-1 or S-8, or to a
registration relating solely to a transaction on Form S-4.

     (j) Assignability. The registration rights set forth in this Section 2
shall be assignable by any Initial Holder, in whole or in part, to any
Transferee of Registrable Securities receiving such Transferred Registrable
Securities in accordance with the terms of this Agreement provided such
Transferee agrees to be bound by all provisions of this Agreement as an Initial
Holder with respect to this Section 2 and as a Holder with respect to all other
Sections of this Agreement.

     (k) Termination. The registration rights set forth in Section 2(b) hereof
shall not be available to any Initial Holder if, in the opinion of counsel to
the Company, all of the Registrable Securities then owned by such Initial Holder
legally could be sold (x) in any 90 day period pursuant to Rule 144 under the
Securities Act or (y) pursuant to Rule 144(k) under the Securities Act.

3.   [Intentionally Deleted]

4.   DEFINITIONS

     (a) Terms Defined. As used in this Agreement, the following terms have the
respective meaning set forth below:

                                       15


     $: means United States dollars. -

     As-converted basis: means including Common Shares issuable upon conversion
of the Series A Preferred Shares.

     Board: means the board of directors of the Company.

     Business Day: means any day except a Saturday, Sunday or other day on which
commercial banks in The City of New York or Bermuda are required or are
authorized by law or executive order to close.

     Commission: means the United States Securities and Exchange Commission.

     Common Shares: means common shares, par value $.01 per share, of the
Company.

     E.Capital: means E.Capital Technologies, LLC, a Delaware limited liability
company.

     Employees: means the employees of the Company on the date of filing a
registration statement and to which the piggy back registration rights set forth
in Section 2(c) are applicable.

     Exchange Act: means the United States Securities Exchange Act of 1934, as
amended.

     PCG: means CalPERS/PCG Corporate Partners, LLC, a Delaware limited
liability company.

     Person: means an individual, partnership, joint-stock company, joint
venture, corporation, trust or unincorporated organization, limited liability
company, or a government or agency or political subdivision thereof or any other
entity.

     Primus Capital: shall mean Primus Capital Advisors, L.L.C., a Delaware
limited liability company.

     Qualified Public Offering: means the closing of an underwritten public
offering of Common Shares pursuant to a registration statement under the
Securities Act resulting in gross proceeds to the Company of at least
US$100,000,000 at a price per share no less than 200% of the Series A Preferred
Shares conversion price in effect as of such date.

     Radian: means Radian Group Inc., a Delaware corporation.

     Radian Warrants: means Common Share Purchase Warrant Certificates dated
March 14, 2002 for 8,488,479 Common Shares and up to 8,751,010 Common Shares,
respectively, of the Company, executed and delivered by the Company to Radian
(together with any amendments, modifications or supplements thereto as may be
made from time to time in accordance with the terms thereof).

     Securities Act: means the United States Securities Act of 1933, as amended.

     Transamerica: means Transamerica Life Insurance Company, an Iowa insurance
company.

                                       16


     Transfer: means any voluntary direct or indirect sale, assignment,
conveyance, pledge, charge, hypothecation, encumbrance or other disposition of
any interest.

     Warrants: means, individually and collectively, the Radian Warrants and the
XL Warrant.

     XL: means XL Insurance (Bermuda) Ltd., a company organized under the laws
of Bermuda.

     XL Capital: means XL Capital Principal Partners I, L.L.C., a Delaware
limited liability company.

     XL Warrant: means that certain Common Share Purchase Warrant Certificate
dated March 14, 2002 for 11,317,972 Common Shares of the Company executed and
delivered by the Company to XL (together with any amendments, modifications or
supplements thereto as may be made from time to time in accordance with the
terms thereof).

5.   MISCELLANEOUS

     (a) Legends. In addition to any other legends required by applicable law,
the Company's Bye-laws or any other agreement restricting the Transfer of the
Company Securities, each certificate evidencing the Company Securities will bear
a legend reflecting the restrictions on the Transfer of such securities
contained in this Agreement, and, specifically, each certificate evidencing the
Company Securities shall (unless otherwise permitted by this Agreement) be
stamped or otherwise imprinted with a legend in substantially the following
form:

     ANY SALE, ASSIGNMENT, TRANSFER, PLEDGE OR OTHER DISPOSITION OF THE
     SECURITIES REPRESENTED BY THIS CERTIFICATE IS RESTRICTED BY, AND THE RIGHTS
     OF THE HOLDER OF SUCH SECURITIES ARE SUBJECT TO, THE TERMS AND CONDITIONS
     CONTAINED IN THE BYE-LAWS OF PRIMUS GUARANTY, LTD. (THE "COMPANY"), THE
     SUBSCRIPTION AGREEMENT AND THE REGISTRATION RIGHTS AGREEMENT WHICH ARE
     AVAILABLE FOR EXAMINATION BY HOLDERS OF THESE SECURITIES AT THE REGISTERED
     OFFICE OF THE COMPANY.

     NEITHER THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES
     ISSUABLE UPON THEIR CONVERSION HAVE BEEN REGISTERED UNDER THE SECURITIES
     ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED
     STATES. THE SECURITIES REPRESENTED HEREBY AND THE SECURITIES ISSUABLE UPON
     THEIR CONVERSION OR EXERCISE MAY NOT BE OFFERED OR SOLD OR OTHERWISE
     TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE
     SECURITIES UNDER APPLICABLE SECURITIES LAWS OR UNLESS OFFERED, SOLD OR
     TRANSFERRED PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION
     REQUIREMENTS OF THOSE LAWS.

                                       17


     ANY TRANSFER OR ASSIGNMENT OF THESE SECURITIES AS WELL AS ANY ISSUE,
     TRANSFER OR ASSIGNMENT OF THE SHARES REFERRED TO ABOVE REQUIRES THE PRIOR
     APPROVAL OF THE BERMUDA MONETARY AUTHORITY. CERTAIN PERMISSIONS HAVE BEEN
     RECEIVED FROM THE BERMUDA MONETARY AUTHORITY FOR ISSUES, TRANSFERS AND
     ASSIGNMENTS SUBJECT TO COMPLIANCE WITH CONDITIONS.

     (b) Waiver; Amendments. Except as expressly provided otherwise herein,
neither this Agreement nor any provision hereof may be changed, waived,
discharged or terminated orally, but only by an instrument in writing signed by
the Company and each of the Holders at the time who are party to this Agreement;
provided, however, that, any provision hereof, other than those provisions
specified below, and any defined terms used therein and other than this Section
5(b), may be amended, which amendment shall be effective as to all Holders, with
the consent of the Company and the Holders parties hereto that at the time just
prior to the amendment hold at least seventy-five percent (75%) of the Common
Shares (on an as-converted basis); provided, further, however, that (i) any
amendment to Section 3 and any defined terms used therein shall require the
consent of the Company and the Holders parties hereto that at the time just
prior to the amendment hold at least ninety percent (90%) of the Common Shares
of the Company, on an as-converted basis, (ii) any amendment to any provision
that affects the Holders of the Series A Preferred Shares in their capacities as
such shall require the consent of the Holders of ninety percent (90%) of the
Series A Preferred Shares party hereto at that time and (iii) any amendment to
this Section 5(b) shall require the consent of each Holder purchasing at least
US$20 million of Series A Preferred Shares under the Subscription Agreement.

     (c) Amendment of Schedule I to this Agreement. The Secretary of the Company
shall, promptly when and as necessary, amend Schedule I to this Agreement to
reflect accurately the addition or deletion of parties to this Agreement by
virtue of the succession, assignment, or other Transfer or issuance of Company
Securities in accordance with this Agreement, including, without limitation, in
respect of the Transfer by any Holder of Company Securities to a Permitted
Transferee, and applicable law.

     (d) Recapitalization, Exchanges, Etc. The provisions of this Agreement
shall apply to the full extent set forth herein with respect to shares or other
securities of the Company that may be issued in respect of, in exchange for, or
in substitution of the Company Securities pursuant to any share subdivision,
combination, split, reclassification, exchange or similar transaction or event.
The Company agrees not to enter into any transaction with any Person pursuant to
which shares or other securities of such Person will be exchanged or substituted
for the Company Securities unless it is a condition to such transaction that
such Person and the Holders execute an agreement substantially in the form of
this Agreement (or the surviving provisions hereof).

     (e) Specific Performance. Each of the parties hereto acknowledges and
agrees that, in the event of any breach of this Agreement, the non-breaching
parties would be irreparably harmed and could not be made whole by monetary
damages. Accordingly, each of the parties hereto agrees that the other parties,
in addition to any other remedy to which they may be entitled at law or in
equity, shall be entitled to compel specific performance of this Agreement.

                                       18


     (f) Notices. All notices, requests, demands and other communications
hereunder shall be in writing and, except to the extent otherwise provided in
this Agreement, shall be deemed to have been duly given if delivered by same day
or next day courier or mailed, registered mail, return receipt requested, or
transmitted by telegram, telex or facsimile (i) if to a Holder, at such Holder's
address appearing on Schedule I attached hereto or at any other address such
Holder may have provided in writing to the Company and (ii) if to the Company,
at Clarendon House, 2 Church Street, Hamilton HM 11, Bermuda, Attention:
Secretary, or such other address as the Company may have furnished to the
Holders in writing. A notice hereunder shall be deemed to have been given on the
day such notice is sent or transmitted; provided, however, that if such notice
is sent by next-day courier it shall be deemed to have been given the day
following sending and, if by registered mail, five days following sending.

     (g) Successors and Assigns. Except as otherwise provided herein, this
Agreement shall inure to the benefit of, and be binding upon, the successors and
assigns of each of the parties; provided, however, that this Agreement may not
be assigned by any party hereto other than in compliance with the terms hereof.

     (h) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original and all of which
together shall be considered one and the same agreement.

     (i) Entire Agreement. This Agreement and the Subscription Agreement
constitute the entire understanding of the parties hereto and supersede all
prior understandings among such parties.

     (j) Applicable Law, Etc.. Except (a) where this Agreement expressly refers
to the laws or regulations of Bermuda and (b) that it is the intent of the
parties hereto that the laws of Bermuda govern any articles, bye-laws, contracts
or agreements created thereunder or expressed to be governed thereby, the
validity of this Agreement, its construction, interpretation and enforcement,
and the rights of the parties hereunder, shall be determined under, governed by
and construed in accordance with the laws of New York without giving effect to
the principles of conflicts of laws thereof. The parties acknowledge that the
expeditious and equitable settlement of disputes arising under this Agreement is
to their mutual advantage. To that end, the parties agree to use their best
efforts to resolve all differences of opinion and to settle all disputes through
joint cooperation and consultation. Any dispute, alleged breach, interpretation,
challenge or disagreement whatsoever arising out of this Agreement that the
parties are unable to settle within sixty (60) days, as set forth in the
preceding sentence, shall be resolved by final and binding arbitration before a
panel of three arbitrators serving under the Commercial Arbitration Rules of the
American Arbitration Association, as supplemented by the Association's
"Supplementary Procedures for Large Complex Disputes," regardless of the amount
in dispute; provided, however, that any temporary restraining orders,
preliminary injunctions or their equivalent may be obtained from any court of
competent jurisdiction. The claimant(s) in the dispute shall select one
arbitrator, the respondent(s) shall select one arbitrator and such arbitrators
shall jointly select a third arbitrator. If the claimant(s) fail(s) to appoint
an arbitrator within thirty (30) days of receipt of a request to do so from the
respondent(s), or the respondent(s) fail(s) to appoint an arbitrator within
thirty (30) days of receipt of a request to do so from the claimant(s), or if
the two arbitrators fail to agree on a third arbitrator within thirty

                                       19


(30) days of their appointment, the appointment shall be made, upon request of a
party, by the Supreme Court of the State of New York. The arbitration shall be
held in the Borough of Manhattan, the City of New York City, unless another
location is mutually agreed upon by the parties to such arbitration, and the
language of the arbitration shall be English. Such arbitration shall be the
exclusive means for settling any disputes hereunder and the majority decision of
the panel of arbitrators shall be final and binding on the parties hereto. The
majority decision of the panel of arbitrators may, but need not, be entered as
judgment in accordance with the provisions of applicable law. If this
arbitration provision is for any reason held to be invalid or otherwise
inapplicable to any dispute, each party hereto agrees that any suit, action or
other proceeding arising out of this Agreement shall be brought and litigated in
the courts of New York and each party hereto hereby irrevocably consents to
personal jurisdiction and venue in any such court and hereby waives any claim it
may have that such court is an inconvenient forum for the purposes of any such
suit, action or other proceeding.

     (k) Section 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.

     (l) Invalid Provisions. If any provision of this Agreement is held to be
illegal, invalid or unenforceable under any present or future law, and if the
rights or obligations of any party hereto under this Agreement will not be
materially and adversely affected thereby, (i) such provision will be fully
severable, (ii) this Agreement will be construed and enforced as if such
illegal, invalid or unenforceable provision had never comprised a part hereof,
(iii) the remaining provisions of this Agreement will remain in full force and
effect and will not be affected by the illegal, invalid or unenforceable
provision or by its severance herefrom and (iv) in lieu of such illegal, invalid
or unenforceable provision, there will be added automatically as part of this
Agreement a legal, valid and enforceable provision as similar in terms to such
illegal, invalid or unenforceable provision as may be possible.



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                                   SCHEDULE I