Document:

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                                                           Exhibit 10.32

                               FIRST AMENDMENT TO
                         BRISBANE TECHNOLOGY PARK LEASE

         THIS FIRST AMENDMENT TO BRISBANE TECHNOLOGY PARK LEASE (this "First
Amendment") is made as of this 26th day of February, 2001 by and between
GAL-BRISBANE, L.P., a California limited partnership, as "Landlord," and
INTERMUNE PHARMACEUTICALS, INC., a Delaware corporation, as "Tenant."

                                    RECITALS

         A. Landlord and Tenant entered into that certain Brisbane Technology
Park Lease (the "Original Lease") dated as of December 18, 2000.

         B. Now Landlord and Tenant desire to amend the Original Lease as set
forth herein.

                                    AGREEMENT

NOW, THEREFORE, for good and valuable consideration, the sufficiency of which is
hereby acknowledged, the parties hereto agree as follows:

         1.       Paragraph 5(a) of the Original Lease is hereby amended and
                  restated, in its entirety, to read as follows:

                  TENANT'S USE. Subject to the provisions of PARAGRAPHS 5(b) AND
                  (c) hereof, Tenant shall use the Premises solely for office,
                  administration, research and development, laboratory,
                  marketing, pharmaceutical storage and distribution,
                  manufacturing and warehousing purposes and for any other legal
                  purpose permitted by the City of Brisbane, California, and
                  shall not use the Premises for any other use or purpose.

         2.       This First Amendment is made effective as of December 18,
                  2000.

         3.       Except as expressly amended hereby, the Original Lease shall
                  remain in full force and effect.

         4.       All references to the "Lease" in the Original Lease shall
                  hereby be deemed to refer to the Original Lease as modified by
                  this First Amendment.

                    [There is no further text on this page.]

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

                             TENANT:

                             INTERMUNE PHARMACEUTICALS, INC.,
                             a Delaware corporation

                             By:      /s/ Stephen N. Rosenfield
                                      ------------------------
                                      Stephen N. Rosenfield, its Senior
                                      Vice President of Legal Affairs

                             By:
                                      ------------------------
                             Name:
                                      ------------------------
                             Its:
                                      ------------------------

                             LANDLORD:

                             GAL-BRISBANE, L.P., a California
                             limited partnership

                             By: Brisbane Tech LLC, a Delaware
                                 limited liability company, its general partner

                                 By: Stuhlmuller Real Estate, LLC, a Delaware
                                     limited liability company

                             By:    /s/ Roger C. Stuhlmuller
                                    ---------------------------------
                                    Roger C. Stuhlmuller, its manager<PAGE>

                                                                EXHIBIT 10.14.33

                                                                  CONFORMED COPY

                                 3 NOVEMBER 2000

                                 XL CAPITAL LTD
                                AS ACCOUNT PARTY

                                 THE GUARANTORS
                               (AS DEFINED HEREIN)

                            THE LENDERS PARTY HERETO
                               (AS DEFINED HEREIN)

                           CITIBANK INTERNATIONAL PLC
                          AS AGENT AND SECURITY TRUSTEE

                     SALOMON BROTHERS INTERNATIONAL LIMITED
                                   AS ARRANGER

       ==================================================================

                  LETTER OF CREDIT AND REIMBURSEMENT AGREEMENT

       ==================================================================

                               [GRAPHIC OMITTED]

<PAGE>

                                    CONTENTS

CLAUSE                                                           PAGE

1.    DEFINITIONS....................................................1

2.    THE FACILITY..................................................13

3.    UTILISATION OF THE FACILITY...................................14

4.    EXTENSION OF LETTERS OF CREDIT................................16

5.    PAYMENT OF DEMANDS............................................19

6.    THE ACCOUNT PARTY'S LIABILITIES IN RELATION TO LETTERS OF
      CREDIT........................................................20

7.    DEFAULT INTEREST..............................................21

8.    TERMINATION AND REDUCTION OF THE COMMITMENTS..................21

9.    FEES..........................................................22

10.   TAXES.........................................................23

11.   TAX RECEIPTS..................................................24

12.   INCREASED COSTS...............................................25

13.   ILLEGALITY....................................................26

14.   MITIGATION OBLIGATIONS; REPLACEMENT OF LENDERS................27

15.   PAYMENTS GENERALLY; PRO RATA TREATMENT; SHARING OF SET-OFFS...28

16.   GUARANTEE AND INDEMNITY.......................................30

17.   REPRESENTATIONS AND WARRANTIES................................33

18.   AFFIRMATIVE COVENANTS.........................................37

19.   NEGATIVE COVENANTS............................................41

20.   EVENTS OF DEFAULT.............................................45

21.   THE AGENT, THE ARRANGER AND THE LENDERS.......................47

22.   NOTICES.......................................................54

23.   WAIVERS AND AMENDMENTS........................................55

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24.   COSTS AND EXPENSES............................................56

25.   INDEMNITIES...................................................56

26.   ALTERATION TO THE PARTIES.....................................58

27.   SET OFF.......................................................63

28.   MISCELLANEOUS PROVISIONS......................................63

29.   GOVERNING LAW AND JURISDICTION................................64

30.   TREATMENT OF CERTAIN INFORMATION; CONFIDENTIALITY.............65

31.   THIRD PARTY RIGHTS............................................66

SCHEDULE 1..........................................................67

    Commitments.....................................................67

SCHEDULE 2..........................................................68

    Indebtedness and Liens..........................................68

SCHEDULE 3..........................................................70

    Subsidiaries....................................................70

schedule 4..........................................................73

    Mandatory Costs Rate............................................73

Schedule 5..........................................................75

    Conditions Precedent............................................75

Schedule 6..........................................................76

    Utilisation Request.............................................76

SCHEDULE 7..........................................................77

    Form of Letter of Credit........................................77
    APPENDIX 1......................................................79
    APPENDIX 2......................................................80
    APPENDIX 3......................................................82

SCHEDULE 8..........................................................83

    Form of Transfer Certificate....................................83

SCHEDULE 9..........................................................85

    Form of Charge Agreement........................................85
    APPENDIX 1......................................................92

                                                                         Page II
<PAGE>

LETTER OF CREDIT AND REIMBURSEMENT AGREEMENT dated 3 November 2000

BETWEEN:

XL CAPITAL LTD, a company incorporated under the laws of the Cayman Islands (the
ACCOUNT PARTY);

The GUARANTORS as defined below;

The LENDERS as defined below;

CITIBANK INTERNATIONAL PLC, as agent and trustee for the Lenders (and when
acting in such capacities the AGENT and SECURITY TRUSTEE respectively); and

SALOMON BROTHERS INTERNATIONAL LIMITED (the ARRANGER).

DEFINITIONS

DEFINED TERMS

1.1   As used in this Agreement, the following terms have the meanings specified
below:

AFFILIATE means, with respect to a specified Person, another Person that
directly, or indirectly, Controls or is Controlled by or is under common Control
with the Person specified;

APPLICABLE PERCENTAGE means, with respect to any Lender, the percentage of the
Total Commitments represented by such Lender's Commitment. If the Total
Commitments or Commitment of a Lender have terminated or expired, the Applicable
Percentage shall be determined based upon the Total Commitments or Commitment of
such Lender (as the case may be) most recently in effect, giving effect to any
permitted assignments or transfers;

APPLICANT means each of XL Europe, Mid Ocean, Global Capital, Stonebridge
Underwriting, NAC Reinsurance, Dornoch, County Down, Brockbank and XL Mid Ocean
and any other Affiliate of the Account Party as may be agreed by the Agent and
the Account Party from time to time;

APPROVED CREDIT INSTITUTION means a credit institution within the meaning of the
First Council Directive on the co-ordination of laws, regulations and
administrative provisions relating to the taking up and pursuit of the business
of credit institutions (No 77/780/EEC) which has been approved by Lloyd's for
the purpose of providing guarantees and issuing or confirming letters of credit
comprising a member's Funds at Lloyd's;

AUTHORISED SIGNATORY means, in relation to an Obligor, any person who is duly
authorised (in such manner as may be reasonably acceptable to the Agent) and in
respect of whom the Agent has received a certificate signed by a director or
another Authorised Signatory of such Obligor setting out the name and signature
of such person and confirming such person's authority to act;

AVAILABLE COMMITMENT means in relation to a Lender at any time and save as
otherwise provided herein its Commitment less the amount of its participation in
the LC Exposures at such time PROVIDED THAT such amount shall not be less than
zero;

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AVAILABLE FACILITY means, at any time, the aggregate of the Available
Commitments adjusted, in the case of a proposed utilisation pursuant to a
Utilisation Request, so as to take into account:

(a)   any reduction in the Commitment of a Lender pursuant to the terms hereof;
      and

(b)   any Letter of Credit which pursuant to any other Utilisation Request is
      to be issued;

on or before the proposed Utilisation Date relating to such utilisation;

AVAILABILITY PERIOD means the period from (and including) the Closing Date to
(and including) the Commitment Termination Date;

BILATERAL LETTER OF CREDIT has the meaning given to it in Clause 4.5(b);

BIS QUALIFYING ASSETS means fixed income securities issued or guaranteed by US
Government Agencies or by the Central Governments of any OECD country which has
not defaulted or re-scheduled its debt obligations in the preceding five years;

BOARD means the Board of Governors of the Federal Reserve System of the United
States of America;

BROCKBANK means XL Brockbank Ltd, a company incorporated under the laws of
England and Wales;

BUSINESS DAY means any day that is not a Saturday, Sunday or other day on which
commercial banks in New York City, London or Bermuda are authorised or required
by law to remain closed;

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

CENTRAL GOVERNMENT means, without limitation, government departments, ministries
and central banks;

CHANGE IN CONTROL means the occurrence of any of the following events or
conditions:

(a)   any Person or group of Persons (as used in Sections 13 and 14 of the
      Securities Exchange Act of 1934 of the United States of America, and the
      rules and regulations thereunder) shall have become the beneficial owner
      (as defined in the rules promulgated by the SEC) of more than 40% of the
      voting securities of the Account Party;

(b)   the sale, lease, exchange or other transfer (in one transaction or a
      series of related transactions) of all, or substantially all, of the
      assets of the Account Party; or

(c)   a majority of the members of the Account Party's board of directors are
      persons who are then serving on the board of directors without having been
      elected by the board of directors or having been nominated for election by
      its shareholders;

                                                                          Page 2
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CHANGE IN LAW means (a) the adoption of any law, rule or regulation after the
date of this Agreement, (b) any change in any law, rule or regulation or in the
interpretation or application thereof by any Governmental Authority after the
date of this Agreement or (c) compliance by any Lender (or, for purposes of
Clause 12.1 and 13, by any lending office of such Lender or by such Lender's
holding company, if any) with any request, guideline or directive (whether or
not having the force of law) of any Governmental Authority made or issued after
the date of this Agreement;

CHARGE AGREEMENT means the charge agreement, in substantially the form set out
in Schedule 9 that may be required to be entered into by the Account Party as
chargor pursuant to the terms hereof and pursuant to which the Account Party
will grant cash cover in favour of the Security Trustee;

CLOSING DATE means the date upon which the conditions set out in Schedule 5
(CONDITIONS PRECEDENT) have, in the reasonable opinion of the Agent, been
satisfied;

CODE means the Internal Revenue Code of 1986 of the United States of America, as
amended from time to time;

COMMITMENT means, with respect to each Lender, the commitment of such Lender to
participate in the issue of Letters of Credit hereunder. The initial amount of
each Lender's Commitment is set forth on Schedule 1, or in the Transfer
Certificate pursuant to which such Lender shall have assumed its Commitment, as
applicable, but in each case as such Commitment may be:

(a)   reduced from time to time pursuant to Clause 8 (TERMINATION AND REDUCTION
      OF THE COMMITMENTS) or Clause 4.5 (b) (REPLACEMENT LETTERS OF CREDIT); and

(b)   reduced or increased from time to time pursuant to assignments by or to
      such Lender pursuant to Clause 26.3 (TRANSFERS BY LENDERS);

COMMITMENT LETTER means the letter so titled from the Arranger to the Account
Party dated 28 September 2000;

COMMITMENT TERMINATION DATE means the LATER of the date which Lloyds may specify
as the Funds Date for 2000 and 1 January 2001;

CONSOLIDATED  NET WORTH means,  at any time,  the  consolidated  shareholders'
equity of the Account Party and its Subsidiaries;

CONTROL means the possession, directly or indirectly, of the power to direct or
cause the direction of the management or policies of a Person, whether through
the ability to exercise voting power, by contract or otherwise. CONTROLLING and
CONTROLLED have meanings correlative thereto;

COUNTY DOWN means County Down Limited, a company incorporated under the laws of
England and Wales;

DEFAULT means any event or condition which  constitutes an Event of Default or
a Potential Event of Default;

DEFAULT PERIOD means the period from and including the date on which the Agent
makes payment of a Demand Amount to but excluding the date on which the Account
Party makes a

                                                                          Page 3
<PAGE>

corresponding reimbursement under Clause 6.1(a) and (b) (THE ACCOUNT PARTY'S
INDEMNITY TO LENDERS);

DEMAND AMOUNT means a principal amount to be paid by the Account Party pursuant
to Clause 6.1(a) and (b) (THE ACCOUNT PARTY'S INDEMNITY TO LENDERS);

DOLLARS or $ refers to the lawful money of the United States of America from
time to time;

DORNOCH means Dornoch Limited, a company incorporated under the laws of England
and Wales;

EFFECTIVE DATE means, in respect of a Letter of Credit, the date upon which a
Letter of Credit shall become valid and enforceable, being any date from (and
including) the Closing Date to (but excluding) 1 January 2001;

ENVIRONMENTAL LAWS means any Law, whether now existing or subsequently enacted
or amended, relating to (a) pollution or protection of the environment,
including natural resources, (b) exposure of Persons, including but not limited
to employees, to Hazardous Materials, (c) protection of the public health or
welfare from the effects of products, by-products, wastes, emissions, discharges
or releases of Hazardous Materials or (d) regulation of the manufacture, use or
introduction into commerce of Hazardous Materials, including their manufacture,
formulation, packaging, labelling, distribution, transportation, handling,
storage or disposal;

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

EQUITY RIGHTS means, with respect to any Person, any subscriptions, options,
warrants, commitments, pre-emptive rights or agreements of any kind (including
any shareholders' or voting trust agreements) for the issuance, sale,
registration or voting of, or securities convertible into, any additional shares
of capital stock of any class, or partnership or other ownership interests of
any type in, such Person;

ERISA means the Employee Retirement Income Security Act of 1974 of the United
States of America, as amended from time to time;

ERISA AFFILIATE means any trade or business (whether or not incorporated) that,
together with the Account Party, is treated as a single employer under Clause
414(b) or (c) of the Code, or, solely for purposes of Clause 302 of ERISA and
Clause 412 of the Code, is treated as a single employer under Clause 414 of the
Code;

ERISA EVENT means (a) any REPORTABLE EVENT, as defined in Clause 4043 of ERISA
or the regulations issued thereunder with respect to a Plan (other than an event
for which the 30-day notice period is waived); (b) the existence with respect to
any Plan of an ACCUMULATED FUNDING DEFICIENCY (as defined in Clause 412 of the
Code or Clause 302 of ERISA), whether or not waived; (c) the filing pursuant to
Clause 412(d) of the Code or Clause 303(d) of ERISA of an application for a
waiver of the minimum funding standard with respect to any Plan; (d) the
incurrence by any Obligor or any of such Obligor's ERISA Affiliates of any
liability under Title IV of ERISA with respect to the termination of any Plan;
(e) the receipt

                                                                          Page 4
<PAGE>

by an Obligor or any ERISA Affiliate from the PBGC or a plan administrator of
any notice relating to an intention to terminate any Plan or Plans or to appoint
a trustee to administer any Plan; (f) the incurrence by any Obligor or any of
its ERISA Affiliates of any liability with respect to the withdrawal or partial
withdrawal from any Plan or Multiemployer Plan; or (g) the receipt by any
Obligor or any ERISA Affiliate of any notice, or the receipt by any
Multiemployer Plan from any Obligor or any ERISA Affiliate of any notice,
concerning the imposition of Withdrawal Liability or a determination that a
Multiemployer Plan is, or is expected to be, insolvent or in reorganisation,
within the meaning of Title IV of ERISA;

EVENT OF DEFAULT has the meaning assigned to such term in Clause 20;

EXPIRY DATE means, in relation to any Letter of Credit, the date on which the
maximum aggregate liability thereunder is to be reduced to zero pursuant to this
Agreement;

FACILITY means the letter of credit facility granted to the Account Party
pursuant to this Agreement;

FEE LETTER means the letter from the Arranger to the Account Party dated 28
September 2000 relating to the payment of certain fees;

FINANCE DOCUMENTS means this Agreement, the Charge Agreement, the Commitment
Letter, the Fee Letter, any Letter of Credit and any other document or documents
as may be agreed by the Agent and the Account Party;

FINAL MATURITY DATE means 31 December 2005, as extended pursuant to Clause 4
(EXTENSION OF LETTERS OF CREDIT);

FINANCE PARTIES means the Lenders, the Agent, the Arranger and the Security
Trustee;

FINANCIAL OFFICER means, with respect to any Obligor, a principal financial
officer of such Obligor;

FUNDS AT LLOYD'S has the meaning given to it in paragraph 4 of the Membership
Bylaw (No. 17 of 1993);

FUNDS AT LLOYD'S REQUIREMENTS means, in respect of any member, the amount
required to be maintained by that member as Funds at Lloyd's;

FUNDS DATE means the date notified by Lloyd's each year as being the latest date
in that year by which Funds at Lloyd's can be placed with Lloyd's in order to
satisfy Funds at Lloyd's Requirements in respect of the immediately succeeding
calendar year being, in respect of the 2000 calendar year, 24 November 2000 or
such other date as may be advised by Lloyd's;

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

GLOBAL CAPITAL means Global Capital Underwriters Limited, a company incorporated
under the laws of England and Wales;

GOVERNMENTAL AUTHORITY means the government of the United Kingdom, or of any
other nation, or any political subdivision thereof, whether state or local, and
any agency, authority, instrumentality, regulatory body, court, central bank or
other entity exercising executive, legislative, judicial, taxing, regulatory or
administrative powers or functions of or pertaining to government;

                                                                          Page 5
<PAGE>

GUARANTEE means, with respect to any Person, without duplication, any
obligations of such Person (other than endorsements in the ordinary course of
business of negotiable instruments for deposit or collection) guaranteeing or
intended to guarantee any Indebtedness of any other Person in any manner,
whether direct or indirect, and including without limitation any obligation,
whether or not contingent, (i) to purchase any such Indebtedness or any property
constituting security therefor for the purpose of assuring the holder of such
Indebtedness, (ii) to advance or provide funds or other support for the payment
or purchase of any such Indebtedness or to maintain working capital, solvency or
other balance sheet condition of such other Person (including without limitation
keepwell agreements, maintenance agreements, comfort letters or similar
agreements or arrangements) for the benefit of any holder of Indebtedness of
such other Person, (iii) to lease or purchase property, securities or services
primarily for the purpose of assuring the holder of such Indebtedness, or (iv)
to otherwise assure or hold harmless the holder of such Indebtedness against
loss in respect thereof. The amount of any Guarantee hereunder shall (subject to
any limitations set forth therein) be deemed to be an amount equal to the
outstanding principal amount of the Indebtedness in respect of which such
Guarantee is made. The terms GUARANTEE and GUARANTEED used as a verb shall have
a correlative meaning;

GUARANTORS means each of the Account Party, XL America, XL Insurance, XL Europe
and XL Mid Ocean;

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

HEDGING AGREEMENT means any interest rate protection agreement, foreign currency
exchange agreement, commodity price protection agreement or other interest or
currency exchange rate or commodity price hedging arrangement;

INDEBTEDNESS means, for any Person, without duplication (it being understood,
for the avoidance of doubt, that insurance payment liabilities, as such, and
liabilities arising in the ordinary course of such Person's business as an
insurance or reinsurance company (including guaranteed investment contracts) or
corporate member of Lloyd's or as a provider of financial or investment services
or contracts (in each case other than in connection with the provision of
financing to such Person or any of such Person's Affiliates) shall not be deemed
to constitute Indebtedness): (i) all indebtedness or liability for or on account
of money borrowed by, or for or on account of deposits with or advances to (but
not including accrued pension costs, deferred income taxes or accounts payable
of) such Person; (ii) all obligations (including contingent liabilities) of such
Person evidenced by bonds, debentures, notes, banker's acceptances or similar
instruments; (iii) all indebtedness or liability for or on account of property
or services purchased or acquired by such Person; (iv) any amount secured by a
Lien on property owned by such Person (whether or not assumed) and Capital Lease
Obligations of such Person (without regard to any limitation of the rights and
remedies of the holder of such Lien or the lessor under such capital lease to
repossession or sale of such property); (v) the maximum available amount of all
standby letters of credit issued for the account of such Person and, without
duplication, all drafts drawn thereunder (to the extent unreimbursed); and (vi)
all Guarantees of such Person;

ISSUING LENDER means any Lender in its capacity as an issuer of one or more
Letters of Credit hereunder;

                                                                          Page 6
<PAGE>

LAW means any law (including common law), constitution, statute, treaty,
regulation, rule, ordinance, order, injunction, writ, decree or award of any
Governmental Authority;

LC DISBURSEMENT means a payment made by a Lender pursuant to a Letter of Credit;

LC EXPOSURE means the sum of (a) the aggregate undrawn amount of all outstanding
Letters of Credit at such time plus (b) the aggregate amount of all Demand
Amounts. The LC Exposure of any Lender at any time shall be the sum of its
participation in the outstanding Letters of Credit at such time and the Demand
Amounts owed to it at such time;

LC PROPORTION means, in relation to the Lender in respect of any Letter of
Credit and save as otherwise provided herein, the proportion (expressed as a
percentage) of such Lender's Available Commitment to the Available Facility
immediately prior to the issue of such Letter of Credit;

LENDER AFFILIATE means with respect to any Lender, (a) an Affiliate of such
Lender or (b) any entity (whether a corporation, partnership, trust or
otherwise) that is engaged in making, purchasing, holding or otherwise investing
in bank loans and similar extensions of credit in the ordinary course of its
business and is administered or managed by a Lender or an Affiliate of such
Lender;

LENDERS means the Persons listed on Schedule 1 (COMMITMENTS) or any other Person
that shall have become a party hereto pursuant to Clause 26.3 (TRANSFERS BY
LENDERS), and which has not ceased to be a party hereto in accordance with the
terms hereof;

LETTERS OF CREDIT means Letters of Credit issued pursuant to the terms of this
Agreement;

LETTER OF CREDIT FEES means the fees payable by the Account Party pursuant to
Clause 9.2 (LETTER OF CREDIT FEES);

LIEN means, with respect to any asset, any mortgage, deed of trust, pledge,
lien, security interest, charge or other encumbrance or security arrangement of
any nature whatsoever, including but not limited to any conditional sale or
title retention arrangement, and any assignment, deposit arrangement or lease
intended as, or having the effect of, security;

LIBOR means, in relation to any unpaid sum:

(a)   the display rate per annum of the offered quotation for overnight deposits
      in the currency of the relevant unpaid sum which appears on Telerate Page
      3750 or Telerate Page 3740 (as appropriate) at or about 11.00 a.m. on any
      relevant day; or

(b)   if the display rate cannot be determined under paragraph (a) above, the
      rate determined by the Agent to be the arithmetic mean (rounded, if
      necessary, to the nearest five decimal places with the midpoint rounded
      upwards) of the rates notified to the Agent by each of the Reference Banks
      quoting (provided that at least two Reference Banks are quoting) as the
      rate at which such Reference Bank is offering overnight deposits in the
      required currency in an amount comparable to that amount to prime banks in
      the London Interbank Market at or about 11.00 a.m. on any relevant day;
      and

      for the purposes of this definition:

      TELERATE PAGE 3750 means the display designated as Page 3750, and TELERATE
      PAGE 3740 means the display designated as Page 3740, in each case on the
      Telerate Service

                                                                          Page 7
<PAGE>

      (or such other pages as may replace Page 3750 or Page 3740 on that service
      or such other service as may be nominated by the British Bankers'
      Association (including the Reuters Screen) as the information vendor for
      the purposes of displaying British Bankers' Association Interest
      Settlement Rates for deposits in the currency concerned);

LLOYD'S means the society incorporated by Lloyd's Act 1871 by the name of
Lloyd's;

MAJORITY LENDERS means, at any time, Lenders having Commitments representing
more than 50% of the sum of the total Commitments at such time; PROVIDED THAT,
if the Commitments have expired or been terminated, MAJORITY LENDERS means
Lenders having more than 50% of the aggregate LC Exposure of the Lenders;

MANDATORY COSTS means, in relation to any unpaid sum for any period, a rate per
annum calculated in accordance with Schedule 4;

MARGIN STOCK means MARGIN STOCK within the meaning of Regulations T, U and X of
the Board;

MATERIAL ADVERSE EFFECT means a material adverse effect on: (a) the assets,
business, financial condition or operations of an Obligor and its Subsidiaries
taken as a whole; or (b) the ability of an Obligor to perform any of its payment
or other material obligations under this Agreement;

MID OCEAN means Mid Ocean Limited, a company incorporated under the laws of the
Cayman Islands;

MULTIEMPLOYER PLAN means a multiemployer plan as defined in Clause 4001(a)(3) of
ERISA;

NAC REINSURANCE means NAC Reinsurance International Ltd, a company incorporated
under the laws of England and Wales;

NON-U.S. BENEFIT PLAN means any plan, fund (including any superannuation fund)
or other similar program established or maintained outside the United States by
any Obligor or any of its Subsidiaries, with respect to which such Obligor or
the Subsidiary has an obligation to contribute, for the benefit of employees of
such Obligor or such Subsidiary, which plan, fund or other similar program
provides, or results in, the type of benefits described in Clause 3(1) or 3(2)
of ERISA, and which plan is not subject to ERISA or the Code;

OBLIGOR JURISDICTION means (a) Bermuda, (b) the Cayman Islands, (c) the Republic
of Ireland, and (d) any other country (i) where any Obligor is licensed or
qualified to do business or (ii) from or through which payments hereunder are
made by any Obligor;

OBLIGORS means each of the Account Party and the Guarantors;

OECD COUNTRY means any member of the Organisation for Economic Co-operation and
Development;

OTHER TAXES means any and all present or future stamp or documentary taxes or
any other excise or property taxes, charges or similar levies arising from any
payment made hereunder or from the execution, delivery or enforcement of, or
otherwise with respect to, this Agreement;

                                                                          Page 8
<PAGE>

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

PERSON means any natural person, corporation, limited liability company, trust,
joint venture, association, company, partnership, Governmental Authority or
other entity;

PLAN means any employee pension benefit plan (other than a Multiemployer Plan)
subject to the provisions of Title IV of ERISA or Clause 412 of the Code or
Clause 302 of ERISA, and in respect of which any Obligor or any ERISA Affiliate
is (or, if such plan were terminated, would under Clause 4069 of ERISA be deemed
to be) an EMPLOYER as defined in Clause 3(5) of ERISA;

POTENTIAL EVENT OF DEFAULT means an event or condition which upon notice, lapse
of time or both would, unless cured or waived, become an Event of Default;

PRIVATE ACT means separate legislation enacted in Bermuda with the intention
that such legislation apply specifically to an Obligor, in whole or in part;

QUALIFYING LENDER means an institution which is a bank as defined for the
purposes of Section 349 of the Income and Corporation of Taxes Act 1988 and such
bank is within the charge to United Kingdom corporation tax as respects to
interest which is (or which, if it were a Lender would be) payable to it
hereunder;

QUARTERLY DATES means the last Business Day of March, June, September and
December in each year, the first of which shall be the first such day after the
date hereof;

REFERENCE BANKS means, subject to Clause 26.6 (REFERENCE BANKS), the principal
London offices of Citibank, N.A., ING Bank N.V., London Branch and Barclays Bank
PLC;

REGISTER has the meaning given to it in Clause 26.11 (MAINTENANCE OF REGISTER BY
AGENT);

RELATED PARTIES means, with respect to any specified Person, such Person's
Affiliates and the respective directors, officers, employees, agents and
advisors of such Person and such Person's Affiliates;

REPRESENTATIONS means each of the representations and warranties set out in
Clause 17 (REPRESENTATIONS AND WARRANTIES);

SAP means, as to each Obligor and each Subsidiary that offers insurance
products, the statutory accounting practices prescribed or permitted by the
relevant Governmental Authority for such Obligor's or such Subsidiary's domicile
for the preparation of its financial statements and other reports by insurance
corporations of the same type as such Obligor or such Subsidiary in effect on
the date such statements or reports are to be prepared, except if otherwise
notified by the Account Party as provided in Clause 1.3;

SEC means the Securities and Exchange Commission of the United States of America
or any successor entity;

STERLING or(POUND)refers to the lawful currency of the United Kingdom from time
to time;

STONEBRIDGE UNDERWRITING means Stonebridge Underwriting Limited, a company
incorporated under the laws of England and Wales;

                                                                          Page 9
<PAGE>

SUBSIDIARY means, with respect to any Person (the PARENT), at any date, any
corporation (or similar entity) of which a majority of the shares of outstanding
capital stock normally entitled to vote for the election of directors
(regardless of any contingency which does or may suspend or dilute the voting
rights of such capital stock) is at such time owned directly or indirectly by
the parent or one or more subsidiaries of the parent. Unless otherwise
specified, SUBSIDIARY means a Subsidiary of an Obligor;

SUBSTITUTE LENDER has the meaning give to it in Clause 4.4(a);

TAXES means any and all present or future taxes, levies, imposts, duties,
deductions, charges or withholdings imposed by any Governmental Authority.
TAXATION and TAX shall be construed accordingly;

TERM means, save as otherwise provided herein, in relation to any Letter of
Credit, the period from its Effective Date until its Expiry Date;

TOTAL COMMITMENTS means, at any time, the aggregate of the Lenders' Commitments
(being on the date hereof(pound)225,000,000);

TOTAL FUNDED DEBT means, at any time, all Indebtedness of the Account Party and
its Subsidiaries which would at such time be classified in whole or in part as a
liability on the consolidated balance sheet of the Account Party in accordance
with GAAP;

TOTAL LC EXPOSURES means, at any time, the aggregate of the Lenders' LC
Exposures;

TRANSACTIONS means the execution, delivery and performance by the Obligors of
this Agreement and the other Finance Documents to which any Obligor is intended
to be a party and the issuance of Letters of Credit hereunder;

TRANSFER CERTIFICATE means a certificate in the form of Schedule 8 (FORM OF
TRANSFER CERTIFICATE) delivered pursuant to Clause 26.4 (TRANSFER PROCEDURE);

TRANSFEREE means a Person to which a Lender seeks to transfer by novation all or
part of such Lender's rights, benefits and obligations under the Finance
Documents;

US GOVERNMENT AGENCIES means US government agencies whose debt obligations are
fully and explicitly guaranteed as to the timely repayment of principal and
interest by the full faith and credit of the US federal government;

UTILISATION DATE means the date on which a Letter of Credit is to be issued;

UTILISATION REQUEST means a notice substantially in the form set out in Schedule
6 (FORM OF UTILISATION REQUEST);

WITHDRAWAL LIABILITY means liability to a Multiemployer Plan as a result of a
complete or partial withdrawal from such Multiemployer Plan, as such terms are
defined in Part I of Subtitle E of Title IV of ERISA;

XL AMERICA means X.L. America, Inc., a company incorporated under the laws of
Delaware, USA;

XL EUROPE means XL Europe Ltd, a company incorporated under the laws of Ireland;

XL INSURANCE means XL Insurance Ltd, a company organised under the laws of
Bermuda;

                                                                         Page 10
<PAGE>

XL MID OCEAN means XL Mid Ocean Reinsurance Ltd, a company organised under the
laws of Bermuda.

INTERPRETATION

1.2   Any reference in this Agreement to:

(a)   the AGENT, SECURITY TRUSTEE, ARRANGER, LENDER or any other Person shall be
      construed so as to include its and any subsequent successors and permitted
      transferees in accordance with their respective interests;

(b)   CONTINUING, in the context of an Event of Default shall be construed as a
      reference to an Event of Default which has not been remedied or waived in
      accordance with the terms hereof and in relation to a POTENTIAL EVENT OF
      DEFAULT, one which has not been remedied within the relevant grace period
      or waived in accordance with the terms hereof;

(c)   a HOLDING COMPANY of a company or corporation shall be construed as a
      reference to any company or corporation of which the first-mentioned
      company or corporation is a subsidiary;

(d)   the EQUIVALENT on any date in one currency (the FIRST CURRENCY) of an
      amount denominated in another currency (the SECOND CURRENCY) is a
      reference to the amount of the first currency which could be purchased
      with the amount of the second currency at the spot rate quoted by the
      Agent at or about 11.00 a.m. on such date for the purchase of the first
      currency with the second currency;

(e)   a MEMBER shall be construed (as the context may require) as a reference to
      an underwriting member of Lloyd's;

(f)   a MONTH is a reference to a period starting on one day in a calendar month
      and ending on the numerically corresponding day in the next succeeding
      calendar month save that, where any such period would otherwise end on a
      day which is not a Business Day, it shall end on the next succeeding
      Business Day, unless that day falls in the calendar month succeeding that
      in which it would otherwise have ended, in which case it shall end on the
      immediately preceding Business Day, PROVIDED THAT, if a period starts on
      the last Business Day in a calendar month or if there is no numerically
      corresponding day in the month in which that period ends, that period
      shall end on the last Business Day in that later month (and references to
      MONTHS shall be construed accordingly);

(g)   a Lender's PARTICIPATION, in relation to a Letter of Credit, shall be
      construed as a reference to the rights and obligations of such Lender in
      relation to such Letter of Credit as are expressly set out in this
      Agreement;

(h)   a SUCCESSOR shall be construed so as to include an assignee or successor
      in title of such party and any person who under the laws of its
      jurisdiction of incorporation or domicile has assumed the rights and
      obligations of such party under this Agreement or to which, under such
      laws, such rights and obligations have been transferred;

(i)   an ASSET or PROPERTY shall be construed to have the same meaning and
      effect and to refer to any and all tangible and intangible assets and
      properties, including cash, securities, accounts and contract rights;

                                                                         Page 11
<PAGE>

(j)   VAT shall be construed as a reference to value added tax including any
      similar tax which may be imposed in place thereof from time to time; and

(k)   the WINDING-UP, DISSOLUTION or ADMINISTRATION of a company or corporation
      shall be construed so as to include any equivalent or analogous
      proceedings under the law of the jurisdiction in which such company or
      corporation is incorporated or any jurisdiction in which such company or
      corporation carries on business including the seeking of liquidation,
      winding-up, reorganisation, dissolution, administration, arrangement,
      adjustment, protection or relief of debtors.

(l)   unless the contrary intention appears:

        (i) a Letter of Credit is CANCELLED, REPAID or PREPAID by:

            (A) providing the Issuing Lender(s) with cash cover (as defined
                below); or

            (B) reducing (in accordance with the terms of this Agreement and the
                Letter of Credit) the amount that may be demanded under the
                Letter of Credit (or by that amount automatically reducing in
                accordance with the terms of the Letter of Credit); or

            (C) cancelling the Letter of Credit by (x) providing written
                confirmation (in form and substance satisfactory to the Agent or
                the Issuing Lender) from Lloyd's that the Issuing Lender(s) has
                no further liability under the Letter of Credit (including by
                way of a notice specifying that Lloyd's does not accept or
                unconditionally rejects a Letter of Credit (unless the Agent or
                the Issuing Lender as the case may be, acting reasonably,
                considers that Lloyd's remains entitled to make a claim under
                such Letter of Credit)), and (y) if Lloyd's agrees, by procuring
                the return of the original to the Agent;

       (ii) CASH COVER is provided, pursuant to the terms of the Charge
            Agreement, in respect of a Lender's participation in a Letter of
            Credit at any time by paying an amount in Sterling equal to the
            outstanding amount of that participation at that time to such
            account or accounts as the Agent may specify and creating effective
            security over such amount in favour of the Security Trustee on
            behalf of the Finance Parties in form and substance satisfactory to
            the Security Trustee (together with legal opinions, evidence of
            corporate authorisation, and similar documentation reasonably
            required by the Security Trustee), in the name of the Account Party
            from which the only withdrawals which may be made are withdrawals
            made with the prior written consent of the Security Trustee in
            accordance with the terms of the Charge Agreement;

      (iii) a reference to PRINCIPAL AMOUNT in respect of a Letter of Credit
            means the maximum amount which is expressed to be capable of being
            demanded under a Letter of Credit ignoring the aggregate amount of
            any cash cover held in relation to that Letter of Credit.

ACCOUNTING TERMS; GAAP AND SAP

1.3   Except as otherwise expressly provided herein, all terms of an accounting
or financial nature shall be construed in accordance with GAAP or SAP, as the
context requires, each as in effect from time to time; provided that, if the
Account Party notifies the Agent that the Obligors request an amendment to any
provision hereof to eliminate the effect of any change

                                                                         Page 12
<PAGE>

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

AGREEMENTS AND STATUTES

1.4   Any reference in this Agreement to:

(a)   this Agreement or any other agreement or document shall be construed as a
      reference to this Agreement or, as the case may be, such other agreement
      or document as the same may have been, or may from time to time be,
      amended, varied, novated or supplemented;

(b)   a statute or treaty shall be construed as a reference to such statute or
      treaty as the same may have been, or may from time to time be, amended or,
      in the case of a statute, re-enacted; and

(c)   a bylaw shall be construed as a reference to a bylaw made under Lloyd's
      Acts 1871 to 1982 as the same may have been, or may from time to time be,
      amended or replaced.

HEADINGS

1.5   Clause and Schedule headings are for ease of reference only.

TIME

1.6   Any reference in this Agreement to a time of day shall, unless a contrary
indication appears, be a reference to London time.

THE FACILITY

GRANT OF THE FACILITY

2.1   The Lenders, upon the terms and subject to other conditions hereof, grant
to the Account Party a letter of credit facility in an aggregate amount of
(pound)225,000,000.

PURPOSE AND APPLICATION

2.2(a)The Facility is intended to support Funds at Lloyd's for the underwriting
      business of the Applicants, and, accordingly, the Account Party shall
      apply all Letters of Credit issued hereunder in or towards satisfaction of
      such purpose.

(b)   Without prejudice to the Account Party's obligations under Clause 2.2(a)
      and the remaining provisions of this Agreement, none of the Finance
      Parties shall be bound to enquire as to, nor shall any of them be
      responsible for, the purpose of, or application of the proceeds of any
      Letter of Credit issued hereunder.

                                                                         Page 13
<PAGE>

CONDITIONS PRECEDENT

2.3   Save as the Lenders may otherwise agree, the Account Party may not deliver
any Utilisation Request unless the Agent has confirmed to the Account Party and
the Lenders that it has waived and/or received all of the documents and other
evidence listed in Schedule 5 (CONDITIONS PRECEDENT) and that each is, in form
and substance, reasonably satisfactory to the Agent.

SEVERAL OBLIGATIONS

2.4   The obligations of each Lender are several and the failure by a Lender to
perform its obligations hereunder and/or under any Letter of Credit issued
hereunder shall not affect the obligations of either Obligor towards any other
party hereto nor shall any other party be liable for the failure by such Lender
to perform its obligations hereunder and/or under such Letter of Credit.

SEVERAL RIGHTS

2.5   The rights of each Finance Party are several and any debt arising
hereunder at any time from an Obligor to any Finance Party shall be a separate
and independent debt. Each such party shall be entitled to protect and enforce
its individual rights arising out of this Agreement independently of any other
party (so that it shall not be necessary for any party hereto to be joined as an
additional party in any proceedings for this purpose).

CHANGE OF CURRENCY

2.6(a)If, after the date of this Agreement, more than one currency or currency
      unit denomination are at the same time recognised by the central bank of
      any country as the lawful currency of that country, then:

        (i) any reference in the Finance Documents to, and any obligations
            arising under the Finance Documents in, the currency of that country
            shall be translated into, or paid in, the currency or currency unit
            of that country designated by the Agent; and

       (ii) any translation from one currency or currency unit to another shall
            be at the official rate of exchange or conversion rate recognised by
            the central bank for the conversion of that currency or currency
            unit into the other, rounded up or down by the Agent acting
            reasonably.

(b)   If a change in any currency of a country occurs, this Agreement will be
      amended in the manner determined by the Agent (acting reasonably) so as to
      reflect the change in currency and to place the parties in the same
      position, so far as possible, that they would have been in if no change in
      currency had occurred.

UTILISATION OF THE FACILITY

UTILISATION CONDITIONS FOR THE FACILITY

3.1   Save as otherwise provided herein, a Letter of Credit will be issued at
the request of the Account Party on behalf of an Applicant if:

(a)   no later than 10.00 a.m. two Business Days before the proposed Utilisation
      Date, the Agent has received a duly completed Utilisation Request from the
      Account Party;

                                                                         Page 14
<PAGE>

(b)   the proposed Utilisation Date is a Business Day falling within the
      Availability Period;

(c)   the proposed amount of such Letter of Credit is less than or equal to the
      Available Facility;

(d)   the proposed Term of the Letter of Credit is a period ending on or before
      the Final Maturity Date;

(e)   the Letter of Credit is substantially in the form set out in Schedule 7
      (FORM OF LETTER OF CREDIT) or in such other form requested by the Account
      Party which is approved by Lloyd's and the Lenders (such approval by the
      Lenders not to be unreasonably withheld or delayed and shall not be
      required unless the other form requested differs materially from the form
      set out in Schedule 7);

(f)   the beneficiary of such Letter of Credit is Lloyd's; and

(g)   on and as of the proposed Utilisation Date (a) no Default has occurred and
      is continuing and (b) the Representations are true in all material
      respects.

REQUEST FOR LETTERS OF CREDIT

3.2   The Account Party may request the issue by the Lenders hereunder of a
total of up to six Letters of Credit in respect of the Applicants. A single
Utilisation Request may be issued in respect of more than one Letter of Credit.

COMPLETION OF LETTERS OF CREDIT

3.3   The Agent is authorised to arrange for the issue of any Letter of Credit
pursuant to Clause 3.1 (UTILISATION CONDITIONS FOR THE FACILITY) by:

(a)   completing the Effective Date and the proposed Expiry Date of such Letter
      of Credit;

(b)   completing the schedule to such Letter of Credit with the percentage
      participation of each Lender as allocated pursuant to the terms hereof;

(c)   executing such Letter of Credit on behalf of each Lender and following
      such execution delivering such Letter of Credit to Lloyd's on the
      Utilisation Date; and

(d)   executing and delivering a "principal private residence letter" in respect
      of each such Letter of Credit substantially in the form set out in
      Appendix 3 to Schedule 7 (FORM OF LETTER AS TO PRINCIPAL PRIVATE
      RESIDENCES OF THE APPLICANTS).

EXPIRY DATE

3.4   Each Letter of Credit shall expire at or prior to the close of business on
31 December 2004 (prior to giving effect to the automatic extension pursuant to
Clause 4.1) (or, in the case of any renewal or extension thereof (or subsequent
renewals or extensions) in accordance with Clause 4 (EXTENSION OF LETTER OF
CREDIT), one year after such renewal or extension (or subsequent renewal or
extension)).

EACH LENDER'S PARTICIPATION IN LETTERS OF CREDIT

3.5(a)Save as otherwise provided herein, each Lender will participate in each
      Letter of Credit issued pursuant to this Clause 3 in the proportion borne
      by its Available

                                                                         Page 15
<PAGE>

      Commitment to the Available Facility immediately prior to the issue of
      such Letter of Credit.

(b)   No Lender shall participate in or issue any Letter of Credit to the extent
      that its LC Exposure would exceed its Commitment following the issue of
      that Letter of Credit.

NOTIFICATION TO LENDERS

3.6   On or before each Utilisation Date the Agent shall notify each Lender of
the Letter of Credit that is to be issued by the Agent on behalf of the Lenders,
the name of the Applicant in respect of whom the Letter of Credit is being
issued, the proposed length of the relevant Term and the aggregate principal
amount of the relevant Letter of Credit allocated to such Lender pursuant to
this Agreement.

CANCELLATION OF AVAILABLE COMMITMENTS

3.7   On the expiry of the Availability Period, the Available Facility and each
Lender's Available Commitment shall be reduced to zero and accordingly the
remaining Commitments of each Lender shall be equal to their respective LC
Exposure under any issued Letters of Credit.

EXTENSION OF LETTERS OF CREDIT

AUTOMATIC EXTENSION

4.1(a)Each Lender acknowledges that, subject to the terms of this Agreement, on
      31 December of each year, each issued Letter of Credit shall be extended
      automatically to 31 December of the year immediately succeeding the year
      in which its then current Expiry Date falls, unless Lloyd's receives
      notice to the contrary, so that each Letter of Credit shall on any date be
      valid for a minimum of four years from such date. No Finance Party is
      entitled to give notice of non-renewal to Lloyd's pursuant to Clause 3 of
      Schedule 7 except as permitted by this Clause 4.

(b)   In any year, the Account Party may, by notice to the Agent given no later
      than 1 October of that year cancel the automatic extension of one or more
      Letters of Credit, in which case the Agent shall promptly give notice to
      the Lenders and to Lloyd's of that cancellation. Following the giving of
      such notice by the Account Party, that Letter of Credit will expire on its
      then current Expiry Date.

LENDERS' RIGHTS TO DECLINE EXTENSIONS OF A LETTER OF CREDIT

4.2   In any year (other than the year 2000), each Lender may in its absolute
discretion elect not to participate in the automatic extension of a Letter of
Credit which (pursuant to Clause 4.1) is expressed to take place on 31 December
of that year. Each Lender undertakes to notify the Agent in writing as soon as
reasonably practicable after it has determined that it will not participate in
the extension, and in any event by no later than close of business on 1
September of that year. The Agent shall give notice thereof to the Account Party
within two Business Days of notification from such Lender. Unless notice is
given to the Agent as aforesaid each Lender will be deemed automatically to have
agreed to the extension taking place on 31 December of such year.

                                                                         Page 16
<PAGE>

EXTENSION OF A LETTER OF CREDIT

4.3(a)If none of the Lenders have given notice pursuant to Clause 4.2 (LENDER'S
      RIGHTS) by 1 September of any year the Agent shall promptly notify the
      Account Party and the Lenders thereof and subject to the provisions of
      Clause 4.6 (EXTENSION CONDITIONS PRECEDENT), the Letter of Credit shall be
      automatically extended on 31 December of that year in accordance with the
      terms thereof.

(b)   If in any year a Lender gives notice in accordance with the provisions of
      Clause 4.2 (LENDER'S RIGHTS) that it does not agree to a requested
      extension of any Letter of Credit the Agent shall notify the Account Party
      accordingly within two Business Days thereafter, (and shall notify Lloyd's
      no earlier than 3 Business Days before 1 December and no later than 1
      December of that year) and the succeeding provisions of this Clause 4
      shall apply.

SUBSTITUTE LENDER

4.4(a)If in any year any Lender (a DECLINING LENDER) gives notice in accordance
      with the provisions of Clause 4.2 (LENDERS' RIGHTS) that it does not agree
      to the extension scheduled to occur on 31 December of that year, then the
      Account Party may designate by the date which falls no later than the
      close of business on the earlier of the date which falls four weeks prior
      to the Funds Date of that year and the date which falls four weeks prior
      to 1 December of that year an Approved Credit Institution (which may be an
      existing Lender or Lenders) (the SUBSTITUTE LENDER) which is willing to
      assume all of the rights and obligations of the Declining Lender in
      respect of its participation in the relevant Letter of Credit (the OLD
      LETTER OF CREDIT).

(b)   If the Account Party has found a Substitute Lender it shall promptly
      notify the Agent and the Declining Lender thereof and shall use its best
      efforts to procure the release by Lloyd's of the Old Letter of Credit from
      the Funds at Lloyd's of the relevant Applicant.

(c)   The Declining Lender shall as soon as reasonably practicable and in any
      event no later than the earlier of two weeks prior to the Funds Date of
      such year and two weeks prior to 1 December of such year transfer its
      rights and obligations hereunder to the Substitute Lender in accordance
      with the provisions of Clause 26.3 (TRANSFERS BY LENDERS) provided that
      such transfer shall not be effective until the Funds Date of such year.

(d)   The Substitute Lender shall pay to the Declining Lender all amounts then
      due and owing (and all fees accrued to but excluding the date of such
      transfer) to the Declining Lender in respect of its participation in the
      Old Letter of Credit.

REPLACEMENT LETTERS OF CREDIT (FOLLOWING EXTENSION)

4.5(a)If a Substitute Lender has become party hereto pursuant to Clause 4.4
      (SUBSTITUTE LENDER), then subject to the provisions of Clause 4.6
      (EXTENSION CONDITIONS PRECEDENT) the Lenders who are deemed to have agreed
      to the extension of the Old Letter of Credit (the EXTENDING LENDERS)
      shall, together with the Substitute Lender, participate in, and issue by
      the Funds Date of such year, a new Letter of Credit (the NEW LETTER OF
      CREDIT) which shall (i) replace the Old Letter of Credit, (ii) be in an
      amount equal to the Old Letter of Credit and (iii) have an Expiry Date
      calculated pursuant to Clause 4.1.

                                                                         Page 17
<PAGE>

(b)   If a Substitute Lender has not been found by the time specified in Clause
      4.4(a) then: (i) the Account Party shall use its best efforts to procure
      the release by Lloyd's of the Old Letter of Credit from the Funds at
      Lloyd's of the relevant Applicant, (ii) subject to the provisions of
      Clause 4.6 (EXTENSION CONDITIONS PRECEDENT), the Extending Lenders shall
      participate in, and issue by the Funds Date of such year, a new Letter of
      Credit (the REDUCED LETTER OF CREDIT) which shall (x) replace their
      participation in the Old Letter of Credit, (y) be in an amount equal to
      the Old Letter of Credit LESS the amount of the Declining Lender's
      participation and (z) have an Expiry Date calculated pursuant to Clause
      4.1; and (iii) the Declining Lender shall participate in a separate Letter
      of Credit (a BILATERAL LETTER OF Credit) which shall (x) replace its
      participation in the Old Letter of Credit, (y) be in an amount equal to
      the Declining Lender's participation in the Old Letter of Credit and (z)
      have an Expiry Date which is the same as the Expiry Date specified in the
      Old Letter of Credit (as the same may have been previously extended from
      time to time with the consent of the Declining Lender).

EXTENSION CONDITIONS PRECEDENT

4.6(a)On or prior to close of business on 1 December of any year, the Account
      Party shall promptly notify the Agent if (as of 1 December of that year):

        (i) an Event of Default or Potential Event of Default occurs which is
            continuing;

       (ii) any of the Representations cease to be correct in all material
            respects, or become misleading in any material respect; or

      (iii) the Letter of Credit which is to be automatically extended pursuant
            to Clause 4.1 ceases solely to be used to support the relevant
            Applicant's underwriting business at Lloyd's which has been provided
            in accordance with the requirements of Lloyd's applicable to it.

(b)   Subject to due notification to Lloyd's in accordance with the provisions
      of the relevant Letter of Credit, the Lenders shall not be obliged to
      participate in the automatic extension of a Letter of Credit to occur on
      31 December of any year if any of the events specified in Clause 4.6(a)
      above occurs and is continuing as at 1 December of that year, and any
      Finance Party shall be entitled to give notice to Lloyd's on 1 December of
      that year to that effect.

CANCELLATION OF BILATERAL LETTERS OF CREDIT

4.7   At any time after the issue of a Bilateral Letter of Credit by a Declining
Lender the Account Party may give the Agent and the Declining Lender not less
than fourteen days' prior written notice of its intention to procure that the
liability of the Declining Lender under such Letter of Credit is reduced to zero
(whereupon it shall do so).

REVISED LETTERS OF CREDIT

4.8   In the event that the Funds at Lloyd's Requirements of an Applicant
changes at or around the time of any given Funds Date in terms of amount and/or
the identity of the Applicant, subject to the approval of Lloyd's and subject to
each Lender's LC Exposures under the Letters of Credit issued hereunder not
being increased, the Lenders shall co-operate with the Account Party to ensure
to the extent reasonably possible that the Letters of Credit provide for the
revised Funds at Lloyd's Requirements of the Applicants.

                                                                         Page 18
<PAGE>

INCREASE TO FACILITY

4.9   If at any time a Bilateral Letter of Credit is outstanding, the Account
Party shall have the right to increase the size of the Facility by up to the
principal amount of the Bilateral Letter of Credit(s) outstanding by introducing
a new lender (which may be an existing Lender) and on terms that one or more
outstanding Bilateral Letters of Credit having an aggregate principal amount at
least equal to the increase are cancelled at the time the increase takes effect.
Each Lender agrees to execute any documentation giving effect to this increase
and new lender provided that no such documentation may increase the Commitment
of any Lender without the express consent of that Lender at the time such
documentation is executed.

PAYMENT OF DEMANDS

DISBURSEMENT PROCEDURES

5.1(a)The Agent shall, within a reasonable time following its receipt thereof,
      examine all documents purporting to represent a demand for payment under
      any Letter of Credit. The Agent shall promptly after such examination (and
      in any event by 12 noon on the Business Day immediately following receipt
      of such demand) (i) notify each of the Lenders and the Account Party by
      facsimile of such demand for payment and (ii) deliver to each Lender and
      the Account Party a copy of each document purporting to represent a demand
      for payment under such Letter of Credit.

(b)   With respect to any drawing properly made under a Letter of Credit, each
      Lender will make an LC Disbursement in respect of such Letter of Credit in
      accordance with its liability under such Letter of Credit and this
      Agreement, such LC Disbursement to be made to the account of the Agent
      most recently designated by it for such purpose by notice to the Lenders
      within two Business Days of receipt of a demand for payment under such
      Letter of Credit by the Agent;

(c)   The Agent will and undertakes to each Lender that it will:

        (i) make any such LC Disbursement available to Lloyd's as the
            beneficiary of such Letter of Credit by promptly crediting the
            amounts so received from the Lenders, in like funds, to the account
            identified by Lloyd's in connection with such demand for payment on
            the date following two Business Days after the receipt by the Agent
            of such demand; and

       (ii) notify each Lender on the third Business Day after the receipt by
            the Agent of such demand for payment that it has credited such
            amounts to the account identified by Lloyd's.

(d)   Promptly following any LC Disbursement by any Lender in respect of any
      Letter of Credit, the Agent will notify the Account Party of such LC
      Disbursement provided that any failure to give or delay in giving such
      notice shall not relieve the Account Party of their obligation to
      reimburse the Lenders with respect to any such LC Disbursement.

RIGHT TO MAKE PAYMENTS UNDER LETTERS OF CREDIT

5.2   Each Lender shall be entitled to make any payment in accordance with the
terms of the relevant Letter of Credit without any reference to or further
authority from the Account Party or any other investigation or enquiry.

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LIABILITY OF LENDERS

5.3   Neither the Agent, nor any Lender nor any of their Related Parties shall
have any liability or responsibility by reason of or in connection with the
issuance or transfer of any Letter of Credit or any payment or failure to make
any payment thereunder (irrespective of any of the circumstances referred to in
the preceding sentence), or any error, omission, interruption, loss or delay in
transmission or delivery of any draft, notice or other communication under or
relating to any Letter of Credit (including any document required to make a
drawing thereunder), any error in interpretation of technical terms or any
consequence arising from causes beyond their control; provided that the
foregoing shall not be construed to excuse the Agent or a Lender from liability
to any Obligor to the extent of any direct damages (as opposed to consequential
damages, claims in respect of which are hereby waived by the Obligors to the
extent permitted by applicable law) suffered by any Obligor that are caused by
the gross negligence or wilful misconduct of the Agent or a Lender. The parties
hereto expressly agree that:

(a)   the Agent may accept documents that appear on their face to be in
      substantial compliance with the terms of a Letter of Credit without
      responsibility for further investigation, regardless of any notice or
      information to the contrary, and may make payment upon presentation of
      documents that appear on their face to be in substantial compliance with
      the terms of such Letter of Credit;

(b)   the Agent shall have the right, in its sole discretion, to decline to
      accept such documents and to make such payment if such documents are not
      in strict compliance with the terms of such Letter of Credit; and

(c)   this Clause shall establish the standard of care to be exercised by the
      Agent when determining whether drafts and other documents presented under
      a Letter of Credit comply with the terms thereof (and the parties hereto
      hereby waive, to the extent permitted by applicable law, any standard of
      care inconsistent with the foregoing).

THE ACCOUNT PARTY'S LIABILITIES IN RELATION TO LETTERS OF CREDIT

THE ACCOUNT PARTY'S INDEMNITY TO LENDERS

6.1   The Account Party shall irrevocably and unconditionally as a primary
obligation indemnify (on demand by the Agent (and any Lender may require the
Agent to make such demand)) each Lender against:

(a)   any LC Disbursement paid or payable by such Lender in accordance with the
      terms of any Letter of Credit requested by the Account Party; and

(b)   all liabilities, reasonable costs (including, without limitation, any
      costs incurred in funding any amount which falls due from such Lender in
      connection with such Letter of Credit), claims, losses and reasonable
      expenses which such Lender may at any time properly incur or sustain in
      connection with any Letter of Credit.

PRESERVATION OF RIGHTS

6.2   Neither the obligations of the Account Party set out in this Clause 6 nor
the rights, powers and remedies conferred on any Lender by this Agreement or by
law shall be discharged, impaired or otherwise affected by:

                                                                         Page 20
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(a)   the winding-up, dissolution, administration or re-organisation of any
      Lender or any other person or any change in its status, function, control
      or ownership;

(b)   any of the obligations of any Lender or any other person hereunder or
      under any Letter of Credit or under any other security taken in respect of
      the Account Party's obligations hereunder or otherwise in connection with
      any Letter of Credit being or becoming illegal, invalid, unenforceable or
      ineffective in any respect;

(c)   time or other indulgence being granted or agreed to be granted to any
      Lender or any other person in respect of its obligations hereunder or
      under or in connection with any Letter of Credit or under any such other
      security;

(d)   any amendment to, or any variation, waiver or release of, any obligation
      of any Lender or any other person under any Letter of Credit or this
      Agreement;

(e)   any other act, event or omission which, but for this Clause 6 might
      operate to discharge, impair or otherwise affect any of the obligations of
      the Account Party set out in this Clause 6 or any of the rights, powers or
      remedies conferred upon any Lender by this Agreement or by law.

The obligations of the Account Party set out in this Clause 6 shall be in
addition to and independent of every other security which any Lender may at any
time hold in respect of the Account Party's obligations hereunder.

SETTLEMENT CONDITIONAL

6.3   Any settlement or discharge between the Account Party and a Lender shall
be conditional upon no security or payment to such Lender by the Account Party
or any other person on behalf of the Account Party, being avoided or reduced by
virtue of any laws relating to Bankruptcy, insolvency, liquidation or similar
laws of general application and, if any such security or payment is so avoided
or reduced, such Lender shall be entitled to recover the value or amount of such
security or payment from the Account Party subsequently as if such settlement or
discharge had not occurred.

DEFAULT INTEREST

7.    A Demand Amount shall bear interest during each Default Period in respect
thereof, and any other amount unpaid hereunder shall bear interest for so long
as it remains outstanding at rate of the sum of (i) two per cent. per annum (ii)
the Mandatory Costs in respect thereof at such time, and (iii) LIBOR on each day
whilst such amount remains outstanding. Such interest shall be payable by the
Account Party on the date on which it reimburses the Lenders under clause 6.1(a)
and (b) (THE ACCOUNT PARTY'S INDEMNITY TO LENDERS).

TERMINATION AND REDUCTION OF THE COMMITMENTS

SCHEDULED TERMINATION

8.1   Unless previously terminated, the unutilised Commitments shall terminate
at the close of business on the Commitment Termination Date.

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VOLUNTARY CANCELLATION OR REDUCTION

8.2   The Account Party may at any time cancel, or from time to time reduce, the
Total Commitments; provided that (a) each reduction of the Total Commitments
shall be in an amount of (pound)15,000,000 or a larger multiple of
(pound)5,000,000 and (b) the Account Party shall not cancel or reduce the
Commitments if the Total LC Exposures would exceed the Total Commitments.

NOTICE OF VOLUNTARY CANCELLATION OR REDUCTION

8.3   The Account Party shall notify the Agent of any election to cancel or
reduce the Total Commitments under Clause 8.2 at least three Business Days prior
to the effective date of such cancellation or reduction, specifying such
election and the effective date thereof. Promptly following receipt of any
notice, the Agent shall advise the Lenders of the contents thereof. Each notice
delivered by the Account Party pursuant to this Clause shall be irrevocable;
provided that a notice of cancellation of the Commitments delivered by the
Account Party may state that such notice is conditioned upon the effectiveness
of other credit facilities, in which case such notice may be revoked by the
Account Party (by notice to the Agent on or prior to the specified effective
date) if such condition is not satisfied.

NO OTHER REPAYMENTS OR CANCELLATION

8.4   The Account Party shall not repay or cancel all or any part of the LC
Exposures except at the times and in the manner expressly provided for in this
Agreement.

EFFECT OF CANCELLATION OR REDUCTION

8.5   Any cancellation or reduction of the Commitments shall be permanent. Each
reduction of the Commitments shall be made rateably among the Lenders in
accordance with their respective Commitments.

FEES

PARTICIPATION FEE

9.1   The Account Party shall pay to the Agent for the account of the Lenders
the participation fees specified in the Fee Letter.

LETTER OF CREDIT FEE

9.2(a)The Account Party shall pay to the Agent for account of each Lender pro
      rata according to their respective LC Exposures hereunder a letter of
      credit fee computed at the rate of 0.40 per cent. per annum on the
      principal amount of each issued Letter of Credit payable from the
      Utilisation Date until the Expiry Date (as extended) of that Letter of
      Credit or any earlier cancellation, repayment or prepayment of the Letter
      of Credit in accordance with Clause 8 (TERMINATION AND REDUCTION OF THE
      COMMITMENTS) of this Agreement;

(b)   The letter of credit fees shall be payable quarterly in arrears on each
      Quarterly Date and on the date on which the Lenders cease to have any LC
      Exposure. Letter of credit fees accrued through and including each
      Quarterly Date shall be payable on the fifth Business Day following such
      Quarterly Date, commencing on the first such date to occur after the
      Effective Date; and

                                                                         Page 22
<PAGE>

(c)   The Agent shall notify the Account Party in writing at least ten Business
      Days prior to each Quarterly Date of (i) the letter of credit fee payable
      in respect of each Letter of Credit issued and (ii) the aggregate letter
      of credit fee payable in respect of all Letters of Credit issued.

COMMITMENT FEE

9.3   The Account Party shall pay to the Agent for the account of each Lender a
commitment fee at the rate of 0.10 per cent. per annum on its Available
Commitment (as determined on a daily basis) for the period from the date hereof
to 1 January 2001 (inclusive). The commitment fee shall be payable by the
Account Party on the first Business Day following 1 January 2001.

AGENT FEES

9.4   The Account Party agrees to pay to the Agent, for its own account, the
agency fees payable in the amounts and at the times specified in the letter
dated 28 September 2000 from the Arranger to the Account Party.

PAYMENT OF FEES

9.5   All fees payable hereunder shall be paid on the dates due, in immediately
available funds, to the Agent for distribution, in the case of the letter of
credit fees and the commitment fees referred to in Clause 9.1 and 9.2, to the
Lenders entitled thereto. Fees paid shall not be refundable under any
circumstances absent manifest error in the calculation or payment of fees due
and payable.

BASIS OF CALCULATION

9.6   The fees payable pursuant to Clauses 9.1, 9.2 and 9.3 shall be calculated
on the basis of actual days elapsed and in the case of Clauses 9.1 and 9.2, a
365 day year and in the case of Clause 9.3, a 360 day year.

TAXES

TAX GROSS-UP

10.1  All payments to be made by an Obligor to any Finance Party hereunder,
whether in respect of principal, interest, fees or any other item, shall be made
free and clear of and without deduction for or on account of tax unless such
Obligor is required to make such a payment subject to the deduction or
withholding of tax, in which case the sum payable by such Obligor (in respect of
which such deduction or withholding is required to be made) shall be increased
to the extent necessary to ensure that such Finance Party receives a sum net of
any deduction or withholding equal to the sum which it would have received had
no such deduction or withholding been made or required to be made.

TAX INDEMNITY

10.2  Without prejudice to Clause 10.1 (TAX GROSS-UP), if any Finance Party is
required to make any payment of or on account of tax on or in relation to any
sum received or receivable hereunder (including any sum deemed for purposes of
tax to be received or receivable by such Finance Party whether or not actually
received or receivable) or if any liability in respect of any such payment is
asserted, imposed, levied or assessed against any Finance Party, the Account
Party shall, upon demand of the Agent, promptly indemnify the Finance Party
which

                                                                         Page 23
<PAGE>

suffers a loss or liability as a result against such payment or liability,
together with any interest, penalties, costs and expenses payable or incurred in
connection therewith, PROVIDED THAT this Clause 10.2 shall not apply to:

(a)   any tax imposed on and calculated by reference to the net income actually
      received or receivable by such Finance Party by the jurisdiction in which
      such Finance Party is incorporated; or

(b)   any tax imposed on and calculated by reference to the net income of the
      Facility Office of such Finance Party actually received or receivable by
      such Finance Party by the jurisdiction in which its Facility Office is
      located.

LENDERS' TAX STATUS CONFIRMATION

10.3  Each Lender confirms in favour of the Agent (on the date hereof or, in the
case of a Lender which becomes a party hereto pursuant to a transfer or
assignment, on the date on which the relevant transfer or assignment becomes
effective) that either:

(a)   it is a Qualifying Lender; or

(b)   it is not resident for tax purposes in the United Kingdom and is
      beneficially entitled to its share of the LC Exposures and any interest
      thereon.

CLAIMS BY LENDERS

10.4  A Lender intending to make a claim pursuant to Clause 10.2 (TAX INDEMNITY)
shall promptly notify the Agent of the event giving rise to the claim, whereupon
the Agent shall promptly notify the Account Party thereof.

TAX RECEIPTS

NOTIFICATION OF REQUIREMENT TO DEDUCT TAX

11.1  If, at any time, an Obligor is required by law to make any deduction or
withholding from any sum payable by it hereunder (or if thereafter there is any
change in the rates at which or the manner in which such deductions or
withholdings are calculated), such Obligor shall promptly, upon becoming aware
of the same, notify the Agent.

EVIDENCE OF PAYMENT OF TAX

11.2  If an Obligor makes any payment hereunder in respect of which it is
required to make any deduction or withholding, it shall pay the full amount
required to be deducted or withheld to the relevant taxation or other authority
within the time allowed for such payment under applicable law and shall deliver
to the Agent for each Lender, within thirty days after it has made such payment
to the applicable authority, an original receipt (or a certified copy thereof)
issued by such authority evidencing the payment to such authority of all amounts
so required to be deducted or withheld in respect of that Lender's share of such
payment.

TAX CREDIT PAYMENT

11.3  If an additional payment is made under Clause 10 (TAXES) by an Obligor for
the benefit of any Finance Party and such Finance Party, in its sole discretion,
determines that it has obtained (and has derived full use and benefit from) a
credit against, a relief or remission

                                                                         Page 24
<PAGE>

for, or repayment of, any tax, then, if and to the extent that such Finance
Party, in its sole opinion, determines that:

(a)   such credit, relief, remission or repayment is in respect of or calculated
      with reference to the additional payment made pursuant to Clause 10
      (TAXES); and

(b)   its tax affairs for its tax year in respect of which such credit, relief,
      remission or repayment was obtained have been finally settled,

such Finance Party shall, to the extent that it can do so without prejudice to
the retention of the amount of such credit, relief, remission or repayment, pay
to such Obligor such amount as such Finance Party shall, in its sole opinion,
determine to be the amount which will leave such Finance Party (after such
payment) in no worse after-tax position than it would have been in had the
additional payment in question not been required to be made by such Obligor.

TAX CREDIT CLAWBACK

11.4  If any Finance Party makes any payment to an Obligor pursuant to Clause
11.3 (TAX CREDIT PAYMENT) and such Finance Party subsequently determines, in its
sole opinion, that the credit, relief, remission or repayment in respect of
which such payment was made was not available or has been withdrawn or that it
was unable to use such credit, relief, remission or repayment in full, the
Obligor shall reimburse such Finance Party such amount as such Finance Party
determines, in its sole opinion, is necessary to place it in the same after-tax
position as it would have been in if such credit, relief, remission or repayment
had been obtained and fully used and retained by such Finance Party.

TAX AND OTHER AFFAIRS

11.5  No provision of this Agreement shall interfere with the right of any
Finance Party to arrange its tax or any other affairs in whatever manner it
thinks fit, oblige any Finance Party to claim any credit, relief, remission or
repayment in respect of any payment under Clause 10.1 (TAX GROSS-UP) in priority
to any other credit, relief, remission or repayment available to it nor oblige
any Finance Party to disclose any information relating to its tax or other
affairs or any computations in respect thereof.

INCREASED COSTS

INCREASED COSTS

12.1  Subject to Clause 12.2 (EXCEPTIONS), if after the date of this Agreement,
the result of:

(a)   the introduction of or any change in the official or judicial
      interpretation or application of any Law (having the force of law or if
      not having the force of law, generally complied with by a Lender in
      relation to any relevant jurisdiction); and/or

(b)   compliance (without adopting materially less prudent policies or standards
      than those previously adopted by it) by any Lender or by the holding
      company of any Lender with any of the matters mentioned in paragraph (a)
      above,

including in each case, without limitation, those laws relating to Taxation, any
change in currency, any reserve, special deposit, cash ratio, liquidity or
capital adequacy requirement or any other form of banking or monetary controls,
is that:

                                                                         Page 25
<PAGE>

        (i) a Lender or its holding company incurs an additional cost as a
            result of that Finance Party having entered into, or performing,
            maintaining or funding its obligations under this Agreement; or

       (ii) a Lender or its holding company incurs an additional cost in making,
            funding or maintaining any Letters of Credit made or to be made by
            it under this Agreement; or

      (iii) any amount payable to a Lender or the effective return to a Lender
            under this Agreement or the effective return to a Lender or its
            holding company on its capital is reduced as a result of any change
            in the amount or nature of the capital resources required to be
            allocated in respect of a Lender's participation under this
            Agreement; or

       (iv) a Lender makes any payment or foregoes any interest or other return
            on or calculated by reference to any amount received or receivable
            by it from the Account Party or the Agent under this Agreement;

then and in each such case:

            (A) the Lender shall notify the Account Party through the Agent of
                the relevant event promptly upon becoming aware of the event
                giving details of any costs or amount likely to be demanded
                under paragraph (B);

            (B) promptly following any demand from time to time by that Lender
                through the Agent, the Account Party shall pay to the Agent for
                the account of that Finance Party (or, as the case may be, its
                holding company) such amount as shall compensate such Finance
                Party or its holding company for the additional cost, reduction,
                payment or foregone interest or other return.

EXCEPTIONS

12.2  Clause 12.1 shall not apply to or in respect of:

(a)   any circumstances referred to in Clause 10.2 (TAX INDEMNITY);

(b)   any circumstances for which a relevant Lender has been compensated for
      under Clause 12.3.

ILLEGALITY

13.   If, after the date of this Agreement, any Change in Law or in the official
or judicial interpretation or application thereof shall make it unlawful or
contrary to an official directive in any jurisdiction for any Lender to make
available or fund or maintain or to give effect to its obligations as
contemplated by this Agreement or the Letters of Credit (or, by reason only of a
Change of Law, the Lender ceases to be an Approved Credit Institution), the
Lender shall promptly on becoming aware of the same give notice thereof to the
Account Party through the Agent, whereupon:

(a)   where such change makes it unlawful or contrary to an official directive
      to maintain or give effect to its obligations under this Agreement, if the
      Agent on behalf of such Lender so requires, the Account Party shall by no
      later than the last day of any

                                                                         Page 26
<PAGE>

      applicable grace period specified by the applicable Law ensure that the
      liabilities of such Lender under or in respect of each Letter of Credit
      are cancelled within the meaning of Clause 1.2(l)(i)(A) (or use its best
      efforts to ensure that such liabilities are cancelled within the meaning
      of Clause 1.2(l)(i)(C)), the Commitment of that Lender shall forthwith be
      cancelled and the Account Party shall prepay forthwith fees, costs and
      expenses due to that Lender hereunder;

(b)   where such change only makes it unlawful or contrary to an official
      directive to participate in further Letters of Credit under this
      Agreement, then upon receipt by the Agent of that notice, the Available
      Commitment of that Lender shall be reduced to zero, and upon the expiry of
      each Letter of Credit in which it is participating at such time, its
      resulting Available Commitment shall also be cancelled, provided that if
      the Lender subsequently transfers or assigns its rights and obligations
      under this Agreement to a new lender pursuant to Clause 26.5 (RIGHTS TO
      SUBSTITUTE A SINGLE BANK), the Account Party may by notice to the Agent
      increase the Commitment of such new lender by the amount of the Available
      Commitment that was previously cancelled.

MITIGATION OBLIGATIONS; REPLACEMENT OF LENDERS.

DESIGNATION OF A DIFFERENT LENDING OFFICE

14.1  If any Lender requests compensation under Clause 12 (INCREASED COSTS), or
if the Account Party is required to pay any additional amount to any Lender or
any Governmental Authority for account of any Lender pursuant to Clause 10
(TAXES), then such Lender shall use reasonable efforts to designate a different
lending office for funding or booking its Letters of Credit hereunder or to
transfer its rights and obligations hereunder to another of its offices,
branches or Affiliates, if, in the reasonable judgment of such Lender, such
designation or assignment (a) would eliminate or reduce amounts payable pursuant
to Clause 12 (INCREASED COSTS) or 10 (TAXES), as the case may be, in the future
and (b) would not subject such Lender to any unreimbursed cost or expense and
would not otherwise be disadvantageous to such Lender. The Account Party hereby
agrees to pay all reasonable costs and expenses incurred by any Lender in
connection with any such designation or assignment.

REPLACEMENT OF LENDERS

14.2  If any Lender requests compensation under Clause 12 (INCREASED COSTS), or
if any Account Party is required to pay any additional amount to any Lender or
any Governmental Authority for account of any Lender pursuant to Clause 10
(TAXES), or if any Lender defaults in its obligation to make LC Disbursements
hereunder, or if any Lender ceases to be an Approved Credit Institution, then
the Account Party may, at its sole expense and effort, upon notice to such
Lender and the Agent, require such Lender to assign and delegate, without
recourse (in accordance with and subject to the restrictions contained in Clause
26.5 (RIGHT TO SUBSTITUTE SINGLE LENDER)), all its interests, rights and
obligations under this Agreement to an Approved Credit Institution that shall
assume such obligations (which assignee may be another Lender, if a Lender
accepts such assignment); provided that:

(a)   the Account Party shall have received the prior written consent of the
      Agent, which consent shall not unreasonably be withheld;

(b)   such Lender shall have received payment of an amount equal to the
      outstanding amount of its LC Disbursements, accrued interest thereon,
      accrued fees and all other amounts payable to it hereunder, from the
      assignee (to the extent of such outstanding

                                                                         Page 27
<PAGE>

      principal and accrued interest and fees) or the relevant Account Party (in
      the case of all other amounts); and

(c)   in the case of any such assignment resulting from a claim for compensation
      under Clause 12 (INCREASED COSTS) or payments required to be made pursuant
      to Clause 10 (TAXES), such assignment will result in a reduction in such
      compensation or payments.

A Lender shall not be required to make any such assignment and delegation if,
prior thereto, as a result of a waiver by such Lender or otherwise, the
circumstances entitling the relevant Account Party to require such assignment
and delegation cease to apply.

PAYMENTS GENERALLY; PRO RATA TREATMENT; SHARING OF SET-OFFS.

PAYMENTS BY THE ACCOUNT PARTY

15.1(a) The Account Party shall make each payment required to be made by them
        hereunder or under any other Finance Document (except to the extent
        otherwise provided therein) in Sterling on the date when due, in
        immediately available cleared funds, without set-off or counterclaim
        (and in the case of payments required pursuant to Clause 6, by 11.00
        a.m. on the due date). Any amounts received after such time on any date
        may, in the discretion of the Agent, be deemed to have been received on
        the next succeeding Business Day for the purposes of calculating
        interest thereon. All such payments shall be made to the Agent at the
        account most recently notified by it, except payments pursuant to
        Clauses 12 (INCREASED Costs), 10 (TAXES), 24 (COSTS AND EXPENSES) and 25
        (INDEMNITIES), which shall be made directly to the Persons entitled
        thereto. The Agent shall distribute any such payments received by it for
        account of any other Person to the appropriate recipient promptly
        following receipt thereof.

(b)     If any payment hereunder shall be due on a day that is not a Business
        Day, the date for payment shall be extended to the next succeeding
        Business Day and, in the case of any payment accruing interest, interest
        thereon shall be payable for the period of such extension.

CURRENCY

15.2  All amounts payable under this Agreement in respect of any Letter of
Credit shall be payable in Sterling.

APPLICATION OF INSUFFICIENT PAYMENTS

15.3  If at any time insufficient funds are received by and available to the
Agent to pay fully all Demand Amounts, interest, fees and expenses then due
hereunder, such funds shall be applied:

(a)   FIRST, in or towards payment pro rata of any unpaid fees, costs, expenses,
      indemnity payments and other amounts due to the Agent and the Security
      Trustee under the Finance Documents;

(b)   SECONDLY, in or towards payment pro rata of any unpaid costs and expenses
      of the Lenders under the Finance Documents;

(c)   THIRDLY, in or towards payment pro rata of any outstanding fees (other
      than Letter of Credit Fees) payable to the Lenders under the Finance
      Documents;

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<PAGE>

(d)   FOURTHLY, in or towards payment pro rata of all accrued Letter of Credit
      Fees due to Issuing Lenders but unsatisfied under this Agreement;

(e)   FIFTHLY, in or towards payment pro rata of any interest on Demand Amounts;

(f)   SIXTHLY, in or towards payment pro rata of Demand Amounts;

(g)   SEVENTHLY, in or towards payment pro rata of any principal (other than a
      Demand Amount) due but unsatisfied under this Agreement (including, for
      the avoidance of doubt, any cash cover to be provided under a Letter of
      Credit); and

(h)   EIGHTHLY, in or towards payment pro rata of any other sum due but
      unsatisfied under this Agreement.

PRO RATA TREATMENT

15.4  Except to the extent otherwise provided herein:

(a)   each reimbursement of LC Disbursements shall be made to the Lenders, each
      payment of fees under Clause 9 (FEES) shall be made for account of the
      Lenders, and each termination or reduction of the Commitments under Clause
      8 (TERMINATION AND REDUCTION OF THE COMMITMENTS) shall be applied to the
      respective Commitments of the Lenders, pro rata according to their
      respective Commitments; and

(b)   each payment of interest shall be made for account of the Lenders pro rata
      in accordance with the amounts of interest then due and payable to the
      respective Lenders.

SHARING OF PAYMENTS BY LENDERS

15.5  If any Lender shall, by exercising any right of set-off or counterclaim or
otherwise, obtain payment in respect of any LC Exposures resulting in such
Lender receiving payment of a greater proportion of the aggregate amount of its
LC Exposures and accrued interest thereon then due than the proportion received
by any other Lender, then the Lender receiving such greater proportion shall
purchase (for cash at face value) participations in the LC Exposures of other
Lenders to the extent necessary so that the benefit of all such payments shall
be shared by the Lenders rateably in accordance with the aggregate amount of LC
Exposures; provided that:

(a)   if any such participations are purchased and all or any portion of the
      payment giving rise thereto is recovered, such participations shall be
      rescinded and the purchase price restored to the extent of such recovery,
      without interest; and

(b)   the provisions of this Clause shall not be construed to apply to any
      payment made by any Obligor pursuant to and in accordance with the express
      terms of this Agreement or any payment obtained by a Lender as
      consideration for the assignment of or sale of a participation in LC
      Disbursements to any assignee or participant, other than to the Account
      Party or any Subsidiary or Affiliate thereof (as to which the provisions
      of this paragraph shall apply).

Each Obligor consents to the foregoing and agrees, to the extent it may
effectively do so under applicable law, that any Lender acquiring a
participation pursuant to the foregoing arrangements may exercise against the
Account Party rights of set-off and counterclaim with respect to such
participation as fully as if such Lender were a direct creditor of the Account

                                                                         Page 29
<PAGE>

Party in the amount of such participation and the Obligors authorise the Lenders
to exchange Transfer Certificates and any other documentation to give effect to
those purchases of participations.

PRESUMPTIONS OF PAYMENT

15.6  Unless the Agent shall have received notice from any party prior to the
date on which any payment is due to the Agent hereunder that the payor will not
make such payment, the Agent may assume that the payor has made such payment on
such date in accordance herewith and may, in reliance upon such assumption,
distribute to the relevant payee the amount due. In such event, if the payor has
not in fact made such payment, then each of the payees severally agrees to repay
to the Agent forthwith on demand the amount so distributed to that payee with
interest thereon, for each day from and including the date such amount is
distributed to it to but excluding the date of payment to the Agent, at the
Agent's cost of funds from such sources as the Agent may reasonably select.

CERTAIN DEDUCTIONS BY THE AGENT

15.7  If any Lender shall fail to make any payment required to be made by it
pursuant to Clause 15.5 (SHARING OF PAYMENTS BY LENDERS), then the Agent may, in
its discretion (notwithstanding any contrary provision hereof), apply any
amounts thereafter received by the Agent for account of such Lender to satisfy
such Lender's obligations under such Clauses until all such unsatisfied
obligations are fully paid.

GUARANTEE AND INDEMNITY

GUARANTEE AND INDEMNITY

16.1  The Guarantors, jointly and severally, irrevocably and unconditionally:

(a)   guarantee to each Finance Party the due and punctual payment from time to
      time on demand any and every sum or sums of money which the Account Party
      is at any time liable to pay to any Finance Party under or pursuant to the
      Finance Documents and which has become due and payable but has not been
      paid at the time such demand is made (the GUARANTEED OBLIGATIONS); and

(b)   agree as a primary obligation to indemnify each Finance Party from time to
      time on demand from and against any loss incurred by any Finance Party as
      a result of any of the obligations of the Account Party under or pursuant
      to the Finance Documents being or becoming void, voidable, unenforceable
      or ineffective as against the Account Party for any reason whatsoever,
      whether or not known to any Finance Party or any other person, the amount
      of such loss being the amount which the person or persons suffering it
      would otherwise have been entitled to recover from the Account Party.

ADDITIONAL SECURITY

16.2  The obligations of each Guarantor herein contained shall be in addition to
and independent of every other security which any Finance Party may at any time
hold in respect of any of the Account Party's obligations under the Finance
Documents.

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CONTINUING OBLIGATIONS

16.3  The obligations of each Guarantor herein contained shall constitute and be
continuing obligations notwithstanding any settlement of account or other matter
or thing whatsoever and shall not be considered satisfied by any intermediate
payment or satisfaction of all or any of the obligations of the Account Party
under the Finance Documents and shall continue in full force and effect until
final payment in full of all amounts owing by the Account Party under this
Agreement and total satisfaction of all the Account Party's actual and
contingent obligations under the Finance Documents.

OBLIGATIONS NOT DISCHARGED

16.4  Neither the obligations of the Guarantors herein contained nor the rights,
powers and remedies conferred in respect of the Guarantors upon any Finance
Party by the Finance Documents or by law shall be discharged, impaired or
otherwise affected by:

(a)   the winding-up, dissolution, administration or re-organisation of the
      Account Party or any other person or any change in its status, function,
      control or ownership;

(b)   any of the obligations of the Account Party or any other person under the
      Finance Documents or under any other security taken in respect of any of
      its obligations under the Finance Documents being or becoming illegal,
      invalid, unenforceable or ineffective in any respect;

(c)   time or other indulgence being granted or agreed to be granted to any
      Obligor in respect of its obligations under the Finance Documents or under
      any such other security;

(d)   any amendment to, or any variation, waiver or release of, any obligation
      of any Obligor under the Finance Documents or under any such other
      security;

(e)   any failure to take, or fully to take, any security contemplated hereby or
      otherwise agreed to be taken in respect of the Obligors' obligations under
      the Finance Documents;

(f)   any failure to realise or fully to realise the value of, or any release,
      discharge, exchange or substitution of, any security taken in respect of
      the Obligors' obligations under the Finance Documents; or

(g)   any other act, event or omission which, but for this Clause 16.4, might
      operate to discharge, impair or otherwise affect any of the obligations of
      any Guarantor herein contained or any of the rights, powers or remedies
      conferred upon any of the Finance Parties by the Finance Documents or by
      law.

SETTLEMENT CONDITIONAL

16.5  Any settlement or discharge between any Obligor and any of the Finance
Parties shall be conditional upon no security or payment to any Finance Party by
the Account Party or any other person on behalf of the Account Party being
avoided or reduced by virtue of any laws relating to bankruptcy, insolvency,
liquidation or similar laws of general application and, if any such security or
payment is so avoided or reduced, each Finance Party shall be entitled to
recover the value or amount of such security or payment from the Account Party
subsequently as if such settlement or discharge had not occurred.

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<PAGE>

EXERCISE OF RIGHTS

16.6  No Finance Party shall be obliged before exercising any of the rights,
powers or remedies conferred upon them in respect of any Guarantor by the
Finance Documents or by law to:

(a)   make any demand of the Account Party or any other Obligor;

(b)   take any action or obtain judgment in any court against the Account Party
      or any other Obligor;

(c)   make or file any claim or proof in a winding-up or dissolution of the
      Account Party or any other Obligor; or

(d)   enforce or seek to enforce any other security taken in respect of any of
      the obligations of the Account Party or any other Obligor under the
      Finance Documents.

DEFERRAL OF GUARANTOR'S RIGHTS

16.7  Each Guarantor agrees that, so long as any amounts are or may be owed by
the Account Party under the Finance Documents or the Account Party is under any
actual or contingent obligations under the Finance Documents, it shall not
exercise any rights which it may at any time have by reason of performance by it
of its obligations under the Finance Documents:

(a)   to be indemnified by the Account Party; and/or

(b)   to claim any contribution from any other Guarantor of the Account Party's
      obligations under the Finance Documents; and/or

(c)   to take the benefit (in whole or in part and whether by way of subrogation
      or otherwise) of any rights of the Finance Parties under the Finance
      Documents or of any other security taken pursuant to, or in connection
      with, this Agreement by all or any of the Finance Documents.

RIGHTS OF CONTRIBUTION

16.8  The Guarantors (other than the Account Party) hereby agree, as between
themselves, that if any such Guarantor shall become an Excess Funding Guarantor
(as defined below) by reason of the payment by such Guarantor of any Guaranteed
Obligations, each other Guarantor (other than the Account Party) shall, on
demand of such Excess Funding Guarantor (but subject to the next sentence), pay
to such Excess Funding Guarantor an amount equal to such Guarantor's Pro Rata
Share (as defined below and determined, for this purpose, without reference to
the properties, debts and liabilities of such Excess Funding Guarantor) of the
Excess Payment (as defined below) in respect of such Guaranteed Obligations. The
payment obligation of a Guarantor to any Excess Funding Guarantor under this
Clause shall be subordinate and subject in right of payment to the prior payment
in full of the obligations of such Guarantor under the other provisions of this
Clause 16 and such Excess Funding Guarantor shall not exercise any right or
remedy with respect to such excess until payment and satisfaction in full of all
of such obligations.

For purposes of this Clause, (i) EXCESS FUNDING GUARANTOR means, in respect of
any Guaranteed Obligations, a Guarantor that has paid an amount in excess of its
Pro Rata Share of such Guaranteed Obligations, (ii) EXCESS PAYMENT means, in
respect of any Guaranteed

                                                                         Page 32
<PAGE>

Obligations, the amount paid by an Excess Funding Guarantor in excess of its Pro
Rata Share of such Guaranteed Obligations and (iii) PRO RATA SHARE means, for
any Guarantor, the ratio (expressed as a percentage) of (x) the amount by which
the aggregate present fair saleable value of all properties of such Guarantor
(excluding any shares of stock of any other Guarantor) exceeds the amount of all
the debts and liabilities of such Guarantor (including contingent, subordinated,
unmatured and unliquidated liabilities, but excluding the obligations of such
Guarantor hereunder and any obligations of any other Guarantor that have been
Guaranteed by such Guarantor) to (y) the amount by which the aggregate fair
saleable value of all properties of all of the Guarantors (other than the
Account Party) exceeds the amount of all the debts and liabilities (including
contingent, subordinated, unmatured and unliquidated liabilities, but excluding
the obligations of the Guarantors under this Clause 16) of all of the Guarantors
(other than the Account Party), determined (A) with respect to any Guarantor
that is a party hereto on the date hereof, as of the date hereof, and (B) with
respect to any other Guarantor, as of the date such Guarantor becomes a
Guarantor hereunder.

GENERAL LIMITATION ON GUARANTEE OBLIGATIONS

16.9  In any action or proceeding involving any state corporate law, or any
state or Federal bankruptcy, insolvency, reorganisation or other law in any
other jurisdiction affecting the rights of creditors generally, if the
obligations of any Guarantor under Clause 16.1 (GUARANTEE AND INDEMNITY) would
otherwise, taking into account the provisions of Clause 16.8, be held or
determined to be void, invalid or unenforceable, or subordinated to the claims
of any other creditors, on account of the amount of its liability under Clause
16.1 (GUARANTEE AND INDEMNITY), then, notwithstanding any other provision hereof
to the contrary, the amount of such liability shall, without any further action
by such Guarantor, any Lender, the Agent or any other Person, be automatically
limited and reduced to the highest amount that is valid and enforceable and not
subordinated to the claims of other creditors as determined in such action or
proceeding.

REPRESENTATIONS AND WARRANTIES

17.1  Each Obligor represents and warrants to the Lenders on the date of this
Agreement, the Closing Date and 1 December of each year unless no extension is
to occur on December 31 of such year (with reference to the facts and
circumstances subsisting on each such date) as follows.

ORGANISATION; POWERS

17.2  It and each of its Subsidiaries is duly organised, validly existing and in
good standing under the laws of the jurisdiction of its organisation, has all
requisite power and authority to carry on its business as now conducted and,
except where the failure to do so, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect, is qualified to
do business in, and is in good standing in, every jurisdiction where such
qualification is required.

AUTHORISATION: ENFORCEABILITY

17.3  The Transactions are within such Obligor's corporate powers and have been
duly authorised by all necessary corporate and, if required, by all necessary
shareholder action. Each Finance Document to which such Obligor is party has
been duly executed and delivered by such Obligor and constitutes a legal, valid
and binding obligation of such Obligor, enforceable against such Obligor in
accordance with its terms, except as such enforceability may be limited by (a)
bankruptcy, insolvency, reorganisation, moratorium or similar laws of general
applicability affecting the enforcement of creditors' rights and (b) the
application of

                                                                         Page 33
<PAGE>

general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).

GOVERNMENTAL APPROVALS; NO CONFLICTS

17.4  The Transactions (a) do not require any consent or approval of (including
any exchange control approval), registration or filing with, or any other action
by, any Governmental Authority, except such as have been obtained or made and
are in full force and effect, (b) will not violate any applicable law or
regulation or the charter, by-laws or other organisational documents of such
Obligor or any of its Subsidiaries or any order of any Governmental Authority,
(c) will not violate or result in a default under any material indenture,
agreement or other instrument binding upon such Obligor or any of its
Subsidiaries or assets, or give rise to a right thereunder to require any
payment to be made by any such Person, and (d) will not result in the creation
or imposition of any Lien on any asset of such Obligor or any of its
Subsidiaries.

FINANCIAL CONDITION; NO MATERIAL ADVERSE CHANGE

17.5(a) FINANCIAL CONDITION. Such Obligor has heretofore furnished to the
        Lenders the consolidated balance sheet and statements of income,
        shareholders' equity and cash flows of such Obligor and its consolidated
        Subsidiaries (i) as of and for the fiscal years ended December 31, 1998
        and December 31, 1999, reported on by PricewaterhouseCoopers LLP,
        independent public accountants (as provided in the Account Party's
        Report on Form 10-K filed with the SEC for the fiscal year ended
        December 31, 1999), and (ii) as of and for the fiscal quarter ended June
        30, 2000, as provided in the Account Party's Report on Form 10-Q filed
        with the SEC for the fiscal quarter ended June 30, 2000. Such financial
        statements (and any further such statements delivered pursuant to Clause
        18.1(a) and (b)) present fairly, in all material respects, the financial
        position and results of operations and cash flows of such Obligor and
        its respective consolidated Subsidiaries as of such dates and for such
        periods (or the dates or periods to which any such further statements
        relate) in accordance with GAAP or (in the case of XL Europe, XL
        Insurance or XL Mid Ocean) SAP, subject to year-end audit adjustments
        and the absence of footnotes in the case of the statements referred to
        in (ii) of the first sentence of this paragraph.

(b)     NO MATERIAL ADVERSE CHANGE. Since December 31, 1999, there has been no
        material adverse change in the assets, business, financial condition or
        operations of such Obligor and its Subsidiaries, taken as a whole.

PROPERTIES

17.6(a) PROPERTY GENERALLY. Such Obligor and each of its Subsidiaries has good
        title to, or valid leasehold interests in, all its real and personal
        property material to its business, subject only to Liens permitted by
        Clause 19.3 (LIENS) and except for minor defects in title that do not
        interfere with its ability to conduct its business as currently
        conducted or to utilise such properties for their intended purposes.

(b)     INTELLECTUAL PROPERTY. Such Obligor and each of its Subsidiaries owns,
        or is licensed to use, all trademarks, tradenames, copyrights, patents
        and other intellectual property material to its business, and the use
        thereof by such Obligor and its Subsidiaries does not infringe upon the
        rights of any other Person, except for any such infringements that,
        individually or in the aggregate, could not reasonably be expected to
        result in a Material Adverse Effect.

                                                                         Page 34
<PAGE>

LITIGATION AND ENVIRONMENTAL MATTERS

17.7(a) ACTIONS, SUITS AND PROCEEDINGS. Except as disclosed in Schedule 2 Part C
        or as routinely encountered in claims activity, there are no actions,
        suits or proceedings by or before any arbitrator or Governmental
        Authority now pending against or, to the knowledge of such Obligor,
        threatened against or affecting such Obligor or any of its Subsidiaries
        (i) as to which there is a reasonable possibility of an adverse
        determination and that could reasonably be expected, individually or in
        the aggregate, to result in a Material Adverse Effect or (ii) that
        involve the Finance Documents or the Transactions.

(b)     ENVIRONMENTAL MATTERS. Except as disclosed in Schedule 2 Part D and
        except with respect to any other matters that, individually or in the
        aggregate, could not reasonably be expected to result in a Material
        Adverse Effect, neither such Obligor nor any of its Subsidiaries (i) has
        failed to comply with any Environmental Law or to obtain, maintain or
        comply with any permit, license or other approval required for its
        business under any Environmental Law, (ii) has incurred any
        Environmental Liability, (iii) has received notice of any claim with
        respect to any Environmental Liability or (iv) knows of any basis for
        any Environmental Liability.

COMPLIANCE WITH LAWS AND AGREEMENTS

17.8  Such Obligor and each of its Subsidiaries is in compliance with all laws,
regulations and orders of any Governmental Authority applicable to it or its
property and all indentures, agreements and other instruments binding upon it or
its property, except where the failure to do so, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect. No Default has occurred and is continuing.

INVESTMENT AND HOLDING COMPANY STATUS

17.9  Such Obligor is not (a) an INVESTMENT COMPANY as defined in, or subject to
regulation under, the Investment Company Act of 1940 or (b) a HOLDING COMPANY as
defined in, or subject to regulation under, the Public Utility Holding Company
Act of 1935.

TAXES

17.10 Such Obligor and each of its Subsidiaries has timely filed or caused to be
filed all Tax returns and reports required to have been filed and has paid or
caused to be paid all Taxes required to have been paid by it, except (a) Taxes
that are being contested in good faith by appropriate proceedings and for which
such Person has set aside on its books adequate reserves or (b) to the extent
that the failure to do so could not reasonably be expected to result in a
Material Adverse Effect.

ERISA

17.11 No ERISA Event has occurred or is reasonably expected to occur that, when
taken together with all other such ERISA Events for which liability is
reasonably expected to occur, could reasonably be expected to result in a
Material Adverse Effect. The present value of all accumulated benefit
obligations under each Plan (based on the assumptions used for purposes of
Statement of Financial Accounting Standards No. 87) did not, as of the date of
the most recent financial statements reflecting such amounts, exceed the fair
market value of the assets of such Plan by an amount that could reasonably be
expected to result in a Material Adverse Effect.

                                                                         Page 35
<PAGE>

Except as could not reasonably be expected to result in a Material Adverse
Effect, (i) all contributions required to be made by any Obligor or any of their
Subsidiaries with respect to a Non-U.S. Benefit Plan have been timely made, (ii)
each Non-U.S. Benefit Plan has been maintained in compliance with its terms and
with the requirements of any and all applicable laws and has been maintained,
where required, in good standing with the applicable Governmental Authority and
(iii) neither any Obligor nor any of their Subsidiaries has incurred any
obligation in connection with the termination or withdrawal from any Non-U.S.
Benefit Plan.

DISCLOSURE

17.12 The reports, financial statements, certificates or other information
furnished by such Obligor to the Lenders in connection with the negotiation of
this Agreement or any other Finance Document or delivered hereunder (taken as a
whole) do not contain any material misstatement of fact or omit to state any
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided that, with
respect to projected financial information, such Obligor represents only that
such information was prepared in good faith based upon assumptions believed to
be reasonable at the time.

USE OF CREDIT

17.13 Neither such Obligor nor any of its Subsidiaries is engaged principally,
or as one of its important activities, in the business of extending credit for
the purpose, whether immediate, incidental or ultimate, of buying or carrying
Margin Stock, and no Letter of Credit will be used in connection with buying or
carrying any Margin Stock.

SUBSIDIARIES

17.14 Set forth in Schedule 3 is a complete and correct list of all of the
Subsidiaries of the Account Party as of the date hereof, together with, for each
such Subsidiary, (i) the jurisdiction of organisation of such Subsidiary, (ii)
each Person holding ownership interests in such Subsidiary and (iii) the
percentage of ownership of such Subsidiary represented by such ownership
interests. Except as disclosed in Schedule 3, (x) each of the Account Party and
its Subsidiaries owns, free and clear of Liens, and has the unencumbered right
to vote, all outstanding ownership interests in each Person shown to be held by
it in Schedule 5, (y) all of the issued and outstanding capital stock of each
such Person organised as a corporation is validly issued, fully paid and
nonassessable and (z) except as disclosed in filings of the Account Party with
the SEC prior to the date hereof, there are no outstanding Equity Rights with
respect to any Obligor.

WITHHOLDING TAXES

17.15 Based upon information with respect to each Lender provided by each Lender
to the Agent, as of the date hereof, the payment of the LC Disbursements and
interest thereon, the fees under Clause 9 (FEES) and all other amounts payable
hereunder will not be subject, by withholding or deduction, to any Taxes imposed
by any Obligor Jurisdiction.

STAMP TAXES

17.16 To ensure the legality, validity, enforceability or admissibility in
evidence of the Finance Documents, it is not necessary that the Finance
Documents or any other document be filed or recorded with any Governmental
Authority or that any stamp or similar tax be paid on or in respect of any of
the Finance Documents, or any other document other than such filings

                                                                         Page 36
<PAGE>

and recordations that have already been made and such stamp or similar taxes
that have already been paid.

LEGAL FORM

17.17 The Finance Documents are in proper legal form under the laws of any
Obligor Jurisdiction for the admissibility thereof in the courts of such Obligor
Jurisdiction.

CLAIMS PARI PASSU

17.18 Under the laws of its jurisdiction of incorporation in force at the date
hereof, the claims of the Finance Parties against it under this Agreement or any
other Finance Document will rank at least PARI PASSU with the claims of all its
other unsecured and unsubordinated creditors save those whose claims are
preferred solely by any bankruptcy, insolvency, liquidation or other similar
laws of general application.

AFFIRMATIVE COVENANTS

18.   Until the Commitments have expired or been terminated and all fees payable
hereunder shall have been paid in full and all Letters of Credit shall have
expired or terminated and all LC Disbursements shall have been reimbursed, the
Obligors covenant and agree with the Lenders that:

FINANCIAL STATEMENTS AND OTHER INFORMATION

18.1  Each Obligor will furnish to the Agent and each Lender:

(a)   within 135 days after the end of each fiscal year of such Obligor (but in
      the case of the Account Party, within 100 days after the end of each
      fiscal year of the Account Party), the audited consolidated balance sheet
      and related statements of operations, shareholders' equity and cash flows
      of such Obligor and its consolidated Subsidiaries as of the end of and for
      such year, setting forth in each case in comparative form the figures for
      the previous fiscal year (if such figures were already produced for such
      corresponding period or periods) (it being understood that delivery to the
      Lenders of the Account Party's Report on Form 10-K filed with the SEC
      shall satisfy the financial statement delivery requirements of this
      paragraph (a) to deliver the annual financial statements of the Account
      Party so long as the financial information required to be contained in
      such Report is substantially the same as the financial information
      required under this paragraph (a)), all reported on by
      PricewaterhouseCoopers LLP or other independent public accountants of
      recognised national standing (without a GOING CONCERN or like
      qualification or exception and without any qualification or exception as
      to the scope of such audit) to the effect that such consolidated financial
      statements present fairly in all material respects the financial condition
      and results of operations of such Obligor and its consolidated
      Subsidiaries on a consolidated basis in accordance with GAAP or (in the
      case of XL Europe, XL Insurance and XL Mid Ocean) SAP, as the case may be,
      consistently applied;

(b)   within 60 days after the end of each of the first three fiscal quarters of
      each fiscal year of such Obligor, the consolidated balance sheet and
      related statements of operations, shareholders' equity and cash flows of
      such Obligor and its consolidated Subsidiaries as of the end of and for
      such fiscal quarter and the then elapsed portion of the fiscal year,
      setting forth in each case in comparative form the figures for (or, in the
      case of the balance sheet, as of the end of) the corresponding period or
      periods of the

                                                                         Page 37
<PAGE>

      previous fiscal year (if such figures were already produced for such
      corresponding period or periods), all certified by a Financial Officer of
      such Obligor as presenting fairly in all material respects the financial
      condition and results of operations of such Obligor and its consolidated
      Subsidiaries on a consolidated basis in accordance with GAAP or (in the
      case of XL Europe, XL Insurance and XL Mid Ocean) SAP, as the case may be,
      consistently applied, subject to normal year-end audit adjustments and the
      absence of footnotes (it being understood that delivery to the Lenders of
      the Account Party's Report on Form 10-Q filed with the SEC shall satisfy
      the financial statement delivery requirements of this paragraph (b) to
      deliver the quarterly financial statements of the Account Party so long as
      the financial information required to be contained in such Report is
      substantially the same as the financial information required under this
      paragraph (b));

(c)   concurrently with any delivery of financial statements under Clause
      18.1(a) and (b), a certificate signed on behalf of each Obligor by a
      Financial Officer (i) certifying as to whether a Default has occurred and,
      if a Default has occurred, specifying the details thereof and any action
      taken or proposed to be taken with respect thereto, (ii) setting forth
      reasonably detailed calculations demonstrating compliance with Clauses
      19.3 (LIENS), 19.5 (RATIO OF TOTAL FUNDED DEBT TO TOTAL CAPITALISATION),
      19.6 (CONSOLIDATED NET WORTH) and 19.7 (INDEBTEDNESS) and (iii) stating
      whether any change in GAAP or (in the case of XL Europe, XL Insurance and
      XL Mid Ocean) SAP or in the application thereof has occurred since the
      date of the audited financial statements referred to in Clause 17.5(a)
      and, if any such change has occurred, specifying the effect of such change
      on the financial statements accompanying such certificate;

(d)   concurrently with any delivery of financial statements under Clause
      18.1(a), a certificate of the accounting firm that reported on such
      financial statements stating whether they obtained knowledge during the
      course of their examination of such financial statements of any Default
      (which certificate may be limited to the extent required by accounting
      rules or guidelines);

(e)   promptly after the same become publicly available, copies of all periodic
      and other reports, proxy statements and other materials filed by such
      Obligor or any of its respective Subsidiaries with the SEC, or any
      Governmental Authority succeeding to any or all of the functions of said
      Commission, or with any U.S. or other securities exchange, or distributed
      by such Obligor to its shareholders generally, as the case may be;

(f)   concurrently with any delivery of financial statements under Clause
      18.1(a) and (b), a certificate of a Financial Officer of the Account
      Party, setting forth on a consolidated basis for the Account Party and its
      consolidated Subsidiaries as of the end of the fiscal year or quarter to
      which such certificate relates (i) the aggregate book value of assets
      which are subject to Liens permitted under Clause 19.3(g) (LIENS) and the
      aggregate book value of liabilities which are subject to Liens permitted
      under Clause 19.3(g) (it being understood that the reports required by
      paragraphs (a) and (b) of this Clause shall satisfy the requirement (i) of
      this Clause 18.1(f) if such reports set forth separately, in accordance
      with GAAP, line items corresponding to such aggregate book values) and
      (ii) a calculation showing the portion of each of such aggregate amounts
      which portion is attributable to transactions among wholly-owned
      Subsidiaries of the Account Party; and

(g)   promptly following any request therefor, such other information regarding
      the operations, business affairs and financial condition of the Account
      Party or any of its

                                                                         Page 38
<PAGE>

      Subsidiaries, or compliance with the terms of this Agreement, as the Agent
      or any Lender may reasonably request.

NOTICES OF MATERIAL EVENTS

18.2 Each Obligor will furnish to the Agent and each Lender prompt written
notice of the following:

(a)   the occurrence of any Default; and

(b)   any event or condition constituting, or which could reasonably be expected
      to have a Material Adverse Effect.

Each notice delivered under this Clause shall be accompanied by a statement of a
Financial Officer or other executive officer of the relevant Obligor setting
forth the details of the event or development requiring such notice and any
action taken or proposed to be taken by such Obligor with respect thereto.

PRESERVATION OF EXISTENCE AND FRANCHISES

18.3  Each Obligor will, and will cause each of its Subsidiaries to, maintain
its corporate existence and its material rights and franchises in full force and
effect in its jurisdiction of incorporation except where the failure to maintain
such corporate existence and material rights and franchises would not reasonably
be expected to have, either individually or in the aggregate, a Material Adverse
Effect; provided that the foregoing shall not prohibit any merger or
consolidation permitted under Clause 19.1 (MERGERS) or 19.2 (DISPOSITIONS). Each
Obligor will, and will cause each of its Subsidiaries to, qualify and remain
qualified as a foreign corporation in each jurisdiction in which failure to
receive or retain such qualification would have a Material Adverse Effect.

INSURANCE

18.4  Each Obligor will, and will cause each of its Subsidiaries to, maintain
with financially sound and reputable insurers, insurance with respect to its
properties in such amounts as is customary in the case of corporations engaged
in the same or similar businesses having similar properties similarly situated.

MAINTENANCE OF PROPERTIES

18.5  Each Obligor will, and will cause each of its Subsidiaries to, maintain or
cause to be maintained in good repair, working order and condition the
properties now or hereafter owned, leased or otherwise possessed by and used or
useful in its business and will make or cause to be made all needful and proper
repairs, renewals, replacements and improvements thereto so that the business
carried on in connection therewith may be properly conducted at all times except
if the failure to do so would not have a Material Adverse Effect, provided,
however, that the foregoing shall not impose on such Obligor or any Subsidiary
of such Obligor any obligation in respect of any property leased by such Obligor
or such Subsidiary in addition to such Obligor's obligations under the
applicable document creating such Obligor's or such Subsidiary's lease or
tenancy.

PAYMENT OF TAXES AND OTHER POTENTIAL CHARGES AND PRIORITY CLAIMS PAYMENT OF
OTHER CURRENT LIABILITIES

18.6  Each Obligor will, and will cause each of its Subsidiaries to, pay or
discharge:

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(a)   on or prior to the date on which penalties attach thereto, all taxes,
      assessments and other governmental charges or levies imposed upon it or
      any of its properties or income;

(b)   on or prior to the date when due, all lawful claims of materialmen,
      mechanics, carriers, warehousemen, landlords and other like Persons which,
      if unpaid, might result in the creation of a Lien upon any such property;
      and

(c)   on or prior to the date when due, all other lawful claims which, if
      unpaid, might result in the creation of a Lien upon any such property
      (other than Liens not forbidden by Clause 19.3 (LIENS)) or which, if
      unpaid, might give rise to a claim entitled to priority over general
      creditors of such Obligor in any proceeding under the Bermuda Companies
      Law or Bermuda Insurance Law, or any insolvency proceeding, liquidation,
      receivership, rehabilitation, dissolution or winding-up involving such
      Obligor or such Subsidiary;

provided that, unless and until foreclosure, distraint, levy, sale or similar
proceedings shall have been commenced, such Obligor need not pay or discharge
any such tax, assessment, charge, levy or claim so long as the validity thereof
is contested in good faith and by appropriate proceedings diligently conducted
and so long as such reserves or other appropriate provisions as may be required
by GAAP or SAP, as the case may be, shall have been made therefor and so long as
such failure to pay or discharge does not have a Material Adverse Effect.

FINANCIAL ACCOUNTING PRACTICES

18.7  Such Obligor will, and will cause each of its consolidated Subsidiaries
to, make and keep books, records and accounts which, in reasonable detail,
accurately and fairly reflect its transactions and dispositions of its assets
and maintain a system of internal accounting controls sufficient to provide
reasonable assurances that transactions are recorded as necessary to permit
preparation of financial statements required under Clause 18.1 (FINANCIAL
STATEMENTS AND OTHER INFORMATION) in conformity with GAAP and SAP, as
applicable, and to maintain accountability for assets.

COMPLIANCE WITH APPLICABLE LAWS

18.8  Each Obligor will, and will cause each of its Subsidiaries to, comply with
all applicable Laws (including but not limited to the Bermuda Companies Law and
Bermuda Insurance Laws) in all respects; provided that such Obligor or any
Subsidiary of such Obligor will not be deemed to be in violation of this Clause
as a result of any failure to comply with any such Law which would not (i)
result in fines, penalties, injunctive relief or other civil or criminal
liabilities which, in the aggregate, would have a Material Adverse Effect or
(ii) otherwise impair the ability of such Obligor to perform its obligations
under this Agreement.

USE OF LETTERS OF CREDIT

18.9  No Letter of Credit will be used, whether directly or indirectly, for any
purpose that entails a violation of any of the Regulations of the Board,
including Regulations U and X.

CONTINUATION OF AND CHANGE IN BUSINESSES

18.10 Each Obligor and its Subsidiaries will continue to engage in substantially
the same business or businesses it engaged in (or proposes to engage in) on the
date of this Agreement and businesses related or incidental thereto.

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VISITATION

18.11 Each Obligor will permit such Persons as any Lender may reasonably
designate to visit and inspect any of the properties of such Obligor, to discuss
its affairs with its financial management, and provide such other information
relating to the business and financial condition of such Obligor at such times
as such Lender may reasonably request. Each Obligor hereby authorises its
financial management to discuss with any Lender the affairs of such Obligor.

NEGATIVE COVENANTS

19.   Until the Total Commitments have expired or terminated and all fees
payable hereunder have been paid in full and all Letters of Credit have expired
or terminated and all LC Disbursements have been reimbursed, each of the
Obligors covenants and agrees with the Lenders that:

MERGERS

19.1  No Obligor will merge with or into or consolidate with any other Person,
except that if no Default shall occur and be continuing or shall exist at the
time of such merger or consolidation or immediately thereafter and after giving
effect thereto any Obligor may merge or consolidate with any other corporation,
including a Subsidiary, if such Obligor shall be the surviving corporation.

DISPOSITIONS

19.2  No Obligor will, nor will it permit any of its Subsidiaries to, sell,
convey, assign, lease, abandon or otherwise transfer or dispose of, voluntarily
or involuntarily (any of the foregoing being referred to in this Clause as a
DISPOSITION and any series of related Dispositions constituting but a single
Disposition), any of its properties or assets, tangible or intangible (including
but not limited to sale, assignment, discount or other disposition of accounts,
contract rights, chattel paper or general intangibles with or without recourse),
except:

(a)   Dispositions in the ordinary course of business involving current assets
      or other assets classified on such Obligor's balance sheet as available
      for sale;

(b)   sales, conveyances, assignments or other transfers or dispositions in
      immediate exchange for cash or tangible assets, provided that any such
      sales, conveyances or transfers shall not individually, or in the
      aggregate for the Obligor and their respective Subsidiaries, exceed
      $500,000,000 in any calendar year;

(c)   Dispositions of equipment or other property which is obsolete or no longer
      used or useful in the conduct of the business of such Obligor or its
      Subsidiaries;

(d)   Dispositions between or among the Obligors and their wholly owned
      Subsidiaries; or

(e)   Dispositions with Affiliates in accordance with Clause 19.4(c)
      (TRANSACTIONS WITH AFFILIATES).

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LIENS

19.3  No Obligor will, nor will it permit any of its Subsidiaries to, create,
incur, assume or permit to exist any Lien on any property or assets, tangible or
intangible, now owned or hereafter acquired by it, except:

(a)   Liens existing on the date hereof (and extension, renewal and replacement
      Liens upon the same property, provided that the amount secured by each
      Lien constituting such an extension, renewal or replacement Lien shall not
      exceed the amount secured by the Lien theretofore existing) and listed on
      Part B of Schedule 2;

(b)   Liens arising from taxes, assessments, charges, levies or claims described
      in Clause 18.6 (PAYMENT OF TAXES AND OTHER POTENTIAL CHARGES AND PRIORITY
      CLAIMS, PAYMENTS OF OTHER CURRENT LIABILITIES) that are not yet due or
      that remain payable without penalty or to the extent permitted to remain
      unpaid under the provision of Clause 18.6;

(c)   Liens on property  securing all or part of the purchase price thereof to
      such Obligor and Liens (whether or not assumed)  existing on property at
      the time of purchase  thereof by such  Obligor (and  extension,  renewal
      and replacement  Liens upon the same  property);  provided (i) each such
      Lien is  confined  solely to the  property  so  purchased,  improvements
      thereto  and  proceeds  thereof,  and (ii) the  aggregate  amount of the
      obligations  secured by all such Liens on any particular property at any
      time purchased by such Obligor, as applicable,  shall not exceed 100% of
      the lesser of the fair  market  value of such  property  at such time or
      the actual purchase price of such property;

(d)   zoning restrictions, easements, minor restrictions on the use of real
      property, minor irregularities in title thereto and other minor Liens that
      do not in the aggregate materially detract from the value of a property or
      asset to, or materially impair its use in the business of, such Obligor or
      any such Subsidiary;

(e)   Liens securing Indebtedness permitted by Clause 19.7(b) (INDEBTEDNESS)
      covering assets whose market value is not materially greater than the
      amount of the Indebtedness secured thereby plus a commercially reasonable
      margin;

(f)   Liens on cash and securities of an Obligor or its Subsidiaries incurred as
      part of the management of its investment portfolio in accordance with the
      Account Party's Statement of Investment Policy Objectives and Guidelines
      as in effect on the date hereof or as it may be changed from time to time
      by a resolution duly adopted by the board of directors of the Account
      Party (or any committee thereof);

(g)   Liens on (i) assets received, and on actual or imputed investment income
      on such assets received, relating and identified to specific insurance
      payment liabilities or to liabilities arising in the ordinary course of
      any Obligor's or any of their Subsidiary's business as an insurance or
      reinsurance company (including guaranteed investment contracts) or
      corporate member of Lloyd's or as a provider of financial or investment
      services or contracts, or the proceeds thereof, in each case held in a
      segregated trust or other account and securing such liabilities or (ii)
      any other assets subject to any trust or other account arising out of or
      as a result of contractual, regulatory or any other requirements; provided
      that in no case shall any such Lien secure Indebtedness and any Lien which
      secures Indebtedness shall not be permitted under this Clause 19.3(g);

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(h)   statutory and common law Liens of materialmen, mechanics, carriers,
      warehousemen and landlords and other similar Liens arising in the ordinary
      course of business; and

(i)   Liens existing on property of a Person immediately prior to its being
      consolidated with or merged into any Obligor or any of their Subsidiaries
      or its becoming a Subsidiary, and Liens existing on any property acquired
      by any Obligor or any of their Subsidiaries at the time such property is
      so acquired (whether or not the Indebtedness secured thereby shall have
      been assumed) (and extension, renewal and replacement Liens upon the same
      property, provided that the amount secured by each Lien constituting such
      an extension, renewal or replacement Lien shall not exceed the amount
      secured by the Lien theretofore existing), provided that (i) no such Lien
      shall have been created or assumed in contemplation of such consolidation
      or merger or such Person's becoming a Subsidiary or such acquisition of
      property and (ii) each such Lien shall extend solely to the item or items
      of property so acquired and, if required by terms of the instrument
      originally creating such Lien, other property which is an improvement to
      or is acquired for specific use in connection with such acquired property.

TRANSACTIONS WITH AFFILIATES

19.4  No Obligor will, nor will it permit any of its Subsidiaries to, enter into
or carry out any transaction with (including, without limitation, purchase or
lease property or services to, loan or advance to or enter into, suffer to
remain in existence or amend any contract, agreement or arrangement with) any
Affiliate of such Obligor, or directly or indirectly agree to do any of the
foregoing, except:

(a)   transactions involving guarantees or co-obligors with respect to any
      Indebtedness described in Part A of Schedule 2;

(b)   transactions between any Obligor and its wholly-owned Subsidiaries; and

(c)   transactions with Affiliates in good faith in the ordinary course of such
      Obligor's business consistent with past practice and on terms no less
      favorable to such Obligor or any Subsidiary than those that could have
      been obtained in a comparable transaction on an arm's length basis from an
      unrelated Person except if any such transaction would not have a Material
      Adverse Effect.

RATIO OF TOTAL FUNDED DEBT TO TOTAL CAPITALISATION

19.5  The Account Party will not permit its ratio of (a) Total Funded Debt to
(b) the sum of Total Funded Debt plus Consolidated Net Worth to be greater than
0.35:1.00 at any time.

CONSOLIDATED NET WORTH

19.6  The Account Party will not permit its Consolidated Net Worth to be less
than the sum of (a) $4,535,621,000 plus (b) 25% of net income (if positive) for
each fiscal quarter of the Account Party commencing with the fiscal quarter
ending September 30, 2000.

INDEBTEDNESS

19.7  No Obligor will, nor will it permit any of its Subsidiaries to, at any
time create, incur, assume or permit to exist any Indebtedness, or agree, become
or remain liable (contingent or otherwise) to do any of the foregoing, except:

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(a)   Indebtedness created hereunder and under any other Finance Document;

(b)   secured Indebtedness (including secured reimbursement obligations with
      respect to letters of credit) of any Obligor or any Subsidiary in an
      aggregate principal amount (for all Obligors and their respective
      Subsidiaries) not exceeding $300,000,000 at any time outstanding;

(c)   other unsecured Indebtedness, so long as upon the incurrence thereof no
      Default would occur or exist;

(d)   Indebtedness consisting of accounts or claims payable and accrued and
      deferred compensation (including options) incurred in the ordinary course
      of business by any Obligor or any Subsidiary;

(e)   Indebtedness incurred in transactions described in Clause 19.3(f); and

(f)   Indebtedness existing on the date hereof and described in Part A of
      Schedule 2 and extensions, renewals and replacements of any such
      Indebtedness that do not increase the outstanding principal amount
      thereof.

RATINGS DOWNGRADE

19.8  If at any time one of the following conditions is not satisfied:

        (i) the Account Party has a claims-paying rating of at least "A" from
            A.M. Best & Co. (or its successor); and

       (ii) XL Insurance has a rating of at least "A" from Standard & Poor's
            Rating Services (or its successor);

then the Agent may (and if so instructed by the Majority Lenders shall) require
the Account Party within 5 Business Days of the failure to satisfy either
condition, either:

(a)   to provide cash cover in an amount equal to the aggregate LC Exposures for
      the time being; or

(b)   to deposit BIS Qualifying Assets with a custodian acceptable to the Agent,
      and enter into custodian and other relevant documentation, together with
      documentation required by the Security Trustee to give the Security
      Trustee (for the benefit of itself and the other Finance Parties) an
      effective and perfected security interest in respect of those BIS
      Qualifying Assets, in an aggregate amount equal to 105% of the aggregate
      LC Exposures for the time being.

Notwithstanding any of the foregoing provisions of this Clause 19.8, if at any
time subsequent to compliance by the Account Party with (a) or (b) above, both
of the conditions in (i) and (ii) above are satisfied, the Security Trustee will
instruct a bank holding any cash cover or otherwise take all necessary actions
to release and return any cash cover or BIS Qualifying Assets to the Account
Party.

PRIVATE ACT

19.9  No Account Party will become subject to a Private Act other than the X.L.
Insurance Company, Ltd. Act, 1989.

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EVENTS OF DEFAULT

20.1  If any of the following events (EVENTS OF DEFAULT) shall occur:

(a)   FAILURE TO PAY:

        (i) any Obligor shall fail to pay any Demand Amount when and as the
            same shall become due and payable; or

       (ii) any Obligor shall fail to pay any interest or any fee payable under
            this Agreement or any other Finance Document or any other amount
            (other than an amount referred to in Clause 20.1(a)(i)) payable
            under this Agreement or any other Finance Document, when and as the
            same shall become due and payable, and such failure shall continue
            unremedied for a period of 3 or more days;

(b)   MISREPRESENTATION: any representation or warranty made or deemed made by
      any Obligor in or in connection with this Agreement or any other Finance
      Document or any amendment or modification hereof, or in any certificate or
      financial statement furnished pursuant to the provisions hereof, shall
      prove to have been false or misleading in any material respect as of the
      time made (or deemed made) or furnished;

(c)   BREACH OF OBLIGATIONS:

        (i) any Obligor shall fail to observe or perform any covenant, condition
            or agreement contained in Clause 19 (NEGATIVE Covenants); and

       (ii) any Obligor shall fail to observe or perform any covenant, condition
            or agreement contained in this Agreement or any other Finance
            Document (other than those specified in Clause 20.1(a) or (c)(i))
            and such failure shall continue unremedied for a period of 20 or
            more days after notice thereof from the Agent (given at the request
            of any Lender) to such Obligor;

(d)   CROSS DEFAULT: any Obligor or any of its Subsidiaries shall default (i) in
      any payment of principal of or interest on any other obligation for
      borrowed money in principal amount of $50,000,000 or more, or any payment
      of any principal amount of $50,000,000 or more under Hedging Agreements,
      in each case beyond any period of grace provided with respect thereto, or
      (ii) in the performance of any other agreement, term or condition
      contained in any such agreement (other than Hedging Agreements) under
      which any such obligation in principal amount of $50,000,000 or more is
      created, if the effect of such default is to cause or permit the holder or
      holders of such obligation (or trustee on behalf of such holder or
      holders) to cause such obligation to become due prior to its stated
      maturity or to terminate its commitment under such agreement, provided
      that this Clause 20.1(d) shall not apply to secured Indebtedness that
      becomes due as a result of the voluntary sale or transfer of the property
      or assets securing such Indebtedness;

(e)   WINDING-UP: a decree or order by a court having jurisdiction in the
      premises shall have been entered adjudging any Obligor a bankrupt or
      insolvent, or approving as properly filed a petition seeking
      reorganisation of such Obligor under the Bermuda Companies Law or the
      Cayman Islands Companies Law (2000 Revision) or any other similar
      applicable Law, and such decree or order shall have continued undischarged
      or unstayed for a period of 60 days; or a decree or order of a court
      having jurisdiction

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      in the premises for the appointment of a receiver or liquidator or trustee
      or assignee in bankruptcy or insolvency of such Obligor or a substantial
      part of its property, or for the winding up or liquidation of its affairs,
      shall have been entered, and such decree or order shall have continued
      undischarged and unstayed for a period of 60 days;

(f)   INSOLVENCY AND RESCHEDULING: any Obligor shall institute proceedings to be
      adjudicated a voluntary bankrupt, or shall consent to the filing of a
      bankruptcy proceeding against it, or shall file a petition or answer or
      consent seeking reorganisation under the Bermuda Companies Law or the
      Cayman Islands Companies Law (2000 Revision) or any other similar
      applicable Law, or shall consent to the filing of any such petition, or
      shall consent to the appointment of a receiver or liquidator or trustee or
      assignee in bankruptcy or insolvency of it or a substantial part of its
      property, or shall make an assignment for the benefit of creditors, or
      shall admit in writing its inability to pay its debts generally as they
      become due, or corporate or other action shall be taken by such Obligor in
      furtherance of any of the aforesaid purposes;

(g)   MATERIAL UNSATISFIED JUDGMENT OR ORDER: one or more judgments for the
      payment of money in an aggregate amount in excess of $100,000,000 shall be
      rendered against any Obligor or any of its Subsidiaries or any combination
      thereof and the same shall not have been vacated, discharged, stayed
      (whether by appeal or otherwise) or bonded pending appeal within 45 days
      from the entry thereof;

(h)   ERISA EVENT: an ERISA Event (or similar event with respect to any Non-U.S.
      Benefit Plan) shall have occurred that, in the opinion of the Majority
      Lenders, when taken together with all other ERISA Events and such similar
      events that have occurred, could reasonably be expected to result in
      liability of the Obligors and their Subsidiaries in an aggregate amount
      exceeding $100,000,000;

(i)   CHANGE OF CONTROL: a Change in Control shall occur;

(j)   CHANGE IN OWNERSHIP: the Account Party shall cease to own, beneficially
      and of record, directly or indirectly all of the outstanding voting shares
      of capital stock of XL Insurance, XL Mid Ocean, XL America or XL Europe
      (except, in the case of any company organised under the laws of Bermuda,
      for a nominal number of shares owned by nominee shareholders required by
      the Bermuda Companies Law); or

(k)   ILLEGALITY: at any time it is or becomes unlawful for any Obligor to
      perform or comply with any or all of its obligations hereunder or any
      court or arbitrator or any governmental body, agency or official which has
      jurisdiction in the matter shall decide, rule or order that any provision
      of the Finance Documents is invalid or unenforceable in any material
      respect, or any Obligor shall so assert in writing;

(l)   DEFAULT UNDER GUARANTEE: the guarantee contained in Clause 16 (GUARANTEE
      AND INDEMNITY) shall terminate or cease, in whole or material part, to be
      a legally valid and binding obligation of each Guarantor or any Guarantor
      or any Person acting for or on behalf of any of such parties shall contest
      such validity or binding nature of such guarantee itself or the
      Transactions, or any other Person shall assert any of the foregoing;

then, and in every such event (other than an event with respect to any Obligor
described in Clause 20.1.(e) or 20.1(f)), and at any time thereafter during the
continuance of such event, the Agent may, and at the request of the Majority
Lenders shall, by notice to the Account Party, take any of the following
actions, at the same or different times:

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(i)   terminate the Total Commitments, and thereupon the Total Commitments
      shall terminate immediately;

(ii)  require the Account Party forthwith to provide cash cover in respect of
      any LC Exposure pursuant to a Letter of Credit; and

(iii) declare all fees and other obligations of the Account Party accrued
      hereunder to be due and payable in whole (or in part, in which case any
      fees and other obligations not so declared to be due and payable may
      thereafter be declared to be due and payable) and thereupon such fees and
      other obligations, shall become due and payable immediately, without
      presentment, demand, protest or other notice of any kind, all of which are
      hereby waived by the Account Party;

and in case of any event with respect to any Obligor described in Clause 20.1(e)
or 20.1(f):

        (x) the Commitments shall automatically terminate; and

        (y) the Account Party shall automatically be required to provide cash
            cover in respect of any LC Exposure pursuant to a Letter of Credit;
            and

        (z) all fees and other obligations of the Account Party accrued
            hereunder, shall automatically become due and payable, without
            presentment, demand, protest or other notice of any kind, all of
            which are hereby waived by the Account Party.

THE AGENT, THE ARRANGER AND THE LENDERS

APPOINTMENT OF THE AGENT

21.1  The Arranger and each of the Lenders hereby appoints the Agent to act as
its agent in connection herewith and authorises the Agent to exercise such
rights, powers, authorities and discretions as are specifically delegated to the
Agent by the terms hereof together with all such rights, powers, authorities and
discretions as are reasonably incidental thereto.

AGENT'S DISCRETIONS

21.2  The Agent may:

(a)   assume, unless it has, in its capacity as agent for the Lenders, received
      notice to the contrary from any other party hereto, that (a) any
      representation made or deemed to be made by an Obligor in connection with
      the Finance Documents is true, (b) no Event of Default or Potential Event
      of Default has occurred, (c) no Obligor is in breach of or default under
      its obligations under the Finance Documents and (d) any right, power,
      authority or discretion vested therein upon the Majority Lenders, the
      Lenders or any other person or group of persons has not been exercised;

(b)   assume that the Facility Office of each Lender is that notified to it by
      such Lender in writing prior to the date hereof (or, in the case of a
      Transferee, at the end of the Transfer Certificate to which it is a party
      as Transferee) until it has received from such Lender a notice designating
      some other office of such Lender to replace its Facility Office and act
      upon any such notice until the same is superseded by a further such
      notice;

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<PAGE>

(c)   engage and pay for the advice or services of any lawyers, accountants,
      surveyors or other experts whose advice or services may to it seem
      necessary, expedient or desirable and rely upon any advice so obtained;

(d)   rely as to any matters of fact which might reasonably be expected to be
      within the knowledge of an Obligor upon a certificate signed by or on
      behalf of such Obligor;

(e)   rely upon any communication or document believed by it to be genuine;

(f)   refrain from exercising any right, power or discretion vested in it as
      agent hereunder unless and until instructed by the Majority Lenders as to
      whether or not such right, power or discretion is to be exercised and, if
      it is to be exercised, as to the manner in which it should be exercised;

(g)   refrain from acting in accordance with any instructions of the Majority
      Lenders to begin any legal action or proceeding arising out of or in
      connection with the Finance Documents until it shall have received such
      security as it may require (whether by way of payment in advance or
      otherwise) for all costs, claims, losses, expenses (including legal fees)
      and liabilities together with any VAT thereon which it will or may expend
      or incur in complying with such instructions; and

(h)   assume (unless it has specific notice to the contrary) that any notice or
      request made by the Account Party is made on behalf of the Obligors.

AGENT'S OBLIGATIONS

21.3  The Agent shall:

(a)   promptly inform each Lender of the contents of any notice or document
      received by it in its capacity as Agent from an Obligor under the Finance
      Documents and shall promptly deliver to each Lender a copy of each Letter
      of Credit delivered to Lloyd's pursuant to Clause 3.3 (COMPLETION OF
      LETTERS OF CREDIT);

(b)   promptly notify each Lender of the occurrence of any Event of Default or
      any default by an Obligor in the due performance of or compliance with its
      obligations under the Finance Documents of which the Agent has notice from
      any other party hereto;

(c)   save as otherwise provided herein, act as agent under the Finance
      Documents in accordance with any instructions given to it by an Majority
      Lenders, which instructions shall be binding on the Arranger and the
      Lenders; and

(d)   if so instructed by the Majority Lenders, refrain from exercising any
      right, power or discretion vested in it as agent under the Finance
      Documents.

The Agent's duties under the Finance Documents are solely mechanical and
administrative in nature.

EXCLUDED OBLIGATIONS

21.4  Notwithstanding anything to the contrary expressed or implied herein,
neither the Agent nor the Arranger shall:

(a)   be bound to enquire as to (i) whether or not any representation made or
      deemed to be made by an Obligor in connection with the Finance Documents
      is true, (ii) the

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      occurrence of any Default, (iii) the performance by an Obligor of its
      obligations under the Finance Documents or (iv) any breach of or default
      by an Obligor of or under its obligations under the Finance Documents;

(b)   be bound to account to any Lender for any sum or the profit element of any
      sum received by it for its own account;

(c)   be bound to disclose to any other person any information relating to any
      Obligor or any Related Party if (i) such person, on providing such
      information, expressly stated to the Agent or, as the case may be, the
      Arranger, that such information was confidential or (ii) such disclosure
      would or might in its opinion constitute a breach of any law or be
      otherwise actionable at the suit of any person;

(d)   be under any obligations other than those for which express provision is
      made herein; or

(e)   be or be deemed to be a fiduciary for any other party hereto.

INDEMNIFICATION

21.5  Each Lender shall, pro rata according to its respective Commitment, from
time to time on demand by the Agent, indemnify the Agent against any and all
costs, claims, losses, expenses (including legal fees) and liabilities together
with any value added tax thereon (or equivalent) which the Agent may incur,
otherwise than by reason of its own gross negligence or wilful misconduct, in
acting in its capacity as agent hereunder.

EXCLUSION OF LIABILITIES

21.6  Except in the case of gross negligence or wilful default, neither the
Agent nor the Arranger accepts any responsibility:

(a)   for the adequacy, accuracy and/or completeness of any information supplied
      by the Agent or the Arranger, by an Obligor or by any other person in
      connection with the Finance Documents or any other agreement, arrangement
      or document entered into, made or executed in anticipation of, pursuant to
      or in connection with the Finance Documents;

(b)   for the legality, validity, effectiveness, adequacy or enforceability of
      the Finance Documents or any other agreement, arrangement or document
      entered into, made or executed in anticipation of, pursuant to or in
      connection with the Finance Documents; or

(c)   for the exercise of, or the failure to exercise, any judgement, discretion
      or power given to any of them by or in connection with the Finance
      Documents or any other agreement, arrangement or document entered into,
      made or executed in anticipation of, pursuant to or in connection with the
      Finance Documents.

Accordingly, neither the Agent nor the Arranger shall be under any liability
(whether in negligence or otherwise) in respect of such matters, save in the
case of gross negligence or wilful misconduct.

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NO ACTIONS

21.7  Each of the Lenders agree that it will not assert or seek to assert
against any director, officer or employee of the Agent or the Arranger any claim
it might have against any of them in respect of the matters referred to in
Clause 21.6 (EXCLUSION OF LIABILITIES).

BUSINESS WITH THE GROUP

21.8  The Agent and the Arranger may accept deposits from, lend money to and
generally engage in any kind of banking or other business with any of the
Obligors or their Subsidiaries.

RESIGNATION

21.9  The Agent may resign its appointment hereunder at any time without
assigning any reason therefor by giving not less than thirty days' prior notice
to that effect to each of the other parties hereto, PROVIDED THAT no such
resignation shall be effective until a successor for the Agent is appointed in
accordance with the succeeding provisions of this Clause 21.

SUCCESSOR AGENT

21.10 If the Agent gives notice of its resignation pursuant to Clause 21.9
(RESIGNATION) then any reputable and experienced Lender or other financial
institution may be appointed as a successor to the Agent by the Majority Lenders
(with the approval of the Account Party, not to be unreasonably withheld or
delayed,) during the period of such notice (with the co-operation of the Agent)
but, if no such successor is so appointed, the Agent may appoint such a
successor itself.

RIGHTS AND OBLIGATIONS

21.11 If a successor to the Agent is appointed under the provisions of Clause
21.10 (SUCCESSOR AGENT), then (a) the retiring Agent shall be discharged from
any further obligation hereunder but shall remain entitled to the benefit of the
provisions of this Clause 21 and (b) its successor and each of the other parties
hereto shall have the same rights and obligations amongst themselves as they
would have had if such successor had been a party hereto.

OWN RESPONSIBILITY

21.12 It is understood and agreed by each Lender that at all times it has itself
been, and will continue to be, solely responsible for making its own independent
appraisal of and investigation into all risks arising under or in connection
with this Agreement including, but not limited to:

(a)   the financial condition, creditworthiness, condition, affairs, status and
      nature of each member of the Group;

(b)   the legality, validity, effectiveness, adequacy and enforceability of the
      Finance Documents and any other agreement, arrangement or document entered
      into, made or executed in anticipation of, pursuant to or in connection
      with the Finance Documents;

(c)   whether such Lender has recourse, and the nature and extent of that
      recourse, against an Obligor or any other person or any of its assets
      under or in connection with the Finance Documents, the Transactions or any
      other agreement, arrangement or

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      document entered into, made or executed in anticipation of, pursuant to or
      in connection with the Finance Documents; and

(d)   the adequacy, accuracy and/or completeness of any information provided by
      the Agent or the Arranger, an Obligor or by any other person in connection
      with the Finance Documents, the Transactions or any other agreement,
      arrangement or document entered into, made or executed in anticipation of,
      pursuant to or in connection with the Finance Documents.

Accordingly, each Lender acknowledges to the Agent and the Arranger that it has
not relied on and will not hereafter rely on the Agent and the Arranger or
either of them in respect of any of these matters.

AGENCY DIVISION SEPARATE

21.13 In acting as agent hereunder for the Lenders, the Agent shall be regarded
as acting through its agency division which shall be treated as a separate
entity from any other of its divisions or departments and, notwithstanding the
foregoing provisions of this Clause 21, any information received by some other
division or department of the Agent may be treated as confidential and shall not
be regarded as having been given to the Agent's agency division.

DECLARATION OF AGENT AS SECURITY TRUSTEE

21.14 The Agent hereby declares that it shall hold:

(a)   all rights, titles and interests that may hereafter be mortgaged, charged,
      assigned or otherwise secured in favour of the Agent by or pursuant to the
      Finance Documents;

(b)   the benefit of all representations, covenants, guarantees, indemnities and
      other contractual provisions given in favour of the Agent (other than any
      such benefits given to the Agent solely for its own benefit) by or
      pursuant to the Finance Documents (other than this Agreement); and

(c)   all proceeds of the security referred to in paragraph (a) above and of
      the enforcement of the benefits referred to in paragraph (b) above,

on trust for itself and the other Finance Parties from time to time.

Such declaration shall remain valid notwithstanding that the Agent may on the
date hereof or at any other time be the sole Finance Party; for the avoidance of
doubt, however, such declaration shall, in such case, be deemed repeated on each
date on which the Agent ceases to be the sole Finance Party.

Each of the parties hereto agrees that the obligations, rights and benefits
vested or to be vested in the Agent as trustee as aforesaid by the Finance
Documents or any document entered into pursuant thereto shall (as well before as
after enforcement) be performed and (as the case may be) exercised by the Agent
in accordance with the provisions of this Clause 21.

POWERS AND DISCRETIONS

21.15 The Agent shall have all the powers and discretions conferred upon
trustees by the Trustee Act 1925 (to the extent not inconsistent herewith) and
by way of supplement it is expressly declared as follows:

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(a)   the Agent shall be at liberty to place any of the Finance Documents and
      any other instruments, documents or deeds delivered to it pursuant thereto
      or in connection therewith for the time being in its possession in any
      safe deposit, safe or receptacle selected by the Agent or with any Lender,
      any company whose business includes undertaking the safe custody of
      documents or any firm of lawyers of good repute;

(b)   the Agent may, whenever it thinks fit, delegate by power of attorney or
      otherwise to any person or persons or fluctuating body of persons all or
      any of the rights, trusts, powers, authorities and discretions vested in
      it by any of the Finance Documents and such delegation may be made upon
      such terms and subject to such conditions (including the power to
      sub-delegate) and subject to such regulations as the Agent may think fit
      and the Agent shall not be bound to supervise, or be in any way
      responsible for any loss incurred by reason of any misconduct or default
      on the part of, any such delegate (or sub-delegate);

(c)   notwithstanding anything else herein contained, the Agent may refrain from
      doing anything which would or might in its opinion be contrary to any law
      of any jurisdiction or any directive or regulation of any agency of any
      state or which would or might otherwise render it liable to any person and
      may do anything which is, in its opinion, necessary to comply with any
      such law, directive or regulation;

(d)   save in the case of gross negligence or wilful misconduct, the Agent and
      every attorney, agent, delegate, sub-delegate and any other person
      appointed by any of them under any of the Finance Documents may indemnify
      itself or himself out of the security held by the Agent against all
      liabilities, costs, fees, charges, losses and expenses incurred by any of
      them in relation to or arising out of the taking or holding of any of the
      security constituted by, or any of the benefits provided by, any of the
      Finance Documents, in the exercise or purported exercise of the rights,
      trusts, powers and discretions vested in any of them or in respect of any
      other matter or thing done or omitted to be done in any way relating to
      any of the Finance Documents or pursuant to any law or regulation; and

(e)   without prejudice to the provisions of any of the Finance Documents, the
      Agent shall not be under any obligation to insure any property or to
      require any other person to maintain any such insurance and shall not be
      responsible for any loss which may be suffered by any person as a result
      of the lack of or inadequacy or insufficiency of any such insurance.

LIABILITY

21.16 The Agent shall not be liable for any failure:

(a)   to require the deposit with it of any deed or document certifying,
      representing or constituting the title of the Account Party to any of the
      property mortgaged, charged, assigned or otherwise encumbered by or
      pursuant to any of the Finance Documents;

(b)   to obtain any licence, consent or other authority for the execution,
      delivery, validity, legality, adequacy, performance, enforceability or
      admissibility in evidence of any of the Finance Documents;

(c)   to register or notify any deed or document mentioned at paragraph (a)
      above in accordance with the provisions of any of the documents of title
      of the Account Party;

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(d)   to effect or procure registration of or otherwise protect any of the
      security created by any of the Finance Documents by registering the same
      under any applicable registration laws in any territory or otherwise by
      registering any notice, caution or other entry prescribed by or pursuant
      to the provisions of relevant laws;

(e)   to take or to require the Account Party to take any steps to render the
      security created or purported to be created by or pursuant to any of the
      Finance Documents effective or to secure the creation of any ancillary
      charge under the laws of any jurisdiction; or

(f)   to require any further assurances in relation to any of the Finance
      Documents.

TITLE TO SECURITY ETC.

21.17 The Agent may accept without enquiry, requisition or objection such right
and title as the Account Party may have to the property belonging (or
purportedly belonging) to it (or any part thereof) which is the subject matter
of any of the Finance Documents and shall not be bound or concerned to
investigate or make any enquiry into the right or title of the Account Party to
such property (or any part thereof) or, without prejudice to the foregoing, to
require the Account Party to remedy any defect in the Account Party's right or
title as aforesaid.

NEW SECURITY TRUSTEE

21.18 The Agent may at any time appoint any person (whether or not a trust
corporation) to act either as a separate trustee or as a co-trustee jointly with
the Agent:

(a)   if the Agent considers such appointment to be in the interests of the
      Lenders; or

(b)   for the purposes of conforming to any legal requirements, restrictions or
      conditions which the Agent deems relevant for the purposes of the Finance
      Documents and the Agent shall give prior notice to the Account Party and
      the Lenders of any such appointment.

Any person so appointed shall (subject to the provisions of the Finance
Documents) have such powers, authorities and discretions and such duties and
obligations as shall be conferred or imposed or such person by the instrument of
appointment and shall have the same benefits under this Clause 21 as the Agent.

The Agent shall have power in like manner to remove any person so appointed.

Such reasonable remuneration as the Agent may pay to any person so appointed,
and any costs, charges and expenses incurred by such person in performing its
functions pursuant to such appointment, shall for the purposes hereof be treated
as costs, charges and expenses incurred by the Agent under the Finance
Documents.

PERPETUITY PERIOD

21.19 The perpetuity period under the rule against perpetuities if applicable to
the trusts constituted in this Clause 21 and the other Finance Documents shall
be the period of eighty years from the date of this Agreement and, subject
thereto, if the Agent determines that all of the obligations of the Account
Party under any of the Finance Documents have been fully and unconditionally
discharged, such trusts shall be wound up.

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LENDER REPRESENTATIONS

21.20 Each Lender represents to the Agent on the date of issue of each Letter of
Credit that:

(a)   the execution and delivery of each Letter of Credit by the Agent on the
      Lender's behalf has been duly authorised by all necessary action on the
      part of the Lender;

(b)   the obligations of the Lender under each Letter of Credit constitute its
      legal, valid and binding obligations; and

(c)   it has not participated in such Letter of Credit on the basis that the
      collateral securing the repayment of any amounts payable by it under the
      Letter of Credit comprises directly or indirectly a security interest over
      a Principal Private Residence.

LETTERS OF CREDIT

21.21 Each Lender shall, (a) pro rata according to its respective Commitment,
indemnify the Agent against any and all liabilities, costs and expenses which
the Agent may incur (in its capacity as Agent) as a result of the execution and
delivery of any Letter of Credit and any documents executed and delivered by the
Agent in connection therewith; and (b) inform the Agent promptly if at any time
the collateral securing the repayment of any amounts payable under any Letter of
Credit comprises directly or indirectly a security interest over a Principal
Private Residence.

NOTICES

22. Except in the case of notices and other communications expressly permitted
to be given by telephone, all notices and other communications provided for
herein shall be in writing and shall be delivered by hand or overnight courier
service, mailed by certified or registered mail or sent by telecopy, as follows:

(a)   if to any Obligor, to:

      XL Capital Ltd;
      Cumberland House,
      One Victoria Street,
      Hamilton HM 11
      Bermuda,

      Attention:  William Robbie
      (Telecopy No. (441) 2966399);

      with a copy to Paul S. Giordano Esq., General Counsel, at the same
      address and telecopy number;

(b)   if to the Agent:

      P O Box 242
      336 The Strand
      London WC2R 1HB

      Tel:        44 207 500 4194
      Fax:        44 207 500 4482/4484
      Attention:  Loans Agency

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(c)   if to a Lender, to it at its address (or telecopy number) on the signature
      pages of this Agreement, or such other address as it shall notify to the
      Agents and the Account Party.

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

WAIVERS AND AMENDMENTS

NO DEEMED WAIVERS

23.1  No failure or delay by any Finance Party in exercising any right or power
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any such right or power, or any abandonment or discontinuance of
steps to enforce such a right or power, preclude any other or further exercise
thereof or the exercise of any other right or power. No waiver of any provision
of this Agreement or consent to any departure by an Obligor therefrom shall in
any event be effective unless the same shall be permitted by Clause 23.3
(AMENDMENTS), and then such waiver or consent shall be effective only in the
specific instance and for the purpose for which given. Without limiting the
generality of the foregoing, the issuance of a Letter of Credit shall not be
construed as a waiver of any Default, regardless of whether the Agent or any
Lender may have had notice or knowledge of such Default at the time.

REMEDIES CUMULATIVE

23.2  The rights and remedies of the Finance Parties hereunder are cumulative
and are not exclusive of any rights or remedies that they would otherwise have.

AMENDMENTS

23.3  Neither this Agreement nor any provision hereof may be waived, amended or
modified except pursuant to an agreement or agreements in writing entered into
by the Obligors and the Majority Lenders or by the Obligors and the Agent with
the consent of the Majority Lenders; PROVIDED that no such agreement shall:

       (i)  increase the Commitment of any Lender without the written  consent
            of such Lender,

      (ii)  reduce the amount of any reimbursement obligation of the Account
            Party in respect of any LC Disbursement or reduce the rate of
            interest thereon, or reduce any fees payable hereunder, without the
            written consent of each Lender affected thereby,

     (iii)  postpone the scheduled date for reimbursement of any LC
            Disbursement, or any interest thereon, or any fees payable
            hereunder, or reduce the amount of, waive or excuse any such
            payment, or postpone the scheduled date of expiration of any
            Commitment or any Letter of Credit (other than an extension thereof
            pursuant to Clause 4), without the written consent of each Lender
            affected thereby,

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<PAGE>

      (iv)  change Clause 15.4 (PRO RATA TREATMENT) or 15.5 (SHARING OF PAYMENTS
            BY LENDERS) without the consent of each Lender affected thereby,

       (v)  release any of the Guarantors from any of their guarantee
            obligations under Clause 16 (GUARANTEE AND INDEMNITY) without the
            written consent of each Lender,

       (vi) release any security granted by the Account Party pursuant to Clause
            19.8 (RATINGS DOWNGRADE) or 20.1 (EVENTS OF DEFAULT) without the
            written consent of each Lender, and

      (vii) change any of the provisions of this Clause or the percentage in the
            definition of the term MAJORITY LENDERS or any other provision
            hereof specifying the number or percentage of Lenders required to
            waive, amend or modify any rights hereunder or make any
            determination or grant any consent hereunder, without the written
            consent of each Lender;

and PROVIDED FURTHER that no such agreement shall amend, modify or otherwise
affect the rights or duties of the Agent hereunder without the prior written
consent of the Agent.

COSTS AND EXPENSES

24.1   The Account Party shall pay:

(a)   all reasonable out-of-pocket expenses and charges incurred by the Agent
      and/or the Arranger (together with VAT or any similar tax thereon and
      including the reasonable fees, charges and disbursements of counsel for
      the Agent) in connection with the syndication of the credit facilities
      provided for herein, the negotiation, preparation, execution and
      administration of the Finance Documents (subject to the terms of the
      Commitment Letter) or any amendments, modifications or waivers of the
      provisions hereof (whether or not the transactions contemplated hereby or
      thereby shall be consummated);

(b)   all reasonable out-of-pocket expenses incurred by the Agent, the Security
      Trustee or any Lender, (together with VAT or any similar tax thereon and
      including the reasonable fees, charges and disbursements of one legal
      counsel for the Agent and one legal counsel for the Lenders), in
      connection with the preservation and/or enforcement or protection of its
      rights in connection with the Finance Documents, including its rights
      under this Clause, or in connection with Letters of Credit issued
      hereunder, including in connection with any workout, restructuring or
      negotiations in respect thereof.

STAMP DUTY

24.2  The Account Party shall pay all transfer, stamp, documentary or other
similar taxes, assessments or charges levied by any governmental or revenue
authority in respect of this Agreement or any other document referred to herein.

INDEMNITIES

CURRENCY INDEMNITY

25.1(a) If:

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        (i) any amount payable by the Account Party under or in connection with
            this Agreement is received by any Finance Party in a currency (the
            PAYMENT CURRENCY) other than that agreed in this Agreement (the
            AGREED CURRENCY) whether as a result of any judgement or order or
            the enforcement thereof, the liquidation of the payer or otherwise;
            and

       (ii) the amount produced by converting the Payment Currency so received
            into the Agreed Currency is less than the relevant amount of the
            Agreed Currency.

      then the Account Party shall, as an independent obligation, indemnify such
      Finance Party for the deficiency and any loss sustained as a result. Such
      conversion shall be made at such prevailing rate of exchange, on such date
      and in such market as is determined by such Finance Party (acting
      reasonably) as being most appropriate for the conversion. The Account
      Party shall in addition pay the costs of the conversion.

(b)   The Account Party waives any right it may have in any jurisdiction to pay
      any amount under this Agreement in a currency other than that in which it
      is expressed to be payable in this Agreement.

OTHER INDEMNITIES

25.2  The Obligors shall indemnify the Agent and each Lender, and each Related
Party of any of the foregoing Persons (each such Person being called an
INDEMNITEE) against, and to hold each Indemnitee harmless from, any and all
losses, claims, damages, liabilities and related expenses, including the fees,
charges and disbursements of any counsel for any Indemnitee, incurred by or
asserted against any Indemnitee arising out of, in connection with, or as a
result of:

(a)   the execution or delivery of this Agreement or any agreement or instrument
      contemplated hereby, the performance by the parties hereto of their
      respective obligations hereunder or the consummation of the Transactions
      or any other transactions contemplated hereby;

(b)   any Letter of Credit or the use of any thereof (including any refusal by
      any Lender to honour a demand for payment under a Letter of Credit if the
      documents presented in connection with such demand do not strictly comply
      with the terms of such Letter of Credit);

(c)   any actual or prospective claim, litigation, investigation or proceeding
      relating to any of the foregoing, whether based on contract, tort or any
      other theory and regardless of whether any Indemnitee is a party thereto;
      provided that such indemnity shall not, as to any Indemnitee, be available
      to the extent that such losses, claims, damages, liabilities or related
      expenses result from or arise out of the gross negligence or wilful
      misconduct of such Indemnitee.

REIMBURSEMENT BY LENDERS

25.3  To the extent that the Obligors fail to pay any amount required to be paid
by them to the Agent under Clauses 25 (COSTS AND EXPENSES) or 25.1 (CURRENCY
INDEMNITY) and 25.2 (OTHER INDEMNITIES), each Lender severally agrees to pay to
the Agent such Lender's Applicable Percentage (determined as of the time that
the applicable unreimbursed expense or indemnity payment is sought) of such
unpaid amount; PROVIDED that the unreimbursed

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

ALTERATION TO THE PARTIES

SUCCESSORS

26.1  The provisions of this Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns
permitted hereby.

ASSIGNMENTS AND TRANSFERS BY THE ACCOUNT PARTY

26.2  The Account Party shall not assign or otherwise transfer any of its rights
or obligations hereunder without the prior written consent of each Lender (and
any attempted assignment or transfer by the Account Party without such consent
shall be null and void).

TRANSFERS BY LENDERS.

26.3(a) Any Lender (the TRANSFEROR) may at any time transfer to another Approved
        Credit Institution (the TRANSFEREE) all or a portion of its rights and
        obligations under this Agreement (including all or a portion of its
        Commitment) and under any Letter of Credit to which it is a party;
        PROVIDED THAT:

        (i) except in the case of an transfer to a Lender or a Lender Affiliate,
            each of the Account Party and the Agent must give their prior
            written consent to such assignment (which consent shall not be
            unreasonably withheld or delayed);

       (ii) except in the case of an transfer to a Lender or a Lender Affiliate
            or a transfer of the entire remaining amount of the Transferor's
            Commitment, the amount of the Commitment of the Transferor subject
            to each such transfer (determined as of the date of the Transfer
            Certificate) shall not be less than (pound)3,000,000 unless each of
            the Account Party and the Agent otherwise consent;

      (iii) a transfer of obligations shall only be effective if the Transferee
            has confirmed to the Agent and the Account Party prior to the
            transfer taking effect that it undertakes to be bound by the terms
            of this Agreement as Lender in form and substance reasonably
            satisfactory to the Agent and the Account Party; and on any such
            transfer being made the Transferor shall be relieved of its
            obligations to the extent they are transferred to the Transferee;

       (iv) the Transferee, if it shall not be a Lender, shall deliver relevant
            contact, notice and account details to the Agent (with a copy to the
            Account Party);

      PROVIDED FURTHER that any consent of the Account Party otherwise required
      under this paragraph shall not be required if an Event of Default under
      Clause 20.1(a), (e) or (f) has occurred and is continuing. Upon transfer
      pursuant to Clause 26.4, from and after the last to occur of (i) the
      effective date specified in each Transfer Certificate; and (ii) the
      cancellation of a Letter of Credit and the issue of a new Letter of Credit
      with the Transferee identified as an Issuing Lender, the Transferee
      thereunder shall be a party hereto and, to the extent of the lesser of the
      interest assigned by such Transfer Certificate and the Transferee's
      participation as an Issuing lender of a re-issued Letter of Credit (the
      TRANSFERRED INTEREST), have the rights and obligations of a Lender under
      this Agreement, and the Transferor

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      thereunder shall, to the extent of the Transferred Interest, be released
      from its obligations under this Agreement (and, in the case of Transfer
      Certificate covering all of the Transferor's rights and obligations under
      this Agreement, such Lender shall cease to be a party hereto but shall
      continue to be entitled to the benefits of Clauses 12 (INCREASED COSTS),
      10 (TAXES) 24 (COSTS AND EXPENSES) and 25 (INDEMNITIES)). Any assignment
      or transfer by a Lender of rights or obligations under this Agreement that
      does not comply with this paragraph shall be treated for purposes of this
      Agreement as a sale by such Lender of a participation in such rights and
      obligations in accordance with Clause 26.7 (PARTICIPATIONS).

      Notwithstanding anything to the contrary contained herein, any Lender (a
      GRANTING LENDER) may grant to a special purpose vehicle (an SPV) of such
      Granting Lender, identified as such in writing from time to time by the
      Granting Lender to the Agent and the Account Party, the option to provide
      to the Account Party all or any part of any LC Disbursement that such
      Granting Lender would otherwise be obligated to make to the Account Party
      pursuant to Clause 2.1, PROVIDED that (i) nothing herein shall constitute
      a commitment by any SPV to make any LC Disbursement, (ii) if an SPV elects
      not to exercise such option or otherwise fails to provide all or any part
      of such LC Disbursement, the Granting Lender shall be obligated to make
      such LC Disbursement pursuant to the terms hereof and (iii) the Account
      Party may bring any proceeding against either or both the Granting Lender
      or the SPV in order to enforce any rights of the Account Party hereunder;
      and (iv) the SPV shall agree to the terms of Clause 30.2
      (CONFIDENTIALITY). The making of an LC Disbursement by an SPV hereunder
      shall utilise the Commitment of the Granting Lender to the same extent,
      and as if, such LC Disbursement were made by the Granting Lender. Each
      party hereto hereby agrees that no SPV shall be liable for any payment
      under this Agreement for which a Lender would otherwise be liable, for so
      long as, and to the extent, the related Granting Lender makes such
      payment. In furtherance of the foregoing, each party hereto hereby agrees
      (which agreement shall survive the termination of this Agreement) that,
      prior to the date that is one year and one day after the payment in full
      of all outstanding commercial paper or other senior indebtedness of any
      SPV, it will not institute against, or join any other person in
      instituting against, such SPV any bankruptcy, reorganisation, arrangement,
      insolvency or liquidation proceedings or similar proceedings under the
      laws of the United States or any State thereof arising out of any claim
      against such SPV under this Agreement. In addition, notwithstanding
      anything to the contrary contained in this Clause, any SPV may with notice
      to, but without the prior written consent of, the Account Party or the
      Agent and without paying any processing fee therefor, assign all or a
      portion of its interests in any Letter of Credit to its Granting Lender or
      to any financial institutions (consented to by the Account Party and the
      Agent) providing liquidity and/or credit support (if any) with respect to
      commercial paper issued by such SPV to issue such Letters of Credit and
      such SPV may disclose, on a confidential basis, confidential information
      with respect to any Account Party and its Subsidiaries to any rating
      agency, commercial paper dealer or provider of a surety, guarantee or
      credit liquidity enhancement to such SPV. This paragraph may not be
      amended without the consent of any SPV at the time holding LC
      Disbursements under this Agreement.

(b)   On each occasion a Transferor assigns, transfers or novates any of its
      rights and/or obligations under this Agreement, the Transferee (unless it
      is already a Lender or a Lender Affiliate immediately prior to the
      transfer) shall ensure that the Agent has notice of the same and shall, on
      the date the assignment, transfer and/or novation takes effect, pay to the
      Agent for its own account a fee of (pound)1,000.

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(c)   Neither a Transferor nor any other Finance Party is responsible to a
      Transferee for:

        (i) the execution, genuineness, validity, enforceability or sufficiency
            of any Finance Documents or any other document;

       (ii) the collectability of amounts payable under any Finance Documents or
            the financial condition of or the performance of its obligations
            under the Finance Documents by any Obligor; or

      (iii) the accuracy of any statements or information (whether written or
            oral) made in or in connection with or supplied in connection with
            any Finance Documents.

(d)   Each Transferee confirms to the Transferor and the other Finance Parties
      that it:

        (i) has made its own independent investigation and assessment of the
            financial condition and affairs of each Obligor and its related
            entities in connection with its participation in this Agreement and
            has not relied exclusively on any information provided to it by the
            Transferor or any other Finance Party in connection with any Finance
            Documents; and

       (ii) will continue to make its own independent appraisal of the
            creditworthiness of each Obligor and its related entities for so
            long as there are any Commitments or LC Exposures under this
            Agreement.

(e)   Nothing in any Finance Document obliges a Transferor to:

        (i) accept a re-transfer from an Transferee of any of the rights and/or
            obligations assigned, transferred or novated under this clause; or

       (ii) support any losses incurred by the Transferee by reason of the
            non-performance by any Obligor of its obligations under any Finance
            Document or otherwise.

26.4  TRANSFER PROCEDURE:

(a)   A novation is effected if:

        (i) the Transferor and the Transferee deliver to the Agent a duly
            completed Transfer Certificate executed by the Transferor and the
            Transferee,; and

       (ii) the Agent executes it.

(b)   Each Party (other than the Transferor and the Transferee) irrevocably
      authorises the Agent to execute any duly completed Transfer Certificate on
      its behalf.

(c)   To the extent that they are  expressed to be the subject of the novation
      in the Transfer Certificate:

        (i) the Transferor and the other Parties (the EXISTING PARTIES) will be
            released from their obligations to each other under the Finance
            Documents (the DISCHARGED OBLIGATIONS);

                                                                         Page 60
<PAGE>

       (ii) the Transferee and the existing Parties will assume obligations
            towards each other under the Finance Documents which differ from the
            discharged obligations only insofar as they are owed to or assumed
            by the Transferee instead of the Transferor;

      (iii) the rights of the Transferor against the existing Parties under the
            Finance Documents and vice versa (the DISCHARGED RIGHTS) will be
            cancelled; and

       (iv) the Transferee and the existing Parties will acquire rights against
            each other under the Finance Documents which differ from the
            discharged rights only insofar as they are exercisable by or against
            the Transferee instead of the Transferor,

      all on the date specified in the proviso to Clause 26.3(a).

RIGHT TO SUBSTITUTE SINGLE LENDER

26.5  If:

(a)   any sum payable to any Finance Party by the Account Party is required to
      be increased under Clause 10 (TAXES); or

(b)   any Lender claims indemnification from the Account Party under Clause 12.1
      (INCREASED COSTS); or

(c)   a Lender's Available Commitment has been reduced to zero pursuant to
      Clause 13(b) (ILLEGALITY),

the Account Party may give the Agent notice of its intention to arrange the
substitution of that Lender with a new bank or financial institution.

On receipt of a notice from the Account Party referred to above, the Lender
shall use its best endeavours to promptly assign or transfer all of its rights
and obligations under this Agreement to an Approved Credit Institution nominated
by the Account Party. Such transfer will be effected in accordance with Clause
26.4 (TRANSFER PROCEDURE) and the consideration for such transfer shall be an
amount equal to the sum of all amounts accrued and owing by the Account Party to
the transferring Lender as calculated on the date of transfer.

REFERENCE BANKS

26.6  If a Reference Bank ceases to be one of the Lenders, the Agent shall (in
consultation with the Account Party) appoint another Lender or an affiliate of a
Lender to replace that Reference Bank.

PARTICIPATIONS

26.7  Any Lender may sell participations to one or more Lenders or other
entities (a PARTICIPANT) in all or a portion of such Lender's rights and
obligations under this Agreement and the other Credit Documents (including all
or a portion of its Commitment); PROVIDED that:

        (i) any such participation sold to a Participant which is not a Lender
            or a Lender Affiliate shall be made only with the consent (which in
            each case shall not be unreasonably withheld) of the Account Party
            and the Agent, unless an Event

                                                                         Page 61
<PAGE>

            of Default under Clause 20.1(a), (e) or (f) has occurred and is
            continuing, in which case the consent of the Account Party shall not
            be required;

       (ii) such Lender's obligations under this Agreement and the other Finance
            Documents shall remain unchanged;

      (iii) such Lender shall remain solely responsible to the other parties
            hereto for the performance of such obligations;

       (iv) the Account Party, the Agent, the Security Trustee and the other
            Lenders shall continue to deal solely and directly with such Lender
            in connection with such Lender's rights and obligations under this
            Agreement and the other Finance Documents; and

        (v) the Participant shall agree to the terms of Clause 30.2
            (CONFIDENTIALITY).

Any agreement or instrument pursuant to which a Lender sells such a
participation shall provide that such Lender shall retain the sole right to
enforce this Agreement and the other Finance Documents and to approve any
amendment, modification or waiver of any provision of this Agreement or the
other Finance Documents; PROVIDED that such agreement or instrument may provide
that such Lender will not, without the consent of the Participant, agree to any
amendment, modification or waiver described in the first proviso to Clause 23.3
(AMENDMENTS) that affects such Participant. Subject to Clause 26.8 (NO INCREASED
COSTS), the Obligors agree that each Participant shall be entitled to the
benefits of Clauses 12 (INCREASED COSTS) and 10 (TAXES) to the same extent as if
it were a Lender and had acquired its interest by assignment pursuant to Clause
26.3 (TRANSFERS BY LENDERS).

NO INCREASED COSTS

26.8  No Participant or Transferee shall be entitled to receive any greater
payment under Clause 12 (INCREASED COSTS) and 10 (TAXES) than the applicable
Lender would have been entitled to receive with respect to the participation
sold to such Participant or the Lender interest transferred.

CERTAIN PLEDGES

26.9  Any Lender may at any time pledge or assign a security interest in all or
any portion of its rights under this Agreement to secure obligations of such
Lender, and this Clause shall not apply to any such pledge or assignment of a
security interest; PROVIDED that no such pledge or assignment of a security
interest shall release a Lender from any of its obligations hereunder or
substitute any such assignee for such Lender as a party hereto.

NO TRANSFERS TO ANY ACCOUNT PARTY OR AFFILIATES

26.10 Anything in this Clause to the contrary notwithstanding, no Lender may
assign or participate any interest in any LC Exposure held by it hereunder to
any Obligor or any of its Affiliates or Subsidiaries without the prior consent
of each Lender.

MAINTENANCE OF REGISTER BY THE AGENT

26.11 The Agent, acting for this purpose as an agent of the Account Party, shall
maintain at one of its offices in London a copy of each Transfer Certificate
delivered to it and a register of the names and addresses of the Lenders, and
the Commitment of, and principal amount of the LC Disbursements owing to, each
Lender pursuant to the terms hereof from time to time

                                                                         Page 62
<PAGE>

(the REGISTER). The entries in the Register shall be conclusive, and the Account
Party, the Agent, the Security Trustee and the Lenders may treat each Person
whose name is recorded in the Register pursuant to the terms hereof as a Lender
hereunder for all purposes of this Agreement, notwithstanding notice to the
contrary. The Register shall be available for inspection by any Account Party
and any Lender, at any reasonable time and from time to time upon reasonable
prior notice.

SET OFF

RIGHT OF SET-OFF

27.   If an Event of Default shall have occurred and be continuing, each Finance
Party is hereby authorised at any time and from time to time, to the fullest
extent permitted by law, to set off and apply any and all deposits in any
currency (general or special, time or demand, provisional or final) at any time
held and other indebtedness in any currency at any time owing by such Finance
Party to or for the credit or the account of any Obligor against any of and all
the obligations of such Obligor now or hereafter existing under this Agreement
held by such Finance Party, irrespective of whether or not such Finance Party
shall have made any demand under this Agreement and although such obligations
may be unmatured. The rights of each Finance Party under this Clause are in
addition to other rights and remedies (including other rights of set-off) which
such Finance Party may have. The relevant Finance Party may effect any
appropriate currency exchanges to implement such set-off.

MISCELLANEOUS PROVISIONS

CERTIFICATES

28.1  Any determination or notification by the Agent or any other Finance Party
concerning any rate or amount under the Finance Documents shall, in the absence
of manifest error, be conclusive evidence as to that matter.

SURVIVAL

28.2  All covenants, agreements, representations and warranties made by the
Account Party herein and in the certificates or other instruments delivered in
connection with or pursuant to this Agreement shall be considered to have been
relied upon by the other parties hereto and shall survive the execution and
delivery of this Agreement and the issuance of any Letters of Credit, regardless
of any investigation made by any such other party or on its behalf and
notwithstanding that the Agent or any Lender may have had notice or knowledge of
any Default or incorrect representation or warranty at the time any credit is
extended hereunder, and shall continue in full force and effect as long as any
fee or any other amount payable under this Agreement is outstanding and unpaid
or any Letter of Credit is outstanding and so long as the Commitments have not
expired or terminated. The provisions of Clauses 12 (INCREASED COSTS), 10
(TAXES), 24 (COSTS AND EXPENSES), 25 (INDEMNITIES) and 21 (AGENT) shall survive
and remain in full force and effect regardless of the consummation of the
transactions contemplated hereby, the expiration or termination of the Letters
of Credit and the Commitments or the termination of this Agreement or any
provision hereof.

COUNTERPARTS

28.3  This Agreement may be executed in counterparts (and by different parties
hereto on separate counterparts), each of which shall constitute an original,
but all of which when taken together shall constitute one and the same
instrument.

                                                                         Page 63
<PAGE>

ENTIRE AGREEMENT

28.4  This Agreement and the other Finance Documents constitute the entire
contract between the parties relating to the subject matter hereof and supersede
any and all previous agreements and understandings, oral or written, relating to
the subject matter hereof.

SEVERABILITY

28.5  Any provision of this Agreement or any other Finance Document held to be
invalid, illegal or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability without affecting the validity, legality and enforceability of
the remaining provisions hereof. The invalidity of a particular provision in a
particular jurisdiction shall not invalidate such provision in any other
jurisdiction. To the extent permitted by applicable Law, each Obligor hereby
waives any provision of Law which renders any provision of the Finance Documents
prohibited or unenforceable in any respect.

GOVERNING LAW AND JURISDICTION

GOVERNING LAW

29.1  This Agreement shall be construed in accordance with and governed by
      English law.

JURISDICTION

29.2(a) All the parties agree that the courts of England are, subject to Clause
        29.2(b) and (c) below, to have jurisdiction to settle any disputes which
        may arise in connection with the creation, validity, effect,
        interpretation or performance of, or the legal relationships established
        by, this Agreement (including, without limitation, claims for set-off or
        counterclaim) or otherwise arising in connection with this Agreement and
        for such purposes irrevocably submit to the jurisdiction of the English
        courts;

(b)     notwithstanding the agreement in (a) above, each of the Finance Parties
        shall retain the right to bring proceedings in any other court which has
        jurisdiction whether by virtue of the Convention on Jurisdiction and the
        Enforcement of Judgments signed on 27 September 1968 (as from time to
        time amended and extended) or by virtue of the Convention on
        Jurisdiction and the Enforcement of Judgments signed on 16 September
        1988 (from time to time amended and extended) or otherwise;

(c)     with respect to the courts agreed in paragraphs (a) and (b) above, each
        of the Parties irrevocably waives any objections on the ground of venue
        or forum non conveniens or any similar ground;

(d)     each of the Parties irrevocably agrees that a judgment or order of any
        court referred to in this clause in connection with this Agreement is
        conclusive and binding on it and may be enforced against it in the
        courts of any other jurisdiction; and

(e)     each of the Parties irrevocably consents to service of process by mail
        or in any other manner permitted by the relevant Law.

AGENT FOR SERVICE OF PROCESS

29.3  Each Obligor shall at all times maintain an agent for service of process
and any other documents in proceedings in England or any other proceedings in
connection with this Agreement. Such agent shall be XL Brockbank Limited of
Fitzwilliam House, 10 St. Mary

                                                                         Page 64
<PAGE>

Axe, London EC3A 8NL and any writ, judgment or other notice of legal process
shall be sufficiently served on the relevant Obligor if delivered to such agent
marked for the attention of the Finance Director at its address for the time
being. Each Obligor undertakes not to revoke the authority of the above agent
without promptly appointing a successor and notifying the Agent thereof.

WAIVER OF IMMUNITIES

29.4  To the extent that any Obligor has or hereafter may acquire any immunity
from jurisdiction of any court or from any legal process (whether through
service of notice, attachment prior to judgment, attachment in aid of execution
or execution, on the ground of sovereignty or otherwise) with respect to itself
or its property, it hereby irrevocably waives, to the fullest extent permitted
by applicable law, such immunity in respect of its obligations under the Finance
Documents.

TREATMENT OF CERTAIN INFORMATION; CONFIDENTIALITY

TREATMENT OF CERTAIN INFORMATION

30.1  Each of the Obligors acknowledges that from time to time financial
advisory, investment banking and other services may be offered or provided to
any Obligor or one or more of their Subsidiaries (in connection with this
Agreement or otherwise) by any Lender or by one or more subsidiaries or
affiliates of such Lender and each of the Obligors hereby authorises each Lender
to share any information delivered to such Lender by such Obligor and its
Subsidiaries pursuant to this Agreement, or in connection with the decision of
such Lender to enter into this Agreement, to any such subsidiary or affiliate,
it being understood that (a) any such information shall be used only for the
purpose of advising the Obligor or preparing presentation materials for the
benefit of the Obligor and (b) any such subsidiary or affiliate receiving such
information shall be bound by Clause 30.2 (CONFIDENTIALITY) as if it were a
Lender hereunder. Such authorisation shall survive the expiration or termination
of the Letters of Credit and the Commitments or the termination of this
Agreement or any provision hereof.

CONFIDENTIALITY

30.2  Each of the Finance Parties agrees to maintain the confidentiality of the
Information (as defined below), except that Information may be disclosed:

(a)   to its and its Affiliates' directors, officers, employees and agents,
      including accountants, legal counsel and other advisors (it being
      understood that the Persons to whom such disclosure is made will be
      informed of the confidential nature of such Information and instructed to
      keep such Information confidential);

(b)   to the extent requested by any regulatory authority having jurisdiction
      over the Agent or any Lender;

(c)   to the extent required by applicable laws or regulations or by any
      subpoena or similar legal process;

(d)   to any other party to this Agreement;

(e)   in connection with the exercise of any remedies hereunder or any suit,
      action or proceeding relating to this Agreement or the enforcement of
      rights hereunder;

                                                                         Page 65
<PAGE>

(f)   subject to an agreement in writing containing provisions substantially the
      same as those of this paragraph and for the benefit of the Obligor, to (i)
      any assignee of or Participant in, or any prospective assignee of or
      Participant in, any of its rights or obligations under this Agreement or
      (ii) any actual or prospective counterparty (or its advisors) to any swap
      or derivative transaction relating to any Obligor and its obligations;

(g)   with the consent of the Obligor; or

(h)   to the extent such Information (i) becomes publicly available other than
      as a result of a breach of this Clause 30.2 or (ii) becomes available to
      the Agent or any Lender on a non-confidential basis from a source other
      than an Obligor.

For the purposes of this Clause, INFORMATION means all information received from
an Obligor relating to an Obligor or its business, other than any such
information that is available to the Finance Parties on a non-confidential basis
prior to disclosure by such Obligor; PROVIDED that, in the case of information
received from an Obligor after the date hereof, such information is clearly
identified at the time of delivery as confidential. Any Person required to
maintain the confidentiality of Information as provided in this Clause shall be
considered to have complied with its obligation to do so if such Person has
exercised the same degree of care to maintain the confidentiality of such
Information as such Person would accord to its own confidential information.
Notwithstanding the foregoing, each of the Finance Parties agree that they will
not trade the securities of any of the Obligors based upon non-public
Information that is received by them.

THIRD PARTY RIGHTS

31.   A person who is not a party to this Agreement shall have no rights under
the Contracts (Rights of Third Parties) Act 1999 to enforce any of its terms.

IN WITNESS whereof the parties hereto have caused this Agreement to be duly
executed on the date first written above.

                                                                         Page 66
<PAGE>

                                   SCHEDULE 1

                                   COMMITMENTS

<TABLE>
<CAPTION>

NAME OF LENDER                                      COMMITMENT ((POUND))

<S>                                                     <C>
Citibank, N.A.                                          68,250,000

ING Bank N.V., London Branch                            68,250,000

Barclays Bank PLC                                       58,500,000

National Westminster Bank plc                           20,000,000

Credit Lyonnais New York Branch                         10,000,000
                                                      ------------
TOTAL:                                          (POUND)225,000,000
</TABLE>

                                                                         Page 67
<PAGE>

                                   SCHEDULE 2

                             INDEBTEDNESS AND LIENS

PART A - INDEBTEDNESS

1.    Credit Agreement (5-Year) between Mid Ocean Limited and The Chase
Manhattan Bank, incorporated by reference to Exhibit 10.14.1 to the Company's
Annual Report on Form 10-K (No. 1-10804) for the year ended November 30, 1998.

2.    Amendment No. 1 to Credit Agreement (5-Year) between Mid Ocean Limited and
The Chase Manhattan Bank, incorporated by reference to Exhibit 10.14.2 to the
Company's Annual Report on Form 10-K (No. 1-10804) for the year ended November
30, 1998.

3.    Amendment No. 2 to Credit Agreement (5-Year) between Mid Ocean Limited and
The Chase Manhattan Bank.

4.    Amendment No. 3 to Credit Agreement (5-Year) between Mid Ocean Limited and
The Chase Manhattan Bank.

5.    Revolving Credit Agreement Between XL Insurance Company, Ltd and Mellon
Bank, N.A., incorporated by reference to Exhibit (b)(2) of the GCR Schedule
14D-1, incorporated by reference to Exhibit 10.14.14 to the Company's Annual
Report on Form 10-K (No. 1-10804) for the year ended November 30, 1998.

6.    First Amendment to Revolving Credit Agreement between XL Insurance
Company, Ltd and Mellon Bank, N.A., incorporated by reference to Exhibit
10.14.15 to the Company's Annual Report on Form 10-K for the year ended November
30, 1998.

7.    Second Amendment to Revolving Credit Agreement between XL Insurance
Company, Ltd and Mellon Bank, N.A., incorporated by reference to Exhibit
10.14.16 to the Company's Annual Report on Form 10-K for the year ended November
30, 1998.

8.    Third Amendment to Revolving Credit Agreement between XL Insurance
Company, Ltd and Mellon Bank, N.A.

9.    Fourth Amendment to Revolving Credit Agreement between XL Insurance
Company, Ltd and Mellon Bank, N.A.

10.   Fifth Amendment to Revolving Credit Agreement between XL Insurance
Company, Ltd and Mellon Bank, N.A.

11.   Letter of Credit Facility and Reimbursement Agreement dated as of December
30, 1999 by and among XL Insurance Ltd et al. and Mellon Bank, N.A.

12.   First Amendment to Letter of Credit Facility and Reimbursement Agreement
dated as of December 30, 1999 by and among XL Insurance Ltd et al. and Mellon
Bank, N.A.

13.   Letter of Credit Agreement dated as of December 17, 1999 by and among XL
Insurance Ltd, XL Mid Ocean Reinsurance Ltd and The Chase Manhattan Bank.

14.   First Amendment to Letter of Credit Agreement dated as of December 17,
1999 by and among XL Insurance Ltd, XL Mid Ocean Reinsurance Ltd and The Chase
Manhattan Bank.

                                                                         Page 68
<PAGE>

15.   Letter of Credit Facility Agreement dated as of December 17, 1999 by and
among XL Capital Ltd et al. and ING Bank, N.V. (London Branch).

16.   Amendment No. 1 to Letter of Credit Facility Agreement dated as of
December 17, 1999 by and among XL Capital Ltd et al. and ING Bank, N.V. (London
Branch).

17.   Letter of Credit Agreement (Secured) between Citibank and XL Mid Ocean
Reinsurance Ltd, dated as of 19th May, 1993 (as amended).

18.   Semi-secured Letter of Credit Facility between Barclays Bank plc and NAC
Reinsurance International Limited, dated November 16, 1999.

19.   7.15% Senior Notes due 2005 issued by NAC Reinsurance.

20.   Arrangements for Letters of Credit issued for NAC Reinsurance Corp. for
U.S. facility by Fleet Boston

21.   Arrangements for Letters of Credit issued for Latin America Reinsurance by
Fleet Boston.

22.   Letter of Credit and Reimbursement Agreement dated as of July 5, 2000
between XL Capital Ltd, The Chase Manhattan Bank and others in the amount of
$1,000,000,000.

23.   364-day $500,000,000 Credit Agreement dated as of July 5, 2000 between XL
Capital Ltd et al. and The Chase Manhattan Bank.

24.   Letter of Credit Facility and Reimbursement Agreement dated as of June 30
1999 by and among XL Capital Ltd et al. and Mellon Bank, N.A.

25.   First Amendment to the Letter of Credit Facility and Reimbursement
Agreement dated as of June 20 2000 by and among XL Capital Ltd et al. and Mellon
Bank N.A..

PART B - LIENS

1.    Liens existing pursuant to the agreements referred to in paragraphs 24 and
25 of Schedule 2.

2.    Liens existing pursuant to the agreement referred to in paragraph 21 of
Schedule 2.

3.    Collateral held as blocked deposits at Barclays for Letters of Credit
between Lloyd (Denham) and NAC Reinsurance International Ltd.

PART C - LITIGATION

None

PART D - ENVIRONMENTAL MATTERS

None

                                                                         Page 69
<PAGE>

                                   SCHEDULE 3

                                  SUBSIDIARIES

XL CAPITAL LTD - CAYMAN

EXEL HOLDINGS LIMITED - CAYMAN(1)

XL INSURANCE LTD - BERMUDA

XL FINANCIAL ASSURANCE LTD. (85%) - BERMUDA

XL CAPITAL PRODUCTS LTD - BERMUDA

XL INVESTMENTS LTD - BERMUDA

      X.L. Investment Private Trustee Ltd. - BERMUDA
      XL Investments (Barbados) Inc. - BARBADOS
      First Cumberland Bank, Inc. - BARBADOS
      Garrison Investments Inc. - BARBADOS
      Kensington Investments Inc. - BARBADOS
      XLB Partners Inc. - BARBADOS IBC
      Cumberland Holdings, Inc. - DE
      Cumberland California, Inc. - DE
      Cumberland New York, Inc. - DE
      InQuisLogic Ltd. - BARBADOS
      InQuisLogic Inc. - DE
      RiskConnect Ltd. - BARBADOS
      RiskConnect Inc. - DE

FINANCIAL SECURITY ASSURANCE INTERNATIONAL LTD. (80%) - BERMUDA

XL GLOBAL SERVICES (BERMUDA) LTD - BERMUDA

XL HOLDINGS BARBADOS LTD - BARBADOS

      X.L. America Inc. - DE
      Brockbank Insurance Services Inc. - CA
      Global Credit Analytics, Inc. - DE
      XL Global Services, Inc. - DE

NAC RE CORPORATION - DE

      NAC Re International Holdings Ltd - UK
      NAC Reinsurance International Limited - UK
      Denham Syndicate Management Ltd - UK
      Stonebridge Underwriting Ltd - UK
      NAC Re International Services Co., Ltd - UK

NAC REINSURANCE CORPORATION (A - 76%) - NY

      NAC Re Investment Holdings, Inc. - DE

                                                                         Page 70
<PAGE>

      XL Capital Assurance, Inc. - NY
      Intercargo Corporation - DE
      Intercargo International Limited - BVI

ECS INC. - PA (70%)

ECS ALTERNATIVE MARKET SERVICES, INC. - PA

ECS HOLDINGS, INC. - DE

      ECS International, Inc. - DE
      ECS Asesores en Seguros Medioambientales,
            S.A.R.L. - SPAIN
      The ECS Group, Ltd - UK
      ECS Underwriting Ltd - UK
      Environmental Compliance Svcs Ltd - UK
      Consulting Services International Ltd - UK
      ECS Asesores en Aseguramiento de Riesgos
            Ambientales S.A. de C.V. - MEXICO
      Risk & Insurance Services, Inc. - BARBADOS

ECS UNDERWRITING, INC. - PA

ECS CLAIMS ADMINISTRATORS, INC. - PA

ECS RISK CONTROL, INC. - PA

ECS CHILD CARE CENTER, INC. - PA

X.L. ONE LTD - BERMUDA

      XL Europe (50%) - REPUBLIC OF IRELAND

X.L. TWO LTD - BERMUDA

      XL Europe (50%) - REPUBLIC OF IRELAND
      XL Australia Pty Ltd - AUSTRALIA
      XL Prevent Ltd - UK

IPT COMPLIANCE LIMITED - UK

EXEL CUMBERLAND LIMITED - UK

INQUISCAPITAL HOLDINGS (BERMUDA) LIMITED - BERMUDA

      InQuisLogic (Bermuda) Limited - BERMUDA
      RiskConnect Limited - BERMUDA

EXEL ACQUISITION LTD - CAYMAN

GCR HOLDINGS LIMITED - CAYMAN (IN LIQUIDATION)

X.L. PROPERTY HOLDINGS LTD - BERMUDA

                                                                         Page 71
<PAGE>

MID OCEAN LIMITED - CAYMAN

MID OCEAN HOLDINGS LIMITED - BERMUDA

      XL Mid Ocean Reinsurance Ltd - BERMUDA
      ECS Reinsurance Ltd - BERMUDA
      Global Capital Underwriting Ltd - UK
      LARC Holdings Ltd. - BERMUDA
      Latin America Reinsurance Company Ltd - BERMUDA
      Ridgewood Holdings Company - BERMUDA
      The Brockbank Group Plc - UK
      XL Brockbank Ltd - UK
      XL Brockbank Ltd Baltusrol Holdings Ltd - BERMUDA
      County Down Limited - CORPORATE MEMBER SYNDICATE 2253
      Dornoch Limited - CORPORATE MEMBER SYNDICATE 1209
      Brockbank Underwriting Limited - UK
      Brockbank Personal Lines Limited - SYNDICATES 253/2253
      Cassidy Brockbank Limited (DORMANT)
      Brockbank Syndicate Management Limited - SYNDICATES 588/861/1209
      Brockbank Syndicate Services Limited

(1)   100% ownership unless otherwise indicated

                                                                         Page 72
<PAGE>

                                   SCHEDULE 4

                              MANDATORY COSTS RATE

The mandatory costs rate is an addition to the interest rate on an Demand Amount
to compensate the Lenders for the cost attributable to an Demand Amount
resulting from the imposition from time to time under or pursuant to the Bank of
England Act 1998 (the ACT) and/or by the Bank of England and/or the Financial
Services Authority (the FSA) (or other United Kingdom governmental authorities
or agencies) of a requirement to place non-interest-bearing deposits or Special
Deposits (whether interest-bearing or not) with the Bank of England and/or pay
fees to the FSA calculated by reference to liabilities used to fund the Demand
Amount.

The mandatory costs rate will be the rate determined by the Agent (rounded
upward, if necessary, to four decimal places) as the rate resulting from the
application (as appropriate) of the following formula:

                           XL+S(L-D)+Fx 0.01
                           -----------------
                               100-(X+S)

where, in each case, on the day of application of a formula:

X     is the percentage of Eligible Liabilities (in excess of any stated
      minimum) by reference to which the Agent is required under or pursuant to
      the Act to maintain cash ratio deposits with the Bank of England;

L     is the percentage rate per annum at which sterling deposits for the
      relevant period are offered by the Agent to leading banks in the London
      Interbank Market at or about 11.00 a.m. on that day;

F     is the rate of charge payable by the Agent to the FSA pursuant to
      paragraph 2.02 of the Fees Regulations (but for this purpose the figure at
      paragraph 2.02b shall be deemed to be zero) and expressed in pounds per
      (pound)1 million of the Fee Base of the Agent;

S     is the level of interest-bearing Special Deposits, expressed as a
      percentage of Eligible Liabilities, which the Agent is required to
      maintain by the Bank of England (or other United Kingdom governmental
      authorities or agencies); and

D     is the percentage rate per annum payable by the Bank of England to the
      Agent on Special Deposits.

(X, L, S and D are to be expressed in the formula as numbers and not as
percentages. A negative result obtained from subtracting D from L shall be
counted as zero.)

The mandatory costs rate attributable to a Demand Amount or other sum for any
period shall be calculated at or about 11.00 a.m. (London time) on the first day
of such period for the duration of such period.

The determination of the mandatory costs rate in relation to any period shall,
in the absence of manifest error, be conclusive and binding on all parties
hereto.

                                                                         Page 73
<PAGE>

If there is any change in circumstance (including the imposition of alternative
or additional requirements) which in the reasonable opinion of the Agent renders
or will render either of the above formulae (or any element thereof, or any
defined term used therein) inappropriate or inapplicable, the Agent (following
consultation with the Account Party and the Majority Banks) shall be entitled to
vary the same. Any such variation shall, in the absence of manifest error, be
conclusive and binding on all parties and shall apply from the date specified in
such notice.

For the purposes of this Schedule:

      The terms ELIGIBLE LIABILITIES and SPECIAL DEPOSITS shall bear the
      meanings ascribed to them under or pursuant to the Act or by the Bank of
      England (as may be appropriate), on the day of the application of the
      formula.

      FEE BASE has the meaning ascribed to it for the purposes of, and shall be
      calculated in accordance with, the Fees Regulations.

      FEES REGULATIONS means, as appropriate, either:

      (a)   the Banking Supervision (Fees) Regulations 1998;  or

      (b)   such regulations as from time to time may be in force, relating to
            the payment of fees for banking supervision in respect of periods
            subsequent to 31 March 1999.

                                                                         Page 74
<PAGE>

                                   SCHEDULE 5

                              CONDITIONS PRECEDENT

1.    In relation to each Obligor:

(a)   a copy, certified as at the date of this Agreement a true and up-to-date
      copy by an Authorised Signatory of such Obligor, of the constitutional
      documents of such Obligor;

(b)   a copy, certified as at the date of this Agreement a true and up-to-date
      copy by an Authorised Signatory of such Obligor, of a board resolution of
      such Obligor approving the execution, delivery and performance of this
      Agreement and the Finance Documents and the terms and conditions hereof
      and thereof and authorising a named person or persons to sign this
      Agreement and any documents to be delivered by such Obligor pursuant
      hereto or thereto;

(c)   a certificate of an Authorised Signatory of such Obligor setting out the
      names and signatures of the persons authorised to sign, on behalf of such
      Obligor, this Agreement and the Finance Documents and any documents to be
      delivered by such Obligor pursuant hereto or thereto.

2.    The following opinions, each in form satisfactory to the Agent:

(a)   Opinion of Freshfields Bruckhaus Deringer, solicitors to the Agent;

(b)   An opinion of Martha G. Bannerman, Esq., General Counsel to XL America;

(c)   An opinion of Conyers, Dill & Pearman, special Bermuda counsel to XL
      Insurance and XL Mid Ocean;

(d)   An opinion of Hunter & Hunter, special Cayman Islands counsel to XL
      Capital; and

(e)   An opinion of A&L Goodbody, special Irish counsel to XL Europe.

3.    Evidence satisfactory to the Agent that XL Brockbank Limited has agreed to
      act as the agent of each Obligor for the service of process in England.

4.    The Agent being satisfied that all fees payable pursuant to the Fee
      Letters have been paid.

                                                                         Page 75
<PAGE>

                                   SCHEDULE 6

                               UTILISATION REQUEST

From:    XL Capital Ltd.

To:      Citibank International plc

Dated:

Dear Sirs,

We refer to the (pound)225,000,000 letter of credit agreement (the CREDIT
Agreement) dated 3 November 2000 and made between inter alia, XL Capital Ltd as
account party, Citibank International plc as agent and the financial
institutions named therein as Lenders. Terms defined in the Credit Agreement
shall have the same meaning in this notice. This notice is irrevocable.

We hereby give you notice that, pursuant to the Credit Agreement we wish the
Lenders to issue the following Letters of Credit:

<TABLE>
<CAPTION>

=======================================================================
Amount        Effective Date   Expiry Date   Beneficiary     Applicant
-----------------------------------------------------------------------
<S>           <C>              <C>           <C>            <C>
(pound)                                      Society of
                                             Lloyd's
-----------------------------------------------------------------------
(pound)                                      Society of
                                             Lloyd's
-----------------------------------------------------------------------
(pound)                                      Society of
                                             Lloyd's
-----------------------------------------------------------------------
(pound)                                      Society of
                                             Lloyd's
-----------------------------------------------------------------------
(pound)                                      Society of
                                             Lloyd's
-----------------------------------------------------------------------
(pound)                                      Society of
                                             Lloyd's
=======================================================================
</TABLE>

3.    Utilisation Date: [                 ].

4.    We confirm that, at the date hereof, the Representations are true in all
material respects and no Default is continuing.

The Letters of Credit should be issued in the form attached and delivered to the
recipient at [ADDRESS OF RECIPIENT]. The purpose of their issue is to support
Funds at Lloyd's in respect of the Applicants.

Yours faithfully

 .............................

Authorised Signatory

for and on behalf of
XL CAPITAL LTD

                                                                         Page 76
<PAGE>

                                   SCHEDULE 7

                            FORM OF LETTER OF CREDIT

      LETTER OF CREDIT TO BE ISSUED BY THE AGENT ON BEHALF OF THE BANKS

To:   The Society and Council of Lloyd's
      Gun Wharf
      Dock Road
      Chatham
      Kent ME4 4TU

Dear Sirs

IRREVOCABLE STANDBY LETTER OF CREDIT NO. [           ]
RE: [NAME OF CORPORATE MEMBER OF LLOYD'S] (THE APPLICANT)

This Clean Irrevocable Standby Letter of Credit (the CREDIT) is issued by the
banks whose names are set out in Appendix 1 hereto (the ISSUING BANKS, and each
an ISSUING BANK) in favour of the Society of Lloyd's (LLOYD'S) on the following
terms:

1.    Subject to the terms hereof, the Issuing Banks shall make payments within
      two business days of demand on Citibank International plc (the AGENT) in
      accordance with paragraph 4 below.

2.    Upon a demand being made by Lloyd's pursuant to paragraph 4 below each
      Issuing Bank shall pay that proportion of the amount demanded which is
      equal to the proportion which its Commitment set out in Appendix 1 hereto
      bears to the aggregate Commitments of all the Issuing Banks set out in
      Appendix 1 hereto, PROVIDED THAT the obligations of the Issuing Banks
      under this Credit shall be several and no Issuing Bank shall be required
      to pay an amount exceeding its Commitment set out in Appendix 1 hereto and
      the Issuing Banks shall not be obliged to make payments hereunder in
      aggregate exceeding a maximum amount of [AMOUNT IN APPROVED CURRENCY]. Any
      payment by an Issuing Bank hereunder shall be made in [APPROVED CURRENCY]
      to Lloyd's account specified in the demand made by Lloyd's pursuant to
      paragraph 4 below.

3.    The initial expiry date of this Credit shall be 31 December 2004. This
      Credit will be extended automatically for a further year, without written
      amendment, on the first day of January of every future year after 1
      January 2001, so that it is always valid for a minimum period of four
      years unless at least THIRTY days prior to 31 December of the first year
      of the then current validity period, notice is given in writing, sent by
      registered mail for the attention of the Manager, Members' Funds
      Department, at the above address, that this Credit will not be extended
      beyond the then current expiry date.

4.    Subject to paragraph 3 above, the Issuing Banks shall pay to Lloyd's under
      this Credit upon presentation of a demand by Lloyd's on Citibank
      International plc at Riversdale House, 68 Molesworth Street, London SE13
      7EU marked for the attention of Cliff Posner, Loans Agency in the form set
      out in Appendix 2 hereto the amount specified therein (which amount shall
      not, when aggregated with all other amounts paid by the Issuing Banks to
      Lloyd's under this Credit, exceed the maximum amount referred to in
      paragraph 2 above).

                                                                         Page 77
<PAGE>

5.    The Agent has signed this Credit as agent for disclosed principals and
      accordingly shall be under no obligation to Lloyd's hereunder other than
      in its capacity as an Issuing Bank.

6.    All charges are for the Applicant's account.

7.    Subject to any contrary indication herein, this Credit is subject to the
      Uniform Customs and Practice for Documentary Credits (1993 Revision)
      International Chamber of Commerce Publication No. 500.

8.    This Credit shall be governed by and interpreted in accordance with
      English law and the Issuing Banks hereby irrevocably submit to the
      jurisdiction of the High Court of Justice in England.

9.    Each of the Issuing Banks engages with Lloyd's that demands made under and
      in compliance with the terms and conditions of this Credit shall be duly
      honoured on presentation.

Yours faithfully

CITIBANK INTERNATIONAL PLC

for and on behalf of

[NAMES OF ALL ISSUING BANKS]

                                                                         Page 78
<PAGE>

                                   APPENDIX 1

                           ISSUING BANKS' COMMITMENTS

Name and Address of Issuing Bank                    Commitment

                                                                         Page 79
<PAGE>

                                   APPENDIX 2

                            FORM OF DEMAND (STERLING)

                             [on Lloyd's letterhead]

Dear Sir/Madam

THE SOCIETY OF LLOYD'S
TRUSTEE OF
LETTER OF CREDIT NO.

With reference to the above, we enclose for your attention a Bill of Exchange,
together with the respective Credit. Payment should be made by way of CHAPS. The
account details are as follows:

[_____ _____]                        [_____ _____]

Please quote Member Code:

Yours faithfully

for Manager
Members' Funds Department
Members' Services Unit

                                                                         Page 80
<PAGE>

Your ref:
Our ref: MEM/   /   /   /C911f
Extn:

BILL OF EXCHANGE
THE SOCIETY OF LLOYD'S

Trustee of
Letter of Credit No.

Please pay in accordance  with the terms of the Credit to our order the amount
of (pound)_____ _____ .

                                                 For and on behalf of

                                                 Authorised Signatory
                                                Membership Department

TO:   CITIBANK INTERNATIONAL PLC
      as Agent

                                                                         Page 81
<PAGE>

                                   APPENDIX 3

       FORM OF LETTER AS TO PRINCIPAL PRIVATE RESIDENCES OF THE APPLICANTS

                              [LETTERHEAD OF AGENT]

To:   The Society and Council of Lloyd's
      Gun Wharf
      Dock Road
      Chatham
      Kent ME4 4TU

We, Citibank International plc (the AGENT) acting as agent on behalf of each of
[_____ _____] (the LENDERS), hereby confirm the following:

1.    We have provided a multi bank letter of credit as agent on behalf of the
      Lenders which will be included in the [Lloyd's deposit/Lloyd's life
      deposit](4) of [_____ _____](5) the CORPORATE MEMBER).

2.    The execution and delivery by the Agent of the letter of credit has been
      duly authorised by all necessary action on the part of the Lenders and the
      letter of credit has been duly executed and delivered by the Agent on
      behalf of the Lenders.

3.    The  obligations  of the Lenders  under the letter of credit  constitute
      legal, valid and binding obligations.

Signature of [_____ _____]
[Authorised signatory]6

for and on behalf of
CITIBANK INTERNATIONAL PLC AS AGENT

Date:_____ _____

----------
(4)  Delete as appropriate.

(5)  Insert the name of the corporate member in respect of whose Lloyd's deposit
     of Lloyd's list deposit the letter of credit has been issued.

(6)  Specify as appropriate - this letter should not be signed by any person who
     signed the letter of credit to which this letter relates.

                                                                         Page 82
<PAGE>

                                   SCHEDULE 8

                          FORM OF TRANSFER CERTIFICATE

To:   Citibank International plc
      as agent for and on behalf of itself and the other Finance Parties (as
      defined in the Facility Agreement referred to below)

                              TRANSFER CERTIFICATE

relating to a facility agreement (the FACILITY AGREEMENT) dated 3 November 2000
and made between, inter alia, XL Capital Ltd and the Guarantors and the Lenders
named therein. Terms defined in the Facility Agreement have the same meanings
herein.

1.    [Transferor Bank] (the TRANSFEROR):

(a)   confirms that to the extent that details appear in the Schedule hereto
      against, as the case may be, the heading TRANSFEROR'S COMMITMENT and/or
      TRANSFEROR'S L/C PARTICIPATION, such details accurately summarise, as the
      case may be, its participation in the FACILITY (as defined in the Facility
      Agreement); and

(b)   requests [Transferee Bank] (the TRANSFEREE) to accept and procure the
      transfer to the Transferee of the portion specified in the Schedule of, as
      the case may be, its participation in the Facility by counter-signing and
      delivering this Transfer Certificate to the Agent at its address for the
      service of notices specified in the Facility Agreement.

2.    The Transferee hereby requests the Agent to accept this Transfer
Certificate as being delivered to the Agent pursuant to and for the purposes of
clause 26.4 of the Facility Agreement so as to take effect in accordance with
the terms thereof.

3.    The Facility Office and address for notices of the Transferee for the
purposes of the Finance Documents are set out in the Schedule.

4.    The Transferor and the Transferee acknowledge and agree that clauses
26.3(c) to 26.3(e) apply to this Transfer Certificate as if set out in full
herein, mutatis mutandis.

5.    The Transferee hereby undertakes with the Transferor and each of the other
parties to the Facility Agreement that it will perform in accordance with their
terms all those obligations which by the terms of the Facility Agreement will be
assumed by it after delivery of this Transfer Certificate to the Agent and
satisfaction of the conditions (if any) subject to which this Transfer
Certificate is expressed to take effect.

6.    This Transfer Certificate and the rights and obligations of the parties
hereunder shall be governed by and construed in accordance with English law.

                                                                         Page 83
<PAGE>

                                  THE SCHEDULE

TRANSFER DATE:

TRANSFEROR'S COMMITMENT             Portion transferred

LETTERS OF CREDIT                   Letters of Credit under which
                                    Lender is Issuing Lender

UTILISATION DATE, LC EXPOSURE AND   Portion transferred

EXPIRY DATE UNDER EACH LETTER OF
CREDIT

[TRANSFEROR]                        [Transferee]

By:                                 By:

Date:                               Date:

[TRANSFEREE]

FACILITY OFFICE                     ADDRESS(ES) FOR NOTICES

[                                   [

                                  ]                                  ]

                                    Telex no:   [----- -----]

                                    Contact for credit and documentation:

                                    Contact for administration:

Citibank International plc
as agent for and on behalf of itself
and the other Finance Parties

By:

Date:

                                                                         Page 84
<PAGE>

                                   SCHEDULE 9

                            FORM OF CHARGE AGREEMENT

A DEED OF CHARGE made on [_____ _____]

XL CAPITAL LTD, a limited liability company incorporated under the laws of the
Cayman Islands with its registered office at [            ] (the CHARGOR); and

CITIBANK INTERNATIONAL PLC, of PO Box 242, 336 The Strand, London WC2R 1HB as
assignee and security trustee for the Secured Parties (the SECURITY TRUSTEE).

IT IS AGREED as follows:

INTERPRETATION

DEFINITIONS

1.1   In this Deed: (a) words and expressions defined in the Facility Agreement
shall bear the same respective meanings; and (b) the following words and
expressions have the meanings respectively shown opposite below, in each case
unless the context otherwise requires:

BANK means  [_____ _____  _____],  being a bank in London at which the Deposit
is held;

CHARGED ACCOUNT means a separate Sterling account in the name of the Chargor
with the Bank, entitled [" "] (account number [_____]) payments to which may be
made by making the following payment instructions:

      [_____ _____ _____]

and into which the Deposit is credited, or such other account as the Security
Trustee may from time to time notify in writing to the Chargor;

DEPOSIT means all sums from time to time standing to the credit of the Charged
Account in any currency together with all interest credited thereto;

FACILITY AGREEMENT means the letter of credit and reimbursement agreement dated
on or about 3 November 2000 between, inter alios, the Lenders, the Security
Trustee and the Chargor;

SECURED OBLIGATIONS means all moneys, liabilities and obligations which are now
or at any time hereafter may be due, owing or payable by the Chargor to the
Secured Parties in any currency, actually or contingently, solely or jointly
and/or severally with another or others, as principal or surety, on any account
whatsoever pursuant to the Facility Agreement, this Deed or any other Finance
Document, or as a consequence of any Event of Default or repudiation by the
Chargor (or by any liquidator, receiver, administrative receiver, administrator
or any similar officer of the Chargor) of any of its obligations under the
Facility Agreement, this Deed or any other Finance Document;

SECURED PARTIES means all and each of the Security Trustee, the Facility Agent,
the Lenders and each of their respective successors and permitted transferees
and assignees and SECURED PARTY means any of them;

                                                                         Page 85
<PAGE>

CONSTRUCTION

1.2   In this Deed, except where the context otherwise requires:

(a)   references to the Security Trustee and to the Chargor include reference to
      the persons deriving title under or through them respectively and to their
      respective successors in title and assigns;

(b)   references to any deed, instrument, account (including the Charged
      Account), certificate, agreement or contract (including this Deed) or a
      provision thereof shall be construed as a reference to that deed,
      instrument, account, certificate, agreement or contract or a provision as
      from time to time varied, novated, amended, supplemented or replaced; and

(c)   references to any statute or other legislative provision shall include any
      statutory or legislative modification or re-enactment thereof, or any
      substitution therefor.

HEADINGS

1.3   The headings in this Deed are inserted for convenience only and shall not
affect its interpretation.

DEED

1.4   It is intended that this Deed take effect as a deed notwithstanding the
Security Trustee may have executed it under hand only.

OPERATION OF CHARGED ACCOUNT

2.1   The Chargor shall give notice to the Bank in the form of Appendix 1 upon
the date of execution of this Deed.

2.2   The Chargor shall not request any repayment of the Deposit without the
consent of the Security Trustee.

2.3   The Security Trustee may at any time instruct the Bank to pay all or part
of the Deposit to the Agent on account of amounts then due and payable (whether
by way of acceleration, demand or otherwise) under the Facility Agreement.

2.4   Unless an Event of Default is continuing, at the request of the Chargor
the Security Trustee will instruct the Bank to pay to the Chargor any amount
standing to the credit of the Account which exceeds the amount required to be so
credited under the Facility Agreement at that time.

CHARGE

3.1   The Chargor with full title guarantee hereby charges by way of first fixed
charge in favour of the Secured Parties all its right, title and interest in and
to the Deposit (and all and any rights and benefits accruing to or arising in
connection therewith) as a continuing security for the payment and discharge of
the Secured Obligations.

3.2   If at any time the Secured Obligations shall have been paid and discharged
in full and the Chargor shall be under no commitment, obligation or liability of
any kind (present or

                                                                         Page 86
<PAGE>

future, actual or contingent) in relation to the Finance Documents, the Security
Trustee will at the request and cost of the Chargor discharge the security
hereby created.

ENFORCEMENT

4.    The security created under clause 3 shall become enforceable immediately
following an Event of Default in relation to all and any part of the Secured
Obligations and, at any time thereafter, the Security Trustee may call for
payment to it of the Deposit and thereafter apply all and any part of the
Deposit together with any interest thereon in respect of any period after the
security has become enforceable towards the discharge of the Secured Obligations
in such manner as it deems fit.

PRIMARY SECURITY

5.    The Deposit shall be deemed to constitute primary and not collateral
security and the security shall not be discharged or impaired by:

(a)   the dealing with, existence or validity of any other security taken by the
      Security Trustee in relation to the Finance Documents or the Secured
      Obligations or any enforcement of or failure to take, perfect or enforce
      any such security;

(b)   any  amendment to or variation of the Finance  Documents or any security
      relating to the Finance Documents or the Secured Obligations;

(c)   any release of, or granting of time or any other indulgence to the Chargor
      or any third party; or

(d)   any other act, event or omission which would or might but for this clause
      operate to impair or discharge the security constituted by, or the
      Chargor's liability under, this Deed including any act, omission or thing
      which would or might afford an equitable defence to a security.

OTHER SECURITY

6.    The security hereby created is a continuing security notwithstanding any
intermediate payment or settlement of account for the payment and discharge of
the Secured Obligations and is in addition to and shall neither be merged in,
nor in any way exclude or prejudice any other Security Interest, right of
recourse, set off, combination or other right or interest whatsoever which the
Secured Parties may now have or at any time hereafter hold or have (or would
apart from this Deed hold or have) as regards the Chargor or any other person in
respect of the Secured Obligations and the Secured Parties may at any time take,
give up, deal with, vary, exchange, or abstain from perfecting or enforcing any
other Security Interest without affecting or prejudicing the security hereby
created.

WARRANTY AND COVENANT

ENTITLEMENT

7.1   From the date of this Deed and until the Secured Obligations have been
satisfied and discharged in full, and the Chargor shall have no further actual
or contingent liability to the Secured Parties under the Finance Documents, the
Chargor warrants that:

                                                                         Page 87
<PAGE>

(a)     it is the sole absolute legal and beneficial owner of the amounts from
        time to time credited to the Charged Account free from all Security
        Interests, trusts, assignments and claims; and

(b)     it is the sole absolute legal and beneficial owner of the right to
        repayment of moneys credited to the Charged Account.

NEGATIVE PLEDGE

7.2(a)  The Chargor undertakes that it shall not (without the Security Trustee's
        prior written consent) create, agree to create or permit to subsist any
        Security Interest (however ranking in point of priority) of any nature
        whatsoever (including such as arises by operation of law or any
        enactment) in, over or affecting the Deposit or over its right to call
        for a discharge of the security hereby constituted nor deal with such
        right in any manner.

NON-DISPOSAL

(b)     The Chargor undertakes that it shall not (without the Security Trustee's
        prior written consent) transfer, assign, convey, declare a trust over or
        otherwise dispose of the Deposit or any part thereof or its right to
        repayment of the Deposit or any part thereof or its right to call for a
        discharge of the security hereby constituted nor deal with such right in
        any manner.

WAIVER AND APPROPRIATION

8.1   The Security Trustee may at any time after the security created hereunder
has become enforceable without further notice and without any right of
redemption appropriate the Deposit or any part thereof in such manner as the
Security Trustee may in its absolute discretion think fit in or towards the
reduction of the Secured Obligations.

8.2   If any appropriation of the Deposit (or any part thereof) takes place
hereunder the Chargor hereby expressly waives all or any formalities prescribed
by law in relation to any such appropriation.

INTEREST

9.    Interest on the Deposit shall accrue at such rates as may be agreed from
time to time between the Bank and the Chargor. Interest which has accrued on the
Deposit shall be credited to the Charged Account at such times as shall be
agreed by the parties.

FURTHER PROVISIONS

EXPENSES AND INDEMNITY:

10.1(a) The Chargor shall on demand pay to or reimburse the Security Trustee (on
        the basis of a full indemnity on an after tax basis) the amount of all
        commissions, reasonable costs (including legal costs), charges and
        expenses incurred by the Security Trustee in connection with the
        preservation, enforcement or the attempted preservation or enforcement
        of any of the Secured Parties' rights under this Deed whether incurred
        as a result of any act or omission by, or proceedings involving, the
        Chargor.

(b)     The Chargor shall on demand fully indemnify the Security Trustee (on an
        after-tax basis) against all losses, actions, claims, reasonable costs
        (including legal costs),

                                                                         Page 88
<PAGE>

      expenses, proceedings, liabilities and expenditure which the Security
      Trustee may suffer, pay or incur in connection with any payment or
      discharge in respect of the Secured Obligations (and which are made by the
      Chargor) being impeached or declared void for any reason whatsoever.

(c)   Where, pursuant to clauses 10.1(a) or (b) above, a sum is paid to the
      Security Trustee the Chargor shall, in addition, pay to the Security
      Trustee in respect of value added tax:

        (i) (except where the payment falls within (ii) below), such amount as
            equals any valued added tax charged to the Security Trustee in
            respect of the matter which gives rise to the payment and which the
            Security Trustee certifies is not recoverable by it by repayment or
            credit (such certificate to be conclusive in the absence of manifest
            error); and

       (ii) on any reimbursement of or indemnification for any commissions,
            costs, charges, expenses or other items incurred by the Security
            Trustee as agent for the Chargor, such amount as equals the amount
            included in the commissions, costs, charges, expenses or other items
            in respect of value added tax (and in such a case the Security
            Trustee shall provide the Chargor with an appropriate tax invoice in
            respect of such item, naming the Chargor as recipient of the
            relevant supply).

FURTHER ASSURANCES

10.2  The Chargor shall on demand execute any document and do any other act or
thing (in either case at the expense of the Chargor) which the Security Trustee
may reasonably specify for protecting, preserving or perfecting any security
created or intended to be created by this Deed or for facilitating the
realisation thereof or otherwise enforcing the same or exercising any of the
powers, rights and discretions of the Security Trustee under this Deed,
including the execution of all releases, transfers, assignments and other
documents and the giving of all notices, orders, instructions and directions
which the Security Trustee may request.

RIGHTS CUMULATIVE

10.3  The rights and powers which this Deed confers on the Secured Parties are
cumulative, may be exercised as often as it considers appropriate and are in
addition to its rights and powers under the general law, and the rights of the
Secured Parties (whether arising under this Deed or under the general law) shall
not be capable of being waived or varied otherwise than by express waiver or
variation in writing; and, in particular, any failure to exercise or any delay
in exercising any such rights shall not operate as a variation or waiver of that
or any other such right; any defective or partial exercise of such right shall
not preclude any other or further exercise of that or any other such right; and
no act or course of conduct or negotiation on their part or on their behalf
shall in any way preclude them from exercising any such right or constitute a
suspension or variation of any such right.

ILLEGALITY, ETC

10.4  If any one of the provisions of this Deed is or becomes invalid, illegal
or unenforceable in any respect, the validity, legality or enforceability of the
remaining provisions of this Deed shall not in any way be affected or impaired
thereby.

                                                                         Page 89
<PAGE>

DUTY TO ACCOUNT

10.5  Save as may otherwise be agreed in writing between the Security Trustee
and the Chargor, the Security Trustee shall not, prior to discharging the
security hereby constituted, have any duty to account to the Chargor in respect
of the Deposit or any part thereof.

EVIDENCE OF INDEBTEDNESS

10.6  In any proceedings relating to this Deed, any determination or
notification by the Security Trustee or any other Finance Party as to any amount
of the Secured Obligations or as to any amount due to the Secured Parties under
this Deed shall, in the absence of manifest error, be conclusive evidence as to
that matter.

ENTIRE AGREEMENT

10.7  This Deed constitutes the entire agreement between the parties hereto in
relation to the Deposit and supersedes all previous proposals, arrangements,
agreements and other written and oral communications in relation thereto.

EXCLUSION OF RESTRICTIONS

10.8  Sections 93 and 103 of the Law of Property Act 1925 shall not apply to
this Deed.

RULING OFF

10.9  If the Security Trustee receives notice of any subsequent Security
Interest affecting the Deposit:

(a)   the Security Trustee may open a new account or accounts with the Chargor
      and if the Security Trustee does not open a new account, it shall
      nevertheless be treated as if it had done so at the time when it received
      notice; and

(b)   all payments made by the Chargor to the Security Trustee after the
      Security Trustee receives such notice shall be credited or be treated as
      having been credited to the new account and in no circumstances whatsoever
      shall operate to reduce the amount due from the Chargor to the Secured
      Parties at the time when it received the notice.

SUCCESSORS IN TITLE

10.10(a) This Deed shall be binding upon and inure to the benefit of each of the
         parties hereto and their successors and assigns.

(b)      The Chargor shall not be entitled to assign or transfer any of its
         rights, benefits or obligations hereunder without the prior written
         consent of the Security Trustee.

(c)      The Security Trustee may assign or transfer all or any part of its
         rights, benefits or obligations under this Deed to any person to whom
         it assigns and/or transfers its rights, benefits or obligations in
         accordance with the provisions of the Facility Agreement. Where the
         Security Trustee assigns or transfers its obligations or any part
         thereof, the Chargor shall execute such documents as the Security
         Trustee may specify to release the Security Trustee to the extent of
         the transfer or with a view to perfecting such document or transfer, or
         where necessary, shall execute further security documentation in favour
         of the assignee or transferee in like form to this Deed.

                                                                         Page 90
<PAGE>

NOTICES AND COMMUNICATIONS

11.   The provisions relating to notices are set forth in Clause 22 of the
Facility Agreement.

GOVERNING LAW AND JURISDICTION

12.1  This Deed shall be governed by, and interpreted and construed in
accordance with, the laws of England.

JURISDICTION

12.2(a)  All the parties agree that the courts of England are, subject to Clause
         12.2(b) and (c) below, to have jurisdiction to settle any disputes
         which may arise in connection with the creation, validity, effect,
         interpretation or performance of, or the legal relationships
         established by, this Deed (including, without limitation, claims for
         set-off or counterclaim) or otherwise arising in connection with this
         Deed and for such purposes irrevocably submit to the jurisdiction of
         the English courts;

(b)      notwithstanding the agreement in (a) above, each of the parties shall
         retain the right to bring proceedings in any other court which has
         jurisdiction whether by virtue of the Convention on Jurisdiction and
         the Enforcement of Judgments signed on 27 September 1968 (as from time
         to time amended and extended) or by virtue of the Convention on
         Jurisdiction and the Enforcement of Judgments signed on 16 September
         1988 (from time to time amended and extended) or otherwise;

(c)      with respect to the courts agreed in paragraphs (a) and (b) above, each
         of the parties hereto irrevocably waives any objections on the ground
         of venue or forum non conveniens or any similar ground;

(d)      each of the parties hereto irrevocably agrees that a judgment or order
         of any court referred to in this clause in connection with this Deed is
         conclusive and binding on it and may be enforced against it in the
         courts of any other jurisdiction; and

(e)      each of the parties hereto irrevocably consents to service of process
         by mail or in any other manner permitted by the relevant law.

AGENT FOR SERVICE OF PROCESS

12.3  The Chargor shall at all times maintain an agent for service of process
and any other documents in proceedings in England or any other proceedings in
connection with this Deed. Such agent shall be XL Brockbank Limited of
Fitzwilliam House, 10 St. Mary Axe, London EC3A 8NL and any writ, judgment or
other notice of legal process shall be sufficiently served on the Chargor if
delivered to such agent marked for the attention of the Finance Director at its
address for the time being. The Chargor undertakes not to revoke the authority
of the above agent without promptly appointing a successor and notifying the
Security Trustee thereof.

CONTRACTS (RIGHTS OF THIRD PARTIES) ACT 1999

13.   A person who is not a party to this Deed shall have no right under the
Contracts (Rights of Third Parties) Act 1999 to enforce any of its terms.

                                                                         Page 91
<PAGE>

                                   APPENDIX 1

                             FORM OF NOTICE TO BANK

To:         [Bank]

And to:     Citibank International plc (the SECURITY TRUSTEE)

Dear Sirs

RE: ACCOUNT [_____ _____] (THE ACCOUNT)

We hereby give you notice that pursuant to a Deed of Charge dated [_____ _____],
a copy of which is attached, we have charged all of our right, title and
interest in and to the Account to the Security Trustee.

Please execute and return to the Security Trustee the attached acknowledgement
attached as Schedule A to this notice.

This notice shall be governed by English law.

Yours truly,

XL Capital Ltd

                                                                         Page 92
<PAGE>

                                   SCHEDULE A

                        FORM OF ACKNOWLEDGMENT FROM BANK

To:         XL Capital Ltd
            P O Box 1350 GT
            The Huntlaw Building
            Fort Street
            Grand Cayman
            Cayman Islands

And to:     Citibank International plc (the SECURITY TRUSTEE)

Dear Sirs

RE: ACCOUNT [_____ _____] (THE ACCOUNT)

We acknowledge receipt of your notice dated [_____ _____] and the deed of charge
to which it refers (the DEED OF CHARGE).

We hereby confirm that:

(a)   we have received no notice of any other charge, mortgage, pledge, lien,
      assignment or security interest in respect of the Account, other than the
      security interest described in the Deed of Charge;

(b)   we hereby waive any rights of set off or combination of accounts we may
      now or at any time in the future have in respect of the Account;

(c)   we undertake not to repay to the Chargor any amount standing to the credit
      of the Account except on the instructions of the Security Trustee;

(d)   we shall deliver to the Security Trustee and the Chargor, on written
      request, an up-to-date statement of the amount standing to the credit of
      the Account; and

(e)   unless the Security Trustee otherwise directs, we shall comply with the
      instructions of the Security Trustee with respect to the Account, and
      payments to and from the Account and shall not make any payments from the
      Account without the consent of the Security Trustee.

This acknowledgment shall be governed by English law.

Yours truly,

[Bank]

                                                                         Page 93
<PAGE>

DULY DELIVERED AS A DEED by the Chargor on the date inserted above.

EXECUTED as a DEED                  )
for and on behalf of                )
XL CAPITAL LTD                      )

SIGNED                              )
for and on behalf of                )
CITIBANK INTERNATIONAL PLC          )

                                                                         Page 94
<PAGE>

IN WITNESS WHEREOF, XL CAPITAL LTD has caused this Agreement to be duly executed
as a Deed by an authorised officer on the day and year first above written.

ACCOUNT PARTY

EXECUTED as a DEED
by XL CAPITAL LTD

By:     WILLIAM ROBBIE

Title:  SENIOR VICE PRESIDENT, TREASURER

Witness Name: FIONA LUCK

Occupation: EXECUTIVE VICE PRESIDENT

Signature:  FIONA LUCK

GUARANTORS

EXECUTED as a DEED
by XL CAPITAL LTD

By:     WILLIAM ROBBIE

Title:  SENIOR VICE PRESIDENT, CONTROLLER

Witness Name: FIONA LUCK

Occupation: EXECUTIVE VICE PRESIDENT

Signature:  FIONA LUCK

X.L. AMERICA, INC.

By:   RICHARD MILLER

Title:  EXECUTIVE VICE PRESIDENT AND
        CHIEF FINANCIAL OFFICER

XL INSURANCE LTD

By:     CHRISTOPHER COELHO

Title:  SENIOR VICE PRESIDENT AND
        CHIEF FINANCIAL OFFICER

                                                                         Page 95
<PAGE>

XL EUROPE LTD

By:    DERMOT J. O'DONOHOE

Title: PRESIDENT AND CHIEF
       UNDERWRITING OFFICER

XL MID OCEAN REINSURANCE LTD

By:     HENRY KEELING

Title:  PRESIDENT AND CHIEF
        EXECUTIVE OFFICER

AGENT

CITIBANK INTERNATIONAL PLC

By:     MICHAEL TAYLOR

Title:  VICE PRESIDENT

ARRANGER

SALOMON BROTHERS INTERNATIONAL LIMITED

By:     RORY HUSSEY

Title:  VICE PRESIDENT

SECURITY TRUSTEE

CITIBANK INTERNATIONAL PLC

By:     MICHAEL TAYLOR

Title:  VICE PRESIDENT

LENDERS

CITIBANK, N.A.

By:     MICHAEL TAYLOR

Title:  VICE PRESIDENT

                                                                         Page 96
<PAGE>

BARCLAYS BANK PLC

By:     J.V. FRENCH

Title:  RELATIONSHIP DIRECTOR

ING BANK, N.V, LONDON BRANCH

By:     MIKE SHARMAN                        T. BATES

Title:  DIRECTOR                            DIRECTOR

CREDIT LYONNAIS NEW YORK BRANCH

By:     SEBASTIAN ROCCO

Title:  SENIOR VICE PRESIDENT

NATIONAL WESTMINSTER BANK PLC

By:     JOHN MALLETT

Title:  SENIOR MANAGER - INSURANCE
        CITY MARKETS GROUP

                                                                         Page 97

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