Document:

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                                                                  EXECUTION COPY

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                                CREDIT AGREEMENT

                                   dated as of

                                 April 25, 2003

                                      among

                                  METLIFE, INC.
                    METROPOLITAN LIFE INSURANCE COMPANY, and
                             METLIFE FUNDING, INC.,
                                  as Borrowers,

                            The LENDERS Party Hereto,

                                 CITIBANK, N.A.,
                               JPMORGAN CHASE BANK
                                       and
                      WACHOVIA BANK, NATIONAL ASSOCIATION,
                              as Syndication Agents

                                       and

                                  BANK ONE, NA
                             as Administrative Agent

                             ---------------------

                                 $1,000,000,000

                             ---------------------

                         BANC ONE CAPITAL MARKETS, INC.,
                     as Sole Lead Arranger and Book Manager

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                                TABLE OF CONTENTS

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ARTICLE I  DEFINITIONS ..................................................................    1
     Section 1.1  Defined Terms .........................................................    1
     Section 1.2  Classification of Loans and Borrowings ................................   14
     Section 1.3  Terms Generally .......................................................   14
     Section 1.4  Accounting Terms; GAAP; SAP ...........................................   15

ARTICLE II  THE CREDITS .................................................................   15
     Section 2.1  Commitments ...........................................................   15
     Section 2.2  Loans and Borrowings ..................................................   15
     Section 2.3  Requests for Revolving Borrowings .....................................   16
     Section 2.4  Competitive Bid Procedure .............................................   17
     Section 2.5  Funding of Borrowings .................................................   19
     Section 2.6  Interest Elections ....................................................   20
     Section 2.7  Termination and Reduction of Commitments ..............................   21
     Section 2.8  Repayment of Loans; Evidence of Debt ..................................   22
     Section 2.9  Prepayment of Loans ...................................................   23
     Section 2.10  Fees .................................................................   23
     Section 2.11  Interest .............................................................   24
     Section 2.12  Alternate Rate of Interest ...........................................   25
     Section 2.13  Increased Costs ......................................................   25
     Section 2.14  Break Funding Payments ...............................................   27
     Section 2.15  Taxes ................................................................   27
     Section 2.16  Payments Generally; Pro Rata Treatment; Sharing of Set-offs ..........   30
     Section 2.17  Mitigation Obligations; Replacement of Lenders .......................   31

ARTICLE III  REPRESENTATIONS AND WARRANTIES .............................................   32
     Section 3.1  Organization; Powers ..................................................   32
     Section 3.2  Authorization; Enforceability .........................................   32
     Section 3.3  Governmental Approvals; No Conflicts ..................................   33
     Section 3.4  Financial Condition; No Material Adverse Change .......................   33
     Section 3.5  Properties ............................................................   33
     Section 3.6  Litigation and Environmental Matters ..................................   34
     Section 3.7  Compliance with Laws and Agreements ...................................   34
     Section 3.8  Investment and Holding Company Status .................................   34
     Section 3.9  Taxes .................................................................   34
     Section 3.10  ERISA ................................................................   35
     Section 3.11  Disclosure ...........................................................   35
     Section 3.12  Margin Stock .........................................................   35

ARTICLE IV  CONDITIONS ..................................................................   35
     Section 4.1  Effective Date ........................................................   35
     Section 4.2  Each Credit Event .....................................................   36

ARTICLE V  AFFIRMATIVE COVENANTS ........................................................   37
     Section 5.1  Financial Statements and Other Information ............................   37
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                                TABLE OF CONTENTS
                                   (Continued)

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     Section 5.2  Notices of Defaults ...................................................   38
     Section 5.3  Existence; Conduct of Business ........................................   38
     Section 5.4  Payment of Obligations ................................................   38
     Section 5.5  Maintenance of Properties; Insurance ..................................   38
     Section 5.6  Books and Records; Inspection Rights ..................................   38
     Section 5.7  Compliance with Laws ..................................................   39
     Section 5.8  Use of Proceeds .......................................................   39
     Section 5.9  Support Agreement .....................................................   39

ARTICLE VI  NEGATIVE COVENANTS ..........................................................   39
     Section 6.1  Liens .................................................................   39
     Section 6.2  Fundamental Changes ...................................................   40
     Section 6.3  Transactions with Affiliates ..........................................   41
     Section 6.4  Adjusted Statutory Surplus ............................................   41
     Section 6.5  Consolidated Net Worth ................................................   41

ARTICLE VII  EVENTS OF DEFAULT ..........................................................   41

ARTICLE VIII  THE ADMINISTRATIVE AGENT ..................................................   44
     Section 8.1  Appointment; Nature of Relationship ...................................   44
     Section 8.2  Powers ................................................................   44
     Section 8.3  General Immunity ......................................................   44
     Section 8.4  No Responsibility for Loans, Recitals, etc ............................   44
     Section 8.5  Action on Instructions of Lenders .....................................   45
     Section 8.6  Employment of Administrative Agents and Counsel .......................   45
     Section 8.7  Reliance on Documents; Counsel ........................................   45
     Section 8.8  Administrative Agent's Reimbursement and Indemnification ..............   45
     Section 8.9  Notice of Default .....................................................   46
     Section 8.10  Rights as a Lender ...................................................   46
     Section 8.11  Lender Credit Decision ...............................................   46
     Section 8.12  Successor Administrative Agent .......................................   46
     Section 8.13  Administrative Agent and Arranger Fees ...............................   47
     Section 8.14  Delegation to Affiliates .............................................   47
     Section 8.15  Syndication Agents, Senior Managing Agents, Managing Agents, etc......   47

ARTICLE IX  BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS ...........................   48
     Section 9.1  Successors and Assigns ................................................   48
     Section 9.2  Participations ........................................................   48
     Section 9.3  Assignments ...........................................................   49
     Section 9.4  Dissemination of Information ..........................................   51
     Section 9.5  Tax Treatment .........................................................   51

ARTICLE X  MISCELLANEOUS ................................................................   51
     Section 10.1  Notices ..............................................................   51
     Section 10.2  Waivers; Amendments ..................................................   51
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                                TABLE OF CONTENTS
                                   (Continued)

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     Section 10.3 Expenses; Indemnity: Damage; Waiver ...................................   52
     Section 10.4 Survival ..............................................................   53
     Section 10.5 Counterparts; Integration; Effectiveness ..............................   53
     Section 10.6 Severability ..........................................................   54
     Section 10.7 Right of Setoff .......................................................   54
     Section 10.8 Governing Law; Jurisdiction; Consent to Service of Process ............   54
     Section 10.9 WAIVER OF JURY TRIAL ..................................................   55
     Section 10.10 Headings .............................................................   55
     Section 10.11 Confidentiality ......................................................   55
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                                TABLE OF CONTENTS
                                   (Continued)

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SCHEDULES:

Schedule 2.1  - Commitments
Schedule 2.10 - Pricing Schedule
Schedule 3.6  - Disclosed Matters

EXHIBITS:

Exhibit A - Form of Assignment and Acceptance
Exhibit B - Form of Opinion of Counsel to the Borrowers
Exhibit C - Form of Promissory Note
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                                     - iv -

<PAGE>

                                CREDIT AGREEMENT

         This CREDIT AGREEMENT dated as of April 25, 2003, is among METLIFE,
INC. ("MetLife"), METROPOLITAN LIFE INSURANCE COMPANY (the "Company") and
METLIFE FUNDING, INC. ("Funding" and together with the Company and MetLife, the
"Borrowers"), the LENDERS party hereto, and BANK ONE, NA, as Administrative
Agent.

                                    RECITALS:

         A.       The Borrowers have requested the Lenders to make financial
accommodations to them in the aggregate principal amount of $1,000,000,000; and

         B.       The Lenders are willing to extend such financial
accommodations on the terms and conditions set forth below.

         NOW, THEREFORE, in consideration of the premises and of the mutual
agreements made herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Borrowers, the
Lenders and the Administrative Agent hereby agree as follows:

                                    ARTICLE I

                                   DEFINITIONS

         Section 1.1       Defined Terms. As used in this Agreement, the
following terms have the meanings specified below:

         "ABR", when used in reference to any Loan or Borrowing, refers to
whether such Loan, or the Loans comprising such Borrowing, are bearing interest
at a rate determined by reference to the Alternate Base Rate.

         "Adjusted Statutory Surplus" means, at any time, the sum of (i) surplus
(calculated in accordance with the Statutory Statements), plus (ii) asset
valuation reserve (calculated in accordance with the Statutory Statements).

         "Administrative Agent" means Bank One in its capacity as contractual
representative of the Lenders pursuant to Article VIII, and not in its
individual capacity as a Lender, and any successor Administrative Agent
appointed pursuant to Article VIII.

         "Administrative Questionnaire" means an Administrative Questionnaire in
a form supplied by the Administrative Agent.

         "Administrative Agent-Related Persons" means the Administrative Agent
and any successor agent arising under Article VIII, together with their
respective Affiliates (including, in the case of Bank One, the Arranger), and
the officers, directors, employees, agents and attorneys-in-fact of such Persons
and Affiliates.

<PAGE>

         "Affiliate" means, with respect to a specified Person, another Person
that directly, or indirectly through one or more intermediaries, Controls or is
Controlled by or is under common Control with the Person specified.

         "Aggregate Commitment" means the aggregate of the Commitments of all
the Lenders, as reduced from time to time pursuant to the terms hereof.

         "Alternate Base Rate" means, for any day, a rate of interest per annum
equal to the higher of (a) the Prime Rate for such day and (b) the sum of (i)
the Federal Funds Effective Rate for such day plus (ii) 1/2% per annum.

         "Applicable Facility Fee Rate" means, at any time, the percentage rate
per annum at which Facility Fees are accruing on the Aggregate Commitment
(without regard to usage) or the total Revolving Credit Exposures, as
applicable, at such time as set forth in the Pricing Schedule.

         "Applicable Insurance Regulatory Authority" means the insurance
department or similar insurance regulatory or administrative authority or agency
of the jurisdiction in which the Company is domiciled.

         "Applicable Margin" means, with respect to Eurodollar Revolving Loans
at any time, the percentage rate per annum which is applicable at such time with
respect to such Loans as set forth in the Pricing Schedule.

         "Applicable Percentage" means, with respect to any Lender, the
percentage of the Aggregate Commitment represented by such Lender's Commitment.
If the Commitments have terminated or expired, the Applicable Percentages shall
be determined based upon the Commitments most recently in effect, giving effect
to any assignments.

         "Applicable Rate" means the rate determined in accordance with Schedule
2.10.

         "Applicable Term Out Premium Rate" means, at any time, the percentage
rate per annum which is applicable at such time with respect to Loans as set
forth in the Pricing Schedule.

         "Applicable Utilization Fee Rate" means, at any time, the percentage
rate per annum at which Utilization Fees are accruing as set forth in the
Pricing Schedule.

         "Approved Fund" means any Fund that is administered or managed by (a) a
Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an
entity that administers or manages a Lender.

         "Arranger" means Banc One Capital Markets, Inc., a Delaware
corporation, and its successors, in its capacity as sole Lead Arranger and Bank
Manager.

         "Asset Securitization" means a public or private transfer of
installment receivables, credit card receivables, lease receivables, mortgage
loan receivables, policyholder loan receivables or any other type of secured or
unsecured financial assets, which transfer is recorded as a sale according to
GAAP as of the date of such transfer.

                                      -2-

<PAGE>

         "Assignment and Acceptance" means an assignment and acceptance entered
into by a Lender and an assignee (with the consent of any party whose consent is
required by Section 9.3.2), and accepted by the Administrative Agent, in the
form of Exhibit A or any other form approved by the Administrative Agent.

         "Availability Period" means the period from and including the Effective
Date to but excluding the earlier of (a) the Termination Date and (b) the
Maturity Date.

         "Bank One" means Bank One, NA, a national banking association having
its principal office in Chicago, Illinois, in its individual capacity, and its
successors.

         "Board" means the Board of Governors of the Federal Reserve System of
the United States of America.

         "Borrowing" means (a) Revolving Loans of the same Type, made, converted
or continued on the same date and, in the case of Eurodollar Loans, as to which
a single Interest Period is in effect, or (b) a Competitive Loan or group of
Competitive Loans of the same Type made on the same date and as to which a
single Interest Period is in effect.

         "Borrowing Request" means a request by a Borrower for a Revolving
Borrowing in accordance with Section 2.3.

         "Business Day" means (a) with respect to any borrowing, payment or rate
selection of Eurodollar Loans, a day (other than a Saturday or Sunday) on which
banks generally are open in Chicago and New York City for the conduct of
substantially all of their commercial lending activities, interbank wire
transfers can be made on the Fedwire system and dealings in United States
dollars are carried on in the London interbank market and (b) for all other
purposes, a day (other than a Saturday or Sunday) on which banks generally are
open in Chicago and New York City for the conduct of substantially all of their
commercial lending activities and interbank wire transfers can be made on the
Fedwire system.

         "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 capitalized amount thereof determined in accordance
with GAAP.

         "Change in Control" means (a) the acquisition of ownership, directly or
indirectly, beneficially or of record, by any Person or group (within the
meaning of the Securities Exchange Act of 1934 and the rules of the Securities
and Exchange Commission thereunder as in effect on the date hereof), of shares
representing more than 25% of the aggregate ordinary voting power represented by
the issued and outstanding capital stock of MetLife, (b) occupation of a
majority of the seats (other than vacant seats) on the board of directors of
MetLife by Persons who were neither (i) nominated by the board of directors of
MetLife nor (ii) appointed by directors so nominated, (c) the failure of the
Company to be a Wholly-Owned Subsidiary of MetLife, or

                                      -3-

<PAGE>

(d) except as provided in the proviso to Section 6.2(a), the failure of Funding
to be a Wholly-Owned Subsidiary of MetLife.

         "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 Section 2.13(b), 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.

         "Class", when used in reference to any Loan or Borrowing, refers to
whether such Loan, or the Loans comprising such Borrowing, are Revolving Loans
or Competitive Loans.

         "Code" means the Internal Revenue Code of 1986, as amended from time to
time.

         "Commitment" means, with respect to each Lender, the commitment of such
Lender to make Revolving Loans hereunder, expressed as an amount representing
the maximum aggregate amount of such Lender's Revolving Credit Exposure
hereunder, as such commitment may be (a) reduced from time to time pursuant to
Section 2.7, and (b) reduced or increased from time to time pursuant to
assignments by or to such Lender pursuant to Section 9.3. The initial amount of
each Lender's Commitment is set forth on Schedule 2.1, or in the Assignment and
Acceptance pursuant to which such Lender shall have assumed its Commitment, as
applicable. The initial aggregate amount of the Lenders' Commitments is
$1,000,000,000.

         "Competitive Bid" means an offer by a Lender to make a Competitive Loan
in accordance with Section 2.4.

         "Competitive Bid Margin" means the margin above or below the applicable
Eurodollar Base Rate (adjusted for reserve costs, if applicable) offered for a
Eurodollar Competitive Borrowing, expressed as a percentage (rounded to the
nearest 1/100 of 1%) to be added to or subtracted from such Eurodollar Base
Rate.

         "Competitive Bid Rate" means, with respect to any Competitive Bid, the
Competitive Bid Margin or the Fixed Rate, as applicable, offered by the Lender
making such Competitive Bid.

         "Competitive Bid Request" means a request by a Borrower for Competitive
Bids in accordance with Section 2.4.

         "Competitive Loan" means a Loan made pursuant to Section 2.4.

         "Consolidated Net Worth" means the consolidated stockholders' equity,
determined in accordance with GAAP, of MetLife and its Consolidated
Subsidiaries.

         "Consolidated Subsidiary" means, with respect to any Person (the
"parent") at any date, any corporation, limited liability company, partnership,
association or other entity the accounts of which would be consolidated with
those of the parent in the parent's consolidated financial statements if such
financial statements were prepared in accordance with GAAP as of such date.

                                      -4-

<PAGE>

         "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.

         "Default" means any event or condition which constitutes an Event of
Default or which upon notice, lapse of time or both would, unless cured or
waived, become an Event of Default.

         "Disclosed Matters" means the actions, suits and proceedings and the
environmental matters disclosed in Schedule 3.6.

         "dollars" or "$" refers to lawful money of the United States of
America.

         "Effective Date" means the date on which the conditions specified in
Section 4.1 are satisfied (or waived in accordance with Section 10.2).

         "Environmental Laws" means all laws, rules, regulations, codes,
ordinances, orders, decrees, judgments, injunctions, notices or binding
agreements issued, promulgated or entered into by any Governmental Authority,
relating in any way to the environment, preservation or reclamation of natural
resources, the management, release or threatened release of any Hazardous
Material or health and safety matters.

         "Environmental Liability" means any liability, contingent or otherwise
(including any liability for damages, costs of environmental remediation, fines,
penalties or indemnities), of MetLife or any of its Material Subsidiaries
directly or indirectly resulting from or based upon (a) the violation of any
Environmental Law, (b) the generation, use, handling, transportation, storage,
treatment or disposal of any Hazardous Materials, (c) any exposure to any
Hazardous Materials, (d) the release or threatened release of any Hazardous
Materials into the environment or (e) any contract, agreement or other
consensual arrangement pursuant to which liability is assumed or imposed with
respect to any of the foregoing.

         "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.

         "ERISA Affiliate" means any trade or business (whether or not
incorporated) that, together with MetLife, is treated as a single employer under
Section 414(b) or (c) of the Code or, solely for purposes of Section 302 of
ERISA and Section 412 of the Code, is treated as a single employer under Section
414 of the Code.

         "ERISA Event" means (a) any "reportable event", as defined in Section
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 and other than an
event which is based on a certain level of unfunded vested benefits, or the
requirement to pay variable PBGC premiums, provided that the amount of unfunded
vested benefits, when determined on a FAS87 basis, do not exceed $50,000,000);
(b) the existence with respect to any Plan of an "accumulated funding
deficiency" (as defined in Section 412 of the Code or Section 302 of ERISA),
whether or not waived; (c) the filing pursuant to Section 412(d) of the Code or
Section 303(d) of ERISA of an application for a waiver of the minimum funding
standard with respect to any Plan; (d) the incurrence by MetLife

                                      -5-

<PAGE>

or any of its ERISA Affiliates of any liability under Title IV of ERISA with
respect to the termination of any Plan; (e) the receipt by MetLife 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 MetLife 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 MetLife or any ERISA Affiliate of any
notice, or the receipt by any Multiemployer Plan from MetLife 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 reorganization, within the meaning of Title IV of ERISA.

         "Eurodollar", when used in reference to any Loan or Borrowing, refers
to whether such Loan, or the Loans comprising such Borrowing, are bearing
interest at a rate determined by reference to the Eurodollar Rate (or, in the
case of a Competitive Loan, the Eurodollar Bid Rate).

         "Eurodollar Base Rate" means, with respect to a Eurodollar Borrowing to
a Borrower for the relevant Eurodollar Interest Period, the applicable British
Bankers' Association LIBOR rate for deposits in U.S. dollars as reported by any
generally recognized financial information service as of 11:00 a.m. (London
time) two Business Days prior to the first day of such Eurodollar Interest
Period, and having a maturity equal to such Eurodollar Interest Period, provided
that, if no such British Bankers' Association LIBOR rate is available to the
Administrative Agent, the applicable Eurodollar Base Rate for the relevant
Eurodollar Interest Period shall instead be the rate determined by the
Administrative Agent to be the rate at which Bank One or one of its Affiliate
banks offers to place deposits in U.S. dollars with first-class banks in the
London interbank market at approximately 11:00 a.m. (London time) two Business
Days prior to the first day of such Eurodollar Interest Period, in the
approximate amount of Bank One's relevant Eurodollar Revolving Loan, or, in the
case of a Eurodollar Competitive Borrowing, the amount of the Eurodollar
Competitive Loan requested by such Borrower, and having a maturity equal to such
Eurodollar Interest Period.

         "Eurodollar Bid Rate" means, with respect to a Eurodollar Competitive
Borrowing made by a given Lender for the relevant Eurodollar Interest Period,
the sum of (a) the quotient of (i) the Eurodollar Base Rate applicable to such
Interest Period, divided by (ii) one minus the Reserve Requirement (expressed as
a decimal) applicable to such Interest Period, plus (b) the Competitive Bid
Margin offered by such Lender and accepted by the Requesting Borrower.

         "Eurodollar Interest Period" means, with respect to a Eurodollar
Borrowing, a period of one, two, three or six months commencing on a Business
Day selected by a Borrower pursuant to this Agreement. Such Eurodollar Interest
Period shall end on the day which corresponds numerically to such date one, two,
three or six months thereafter; provided, that if there is no such numerically
corresponding day in such next, second, third or sixth succeeding month, such
Eurodollar Interest Period shall end on the last Business Day of such next,
second, third or sixth succeeding month. If a Eurodollar Interest Period would
otherwise end on a day which is not a Business Day, such Eurodollar Interest
Period shall end on the next succeeding Business Day, provided, that if said
next succeeding Business Day falls in a new calendar month, such Eurodollar
Interest Period shall end on the immediately preceding Business Day.

                                      -6-

<PAGE>

         "Eurodollar Rate" means, with respect to a Eurodollar Revolving
Borrowing for the relevant Eurodollar Interest Period, the sum of (a) the
quotient of (i) the Eurodollar Base Rate applicable to such Eurodollar Interest
Period, divided by (ii) one minus the Reserve Requirement (expressed as a
decimal) applicable to such Eurodollar Interest Period, plus (b) the Applicable
Margin, plus (c) from and after the Termination Date, the Applicable Term Out
Premium Rate.

         "Event of Default" has the meaning assigned to such term in Article
VII.

         "Excluded Taxes" means, with respect to the Administrative Agent, any
Lender or any other recipient of any payment to be made by or on account of any
obligation of any Borrower hereunder, (a) income, franchise or similar taxes, in
each case, imposed on (or measured by) its net income by the United States of
America, or by the jurisdiction (or any political subdivision thereof) under the
laws of which such recipient is organized or in which its principal office is
located or, in the case of any Lender, in which its applicable lending office is
located, or, in the case of a jurisdiction (or any political subdivision
thereof) that imposes taxes on the basis of management or control or other
concept or principle of residence, the jurisdiction (or any political
subdivision thereof) in which such recipient is so resident, (b) Taxes imposed
by reason of any present or former connection between such Person and the
jurisdiction (or any political subdivision thereof) imposing such Taxes, other
than as a result of the execution and delivery of this Agreement, the making of
any Loans hereunder or the performance of any action provided for hereunder, (c)
any branch profits taxes imposed by the United States of America or any similar
tax imposed by any other jurisdiction in which any Borrower is located and (d)
in the case of a Lender (other than an assignee pursuant to a request by the
Company under Section 2.17(b)), any withholding tax that (i) is imposed on
amounts payable to a Foreign Lender at the time such Foreign Lender becomes a
party to this Agreement (or designates a new lending office), except to the
extent that such Foreign Lender (or its assignor, if any) was entitled, at the
time of designation of a new lending office (or assignment), to receive
additional amounts from such Borrower with respect to such withholding tax
pursuant to Section 2.15(a) or (ii) is attributable to such Lender's failure to
comply with Section 2.15(e).

         "Facility Fee" has the meaning set forth in Section 2.10(a).

         "Federal Funds Effective Rate" means, for any day, an interest rate per
annum equal to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers on such day, as published for such day (or, if such day is not a
Business Day, for the immediately preceding Business Day) by the Federal Reserve
Bank of New York, or, if such rate is not so published for any day which is a
Business Day, the average of the quotations at approximately 10:00 a.m. (Chicago
time) on such day on such transactions received by the Administrative Agent from
three Federal funds brokers of recognized standing selected by the
Administrative Agent in its sole discretion.

         "Fee Letter" has the meaning set forth in Section 2.10(c).

         "Financial Officer" means the chief financial officer, principal
accounting officer, treasurer, assistant treasurer or controller of MetLife or,
in the case of Section 4.1(d), any Borrower.

                                      -7-

<PAGE>

         "Fixed Rate" means, with respect to a Competitive Loan (other than a
Eurodollar Competitive Loan) made by a given Lender for the relevant Fixed Rate
Interest Period, the rate of interest per annum (rounded to the nearest 1/100 of
1%) offered by such Lender and accepted by the requesting Borrower pursuant to
Section 2.4.

         "Fixed Rate Interest Period" means, with respect to any Fixed Rate
Competitive Loan, a period of not less than seven and not more than 180 days
commencing on a Business Day selected by the Requesting Borrower pursuant to
this Agreement. If such Fixed Rate Interest Period would end on a day which is
not a Business Day, such Fixed Rate Interest Period shall end on the next
succeeding Business Day.

         "Fixed Rate Loan" means a Competitive Loan bearing interest at a Fixed
Rate.

         "Foreign Lender" means any Lender that is organized under the laws of a
jurisdiction other than that in which any Borrower is located. For purposes of
this definition, the United States of America, each State thereof and the
District of Columbia shall be deemed to constitute a single jurisdiction.

         "Fund" means any Person (other than a natural person) that is (or will
be) engaged in making, purchasing, holding or otherwise investing in commercial
loans and similar extensions of credit in the ordinary course of its business.

         "Funding" means MetLife Funding, Inc., a Delaware corporation.

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

         "Governmental Authority" means the government of the United States of
America, 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.

         "Guarantee" of or by any Person (the "guarantor") means any obligation,
contingent or otherwise, of the guarantor guaranteeing or having the economic
effect of guaranteeing any Indebtedness or other obligation of any other Person
(the "primary obligor") in any manner, whether directly or indirectly, and
including any obligation of the guarantor, direct or indirect, (a) to purchase
or pay (or advance or supply funds for the purchase or payment of) such
Indebtedness or other obligation or to purchase (or to advance or supply funds
for the purchase of) any security for the payment thereof, (b) to purchase or
lease property, securities or services for the purpose of assuring the owner of
such Indebtedness or other obligation of the payment thereof, (c) to maintain
working capital, equity capital or any other financial statement condition or
liquidity of the primary obligor so as to enable the primary obligor to pay such
Indebtedness or other obligation or (d) as an account party in respect of any
letter of credit or letter of guaranty issued to support such Indebtedness or
obligation; provided, that the term Guarantee shall not include endorsements for
collection or deposit in the ordinary course of business.

                                      -8-

<PAGE>

         "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" of any Person means, without duplication, (a) all
obligations of such Person for borrowed money or with respect to deposits or
advances of any kind, (b) all obligations of such Person evidenced by bonds,
debentures, notes or similar instruments, (c) all obligations of such Person
upon which interest charges are customarily paid, (d) all obligations of such
Person under conditional sale or other title retention agreements relating to
property acquired by such Person, (e) all obligations of such Person in respect
of the deferred purchase price of property or services (excluding current
accounts payable incurred in the ordinary course of business), (f) all
Indebtedness of others secured by (or for which the holder of such Indebtedness
has an existing right, contingent or otherwise, to be secured by) any Lien on
property owned or acquired by such Person, whether or not the Indebtedness
secured thereby has been assumed, (g) all Guarantees by such Person of
Indebtedness of others, (h) all Capital Lease Obligations of such Person, (i)
all obligations, contingent or otherwise, of such Person as an account party in
respect of letters of credit and letters of guaranty, (j) all obligations,
contingent or otherwise, of such Person in respect of bankers' acceptances, and
(k) all Surplus Relief Reinsurance ceded by such Person. The Indebtedness of any
Person shall include the Indebtedness of any other entity (including any
partnership in which such Person is a general partner) to the extent such Person
is liable therefor as a result of such Person's ownership interest in or other
relationship with such entity, except to the extent the terms of such
Indebtedness provide that such Person is not liable therefor.

         "Indemnified Taxes" means Taxes other than Excluded Taxes.

         "Interest Election Request" means a request by any Borrower to convert
or continue a Revolving Borrowing in accordance with Section 2.6.

         "Interest Period" means a Eurodollar Interest Period or a Fixed Rate
Interest Period.

         "Lenders" means the Persons listed on Schedule 2.1 and any other Person
that shall have become a party hereto pursuant to an Assignment and Acceptance,
other than any such Person that ceases to be a party hereto pursuant to an
Assignment and Acceptance.

         "Lien" means, with respect to any asset, (a) any mortgage, deed of
trust, lien, pledge, hypothecation, encumbrance, charge or security interest in,
on or of such asset, (b) the interest of a vendor or a lessor under any
conditional sale agreement, capital lease or title retention agreement (or any
financing lease having substantially the same economic effect as any of the
foregoing) relating to such asset and (c) in the case of securities, any
purchase option, call or similar right of a third party with respect to such
securities.

                                      -9-

<PAGE>

         "Loan Documents" means this Agreement and any Notes issued pursuant to
Section 2.8(e).

         "Loans" means the loans made by the Lenders to the Borrowers pursuant
to this Agreement.

         "Margin Stock" means "margin stock" within the meaning of Regulations U
and X.

         "Material Adverse Change" means any event, development or circumstance
that has had or could reasonably be expected to have a material adverse effect
on (a) the business, assets, property, condition (financial or otherwise) or
prospects of MetLife and its Subsidiaries taken as a whole, or (b) the validity
or enforceability of this Agreement or the rights and remedies of the
Administrative Agent and the Lenders in respect of any Borrower hereunder.

         "Material Indebtedness" means Indebtedness (other than the Loans), or
obligations in respect of one or more Hedging Agreements, of MetLife or any of
its Material Subsidiaries in an aggregate principal amount exceeding
$200,000,000 (or its equivalent in any other currency). For purposes of
determining Material Indebtedness, the "principal amount" of the obligations of
MetLife or any of its Material Subsidiaries in respect of any Hedging Agreement
at any time shall be the maximum aggregate amount (giving effect to any netting
agreements) that MetLife or such Material Subsidiary would be required to pay if
such Hedging Agreement were terminated at such time.

         "Material Subsidiary" means, at any time, (i) Funding, (ii) the Company
and (iii) each Subsidiary of MetLife that as of such time meets the definition
of "significant subsidiary" contained as of the date hereof in Regulation S-X of
the SEC.

         "Maturity Date" means (a) the one year anniversary of the Termination
Date or (b) any earlier date on which (i) the Aggregate Commitment is reduced to
zero or otherwise terminated pursuant to the terms hereof (other than pursuant
to Section 2.7(a)) or (ii) the Loans and other obligations of the Borrowers
hereunder shall become due and payable.

         "MetLife" means MetLife, Inc., a Delaware corporation.

         "Moody's" means Moody's Investors Service, a subsidiary of Moody's
Corporation, and its successors.

         "Multiemployer Plan" means a multiemployer plan as defined in Section
4001(a)(3) of ERISA.

         "NAIC" means the National Association of Insurance Commissioners and
any successor thereto.

         "Note" has the meaning set forth in Section 2.8(e).

         "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

                                      -10-

<PAGE>

hereunder or from the execution, delivery or enforcement of, or otherwise with
respect to, this Agreement.

         "Participant" has the meaning set forth in Section 9.2.1.

         "Payment Date" means (a) with respect to any ABR Loan, Facility Fee or
Utilization Fee, the last day of each March, June, September and December, (b)
with respect to any Eurodollar Loan, the last day of the Interest Period
applicable to the Borrowing of which such Loan is a part and, in the case of a
Eurodollar Borrowing with an Interest Period of more than three months'
duration, each day prior to the last day of such Interest Period that occurs at
intervals of three months' duration after the first day of such Interest Period,
and (c) with respect to any Fixed Rate Loan, the last day of the Interest Period
applicable to the Borrowing of which such Loan is a part and, in the case of a
Fixed Rate Borrowing with an Interest Period of more than 90 days' duration
(unless otherwise specified in the applicable Competitive Bid Request), each day
prior to the last day of such Interest Period that occurs at intervals of 90
days' duration after the first day of such Interest Period, and any other dates
that are specified in the applicable Competitive Bid Request as Payment Dates
with respect to such Borrowing.

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

         "Permitted Encumbrances" means:

                  (a)      Liens imposed by law for taxes that are not yet due
         or are being contested in compliance with Section 5.4;

                  (b)      carriers', warehousemen's, mechanics', materialmen's,
         repairmen's and other like Liens imposed by law, arising in the
         ordinary course of business and securing obligations that are not
         overdue by more than 30 days or are being contested in compliance with
         Section 5.4;

                  (c)      pledges and deposits made in the ordinary course of
         business in compliance with workers' compensation, unemployment
         insurance and other social security laws or regulations;

                  (d)      deposits to secure the performance of bids, trade
         contracts, leases, statutory obligations, surety and appeal bonds,
         performance bonds and other obligations of a like nature, in each case
         in the ordinary course of business; and

                  (e)      easements, zoning restrictions, rights-of-way and
         similar encumbrances on real property imposed by law or arising in the
         ordinary course of business that do not secure any monetary obligations
         and do not materially detract from the value of the affected property
         or interfere with the ordinary conduct of business of any Borrower;

provided that the term "Permitted Encumbrances" shall not include any Lien
securing Indebtedness.

                                      -11-

<PAGE>

         "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 Section
412 of the Code or Section 302 of ERISA, and in respect of which MetLife or any
ERISA Affiliate is (or, if such plan were terminated, would under Section 4069
of ERISA be deemed to be) an "employer" as defined in Section 3(5) of ERISA.

         "Pricing Schedule" means Schedule 2.10 hereto.

         "Prime Rate" means a rate per annum equal to the prime rate of interest
announced from time to time by Bank One or its parent (which is not necessarily
the lowest rate charged to any customer), changing when and as said prime rate
changes.

         "Purchasers" has the meaning set forth in Section 9.3.1.

         "Register" has the meaning set forth in Section 9.3.4.

         "Regulations D, U and X" means, respectively, Regulations D, U and X of
the Board (or any successor), as the same may be modified and supplemented and
in effect from time to time.

         "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.

         "Requesting Borrower" means, with respect to a Revolving Borrowing or a
Competitive Borrowing pursuant to Article II, the relevant Borrower requesting
such a Borrowing.

         "Required Lenders" means, at any time, Lenders having Revolving Credit
Exposures and unused Commitments representing more than 50% of the sum of the
total Revolving Credit Exposures and unused Commitments at such time; provided
that, for all purposes after the Commitments expire or terminate, the
outstanding Competitive Loans of the Lenders shall be included in their
respective Revolving Credit Exposures in determining the Required Lenders.

         "Reserve Requirement" means, with respect to an Interest Period, the
maximum aggregate reserve requirement (including all basic, supplemental,
marginal and other reserves) which is imposed under Regulation D on Eurocurrency
liabilities.

         "Revolving Credit Exposure" means, with respect to any Lender at any
time, the outstanding principal amount of such Lender's Revolving Loans.

         "Revolving Loan" means a Loan made pursuant to Section 2.3.

         "Revolving Loan Termination Balance" means the aggregate principal
amount of Revolving Loans outstanding on the Termination Date after giving
effect to any Revolving Loans made or repaid on such date.

                                      -12-

<PAGE>

         "SAP" means the accounting procedures and practices prescribed or
permitted by the Applicable Insurance Regulatory Authority or the NAIC.

         "S&P" means Standard & Poor's Credit Market Services, a division of The
McGraw-Hill Companies, Inc., and any successor thereto.

         "SEC" means the Securities and Exchange Commission or any governmental
authority succeeding to its principal functions.

         "Securities Transactions" means (a) securities lending arrangements,
and (b) repurchase and reverse repurchase arrangements with respect to
securities and financial instruments.

         "Separate Accounts Assets" means, as at any date, the "Separate
Accounts Assets" of the Company, determined in accordance with SAP, reported as
such in the Statutory Statements of the Company.

         "Statutory Statement" means a statement of the condition and affairs of
the Company, prepared in accordance with SAP, and filed with the Applicable
Insurance Regulatory Authority.

         "Structured Transaction Liens" means Liens granted by the Company to
(A) a 99%-owned Subsidiary (the "Relevant Subsidiary") in connection with a
structured private investment transaction entered into in September 1999, as the
same may be amended from time to time (the "Structured Transaction"), where (i)
in connection with such transaction, such Liens are assigned to a special
purpose Subsidiary of the Company (the "SPV") in which the Company is the holder
of all outstanding obligations (other than ordinary course administrative
expenses and common equity interests) and (ii) the assets covered by such Liens
consist solely of the rights of the Company against the SPV; and (B) the SPV in
connection with the Structured Transaction which are subordinated to, and
exercisable only after, the Liens described in the preceding clause (A) and
which cover only the assets covered by the Liens described in said clause (A).

         "Subsidiary" means, with respect to any Person (the "parent") at any
date, any Consolidated Subsidiary of the parent, as well as any other
corporation, limited liability company, partnership, association or other entity
(a) of which securities or other ownership interests representing more than 50%
of the equity or more than 50% of the ordinary voting power or, in the case of a
partnership, more than 50% of the general partnership interests are, as of such
date, owned, controlled or held, or (b) that is, as of such date, otherwise
Controlled, by the parent or one or more subsidiaries of the parent or by the
parent and one or more subsidiaries of the parent.

         "Support Agreement" means the Support Agreement dated as of November
30, 1984 between the Company and Funding, as amended and restated effective as
of that date on July 2, 1985.

         "Surplus Relief Reinsurance" means any transaction in which the Company
or any Subsidiary of the Company cedes business under a reinsurance agreement
that would be considered a "financing-type" reinsurance agreement as determined
by the independent certified public accountants of the Company in accordance
with principles published by the Financial

                                      -13-

<PAGE>

Accounting Standards Board or the Second Edition of the AICPA Audit Guide for
Stock Life Insurance Companies (pp. 91-92), as the same may be revised from time
to time.

         "Taxes" means any and all present or future taxes, levies, imposts,
duties, deductions, charges or withholdings imposed by any Governmental
Authority including penalties, interest and additions to tax.

         "Termination Date" means April 23, 2004.

         "Transactions" means the execution, delivery and performance by the
Borrowers of this Agreement, the borrowing of Loans when made and the use of the
proceeds thereof.

         "Transferee" has the meaning set forth in Section 9.4.

         "Type", when used in reference to any Loan or Borrowing, refers to
whether the rate of interest on such Loan, or on the Loans comprising such
Borrowing, is determined by reference to the Eurodollar Rate, the Alternate Base
Rate or, in the case of a Competitive Loan or Borrowing, the Eurodollar Bid Rate
or a Fixed Rate.

         "Utilization Fee" has the meaning set forth in Section 2.10(b).

         "Wholly-Owned Subsidiary" of a Person means (a) any Subsidiary all of
the outstanding voting securities of which shall at the time be owned or
Controlled, directly or indirectly, by such Person or one of more Wholly-Owned
Subsidiaries of such Person, or by such Person and one or more Wholly-Owned
Subsidiaries of such Person, or (b) any partnership, limited liability company,
association, joint venture or similar business organization 100% of the
ownership interests having ordinary voting power of which shall at the time be
so owned or Controlled.

         "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.

         Section 1.2       Classification of Loans and Borrowings. For purposes
of this Agreement, Loans may be classified and referred to by Class (e.g., a
"Revolving Loan") or by Type (e.g., a "Eurodollar Loan") or by Class and Type
(e.g., a "Eurodollar Revolving Loan"). Borrowings also may be classified and
referred to by Class (e.g., a "Revolving Borrowing") or by Type (e.g., a
"Eurodollar Borrowing") or by Class and Type (e.g., a "Eurodollar Revolving
Borrowing").

         Section 1.3       Terms Generally. The definitions of terms herein
shall apply equally to the singular and plural forms of the terms defined.
Whenever the context may require, any pronoun shall include the corresponding
masculine, feminine and neuter forms. The words "include", "includes" and
"including" shall be deemed to be followed by the phrase "without limitation".
The word "will" shall be construed to have the same meaning and effect as the
word "shall". Unless the context requires otherwise (a) any definition of or
reference to any agreement, instrument or other document herein shall be
construed as referring to such agreement, instrument or other document as from
time to time amended, supplemented or otherwise modified (subject to any
restrictions on such amendments, supplements or modifications set forth herein),
(b) any reference herein to any Person shall be construed to

                                      -14-

<PAGE>

include such Person's successors and assigns, (c) the words "herein", "hereof"
and "hereunder", and words of similar import, shall be construed to refer to
this Agreement in its entirety and not to any particular provision hereof, (d)
all references herein to Articles, Sections, Exhibits and Schedules shall be
construed to refer to Articles and Sections of, and Exhibits and Schedules to,
this Agreement and (e) the words "asset" and "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.

         Section 1.4       Accounting Terms; GAAP; SAP. 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 case may be, as in effect
from time to time; provided that, if MetLife notifies the Administrative Agent
that MetLife requests an amendment to any provision hereof to eliminate the
effect of any change 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 Administrative Agent notifies MetLife that the Required 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.

                                   ARTICLE II

                                   THE CREDITS

         Section 2.1       Commitments. Subject to the terms and conditions set
forth herein, each Lender severally and not jointly agrees to make Revolving
Loans to the Borrowers from time to time during the Availability Period in an
aggregate principal amount that will not result in (a) such Lender's Revolving
Credit Exposure exceeding such Lender's Commitment or (b) the sum of the total
Revolving Credit Exposures of all Lenders plus the aggregate principal amount of
all outstanding Competitive Loans exceeding the Aggregate Commitment. Within the
foregoing limits and subject to the terms and conditions set forth herein, any
Borrower or all Borrowers may borrow, prepay and reborrow Revolving Loans. The
Commitments to lend hereunder shall expire on the Termination Date.

         Section 2.2       Loans and Borrowings.

                  (a)      Each Revolving Loan shall be made as part of a
         Borrowing consisting of Revolving Loans made by the Lenders ratably in
         accordance with their respective Commitments. Each Competitive Loan
         shall be made in accordance with the procedures set forth in Section
         2.4. The failure of any Lender to make any Loan required to be made by
         it shall not relieve any other Lender of its obligations hereunder;
         provided that the Commitments and Competitive Bids of the Lenders are
         several and not joint, and no Lender shall be responsible for any other
         Lender's failure to make Loans as required. The obligations of the
         Borrowers to repay Loans shall be several, not joint.

                                      -15-

<PAGE>

                  (b)      Subject to Section 2.12, (i) each Revolving Borrowing
         shall be comprised entirely of ABR Loans or Eurodollar Loans as the
         Requesting Borrower may request in accordance herewith, and (ii) each
         Competitive Borrowing shall be comprised entirely of Eurodollar Loans
         or Fixed Rate Loans as the Requesting Borrower may request in
         accordance herewith. Each Lender at its option may make any Eurodollar
         Loan by causing any domestic or foreign branch or Affiliate of such
         Lender to make such Loan; provided that any exercise of such option
         shall not affect the obligation of the Requesting Borrower to repay
         such Loan in accordance with the terms of this Agreement.

                  (c)      At the commencement of each Interest Period for any
         Eurodollar Revolving Borrowing, such Borrowing shall be in an aggregate
         amount that is an integral multiple of $1,000,000 and not less than
         $10,000,000. At the time that each ABR Revolving Borrowing is made,
         such Borrowing shall be in an aggregate amount that is an integral
         multiple of $1,000,000 and not less than $5,000,000; provided, that an
         ABR Revolving Borrowing may be in an aggregate amount that is equal to
         the entire unused balance of the total Commitments. Each Competitive
         Borrowing shall be in an aggregate amount that is an integral multiple
         of $1,000,000 and not less than $10,000,000. Borrowings of more than
         one Type and Class may be outstanding at the same time; provided that
         there shall not at any time be more than a total of ten (10) Eurodollar
         Revolving Borrowings outstanding.

                  (d)      Notwithstanding any other provision of this
         Agreement, the Borrowers shall not be entitled to request, or to elect
         to convert or continue, any Revolving Borrowing if the Interest Period
         requested with respect thereto would end after the Maturity Date.

         Section 2.3       Requests for Revolving Borrowings. To request a
Revolving Borrowing, the Requesting Borrower shall notify the Administrative
Agent of such request by telephone (a) in the case of a Eurodollar Borrowing,
not later than 10:00 a.m., Chicago time, three Business Days before the date of
the proposed Borrowing or (b) in the case of an ABR Borrowing, not later than
10:00 a.m., Chicago time, one Business Day before the date of the proposed
Borrowing. Each such telephonic Borrowing Request shall be irrevocable and shall
be confirmed promptly by hand delivery or telecopy to the Administrative Agent
of a written Borrowing Request in a form approved by the Administrative Agent
and signed by the Requesting Borrower. Each such telephonic and written
Borrowing Request shall specify the following information in compliance with
Section 2.2:

                           (i)      the name of the Requesting Borrower and
                  aggregate amount of the requested Borrowing;

                           (ii)     the date of such Borrowing, which shall be a
                  Business Day;

                           (iii)    whether such Borrowing is to be an ABR
                  Borrowing or a Eurodollar Borrowing;

                           (iv)     in the case of a Eurodollar Borrowing, the
                  initial Interest Period to be applicable thereto (which may
                  not end after the Maturity Date); and

                                      -16-

<PAGE>

                           (v)      the location and number of the Requesting
                  Borrower's account to which funds are to be disbursed, which
                  shall comply with the requirements of Section 2.5.

If no election as to the Type of Revolving Borrowing is specified, then the
requested Revolving Borrowing shall be an ABR Borrowing. If no Interest Period
is specified with respect to any requested Eurodollar Revolving Borrowing, then
the Requesting Borrower shall be deemed to have selected an Interest Period of
one month's duration. Promptly following receipt of a Borrowing Request in
accordance with this Section, the Administrative Agent shall advise each Lender
of the details thereof and of the amount of such Lender's Loan to be made as
part of the requested Borrowing.

         Section 2.4       Competitive Bid Procedure.

                  (a)      Subject to the terms and conditions set forth herein,
         from time to time during the Availability Period any Borrower or all
         Borrowers may request Competitive Bids and may (but shall not have any
         obligation to) accept Competitive Bids and borrow Competitive Loans;
         provided that the sum of the total Revolving Credit Exposures of all
         Lenders plus the aggregate principal amount of all outstanding
         Competitive Loans at any time shall not exceed the Aggregate
         Commitment. To request Competitive Bids, the Requesting Borrower shall
         notify the Administrative Agent of such request by telephone, in the
         case of a Eurodollar Borrowing, not later than 10:00 a.m., Chicago
         time, four Business Days before the date of the proposed Borrowing and,
         in the case of a Fixed Rate Borrowing, not later than 9:00 a.m.,
         Chicago time, one Business Day before the date of the proposed
         Borrowing; provided that the Borrowers may submit up to (but not more
         than) three Competitive Bid Requests on the same day, but a Competitive
         Bid Request shall not be made within five Business Days after the date
         of any previous Competitive Bid Request, unless any and all such
         previous Competitive Bid Requests shall have been withdrawn or all
         Competitive Bids received in response thereto rejected. Each such
         telephonic Competitive Bid Request shall be confirmed promptly by hand
         delivery or telecopy to the Administrative Agent of a written
         Competitive Bid Request in a form approved by the Administrative Agent
         and signed by the Requesting Borrower. Each such telephonic and written
         Competitive Bid Request shall specify the following information in
         compliance with Section 2.2:

                           (i)      the name of the Borrower and aggregate
                  amount of the requested Borrowing;

                           (ii)     the date of such Borrowing, which shall be a
                  Business Day;

                           (iii)    whether such Borrowing is to be a Eurodollar
                  Borrowing or a Fixed Rate Borrowing;

                           (iv)     the Interest Period to be applicable to such
                  Borrowing (which may not end after the Termination Date); and

                                      -17-

<PAGE>

                           (v)      the location and number of the Requesting
                  Borrower's account to which funds are to be disbursed, which
                  shall comply with the requirements of Section 2.5.

                  Promptly following receipt of a Competitive Bid Request in
         accordance with this Section, the Administrative Agent shall notify the
         Lenders of the details thereof by telecopy, inviting the Lenders to
         submit Competitive Bids.

                  (b)      Each Lender may (but shall not have any obligation
         to) make one or more Competitive Bids to the Requesting Borrower in
         response to a Competitive Bid Request. Each Competitive Bid by a Lender
         must be in a form approved by the Administrative Agent and must be
         received by the Administrative Agent by telecopy, in the case of a
         Eurodollar Competitive Borrowing, not later than 9:00 a.m., Chicago
         time, three Business Days before the proposed date of such Competitive
         Borrowing, and in the case of a Fixed Rate Borrowing, not later than
         9:00 a.m., Chicago time, on the proposed date of such Competitive
         Borrowing. Competitive Bids that do not conform substantially to the
         form approved by the Administrative Agent may be rejected by the
         Administrative Agent, and the Administrative Agent shall notify the
         applicable Lender as promptly as practicable. Each Competitive Bid
         shall specify (i) the principal amount (which shall be a minimum of
         $10,000,000 and an integral multiple of $1,000,000 and which may equal
         the entire principal amount of the Competitive Borrowing requested by
         the Requesting Borrower) of the Competitive Loan or Loans that the
         Lender is willing to make, (ii) the Competitive Bid Rate or Rates at
         which the Lender is prepared to make such Loan or Loans, and (iii) the
         Interest Period applicable to each such Loan and the last day thereof.

                  (c)      The Administrative Agent shall promptly notify the
         Requesting Borrower by telecopy of the Competitive Bid Rate and the
         principal amount specified in each Competitive Bid and the identity of
         the Lender that shall have made such Competitive Bid.

                  (d)      Subject only to the provisions of this paragraph, the
         Requesting Borrower may accept or reject any Competitive Bid. Such
         Borrower shall notify the Administrative Agent by telephone, confirmed
         by telecopy in a form approved by the Administrative Agent, whether and
         to what extent it has decided to accept or reject each Competitive Bid,
         in the case of a Eurodollar Competitive Borrowing, not later than 10:00
         a.m., Chicago time, three Business Days before the date of the proposed
         Competitive Borrowing, and in the case of a Fixed Rate Borrowing, not
         later than 10:00 a.m., Chicago time, on the proposed date of the
         Competitive Borrowing; provided that (i) the failure of such Borrower
         to give such notice shall be deemed to be a rejection of each
         Competitive Bid, (ii) such Borrower shall not accept a Competitive Bid
         made at a particular Competitive Bid Rate if such Borrower rejects a
         Competitive Bid made at a lower Competitive Bid Rate, (iii) the
         aggregate amount of the Competitive Bids accepted by such Borrower
         shall not exceed the aggregate amount of the requested Competitive
         Borrowing specified in the related Competitive Bid Request, (iv) to the
         extent necessary to comply with clause (iii) above, such Borrower may
         accept Competitive Bids at the same Competitive Bid Rate in part, which
         acceptance, in the case of multiple Competitive Bids at such
         Competitive Bid Rate, shall be made by such Borrower in

                                      -18-

<PAGE>

         consultation with the Administrative Agent pro rata in accordance with
         the amount of each such Competitive Bid, and (v) except pursuant to
         clause (iv) above, no Competitive Bid shall be accepted for a
         Competitive Loan unless such Competitive Loan is in a minimum principal
         amount of $5,000,000 and an integral multiple of $1,000,000; and
         provided further that if a Competitive Loan must be in an amount less
         than $5,000,000 because of the provisions of clause (iv) above, such
         Competitive Loan may be for a minimum of $1,000,000 or any integral
         multiple thereof, and in calculating the pro rata allocation of
         acceptances of portions of multiple Competitive Bids at a particular
         Competitive Bid Rate pursuant to clause (iv) the amounts shall be
         rounded to integral multiples of $1,000,000 in a manner determined by
         the Requesting Borrower in consultation with the Administrative Agent.
         A notice given by the Requesting Borrower pursuant to this paragraph
         shall be irrevocable.

                  (e)      The Administrative Agent shall promptly notify each
         bidding Lender by telecopy whether or not its Competitive Bid has been
         accepted (and, if so, the amount and Competitive Bid Rate so accepted),
         and each successful bidder will thereupon become bound, subject to the
         terms and conditions hereof, to make the Competitive Loan in respect of
         which its Competitive Bid has been accepted.

                  (f)      If the Administrative Agent shall elect to submit a
         Competitive Bid in its capacity as a Lender, it shall submit such
         Competitive Bid directly to the Requesting Borrower at least one
         quarter of an hour earlier than the time by which the other Lenders are
         required to submit their Competitive Bids to the Administrative Agent
         pursuant to paragraph (b) of this Section.

         Section 2.5       Funding of Borrowings.

                  (a)      Each Lender shall make each Loan to be made by it
         hereunder on the proposed date thereof by wire transfer of immediately
         available funds by 11:00 a.m., Chicago time, to the account of the
         Administrative Agent most recently designated by it for such purpose by
         notice to the Lenders. The Administrative Agent will make such Loans
         available to the Requesting Borrower by transferring the amounts so
         received on the proposed date of the Borrowing, in immediately
         available funds, to an account of such Borrower maintained with the
         Administrative Agent in Chicago or as designated by such Borrower in
         the applicable Borrowing Request or Competitive Bid Request.

                  (b)      Unless the Administrative Agent shall have received
         notice from a Lender prior to the proposed date of any Borrowing that
         such Lender will not make available to the Administrative Agent such
         Lender's share of such Borrowing, the Administrative Agent may assume
         that such Lender has made such share available on such date in
         accordance with paragraph (a) of this Section and may, in reliance upon
         such assumption, make available to the Requesting Borrower a
         corresponding amount. In such event, if a Lender has not in fact made
         its share of the applicable Borrowing available to the Administrative
         Agent, then the applicable Lender and the Requesting Borrower severally
         agree to pay to the Administrative Agent forthwith on demand such
         corresponding amount with interest thereon, for each day from and
         including the date such amount is made available to such Borrower to
         but excluding the date of payment to the

                                      -19-

<PAGE>

         Administrative Agent, at (i) in the case of such Lender, the Federal
         Funds Effective Rate for such day for the first three days and,
         thereafter, the interest rate applicable to the relevant Loan or (ii)
         in the case of such Borrower, the interest rate applicable to the
         relevant Loan. If such Lender pays such amount to the Administrative
         Agent, then such amount shall constitute such Lender's Loan included in
         such Borrowing.

         Section 2.6       Interest Elections.

                  (a)      Each Revolving Borrowing initially shall be of the
         Type specified in the applicable Borrowing Request and, in the case of
         a Eurodollar Revolving Borrowing, shall have an initial Interest Period
         as specified in such Borrowing Request. Thereafter, the Requesting
         Borrower may elect to convert such Borrowing to a different Type or to
         continue such Borrowing and, in the case of a Eurodollar Revolving
         Borrowing, may elect Interest Periods therefor, all as provided in this
         Section. The Requesting Borrower may elect different options with
         respect to different portions of the affected Borrowing, in which case
         each such portion shall be allocated ratably among the Lenders holding
         the Loans comprising such Borrowing, and the Loans comprising each such
         portion shall be considered a separate Borrowing. This Section shall
         not apply to Competitive Borrowings, which may not be converted or
         continued.

                  (b)      To make an election pursuant to this Section, the
         Requesting Borrower shall notify the Administrative Agent of such
         election by telephone by the time that a Borrowing Request would be
         required under Section 2.3 if such Borrower were requesting a Revolving
         Borrowing of the Type resulting from such election to be made on the
         effective date of such election. Each such telephonic Interest Election
         Request shall be irrevocable and shall be confirmed promptly by hand
         delivery or telecopy to the Administrative Agent of a written Interest
         Election Request in a form approved by the Administrative Agent and
         signed by the Requesting Borrower.

                  (c)      Each telephonic and written Interest Election Request
         shall specify the following information in compliance with Section 2.2:

                           (i)      the name of the Borrower and Borrowing to
                  which such Interest Election Request applies and, if different
                  options are being elected with respect to different portions
                  thereof, the portions thereof to be allocated to each
                  resulting Borrowing (in which case the information to be
                  specified pursuant to clauses (iii) and (iv) below shall be
                  specified for each resulting Borrowing);

                           (ii)     the effective date of the election made
                  pursuant to such Interest Election Request, which shall be a
                  Business Day;

                           (iii)    whether the resulting Borrowing is to be an
                  ABR Borrowing or a Eurodollar Borrowing; and

                           (iv)     if the resulting Borrowing is a Eurodollar
                  Borrowing, the Interest Period to be applicable thereto after
                  giving effect to such election (which may not end after the
                  Maturity Date).

                                      -20-

<PAGE>

         If any such Interest Election Request requests a Eurodollar Borrowing
         but does not specify an Interest Period, then the Requesting Borrower
         shall be deemed to have selected an Interest Period of one month's
         duration.

                  (d)      Promptly following receipt of an Interest Election
         Request, the Administrative Agent shall advise each Lender of the
         details thereof and of such Lender's portion of each resulting
         Borrowing.

                  (e)      If the Requesting Borrower fails to deliver a timely
         Interest Election Request with respect to a Eurodollar Revolving
         Borrowing prior to the end of the Interest Period applicable thereto,
         then, unless such Borrowing is repaid as provided herein, at the end of
         such Interest Period such Borrowing shall be converted to an ABR
         Revolving Borrowing. Notwithstanding any contrary provision hereof, if
         an Event of Default has occurred and is continuing and the
         Administrative Agent, at the request of the Required Lenders, so
         notifies the Requesting Borrower, then, so long as an Event of Default
         is continuing (i) no outstanding Revolving Borrowing may be converted
         to or continued as a Eurodollar Borrowing and (ii) unless repaid, each
         Eurodollar Revolving Borrowing shall be converted to an ABR Borrowing
         at the end of the Interest Period applicable thereto.

         Section 2.7       Termination and Reduction of Commitments.

                  (a)      Unless previously terminated, the Commitments shall
         terminate on the Termination Date.

                  (b)      Upon the occurrence of a Change in Control, the
         Administrative Agent shall, at the request of the Required Lenders, by
         notice to the Borrowers, terminate the Commitments and thereupon the
         Commitments shall terminate immediately.

                  (c)      The Borrowers may at any time terminate, or from time
         to time reduce, the Aggregate Commitment; provided that (i) each
         reduction of the Aggregate Commitment shall be in an amount that is an
         integral multiple of $10,000,000 and (ii) the Borrowers shall not
         terminate or reduce the Aggregate Commitment if, after giving effect to
         any concurrent prepayment of the Loans in accordance with Section 2.9,
         the sum of the Revolving Credit Exposures of all Lenders plus the
         aggregate principal amount of all outstanding Competitive Loans would
         exceed the Aggregate Commitment.

                  (d)      The Borrowers shall notify the Administrative Agent
         of any election to terminate or reduce the Aggregate Commitment under
         paragraph (c) of this Section at least three Business Days prior to the
         effective date of such termination or reduction, specifying such
         election and the effective date thereof. Promptly following receipt of
         any notice, the Administrative Agent shall advise the Lenders of the
         contents thereof. Each notice delivered by the Borrowers pursuant to
         this Section shall be irrevocable; provided that a notice of
         termination or reduction of the Aggregate Commitment delivered by the
         Borrowers may state that such notice is conditioned upon the
         effectiveness of other credit facilities, in which case such notice may
         be revoked by the Borrowers (by notice to the Administrative Agent on
         or prior to the specified effective date) if such condition is not

                                      -21-

<PAGE>

         satisfied. Any termination or reduction of the Aggregate Commitment
         shall be permanent. Each reduction of the Aggregate Commitment shall be
         made ratably among the Lenders in accordance with their respective
         Commitments. All accrued Facility Fees and Utilization Fees shall be
         payable on the effective date of the termination of the obligations of
         the Lenders to make Loans hereunder.

         Section 2.8       Repayment of Loans; Evidence of Debt.

                  (a)      Each Borrower hereby unconditionally promises to pay
         (i) to the Administrative Agent for the account of each Lender the then
         unpaid principal amount of each Revolving Loan made to such Borrower
         hereunder on the Termination Date, and (ii) to the Administrative Agent
         for account of each Lender the then unpaid principal amount of each
         Competitive Loan made to such Borrower on the last day of the Interest
         Period applicable to such Loan; provided, that upon the written request
         of the Borrowers delivered to the Administrative Agent at least ten
         (10) Business Days prior to the Termination Date and so long as no
         Default has occurred and is continuing on the Termination Date, the
         Revolving Loan Termination Balance shall be converted to a term loan
         which shall be due and payable on the Maturity Date.

                  (b)      Each Lender shall maintain in accordance with its
         usual practice an account or accounts evidencing the indebtedness of
         each Borrower to such Lender resulting from each Loan made by such
         Lender, including the amounts of principal and interest payable and
         paid to such Lender from time to time hereunder.

                  (c)      The Administrative Agent shall maintain accounts in
         which it shall record (i) the name of the Borrower and amount of each
         Loan made hereunder, the Class and Type thereof and the Interest Period
         applicable thereto, (ii) the amount of any principal or interest due
         and payable or to become due and payable from each Borrower to each
         Lender hereunder and (iii) the amount of any sum received by the
         Administrative Agent from any Borrower hereunder for the account of the
         Lenders and each Lender's share thereof.

                  (d)      The entries made in the accounts maintained pursuant
         to paragraph (b) or (c) of this Section shall be prima facie evidence
         of the existence and amounts of the obligations recorded therein;
         provided that the failure of any Lender or the Administrative Agent to
         maintain such accounts or any error therein shall not in any manner
         affect the obligation of any Borrower to repay its Loans in accordance
         with the terms of this Agreement.

                  (e)      Any Lender may request that Loans made by it be
         evidenced by promissory notes substantially in the form of Exhibit C
         (each, a "Note"). In such event, each Borrower shall prepare, execute
         and deliver to such Lender a Note payable to such Lender (or, if
         requested by such Lender, to such Lender and its registered assigns)
         and in a form approved by the Administrative Agent. Thereafter, the
         Loans evidenced by such Note and interest thereon shall at all times
         (including after assignment pursuant to Article IX) be represented by
         one or more Notes in such form payable to the payee named therein (or
         to its registered assigns).

                                      -22-

<PAGE>

         Section 2.9       Prepayment of Loans.

                  (a)      Each Borrower shall have the right at any time and
         from time to time to prepay without penalty (except as may be provided
         in Section 2.14) any Borrowing of such Borrower in whole or in part,
         subject to prior notice in accordance with paragraph (b) of this
         Section; provided that no Borrower shall have the right to prepay any
         Competitive Loan without the prior consent of the Lender thereof.

                  (b)      The Borrowers shall notify the Administrative Agent
         by telephone (confirmed by telecopy) of any prepayment hereunder (i) in
         the case of prepayment of a Eurodollar Revolving Borrowing, not later
         than 10:00 a.m., Chicago time, three Business Days before the date of
         prepayment, or (ii) in the case of prepayment of an ABR Revolving
         Borrowing, not later than 10:00 a.m., Chicago time, one Business Day
         before the date of prepayment. Each such notice shall be irrevocable
         and shall specify the name of the Borrower, the prepayment date and the
         principal amount of each Borrowing or portion thereof to be prepaid;
         provided that, if a notice of prepayment is given in connection with a
         conditional notice of termination of the Aggregate Commitment as
         contemplated by Section 2.7, then such notice of prepayment may be
         revoked if such notice of termination is revoked in accordance with
         Section 2.7. Promptly following receipt of any such notice relating to
         a Revolving Borrowing, the Administrative Agent shall advise the
         Lenders of the contents thereof. Each partial prepayment of any
         Revolving Borrowing shall be in an amount that would be permitted in
         the case of an advance of a Revolving Borrowing of the same Type as
         provided in Section 2.2. Each prepayment of a Revolving Borrowing shall
         be applied ratably to the Loans included in the prepaid Borrowing.
         Prepayments shall be accompanied by accrued interest to the extent
         required by Section 2.11.

                  (c)      Upon the occurrence of a Change in Control, each
         Borrower agrees that if requested by the Administrative Agent (acting
         at the request of the Required Lenders) such Borrower will promptly
         prepay each Loan, together with accrued interest.

         Section 2.10      Fees.

                  (a)      Facility Fee. The Borrowers jointly and severally
         agree to pay to the Administrative Agent for the account of each Lender
         a facility fee (the "Facility Fee") as follows: (i) from the Effective
         Date to but not including the Termination Date, the Borrowers agree to
         pay a Facility Fee at a per annum rate equal to the Applicable Facility
         Fee Rate on each Lender's Commitment, regardless of usage; and (ii)
         from and after the Termination Date, the Borrowers agree to pay a
         Facility Fee at a per annum rate equal to the Applicable Facility Fee
         Rate on each Lender's Revolving Credit Exposure. The Facility Fee shall
         be based on the Level Status (as defined in the Pricing Schedule) of
         the Borrower which has the lowest Level Status of all Borrowers. The
         Facility Fee is payable quarterly in arrears on each Payment Date
         hereafter, on the Termination Date and on the Maturity Date.

                  (b)      Utilization Fee. The Borrowers agree to pay to the
         Administrative Agent for the account of each Lender a utilization fee
         (the "Utilization Fee") as follows: (i) for

                                      -23-

<PAGE>

         each day from the Effective Date to but not including the Termination
         Date on which the aggregate principal amount of all outstanding Loans
         (including both Revolving Loans and Competitive Loans) to all Borrowers
         exceeds 50% of the Aggregate Commitment, each Borrower agrees to pay a
         Utilization Fee based on each Lender's outstanding Loans at a per annum
         rate equal to the Applicable Utilization Fee Rate on the average daily
         amount of all outstanding Loans to such Borrower and (ii) on and after
         the Termination Date, each Borrower agrees to pay a Utilization Fee
         based on each Lender's outstanding Loans at a rate per annum equal to
         the Applicable Utilization Fee Rate on the average daily amount of all
         outstanding Loans to such Borrower. The Utilization Fee is payable
         quarterly in arrears on each Payment Date hereafter, on the Termination
         Date and on the Maturity Date.

                  (c)      Competitive Bid Fee. Each Borrower agrees to pay to
         the Administrative Agent for its own account a fee for each Competitive
         Bid Request submitted by such Borrower under Section 2.4 in an amount
         agreed to in the fee letter dated March 31, 2003 (the "Fee Letter").

                  (d)      Payment of Fees. All fees payable hereunder shall be
         paid on the dates due, in immediately available funds, to the
         Administrative Agent for distribution, in the case of the Utilization
         Fee and the Facility Fee, to the Lenders. Fees paid shall not be
         refundable under any circumstances.

         Section 2.11      Interest.

                  (a)      The Loans comprising each ABR Borrowing shall bear
         interest at the Alternate Base Rate. Changes in the rate of interest on
         any ABR Borrowing will take effect simultaneously with each change in
         the Alternate Base Rate.

                  (b)      The Loans comprising each Eurodollar Borrowing shall
         bear interest at (i) in the case of a Eurodollar Revolving Loan, the
         Eurodollar Rate for the Interest Period in effect for such Borrowing,
         or (ii) in the case of a Eurodollar Competitive Loan, the Eurodollar
         Bid Rate for the Interest Period in effect for such Borrowing.

                  (c)      Each Fixed Rate Loan shall bear interest at the Fixed
         Rate applicable to such Loan.

                  (d)      Notwithstanding the foregoing, if any principal of or
         interest on any Loan or any fee or other amount payable by any Borrower
         hereunder is not paid when due, whether at stated maturity, upon
         acceleration or otherwise, such overdue amount shall bear interest,
         after as well as before judgment, at a rate per annum equal to (i) in
         the case of overdue principal of any Loan, 2% plus the rate otherwise
         applicable to such Loan as provided in the preceding paragraphs of this
         Section or (ii) in the case of any other amount, 2% plus the rate
         applicable to ABR Loans as provided in paragraph (a) of this Section.

                  (e)      Accrued interest on each Loan shall be payable in
         arrears on each Payment Date for such Loan and, in the case of
         Revolving Loans, upon termination of the

                                      -24-

<PAGE>

         Commitments; provided that (i) interest accrued pursuant to paragraph
         (d) of this Section shall be payable on demand, (ii) in the event of
         any repayment or prepayment of any Loan (other than a prepayment of an
         ABR Revolving Loan prior to the end of the Availability Period),
         accrued interest on the principal amount repaid or prepaid shall be
         payable on the date of such repayment or prepayment and (iii) in the
         event of any conversion of any Eurodollar Revolving Loan prior to the
         end of the current Interest Period therefor, accrued interest on such
         Loan shall be payable on the effective date of such conversion.

                  (f)      All interest and fees hereunder shall be computed on
         the basis of a year of 360 days, except that interest computed by
         reference to the Alternate Base Rate at times when the Alternate Base
         Rate is based on the Prime Rate shall be computed on the basis of a
         year of 365 days (or 366 days in a leap year), and in each case shall
         be payable for the actual number of days elapsed (including the first
         day but excluding the last day). The applicable Alternate Base Rate,
         Eurodollar Rate, Eurodollar Bid Rate or Eurodollar Base Rate shall be
         determined by the Administrative Agent, and such determination shall be
         conclusive absent manifest error.

         Section 2.12      Alternate Rate of Interest. If prior to the
commencement of any Interest Period for a Eurodollar Borrowing:

                  (a)      the Administrative Agent determines (which
         determination shall be conclusive absent manifest error) that adequate
         and reasonable means do not exist for ascertaining the Eurodollar Rate,
         the Eurodollar Base Rate or the Eurodollar Bid Rate, as applicable, for
         such Interest Period; or

                  (b)      the Administrative Agent is advised by the Required
         Lenders (or, in the case of a Eurodollar Competitive Loan, the Lender
         that is required to make such Loan) that the Eurodollar Rate, the
         Eurodollar Base Rate or the Eurodollar Bid Rate, as applicable, for
         such Interest Period will not adequately and fairly reflect the cost to
         such Lenders (or Lender) of making or maintaining their Loans (or its
         Loan) included in such Borrowing for such Interest Period;

then the Administrative Agent shall give notice thereof to the Borrowers and the
Lenders by telephone or telecopy as promptly as practicable thereafter and,
until the Administrative Agent notifies the relevant Borrower and the Lenders
that the circumstances giving rise to such notice no longer exist, (i) any
Interest Election Request that requests the conversion of any Revolving
Borrowing to, or continuation of any Revolving Borrowing as, a Eurodollar
Borrowing shall be ineffective, (ii) if any Borrowing Request requests a
Eurodollar Revolving Borrowing, such Borrowing shall be made as an ABR Borrowing
and (iii) any request by the relevant Borrower for a Eurodollar Competitive
Borrowing shall be ineffective; provided that (A) if the circumstances giving
rise to such notice do not affect all the Lenders, then requests by such
Borrower for Eurodollar Competitive Borrowings may be made to Lenders that are
not affected thereby and (B) if the circumstances giving rise to such notice
affect only one Type of Borrowing, then the other Type of Borrowing shall be
permitted.

         Section 2.13      Increased Costs.

                                      -25-

<PAGE>

                  (a)      If any Change in Law shall:

                           (i)      impose, modify or deem applicable any
                  reserve, special deposit or similar requirement against assets
                  of, deposits with or for the account of, or credit extended
                  by, any Lender (except any such reserve requirement reflected
                  in the Eurodollar Rate); or

                           (ii)     impose on any Lender or the London interbank
                  market any other condition affecting this Agreement or
                  Eurodollar Loans or Fixed Rate Loans made by such Lender;

         and the result of any of the foregoing shall be to increase the cost to
         such Lender of making or maintaining any Eurodollar Loan or Fixed Rate
         Loan (or of maintaining its obligation to make any such Loan) or to
         reduce the amount of any sum received or receivable by such Lender
         hereunder (whether of principal, interest or otherwise), then the
         relevant Borrower will pay to such Lender such additional amount or
         amounts as will compensate such Lender for such additional costs
         incurred or reduction suffered.

                  (b)      If any Lender determines that any Change in Law
         regarding capital requirements has or would have the effect of reducing
         the rate of return on such Lender's capital or on the capital of such
         Lender's holding company as a consequence of this Agreement or the
         Loans made to a level below that which such Lender or such Lender's
         holding company could have achieved but for such Change in Law (taking
         into consideration such Lender's policies and the policies of such
         Lender's holding company with respect to capital adequacy), then from
         time to time each Borrower will pay to such Lender such additional
         amount or amounts as will compensate such Lender or such Lender's
         holding company, as the case may be, for any such reduction suffered.

                  (c)      A certificate of a Lender setting forth the amount or
         amounts necessary to compensate such Lender or its holding company, as
         the case may be, as specified in paragraph (a) or (b) of this Section
         shall be delivered to the relevant Borrower(s) and shall be conclusive
         absent manifest error. Such Borrower(s) shall pay such Lender the
         amount shown as due on any such certificate within ten (10) days after
         receipt thereof.

                  (d)      Failure or delay on the part of any Lender to demand
         compensation pursuant to this Section shall not constitute a waiver of
         such Lender's right to demand such compensation; provided that no
         Borrower shall be required to compensate a Lender pursuant to this
         Section for any increased costs or reductions incurred more than 90
         days prior to the date that such Lender notifies the relevant
         Borrower(s) of the Change in Law giving rise to such increased costs or
         reductions and of such Lender's intention to claim compensation
         therefor; provided, further, that, if the Change in Law giving rise to
         such increased costs or reductions is retroactive, then the 90-day
         period referred to above shall be extended to include the period of
         retroactive effect thereof.

                  (e)      Notwithstanding the foregoing provisions of this
         Section, a Lender shall not be entitled to compensation pursuant to
         this Section in respect of any Competitive Loan if the Change in Law
         that would otherwise entitle it to such compensation shall

                                      -26-

<PAGE>

         have been publicly announced prior to submission of the Competitive Bid
         pursuant to which such Loan was made.

         Section 2.14      Break Funding Payments. In the event of (a) the
payment of any principal of any Eurodollar Loan or Fixed Rate Loan other than on
the last day of an Interest Period applicable thereto (including, without
limitation, as a result of a mandatory prepayment under Section 2.9(c) or an
Event of Default), (b) the conversion of any Eurodollar Loan other than on the
last day of the Interest Period applicable thereto, (c) the failure to borrow,
convert, continue or prepay any Revolving Loan on the date specified in any
notice delivered pursuant hereto (regardless of whether such notice may be
revoked under Section 2.9(b) and is revoked in accordance therewith), (d) the
failure to borrow any Competitive Loan after accepting the Competitive Bid to
make such Loan, or (e) the assignment of any Eurodollar Loan or Fixed Rate Loan
other than on the last day of the Interest Period applicable thereto as a result
of a request by any Borrower pursuant to Section 2.17, then, in any such event,
the relevant Borrower shall compensate each Lender for the loss, cost and
expense attributable to such event. In the case of a Eurodollar Loan, such loss,
cost or expense to any Lender shall be deemed to include an amount determined by
such Lender to be the excess, if any, of (i) the amount of interest which would
have accrued on the principal amount of such Loan had such event not occurred,
at the Eurodollar Rate that would have been applicable to such Loan, for the
period from the date of such event to the last day of the then current Interest
Period therefor (or, in the case of a failure to borrow, convert or continue,
for the period that would have been the Interest Period for such Loan), over
(ii) the amount of interest which would accrue on such principal amount for such
period at the interest rate which such Lender would bid were it to bid, at the
commencement of such period, for dollar deposits of a comparable amount and
period from other banks in the eurodollar market. A certificate of any Lender
setting forth any amount or amounts that such Lender is entitled to receive
pursuant to this Section shall be delivered to the relevant Borrower and shall
be conclusive absent manifest error. Such Borrower shall pay such Lender the
amount shown as due on any such certificate within ten (10) days after receipt
thereof.

         Section 2.15      Taxes.

                  (a)      Any and all payments by or on account of any
         obligation of each Borrower hereunder shall be made free and clear of
         and without deduction for any Indemnified Taxes or Other Taxes;
         provided that if any Borrower shall be required to deduct any
         Indemnified Taxes or Other Taxes from such payments, then (i) the sum
         payable shall be increased as necessary so that after making all
         required deductions (including deductions applicable to additional sums
         payable under this Section) the Administrative Agent or Lender (as the
         case may be) receives an amount equal to the sum it would have received
         had no such deductions been made, (ii) such Borrower shall make such
         deductions and (iii) such Borrower shall pay the full amount deducted
         to the relevant Governmental Authority in accordance with applicable
         law.

                  (b)      In addition, each Borrower shall pay any Other Taxes
         not paid pursuant to Section 2.15(a)(iii) to the relevant Governmental
         Authority in accordance with applicable law.

                                      -27-

<PAGE>

                  (c)      Each Borrower shall indemnify the Administrative
         Agent and each Lender within thirty (30) days after written demand
         therefor, for the full amount of any Indemnified Taxes or Other Taxes
         paid by the Administrative Agent or such Lender, as the case may be, on
         or with respect to any payment by or on account of any obligation of
         such Borrower hereunder (including Indemnified Taxes or Other Taxes
         imposed or asserted on or attributable to amounts payable under this
         Section) and any penalties, interest, additions to tax and reasonable
         expenses arising therefrom or with respect thereto, whether or not such
         Indemnified Taxes or Other Taxes were correctly or legally imposed or
         asserted by the relevant Governmental Authority; provided, that such
         Borrower shall not be obligated to make a payment pursuant to this
         Section 2.15 in respect of penalties, interest and additions to tax
         attributable to any Indemnified Taxes or Other Taxes, if (i) such
         penalties, interest and additions to tax are attributable to the
         failure of the Administrative Agent or such Lender, as the case may be,
         to pay amounts paid to the Administrative Agent or such Lender by such
         Borrower (for Indemnified Taxes or Other Taxes) to the relevant
         Governmental Authority within thirty (30) days after receipt of such
         payment from such Borrower or (ii) such penalties, interest and
         additions to tax are attributable to the gross negligence or willful
         misconduct of the Administrative Agent or such Lender, as the case may
         be. Within 180 days after the Administrative Agent or such Lender
         learns of the imposition of Indemnified Taxes or Other Taxes, such
         Person shall give notice to the relevant Borrower of the payment by the
         Administrative Agent or such Lender, as the case may be, of such
         Indemnified Taxes or Other Taxes, and of the assertion by any
         Governmental Authority that such Indemnified Taxes or Other Taxes are
         due and payable, but the failure to give such notice shall not affect
         such Borrower's obligations hereunder to reimburse the Administrative
         Agent and such Lender for such Indemnified Taxes or Other Taxes, except
         that such Borrower shall not be liable for penalties, interest and
         other liabilities accrued or incurred after such 180 day period until
         such time as it receives the notice contemplated above, after which
         time it shall be liable for penalties, interest and other liabilities
         accrued or incurred prior to or during such 180 day period and accrued
         or incurred after such receipt. Such Borrower shall not be liable for
         any penalties, interest and other liabilities with respect to such
         Indemnified Taxes or Other Taxes to the extent it has reimbursed the
         amount thereof to the Administrative Agent or such Lender, as the case
         may be. A certificate as to the amount of such payment or liability
         delivered to the relevant Borrower by a Lender, or by the
         Administrative Agent on its own behalf or on behalf of a Lender, shall
         be conclusive absent manifest error.

                  (d)      As soon as practicable after any payment of
         Indemnified Taxes or Other Taxes by the relevant Borrower to a
         Governmental Authority, such Borrower shall deliver to the
         Administrative Agent the original or a certified copy of a receipt
         issued by such Governmental Authority evidencing such payment, a copy
         of the return reporting such payment or other evidence of such payment
         reasonably satisfactory to the Administrative Agent.

                  (e)      Each Foreign Lender, before it signs and delivers
         this Agreement if listed on the signature pages hereof, and before it
         becomes a Lender in the case of each other Foreign Lender, shall
         provide such Borrower and the Administrative Agent either (i) two
         accurate, complete and signed copies of either (x) U.S. Internal
         Revenue Service Form

                                      -28-

<PAGE>

         W-8ECI or any successor form, or (y) U.S. Internal Revenue Service Form
         W-8BEN or U.S. Internal Revenue Service Form W-8IMY, or any successor
         form, in each case, indicating that such Lender is on the date of
         delivery thereof entitled to receive payments of interest hereunder
         free from, or subject to a reduced rate of withholding of United States
         Federal income tax or (ii) in the case of such a Lender that is
         entitled to claim exemption from withholding of United States Federal
         income tax under Section 871(h) or Section 881(c) of the Code with
         respect to payments of "portfolio interest", (x) a certificate to the
         effect that such Lender is (A) not a "bank" within the meaning of
         Section 881(c)(3)(A) of the Code, (B) not a "10 percent shareholder" of
         any Borrower within the meaning of Section 881(c)(3)(B) of the Code and
         (C) not a controlled foreign corporation related to any Borrower within
         the meaning of Section 881(c)(3)(C) of the Code and (y) two accurate,
         complete and signed copies of U.S. Internal Revenue Service Form W-8BEN
         or U.S. Internal Revenue Service Form W-81MY, or any successor Form. To
         the extent permitted by applicable law, from time to time thereafter,
         at the request of any Borrower, each Foreign Lender shall deliver
         renewals or additional copies of such forms (or successor forms) on or
         before the date that such form expires or becomes obsolete. Upon the
         written request of a Borrower to the Administrative Agent and any
         Lender which is not a Foreign Lender, such Lender shall provide such
         Borrower and the Administrative Agent with two accurate, complete and
         signed copies of the U.S. Internal Revenue Service Form W-9.

                  (f)      If the U.S. Internal Revenue Service or any other
         Governmental Authority asserts a claim that the Administrative Agent
         did not properly withhold tax from amounts paid to or for the account
         of any Lender (because the appropriate form was not delivered or
         properly completed, because such Lender failed to notify the
         Administrative Agent of a change in circumstances which rendered its
         exemption from withholding ineffective, or for any other reason), such
         Lender shall indemnify the Administrative Agent fully for all amounts
         paid, directly or indirectly, by the Administrative Agent as tax,
         withholding therefor, or otherwise, including penalties and interest,
         and including taxes imposed by any jurisdiction on amounts payable to
         the Administrative Agent under this paragraph (f), together with all
         costs and expenses related thereto (including attorneys fees and time
         charges of attorneys for the Administrative Agent, which attorneys may
         be employees of the Administrative Agent). The obligations of the
         Lenders under this paragraph (f) shall survive the payment of the Loans
         and termination of this Agreement.

                  (g)      If the Administrative Agent or any Lender determines,
         in its good faith judgment, that it has actually received or realized
         any refund of tax or any reduction of its tax liabilities or otherwise
         recovered any amount in connection with any deduction or withholding or
         payment of any additional amount by any Borrower pursuant to Section
         2.13(a) or this Section 2.15, such Person shall reimburse such Borrower
         in an amount equal to the net benefit, after tax, and net of all
         expenses incurred by such Person in connection with such refund,
         reduction or recovery; provided, that nothing in this paragraph (g)
         shall require any Person to make available its tax returns (or any
         other information relating to its taxes which it deems to be
         confidential). Each Borrower shall return such amount to the applicable
         Person in the event that such Person is required to repay such refund
         of tax or is not entitled to such reduction of, or credit against, its
         tax liabilities. If the Administrative Agent or any Lender shall become
         aware that it is

                                      -29-

<PAGE>

         entitled to receive a refund or direct credit in respect of Indemnified
         Taxes or Other Taxes as to which it has been indemnified by any
         Borrower or with respect to which any Borrower has paid additional
         amounts, it shall promptly notify such Borrower of the availability of
         such refund or direct credit and shall, within 30 days after receipt of
         a request for such by such Borrower (whether as a result of
         notification that it has made of such to such Borrower or otherwise),
         make a claim to such Governmental Authority for such refund or direct
         credit and contest such Indemnified Taxes, Other Taxes or liabilities
         if (i) such Borrower has agreed in writing to pay all of such Lender's
         or Administrative Agent's reasonable costs and expenses relating to
         such claim or contest, (ii) such Lender or the Administrative Agent
         determines, in its good faith judgment, that it would not be materially
         disadvantaged or prejudiced as a result of such claim or contest (it
         being understood that the mere existence of fees, charges, costs or
         expenses that such Borrower has offered to and agreed to pay on behalf
         of such Lender or the Administrative Agent shall not be deemed to be
         materially disadvantageous to such person) and (iii) such Borrower
         furnishes, upon request of such Lender or the Administrative Agent, an
         opinion of reputable tax counsel (such opinion and such counsel to be
         acceptable to such Lender or the Administrative Agent) to the effect
         that such Indemnified Taxes or Other Taxes were wrongly or illegally
         imposed.

         Section 2.16      Payments Generally; Pro Rata Treatment; Sharing of
Set-offs.

                  (a)      Each Borrower shall make each payment required to be
         made by it hereunder (whether of principal, interest or fees, or of
         amounts payable under Section 2.13, 2.14 or 2.15, or otherwise) prior
         to 11:00 a.m., Chicago time, on the date when due, in immediately
         available funds, without set-off or counterclaim. Any amounts received
         after such time on any date may, in the discretion of the
         Administrative Agent, be deemed to have been received on the next
         succeeding Business Day for purposes of calculating interest thereon.
         All such payments shall be made to the Administrative Agent at its
         offices at 1 Bank One Plaza, Chicago, Illinois, 60670, except that
         payments pursuant to Sections 2.13, 2.14, 2.15 and 10.3 shall be made
         directly to the Persons entitled thereto. The Administrative Agent
         shall distribute any such payments received by it for the account of
         any other Person to the appropriate recipient promptly following
         receipt thereof. 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. All payments hereunder shall be made in dollars.

                  (b)      If at any time insufficient funds are received by and
         available to the Administrative Agent to pay fully all amounts of
         principal, interest and fees then due hereunder, such funds shall be
         applied (i) first, towards payment of interest and fees then due
         hereunder, ratably among the parties entitled thereto in accordance
         with the amounts of interest and fees then due to such parties, and
         (ii) second, towards payment of principal then due hereunder, ratably
         among the parties entitled thereto in accordance with the amounts of
         principal then due to such parties.

                  (c)      If any Lender shall, by exercising any right of
         set-off or counterclaim or otherwise, obtain payment in respect of any
         principal of or interest on any of its

                                      -30-

<PAGE>

         Revolving Loans resulting in such Lender receiving payment of a greater
         proportion of the aggregate amount of its Revolving Loans and accrued
         interest thereon 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 Revolving Loans of other Lenders
         to the extent necessary so that the benefit of all such payments shall
         be shared by the Lenders ratably in accordance with the aggregate
         amount of principal of and accrued interest on their respective
         Revolving Loans; provided that (i) 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
         (ii) the provisions of this paragraph shall not be construed to apply
         to any payment made by any Borrower 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
         any of its Loans to any assignee or participant, other than to MetLife
         or any Subsidiary or Affiliate thereof (as to which the provisions of
         this paragraph shall apply). Each Borrower 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 such Borrower rights of
         set-off and counterclaim with respect to such participation as fully as
         if such Lender were a direct creditor of such Borrower in the amount of
         such participation.

                  (d)      Unless the Administrative Agent shall have received
         notice from the relevant Borrower prior to the date on which any
         payment is due to the Administrative Agent for the account of the
         Lenders hereunder that such Borrower will not make such payment, the
         Administrative Agent may assume that such Borrower has made such
         payment on such date in accordance herewith and may, in reliance upon
         such assumption, distribute to the Lenders, the amount due. In such
         event, if such Borrower has not in fact made such payment, then each of
         the Lenders, severally agrees to repay to the Administrative Agent
         forthwith on demand the amount so distributed to such Lender 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
         Administrative Agent, at the greater of the Federal Funds Effective
         Rate and a rate determined by the Administrative Agent in accordance
         with banking industry rules on interbank compensation.

                  (e)      If any Lender shall fail to make any payment required
         to be made by it pursuant to Section 2.5(b) or 2.16(d), then the
         Administrative Agent may, in its discretion (notwithstanding any
         contrary provision hereof), apply any amounts thereafter received by
         the Administrative Agent for the account of such Lender to satisfy such
         Lender's obligations under such Sections until all such unsatisfied
         obligations are fully paid.

         Section 2.17      Mitigation Obligations; Replacement of Lenders.

                  (a)      If any Lender requests compensation under Section
         2.13, or if any Borrower is required to pay any additional amount to
         any Lender or any Governmental Authority for the account of any Lender
         pursuant to Section 2.15, then such Lender shall, upon the request of
         such Borrower, use reasonable efforts to designate a different lending
         office for funding or booking its Loans hereunder or to assign its
         rights and obligations

                                      -31-

<PAGE>

         hereunder to another of its offices, branches or affiliates, if, in the
         judgment of such Lender, such designation or assignment (i) would
         eliminate or reduce amounts payable pursuant to Section 2.13 or 2.15,
         as the case may be, in the future and (ii) would not subject such
         Lender to any unreimbursed cost or expense and would not otherwise be
         disadvantageous to such Lender. Each Borrower hereby agrees to pay all
         reasonable costs and expenses incurred by any Lender in connection with
         any such designation or assignment.

                  (b)      If any Lender (or, subject to Section 9.2.3, any
         Participant in Loans made by such Lender) requests compensation under
         Section 2.13, or if any Borrower is required to pay any additional
         amount to any Lender (or, subject to Section 9.2.3, any Participant in
         Loans made by such Lender) or any Governmental Authority for account of
         any Lender (or any Participant in Loans made by such Lender) pursuant
         to Section 2.15, or if any Lender defaults in its obligation to fund
         Loans hereunder, then the Company may, at its sole expense and effort,
         upon notice to such Lender and the Administrative Agent, require such
         Lender to assign and delegate, without recourse (in accordance with and
         subject to the restrictions contained in Section 9.3), all its
         interests, rights and obligations under this Agreement (other than any
         outstanding Competitive Loans held by it) to an assignee that shall
         assume such obligations (which assignee may be another Lender, if a
         Lender accepts such assignment); provided that (i) the Company shall
         have received the prior written consent of the Administrative Agent,
         which consent shall not unreasonably be withheld and (ii) such Lender
         shall have received payment of an amount equal to the outstanding
         principal of its Loans (other than Competitive Loans), accrued interest
         thereon, accrued fees and all other amounts payable to it hereunder,
         from the assignee (to the extent of such outstanding principal and
         accrued interest and fees) or the relevant Borrower (in the case of all
         other amounts). 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 Company to
         require such assignment and delegation cease to apply.

                                   ARTICLE III

                         REPRESENTATIONS AND WARRANTIES

         Each Borrower represents and warrants to the Lenders, as to itself and
its Subsidiaries, as applicable, that:

         Section 3.1       Organization; Powers. MetLife and each of its
Material Subsidiaries is duly organized, validly existing and in good standing
under the laws of the jurisdiction of its organization, 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 Change, is qualified to do business in,
and is in good standing in, every jurisdiction where such qualification is
required.

         Section 3.2       Authorization; Enforceability. The Transactions are
within each Borrower's corporate powers and have been duly authorized by all
necessary corporate action. This Agreement has been duly executed and delivered
by each Borrower and constitutes a legal,

                                      -32-

<PAGE>

valid and binding obligation of each Borrower, enforceable in accordance with
its terms, subject to applicable bankruptcy, insolvency, reorganization,
moratorium or other laws affecting creditors' rights generally and subject to
general principles of equity, regardless of whether considered in a proceeding
in equity or at law. The Support Agreement has been duly executed and delivered
by and constitutes a legal, valid and binding obligation of the Company and
Funding, enforceable in accordance with its terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium or other laws affecting
creditors' rights generally and subject to general principles of equity,
regardless of whether considered in a proceeding in equity or at law.

         Section 3.3       Governmental Approvals; No Conflicts. The
Transactions (a) do not require any consent or approval of, 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
organizational documents of any Borrower or any order of any Governmental
Authority, and (c) will not violate or result in a default under any indenture,
agreement or other instrument binding upon any Borrower or its assets, or give
rise to a right thereunder to require any payment to be made by any Borrower.

         Section 3.4       Financial Condition; No Material Adverse Change.

                  (a)      MetLife has heretofore furnished to the Lenders its
         audited consolidated balance sheet and statements of earnings, equity
         and cash flows as of and for the fiscal year ended December 31, 2002,
         reported on by Deloitte & Touche, LLP, independent public accountants.
         Such financial statements present fairly, in all material respects, the
         financial position and results of operations and cash flows of MetLife
         and its Consolidated Subsidiaries, as of the date thereof and for such
         fiscal year, in accordance with GAAP.

                  (b)      The Company has heretofore furnished to each of the
         Lenders the annual Statutory Statement of the Company as at and for the
         year ended December 31, 2002, as filed with the Applicable Insurance
         Regulatory Authority. Such Statutory Statement presents fairly, in all
         material respects, the financial position and results of operations of
         the Company, as of the date thereof and for such year, in accordance
         with SAP.

                  (c)      Since December 31, 2002, there has been no material
         adverse change in the business, assets, property, condition (financial
         or otherwise) or prospects of MetLife and its Subsidiaries taken as a
         whole from that set forth in the respective financial statements
         referred to in Sections 3.4(a) and 3.4(b).

         Section 3.5       Properties.

                  (a)      MetLife and each of its Material Subsidiaries has
         good title to, or valid leasehold interests in, all its real and
         personal property material to its business, except for defects in title
         that, individually or in the aggregate, could not reasonably be
         expected to result in a Material Adverse Change.

                                      -33-

<PAGE>

                  (b)      MetLife and each of its Material 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 MetLife and its Material 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 Change.

         Section 3.6       Litigation and Environmental Matters.

                  (a)      There are no actions, suits or proceedings by or
         before any arbitrator or Governmental Authority pending against or, to
         the knowledge of any Borrower, threatened against or affecting MetLife
         or any of its Material Subsidiaries (i) as to which there is a
         reasonable possibility of an adverse determination and that, if
         adversely determined, is reasonably likely, individually or in the
         aggregate, to result in a Material Adverse Change (other than the
         Disclosed Matters) or (ii) that involve this Agreement or the
         Transactions.

                  (b)      Except for the Disclosed Matters 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
         Change, neither MetLife nor any of its Material Subsidiaries (i) has
         failed to comply with any Environmental Law or to obtain, maintain or
         comply with any permit, license or other approval required under any
         Environmental Law, (ii) has become subject to 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.

         Section 3.7       Compliance with Laws and Agreements. MetLife and each
of its Material 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 Change. No Default has
occurred and is continuing.

         Section 3.8       Investment and Holding Company Status. Neither
MetLife nor any of its Material Subsidiaries (other than Funding) is an
"investment company" as defined in, or subject to regulation under, the
Investment Company Act of 1940, and Funding is an "investment company" as
defined in such Act that is exempt from the requirements of such Act. Neither
MetLife nor any of its Material Subsidiaries is a "holding company" as defined
in, or subject to regulation under, the Public Utility Holding Company Act of
1935.

         Section 3.9       Taxes. MetLife 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 MetLife or such Subsidiary, as applicable,
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 Change.

                                      -34-

<PAGE>

         Section 3.10      ERISA. Each Plan and, to the knowledge of MetLife,
each Multiemployer Plan, is in compliance in all material respects with, and has
been administered in all material respects in compliance with, the applicable
provisions of ERISA, the Code and any other Federal or State law, and 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 Change.

         Section 3.11      Disclosure. None of the reports, financial
statements, certificates or other information furnished by or on behalf of any
Borrower to the Administrative Agent or any Lender in connection with the
negotiation of this Agreement or delivered hereunder (as modified or
supplemented by other information so furnished) contains any material
misstatement of fact or omits 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, each Borrower represents only that such information was prepared in
good faith based upon assumptions believed to be reasonable at the time.

         Section 3.12      Margin Stock. No part of the proceeds of any Loan
hereunder 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. Not more than 25% of the value (as determined by any
reasonable method) of the assets of any of the Borrowers is represented by
Margin Stock.

                                   ARTICLE IV

                                   CONDITIONS

         Section 4.1       Effective Date. The obligations of the Lenders to
make Loans hereunder shall not become effective until the date (the "Effective
Date") on which each of the following conditions is satisfied (or waived in
accordance with Section 10.2):

                  (a)      Charters and Good Standing Certificates. The
         Administrative Agent shall have received copies of the charter or
         certificate of incorporation of each Borrower, together with all
         amendments, and a certificate of good standing, each certified by the
         appropriate governmental officer in its jurisdiction of incorporation
         and, in the case of the Company, a certificate of authority (or its
         equivalent) issued by the Applicable Insurance Regulatory Authority.

                  (b)      By-Laws and Resolutions. The Administrative Agent
         shall have received copies, certified by the Secretary or Assistant
         Secretary of each Borrower, of its by-laws and of its Board of
         Directors' resolutions and of resolutions or actions of any other body
         authorizing the execution of the Loan Documents to which such Borrower
         is a party.

                  (c)      Incumbency Certificate. The Administrative Agent
         shall have received an incumbency certificate, executed by the
         Secretary or Assistant Secretary of each Borrower, which shall identify
         by name and title and bear the signatures of any officers of such
         Borrower authorized to sign the Loan Documents to which such Borrower
         is a

                                      -35-

<PAGE>

         party, upon which certificate the Administrative Agent and the Lenders
         shall be entitled to rely until informed of any change in writing by
         such Borrower.

                  (d)      Closing Certificate. The Administrative Agent shall
         have received a certificate, signed by the Financial Officer of each
         Borrower, stating that on the Effective Date no Default has occurred
         and is continuing.

                  (e)      Opinion. The Administrative Agent shall have received
         a written opinion of the Borrowers' counsel, addressed to the Lenders
         in substantially the form of Exhibit B.

                  (f)      Notes. Each Lender which has requested that the Loans
         made by it be evidenced by Notes shall have received such Notes
         executed by the Borrowers.

                  (g)      Termination of Existing Credit Agreement. The
         Administrative Agent shall have received evidence satisfactory to the
         Administrative Agent that all principal, interest and other amounts due
         under that certain Five-Year Credit Agreement, dated as of April 27,
         1998, among the Company, Funding, the financial institutions party
         thereto, JPMorgan Chase Bank, as Administrative Agent, and the other
         agents party thereto and all other loan documents identified therein
         shall have been paid in full and such agreement and all related
         documents shall have been terminated.

                  (h)      Upfront Fee. The Arranger shall have received from
         the Borrowers for distribution to the Lenders the upfront fee described
         in the Fee Letter.

                  (i)      Other. The Administrative Agent shall have received
         such other documents as any Lender or its counsel may have reasonably
         requested.

The Administrative Agent shall notify the Borrowers and the Lenders of the
Effective Date, and such notice shall be conclusive and binding. Notwithstanding
the foregoing, the obligations of the Lenders to make Loans hereunder shall not
become effective unless each of the foregoing conditions is satisfied (or waived
pursuant to Section 10.2) at or prior to 3:00 p.m., Chicago time, on April 25,
2003 (and, in the event such conditions are not so satisfied or waived, the
Commitments shall terminate at such time).

         Section 4.2       Each Credit Event. The obligation of each Lender to
make a Loan on the occasion of any Borrowing is subject to the satisfaction of
the following conditions:

                  (a)      The representations and warranties of each of the
         Borrowers set forth in this Agreement (other than, after the Effective
         Date, in Section 3.4(c) and in Section 3.6) shall be true and correct
         on and as of the date of such Borrowing.

                  (b)      At the time of and immediately after giving effect to
         such Borrowing, no Default shall have occurred and be continuing.

                  (c)      At the time of and immediately after giving effect to
         such Borrowing, no default or event or condition which constitutes a
         default or which upon notice, lapse of

                                      -36-

<PAGE>

         time or both would, unless cured or waived, become a default shall have
         occurred and be continuing under the Support Agreement.

                  (d)      The Borrower is authorized to perform its obligations
         in respect of the proposed Borrowing.

Each Borrowing shall be deemed to constitute a representation and warranty by
each Borrower on the date thereof as to the matters specified in paragraphs (a)
and (b) of this Section.

                                    ARTICLE V

                              AFFIRMATIVE COVENANTS

         Until the Commitments have expired or been terminated and the principal
of and interest on each Loan and all fees payable hereunder shall have been paid
in full, each Borrower covenants and agrees with the Lenders that:

         Section 5.1       Financial Statements and Other Information. MetLife
will furnish to the Administrative Agent and each Lender:

                  (a)      (i) as soon as available, but not later than 120 days
         after the end of each fiscal year of MetLife, copies of MetLife's
         annual report on Form 10-K as filed with the SEC for such fiscal year;
         and (ii) as soon as available, but not later than 45 days after the end
         of each of the first three fiscal quarters of each fiscal year of
         MetLife, copies of MetLife's quarterly report on Form 10-Q as filed
         with the SEC for such fiscal quarter, in each case certified by an
         appropriate Financial Officer as being the complete and correct copies
         of the statements on such forms furnished by MetLife to the SEC;

                  (b)      concurrently with any delivery of financial
         statements under clause (a) above or (except as to clause (ii) of this
         paragraph (b)) clause (c) or (d) below, a certificate of a Financial
         Officer of MetLife (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
         Sections 6.4 and 6.5 and (iii) stating whether any change in GAAP or
         SAP, as the case may be, or in the application thereof has occurred
         since December 31, 2002 and, if any such change has occurred,
         specifying the effect of such change on the financial statements
         accompanying such certificate;

                  (c)      within five days after filing with the Applicable
         Insurance Regulatory Authority and in any event within 60 days after
         the end of each year, the annual Statutory Statement of the Company for
         such year, certified by one of its Financial Officers as presenting
         fairly in all material respects the financial position of the Company
         for such year in accordance with SAP;

                  (d)      within five days after filing with the Applicable
         Insurance Regulatory Authority and in any event within 60 days after
         the end of each of the first three quarterly periods of each year, the
         quarterly Statutory Statement of the Company for such period,

                                      -37-

<PAGE>

         certified by one of its Financial Officers as presenting fairly in all
         material respects the financial position of the Company for such period
         in accordance with SAP; and

                  (e)      promptly following any request therefor, such other
         information regarding the operations, business affairs and financial
         condition of MetLife or any of its Subsidiaries, or compliance with the
         terms of this Agreement, as the Administrative Agent or any Lender may
         reasonably request.

         The delivery requirements of this Section 5.1 and of Section 3.4 may be
complied with by the Borrowers posting the required information on an Intralinks
site (or a successor site) available to the Lenders and payment of the
applicable Intralinks fees.

         Section 5.2       Notices of Defaults. The Borrowers will furnish to
the Administrative Agent and each Lender prompt written notice of the occurrence
of any Default. Each such notice shall be accompanied by a statement of a
Financial Officer or other executive officer of MetLife setting forth the
details of the event or development requiring such notice and any action taken
or proposed to be taken with respect thereto.

         Section 5.3       Existence; Conduct of Business. MetLife will, and
will cause each of its Material Subsidiaries to, do or cause to be done all
things necessary to preserve, renew and keep in full force and effect its legal
existence and the rights, licenses, permits, privileges and franchises material
to the conduct of its business; provided that the foregoing shall not prohibit
any merger, consolidation, liquidation, dissolution or other transaction
permitted under Section 6.2.

         Section 5.4       Payment of Obligations. MetLife will, and will cause
each of its Material Subsidiaries to, pay its obligations, including Tax
liabilities, that, if not paid, could result in a Material Adverse Change before
the same shall become delinquent or in default, except where (a) the validity or
amount thereof is being contested in good faith by appropriate proceedings, (b)
MetLife or such Material Subsidiary has set aside on its books adequate reserves
with respect thereto in accordance with GAAP and (c) the failure to make payment
pending such contest could not reasonably be expected to result in a Material
Adverse Change.

         Section 5.5       Maintenance of Properties; Insurance. MetLife will,
and will cause each of its Material Subsidiaries to, (a) keep and maintain all
property material to the conduct of its business in good working order and
condition, ordinary wear and tear excepted, and (b) maintain, with financially
sound and reputable insurance companies, insurance in such amounts and against
such risks as are customarily maintained by companies engaged in the same or
similar businesses operating in the same or similar locations.

         Section 5.6       Books and Records; Inspection Rights. MetLife will,
and will cause each of its Material Subsidiaries to, keep proper books of record
and account in which full, true and correct entries are made of all dealings and
transactions in relation to its business and activities. MetLife will, and will
cause each of its Material Subsidiaries to, permit any representative designated
by the Administrative Agent (and, if a Default shall have occurred and be
continuing, any representatives designated by any Lender), upon reasonable prior
notice, to visit and inspect its properties, to examine and make extracts from
its books and records, and to discuss its affairs,

                                      -38-

<PAGE>

finances and condition with its officers and independent accountants, all at
such reasonable times and as often as reasonably requested.

         Section 5.7       Compliance with Laws. MetLife will, and will cause
each of its Material Subsidiaries to, comply with all laws, rules, regulations
and orders of any Governmental Authority applicable to 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 Change.

         Section 5.8       Use of Proceeds. The proceeds of the Loans will be
used only for general corporate purposes (including the back-up of commercial
paper) of MetLife and its Subsidiaries in the ordinary course of business;
provided that no part of the proceeds of any Loan 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; provided further that
no part of the proceeds of any Loan will be used, whether directly or
indirectly, to acquire the capital stock or business of any other Person without
the consent of such Person; and provided further that neither the Administrative
Agent nor any Lender shall have any responsibility as to the use of any such
proceeds.

         Section 5.9       Support Agreement. The Company and Funding will
maintain the Support Agreement in full force and effect, and comply with the
provisions thereof, and will not modify, supplement or waive any of its
provisions without the prior consent of the Administrative Agent (with the
approval of the Required Lenders); provided that any modification, supplement or
waiver that reduces or impairs the support provided to Funding shall require the
approval of all Lenders.

                                   ARTICLE VI

                               NEGATIVE COVENANTS

         Until the Commitments have expired or terminated and the principal of
and interest on each Loan and all fees payable hereunder have been paid in full,
each Borrower covenants and agrees with the Lenders that:

         Section 6.1       Liens. None of the Borrowers will create, incur,
assume or permit to exist any Lien on any property or asset now owned or
hereafter acquired by it, or assign or sell any income or revenues (including
accounts receivable) or rights in respect of any thereof, except:

                  (a)      Permitted Encumbrances;

                  (b)      any Lien existing on any property or asset prior to
         the acquisition thereof by such Borrower; provided that (i) such Lien
         is not created in contemplation of or in connection with such
         acquisition, (ii) such Lien shall not apply to any other property or
         assets of such Borrower, and (iii) such Lien shall secure only those
         obligations which it secures on the date of such acquisition;

                  (c)      Liens on assets acquired, constructed or improved by
         such Borrower; provided that (i) such Liens and the Indebtedness
         secured thereby are incurred prior to or within 360 days after such
         acquisition or the completion of such construction or

                                      -39-

<PAGE>

         improvement, (ii) the Indebtedness secured thereby does not exceed the
         cost of acquiring, constructing or improving such assets, and (iii)
         such security interests shall not apply to any other property or assets
         of such Borrower;

                  (d)      Liens on any property or assets of any Person
         existing at the time such Person is merged or consolidated with or into
         such Borrower and not created in contemplation of such event;

                  (e)      Liens on any real property securing Indebtedness in
         respect of which (i) the recourse of the holder of such Indebtedness
         (whether direct or indirect and whether contingent or otherwise) under
         the instrument creating the Lien or providing for the Indebtedness
         secured by the Lien is limited to such real property directly securing
         such Indebtedness and (ii) such holder may not under the instrument
         creating the Lien or providing for the Indebtedness secured by the Lien
         collect by levy of execution or otherwise against assets or property of
         such Borrower (other than such real property directly securing such
         Indebtedness) if such Borrower fails to pay such Indebtedness when due
         and such holder obtains a judgment with respect thereto, except for
         recourse obligations that are customary in "non-recourse" real estate
         transactions;

                  (f)      Liens arising out of Securities Transactions entered
         into in the ordinary course of business and on ordinary business terms;

                  (g)      Structured Transaction Liens;

                  (h)      Liens arising out of Asset Securitizations;

                  (i)      Liens on Separate Accounts Assets;

                  (j)      Liens arising out of the ordinary course of the
         Borrowers' business that do not secure any Indebtedness; provided that
         the obligations of the Borrowers secured by such Liens shall not exceed
         $2,000,000,000 at any one time outstanding;

                  (k)      Liens on debt obligations of such Borrower which are
         pledged to the Federal Home Loan Bank Board (the "FHLBB") to secure
         loans made by the FHLBB to such Borrower in the ordinary course of
         business and on ordinary business terms;

                  (l)      Liens not otherwise permitted by the foregoing
         clauses of this Section 6.1; provided that the aggregate principal
         amount of the Indebtedness secured by such Liens shall not exceed
         $3,000,000,000 at any one time outstanding; and

                  (m)      any extension, renewal or replacement of the
         foregoing; provided that the Liens permitted hereunder shall not be
         spread to cover any additional Indebtedness or assets (other than a
         substitution of like assets) unless such additional Indebtedness or
         assets would have been permitted in connection with the original
         creation, incurrence or assumption of such Lien.

         Section 6.2       Fundamental Changes.

                                      -40-

<PAGE>

                  (a)      No Borrower will merge into or consolidate with any
         other Person, or permit any other Person to merge into or consolidate
         with it, or sell, transfer, lease or otherwise dispose of (in one
         transaction or in a series of transactions) all or any substantial part
         of its assets (excluding assets sold or disposed of in the ordinary
         course of business), or (in the case of the Company) all or any
         substantial part of the stock of Funding (except to MetLife) or (in the
         case of MetLife) all or any substantial part of the stock of the
         Company (in each case, whether now owned or hereafter acquired), or
         liquidate or dissolve; provided that, if at the time thereof and
         immediately after giving effect thereto no Default shall have occurred
         and be continuing (i) any Subsidiary of a Borrower may merge into such
         Borrower in a transaction in which such Borrower is the surviving
         corporation, (ii) Funding may sell, transfer, lease or otherwise
         dispose of its assets to MetLife or the Company, including via
         liquidation, so long as MetLife or the Company, as the case may be,
         expressly assumes the obligations of Funding hereunder and under the
         Notes issued hereunder, and (iii) a Borrower may merge or consolidate
         with any other Person if such Borrower is the surviving corporation.

                  (b)      MetLife will not, and will not permit any of its
         Material Subsidiaries to, engage to any material extent in any business
         other than (i) businesses of the type conducted by MetLife and its
         Material Subsidiaries on the date of execution of this Agreement and
         businesses reasonably related thereto or (ii) the business of providing
         financial services.

         Section 6.3       Transactions with Affiliates. MetLife will not, and
will not permit any of its Material Subsidiaries to, sell, lease or otherwise
transfer any property or assets to, or purchase, lease or otherwise acquire any
property or assets from, or otherwise engage in any other transactions with, any
of its Affiliates, except (a) in the ordinary course of business at prices and
on terms and conditions not less favorable to MetLife or such Material
Subsidiary than could be obtained on an arm's-length basis from unrelated third
parties, and (b) transactions between or among MetLife and its wholly-owned
Subsidiaries not involving any other Affiliate.

         Section 6.4       Adjusted Statutory Surplus. The Company will not
permit the Adjusted Statutory Surplus, calculated as of the last day of each
fiscal quarter of the Company, to be less than $6,750,000,000.

         Section 6.5       Consolidated Net Worth. MetLife will not permit its
Consolidated Net Worth, calculated as of the last day of each fiscal quarter, to
be less than $12,000,000,000.

                                   ARTICLE VII

                                EVENTS OF DEFAULT

         If any of the following events ("Events of Default") shall occur:

                  (a)      any Borrower shall fail to pay any principal of any
         Loan when and as the same shall become due and payable, whether at the
         due date thereof or at a date fixed for prepayment thereof or
         otherwise;

                                      -41-

<PAGE>

                  (b)      any Borrower shall fail to pay any interest on any
         Loan or any fee or any other amount (other than an amount referred to
         in clause (a) of this Article) payable under this Agreement, when and
         as the same shall become due and payable, and such failure shall
         continue unremedied for a period of five or more Business Days;

                  (c)      any representation or warranty made or deemed made by
         or on behalf of MetLife or any of its Material Subsidiaries in or in
         connection with this Agreement or any amendment or modification hereof
         or waiver hereunder, or in any report, certificate, financial statement
         or other document furnished pursuant to or in connection with this
         Agreement or any amendment or modification hereof or waiver hereunder,
         shall prove to have been incorrect in any material respect when made or
         deemed made;

                  (d)      any Borrower shall fail to observe or perform any
         covenant, condition or agreement contained in Section 5.2, 5.3 (with
         respect to such Borrower's existence), 5.8 or 5.9 or in Article VI;

                  (e)      any Borrower shall fail to observe or perform any
         covenant, condition or agreement contained in this Agreement (other
         than those specified in clause (a), (b) or (d) of this Article), and
         such failure shall continue unremedied for a period of 30 days after
         notice thereof from the Administrative Agent to the relevant Borrower
         (which notice will be given at the request of any Lender);

                  (f)      MetLife or any of its Material Subsidiaries shall
         fail to make any payment (whether of principal or interest and
         regardless of amount) in respect of any Material Indebtedness, when and
         as the same shall become due and payable;

                  (g)      any event or condition occurs that results in any
         Material Indebtedness becoming due prior to its scheduled maturity or
         that enables or permits (with or without the giving of notice, the
         lapse of time or both) the holder or holders of any Material
         Indebtedness or any trustee or agent on its or their behalf to cause
         any Material Indebtedness to become due, or to require the prepayment,
         repurchase, redemption or defeasance thereof, prior to its scheduled
         maturity; provided that this clause (g) 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;

                  (h)      an involuntary proceeding shall be commenced or an
         involuntary petition shall be filed seeking (i) liquidation,
         reorganization or other relief in respect of MetLife or any of its
         Material Subsidiaries or its debts, or of a substantial part of its
         assets, under any Federal, state or foreign bankruptcy, insolvency,
         receivership or similar law now or hereafter in effect or (ii) the
         appointment of a receiver, trustee, custodian, sequestrator,
         conservator or similar official for MetLife or any or its Material
         Subsidiaries or for a substantial part of its assets, and, in any such
         case, such proceeding or petition shall continue undismissed for 60
         days or an order or decree approving or ordering any of the foregoing
         shall be entered;

                  (i)      MetLife or any of its Material Subsidiaries shall (i)
         voluntarily commence any proceeding or file any petition seeking
         liquidation, reorganization or other relief

                                      -42-

<PAGE>

         under any Federal, state or foreign bankruptcy, insolvency,
         receivership or similar law now or hereafter in effect, (ii) consent to
         the institution of, or fail to contest in a timely and appropriate
         manner, any proceeding or petition described in clause (h) of this
         Article, (iii) apply for or consent to the appointment of a receiver,
         trustee, custodian, sequestrator, conservator or similar official for
         MetLife or any or its Material Subsidiaries or for a substantial part
         of its assets, (iv) file an answer admitting the material allegations
         of a petition filed against it in any such proceeding, (v) make a
         general assignment for the benefit of creditors or (vi) take any action
         for the purpose of effecting any of the foregoing;

                  (j)      MetLife or any of its Material Subsidiaries shall
         become unable, admit in writing or fail generally to pay its debts as
         they become due;

                  (k)      one or more judgments for the payment of money in an
         aggregate amount in excess of $200,000,000 (or its equivalent in any
         other currency) shall be rendered against MetLife, any Material
         Subsidiary of MetLife or any combination thereof and the same shall
         remain undischarged for a period of 30 consecutive days during which
         execution shall not be effectively stayed; or

                  (l)      an ERISA Event shall have occurred that, in the
         opinion of the Required Lenders, when taken together with all other
         ERISA Events that have occurred, could reasonably be expected to result
         in liability of MetLife and its Material Subsidiaries in an aggregate
         amount exceeding $200,000,000 in any year;

then, and in every such event (other than an event with respect to any Borrower
described in clause (h) or (i) of this Article), and at any time thereafter
during the continuance of such event, (A) the Administrative Agent shall, at the
request of the Required Lenders, by notice to the Borrowers, terminate the
Commitments, and thereupon the Commitments shall terminate immediately, and (B)
the Administrative Agent shall, at the request of the Lenders holding more than
50% of the aggregate outstanding principal amount of the Loans, by notice to the
Borrowers, declare the Loans then outstanding to be due and payable in whole (or
in part, in which case any principal not so declared to be due and payable may
thereafter be declared to be due and payable), and thereupon the principal of
the Loans so declared to be due and payable, together with accrued interest
thereon and all fees and other obligations of the Borrowers accrued hereunder,
shall become due and payable immediately, without presentment, demand, protest
or other notice of any kind, all of which are hereby waived by the Borrowers;
and in case of any event with respect to any Borrower described in clause (h) or
(i) of this Article, the Commitments shall automatically terminate and the
principal of the Loans then outstanding, together with accrued interest thereon
and all fees and other obligations of the Borrowers 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 Borrowers.

                                      -43-

<PAGE>

                                  ARTICLE VIII

                            THE ADMINISTRATIVE AGENT

         Section 8.1       Appointment; Nature of Relationship. Bank One, NA is
hereby appointed by each of the Lenders as its contractual representative
(herein referred to as the "Administrative Agent") hereunder and under each
other Loan Document, and each of the Lenders irrevocably authorizes the
Administrative Agent to act as the contractual representative of such Lender
with the rights and duties expressly set forth herein and in the other Loan
Documents. The Administrative Agent agrees to act as such contractual
representative upon the express conditions contained in this Article VIII.
Notwithstanding the use of the defined term "Administrative Agent," it is
expressly understood and agreed that the Administrative Agent shall not have any
fiduciary responsibilities to any Lender by reason of this Agreement or any
other Loan Document and that the Administrative Agent is merely acting as the
contractual representative of the Lenders with only those duties as are
expressly set forth in this Agreement and the other Loan Documents. In its
capacity as the Lenders' contractual representative, the Administrative Agent
(a) does not hereby assume any fiduciary duties to any of the Lenders, (b) is a
"representative" of the Lenders within the meaning of the term "secured party"
as defined in the New York Uniform Commercial Code and (c) is acting as an
independent contractor, the rights and duties of which are limited to those
expressly set forth in this Agreement and the other Loan Documents. Each of the
Lenders hereby agrees to assert no claim against the Administrative Agent on any
agency theory or any other theory of liability for breach of fiduciary duty, all
of which claims each Lender hereby waives.

         Section 8.2       Powers. The Administrative Agent shall have and may
exercise such powers under the Loan Documents as are specifically delegated to
the Administrative Agent by the terms of each thereof, together with such powers
as are reasonably incidental thereto. The Administrative Agent shall have no
implied duties to the Lenders, or any obligation to the Lenders to take any
action thereunder except any action specifically provided by the Loan Documents
to be taken by the Administrative Agent.

         Section 8.3       General Immunity. Neither the Administrative Agent
nor any of its directors, officers, agents or employees shall be liable to the
Borrowers, any Borrower, the Lenders or any Lender for any action taken or
omitted to be taken by it or them hereunder or under any other Loan Document or
in connection herewith or therewith except to the extent such action or inaction
is determined in a final non-appealable judgment by a court of competent
jurisdiction to have arisen from the gross negligence or willful misconduct of
such Person.

         Section 8.4       No Responsibility for Loans, Recitals, etc. Neither
the Administrative Agent nor any of its directors, officers, agents or employees
shall be responsible for or have any duty to ascertain, inquire into, or verify
(a) any statement, warranty or representation made in connection with any Loan
Document or any borrowing hereunder; (b) the performance or observance of any of
the covenants or agreements of any obligor under any Loan Document, including,
without limitation, any agreement by an obligor to furnish information directly
to each Lender; (c) the satisfaction of any condition specified in Article IV,
except receipt of items required to be delivered solely to the Administrative
Agent; (d) the existence or possible existence of any Default; (e) the validity,
enforceability, effectiveness, sufficiency or

                                      -44-

<PAGE>

genuineness of any Loan Document or any other instrument or writing furnished in
connection therewith; (f) the value, sufficiency, creation, perfection or
priority of any Lien in any collateral security; or (g) the financial condition
of any Borrower or any guarantor of any of the Loans or of any Borrower's or any
such guarantor's respective Subsidiaries. The Administrative Agent shall have no
duty to disclose to the Lenders information that is not required to be furnished
by any Borrower to the Administrative Agent at such time, but is voluntarily
furnished by any Borrower to the Administrative Agent (either in its capacity as
Administrative Agent or in its individual capacity).

         Section 8.5       Action on Instructions of Lenders. The Administrative
Agent shall in all cases be fully protected in acting, or in refraining from
acting, hereunder and under any other Loan Document in accordance with written
instructions signed by the Required Lenders, and such instructions and any
action taken or failure to act pursuant thereto shall be binding on all of the
Lenders. The Lenders hereby acknowledge that the Administrative Agent shall be
under no duty to take any discretionary action permitted to be taken by it
pursuant to the provisions of this Agreement or any other Loan Document unless
it shall be requested in writing to do so by the Required Lenders. The
Administrative Agent shall be fully justified in failing or refusing to take any
action hereunder and under any other Loan Document unless it shall first be
indemnified to its satisfaction by the Lenders pro rata against any and all
liability, cost and expense that it may incur by reason of taking or continuing
to take any such action.

         Section 8.6       Employment of Administrative Agents and Counsel. The
Administrative Agent may execute any of its duties as Administrative Agent
hereunder and under any other Loan Document by or through employees, agents, and
attorneys-in-fact and shall not be answerable to the Lenders, except as to money
or securities received by it or its authorized agents, for the default or
misconduct of any such agents or attorneys-in-fact selected by it with
reasonable care. The Administrative Agent shall be entitled to advice of counsel
concerning the contractual arrangement between the Administrative Agent and the
Lenders and all matters pertaining to the Administrative Agent's duties
hereunder and under any other Loan Document.

         Section 8.7       Reliance on Documents; Counsel. The Administrative
Agent shall be entitled to rely upon any note, notice, consent, certificate,
affidavit, letter, telegram, statement, paper or document reasonably believed by
it to be genuine and correct and to have been signed or sent by the proper
Person or Persons, and, with respect to legal matters, upon the opinion of
counsel selected by the Administrative Agent, which counsel may be employees of
the Administrative Agent.

         Section 8.8       Administrative Agent's Reimbursement and
Indemnification. The Lenders agree to reimburse and indemnify the Administrative
Agent ratably in proportion to their respective Commitments (or, if the
Commitments have been terminated, in proportion to their Commitments immediately
prior to such termination) (a) for any amounts not reimbursed by the Borrowers
for which the Administrative Agent is entitled to reimbursement by the Borrowers
under the Loan Documents, (b) for any other expenses incurred by the
Administrative Agent on behalf of the Lenders, in connection with the
preparation, execution, delivery, administration and enforcement of the Loan
Documents (including, without limitation, for any expenses incurred by the
Administrative Agent in connection with any dispute between the Administrative
Agent and any Lender or between two or more of the Lenders) and (c) for any

                                      -45-

<PAGE>

liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind and nature whatsoever which may be
imposed on, incurred by or asserted against the Administrative Agent in any way
relating to or arising out of the Loan Documents or any other document delivered
in connection therewith or the transactions contemplated thereby (including,
without limitation, for any such amounts incurred by or asserted against the
Administrative Agent in connection with any dispute between the Administrative
Agent and any Lender or between two or more of the Lenders), or the enforcement
of any of the terms of the Loan Documents or of any such other documents,
provided that (i) no Lender shall be liable for any of the foregoing to the
extent any of the foregoing is found in a final non-appealable judgment by a
court of competent jurisdiction to have resulted from the gross negligence or
willful misconduct of the Administrative Agent and (ii) any indemnification
required pursuant to Section 2.15(f) shall, notwithstanding the provisions of
this Section 8.8, be paid by the relevant Lender in accordance with the
provisions thereof. The obligations of the Lenders under this Section 8.8 shall
survive payment of the Loans and all interest and fees with respect thereto and
termination of this Agreement.

         Section 8.9       Notice of Default. The Administrative Agent shall not
be deemed to have knowledge or notice of the occurrence of any Default hereunder
unless the Administrative Agent has received written notice from a Lender or a
Borrower referring to this Agreement describing such Default and stating that
such notice is a "notice of default". In the event that the Administrative Agent
receives such a notice, the Administrative Agent shall give prompt notice
thereof to the Lenders.

         Section 8.10      Rights as a Lender. In the event the Administrative
Agent is a Lender, the Administrative Agent shall have the same rights and
powers hereunder and under any other Loan Document with respect to its
Commitment and its Loans as any Lender and may exercise the same as though it
were not the Administrative Agent, and the term "Lender" or "Lenders" shall, at
any time when the Administrative Agent is a Lender, unless the context otherwise
indicates, include the Administrative Agent in its individual capacity. The
Administrative Agent and its Affiliates may accept deposits from, lend money to,
and generally engage in any kind of trust, debt, equity or other transaction, in
addition to those contemplated by this Agreement or any other Loan Document,
with any Borrower or any Subsidiary of any Borrower in which such Borrower or
such Subsidiary is not restricted hereby from engaging with any other Person.

         Section 8.11      Lender Credit Decision. Each Lender acknowledges that
it has, independently and without reliance upon the Administrative Agent, the
Arranger or any other Lender and based on the financial statements prepared by
MetLife and the Company and such other documents and information as it has
deemed appropriate, made its own credit analysis and decision to enter into this
Agreement and the other Loan Documents. Each Lender also acknowledges that it
will, independently and without reliance upon the Administrative Agent, the
Arranger or any other Lender and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under this Agreement and the other Loan Documents.

         Section 8.12      Successor Administrative Agent. The Administrative
Agent may resign at any time by giving written notice thereof to the Lenders and
the Borrowers, such resignation to be effective upon the appointment of a
successor Administrative Agent or, if no successor

                                      -46-

<PAGE>

Administrative Agent has been appointed, forty-five days after the retiring
Administrative Agent gives notice of its intention to resign. The Administrative
Agent may be removed at any time with or without cause by written notice
received by the Administrative Agent from the Required Lenders, such removal to
be effective on the date specified by the Required Lenders. Upon any such
resignation or removal, the Required Lenders shall have the right to appoint, on
behalf of the Borrowers and the Lenders, a successor Administrative Agent. If no
successor Administrative Agent shall have been so appointed by the Required
Lenders within thirty days after the resigning Administrative Agent's giving
notice of its intention to resign, then the resigning Administrative Agent may
appoint, on behalf of the Borrowers and the Lenders, a successor Administrative
Agent. Notwithstanding the foregoing, the Administrative Agent may at any time
without the consent of any Borrower or any Lender, appoint any of its Affiliates
which is a commercial bank as a successor Administrative Agent hereunder. No
successor Administrative Agent shall be deemed to be appointed hereunder until
such successor Administrative Agent has accepted the appointment. Any such
successor Administrative Agent shall be a commercial bank having capital and
retained earnings of at least $100,000,000. Upon the acceptance of any
appointment as Administrative Agent hereunder by a successor Administrative
Agent, such successor Administrative Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the resigning or
removed Administrative Agent. Upon the effectiveness of the resignation or
removal of the Administrative Agent, the resigning or removed Administrative
Agent shall be discharged from its duties and obligations hereunder and under
the Loan Documents. After the effectiveness of the resignation or removal of an
Administrative Agent, the provisions of this Article VIII shall continue in
effect for the benefit of such Administrative Agent in respect of any actions
taken or omitted to be taken by it while it was acting as the Administrative
Agent hereunder and under the other Loan Documents. In the event that there is a
successor to the Administrative Agent by merger, or the Administrative Agent
assigns its duties and obligations to an Affiliate pursuant to this Section
8.12, then the term "Prime Rate" as used in this Agreement shall mean the prime
rate, base rate or other analogous rate of the new Administrative Agent.

         Section 8.13      Administrative Agent and Arranger Fees. The Borrowers
agree to pay to the Administrative Agent and the Arranger, for their respective
accounts, the fees agreed to by the Borrowers, the Administrative Agent and the
Arranger pursuant to the Fee Letter, or as otherwise agreed from time to time.

         Section 8.14      Delegation to Affiliates. The Borrowers and the
Lenders agree that the Administrative Agent may delegate any of its duties under
this Agreement to any of its Affiliates. Any such Affiliate (and such
Affiliate's directors, officers, agents and employees) which performs duties in
connection with this Agreement shall be entitled to the same benefits of the
indemnification, waiver and other protective provisions to which the
Administrative Agent is entitled under Articles VIII and X.

         Section 8.15      Syndication Agents, Senior Managing Agents, Managing
Agents, etc. Neither any of the Lenders identified in this Agreement as a
"co-agent" nor any Syndication Agent, Senior Managing Agent or Managing Agent
shall have any right, power, obligation, liability, responsibility or duty under
this Agreement other than those applicable to all Lenders as such. Without
limiting the foregoing, none of such Lenders shall have or be deemed to have a
fiduciary relationship with any Lender. Each Lender hereby makes the same
acknowledgments

                                      -47-

<PAGE>

with respect to such Lenders as it makes with respect to the Administrative
Agent in Section 8.11.

                                   ARTICLE IX

                BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS

         Section 9.1       Successors and Assigns. The terms and provisions of
the Loan Documents shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns permitted hereby, except that
(a) no Borrower shall have the right to assign its rights or obligations under
the Loan Documents without the prior written consent of each Lender, (b) any
assignment by any Lender must be made in compliance with Section 9.3, and (c)
any transfer by Participation must be made in compliance with Section 9.2. Any
attempted assignment or transfer by any party not made in compliance with this
Section 9.1 shall be null and void, unless such attempted assignment or transfer
is treated as a participation in accordance with Section 9.2. The parties to
this Agreement acknowledge that clause (b) of this Section 9.1 relates only to
absolute assignments and this Section 9.1 does not prohibit assignments creating
security interests, including, without limitation, (x) any pledge or assignment
by any Lender of all or any portion of its rights under this Agreement and any
Note to a Federal Reserve Bank or (y) in the case of a Lender which is a Fund,
any pledge or assignment of all or any portion of its rights under this
Agreement and any Note to its trustee in support of its obligations to its
trustee; provided, that no such pledge or assignment creating a security
interest shall release the transferor Lender from its obligations hereunder
unless and until the parties thereto have complied with the provisions of
Section 9.3. The Administrative Agent may treat the Person which made any Loan
or which holds any Note as the owner thereof for all purposes hereof unless and
until such Person complies with Section 9.3; provided, that the Administrative
Agent may in its discretion (but shall not be required to) follow instructions
from the Person which made any Loan or which holds any Note to direct payments
relating to such Loan or Note to another Person. Any assignee of the rights to
any Loan or any Note agrees by acceptance of such assignment to be bound by all
the terms and provisions of the Loan Documents. Any request, authority or
consent of any Person, who at the time of making such request or giving such
authority or consent is the owner of the rights to any Loan (whether or not a
Note has been issued in evidence thereof), shall be conclusive and binding on
any subsequent holder or assignee of the rights to such Loan.

         Section 9.2       Participations.

                  9.2.1.   Permitted Participants; Effect. Any Lender may at any
         time sell to one or more banks or other entities ("Participants")
         participating interests in any Loan owing to such Lender, any Note held
         by such Lender, any Commitment of such Lender or any other interest of
         such Lender under the Loan Documents. In the event of any such sale by
         a Lender of participating interests to a Participant, such Lender's
         obligations under the Loan Documents shall remain unchanged, such
         Lender shall remain solely responsible to the other parties hereto for
         the performance of such obligations, such Lender shall remain the owner
         of its Loans and the holder of any Note issued to it in evidence
         thereof for all purposes under the Loan Documents, all amounts payable
         by the Borrowers under this Agreement shall be determined as if such
         Lender had not sold such participating interests,

                                      -48-

<PAGE>

         and the Borrowers and the Administrative Agent shall continue to deal
         solely and directly with such Lender in connection with such Lender's
         rights and obligations under the Loan Documents.

                  9.2.2.   Voting Rights. Each Lender shall retain the sole
         right to approve, without the consent of any Participant, any
         amendment, modification or waiver of any provision of the Loan
         Documents other than any amendment, modification or waiver with respect
         to any Loan or Commitment in which such Participant has an interest
         which would require consent of all of the Lenders pursuant to the terms
         of Section 10.2 or of any other Loan Document.

                  9.2.3.   Benefit of Certain Provisions. Each Borrower agrees
         that each Participant shall be deemed to have the right of setoff
         provided in Section 10.7 in respect of its participating interest in
         amounts owing under the Loan Documents to the same extent as if the
         amount of its participating interest were owing directly to it as a
         Lender under the Loan Documents, provided that each Lender shall retain
         the right of setoff provided in Section 10.7 with respect to the amount
         of participating interests sold to each Participant. The Lenders agree
         to share with each Participant, and each Participant, by exercising the
         right of setoff provided in Section 10.7, agrees to share with each
         Lender, any amount received pursuant to the exercise of its right of
         setoff, such amounts to be shared in accordance with Section 2.16(c) as
         if each Participant were a Lender. The Borrowers further agree that
         each Participant shall be entitled to the benefits of Sections 2.13,
         2.14 and 2.15 to the same extent as if it were a Lender and had
         acquired its interest by assignment pursuant to Section 9.3, provided
         that (a) a Participant shall not be entitled to receive any greater
         payment under Section 2.13, 2.14 or 2.15 than the Lender who sold the
         participating interest to such Participant would have received had it
         retained such interest for its own account, unless the sale of such
         interest to such Participant is made with the prior written consent of
         MetLife, and (b) any Participant not incorporated under the laws of the
         United States of America or any State thereof agrees to comply with the
         provisions of Section 2.15 to the same extent as if it were a Lender.

         Section 9.3       Assignments.

                  9.3.1.   Permitted Assignments. Subject to Section 9.3.2, any
         Lender may at any time assign to one or more banks or other entities
         ("Purchasers") all or any part of its rights and obligations under the
         Loan Documents. Such assignment shall be substantially in the form of
         Exhibit A or in such other form as may be agreed to by the parties
         thereto. Each such assignment with respect to a Purchaser which is not
         a Lender or an Affiliate of a Lender or an Approved Fund shall either
         be in an amount equal to the entire applicable Commitment and Loans of
         the assigning Lender or (unless each of MetLife and the Administrative
         Agent otherwise consents) be in an aggregate amount not less than
         $5,000,000. The amount of the assignment shall be based on the
         Commitment or outstanding Loans (if the Commitment has been terminated)
         subject to the assignment, determined as of the date of such assignment
         or as of the "Trade Date," if the "Trade Date" is specified in the
         assignment.

                                      -49-

<PAGE>

                  9.3.2.   Consents. The consent of MetLife shall be required
         prior to an assignment becoming effective unless the Purchaser is a
         Lender, an Affiliate of a Lender or an Approved Fund, provided that the
         consent of MetLife shall not be required if an Event of Default has
         occurred and is continuing. The consent of the Administrative Agent
         shall be required prior to an assignment becoming effective unless the
         Purchaser is a Lender, an Affiliate of a Lender or an Approved Fund.
         Any consent required under this Section 9.3.2 shall not be unreasonably
         withheld or delayed.

                  9.3.3    Effect; Effective Date. Upon (a) delivery to the
         Administrative Agent of an assignment, together with any consents
         required by Sections 9.3.1 and 9.3.2, and (b) payment of a $3,500 fee
         to the Administrative Agent for processing such assignment (unless such
         fee is waived by the Administrative Agent), such assignment shall
         become effective on the effective date specified in such assignment.
         The assignment shall contain a representation by the Purchaser to the
         effect that none of the consideration used to make the purchase of the
         Commitment and Loans under the applicable assignment agreement
         constitutes "plan assets" as defined under ERISA and that the rights
         and interests of the Purchaser in and under the Loan Documents will not
         be "plan assets" under ERISA. On and after the effective date of such
         assignment, such Purchaser shall for all purposes be a Lender party to
         this Agreement and any other Loan Document executed by or on behalf of
         the Lenders and shall have all the rights and obligations of a Lender
         under the Loan Documents, to the same extent as if it were an original
         party thereto, and the transferor Lender shall be released with respect
         to the Commitment and Loans assigned to such Purchaser without any
         further consent or action by the Borrowers, the Lenders or the
         Administrative Agent. In the case of an assignment covering all of the
         assigning Lender's rights and obligations under this Agreement, such
         Lender shall cease to be a Lender hereunder but shall continue to be
         entitled to the benefits of, and subject to, those provisions of this
         Agreement and the other Loan Documents which survive payment of the
         Loans and all interest and fees with respect thereto and termination of
         the applicable agreement. Any assignment or transfer by a Lender of
         rights or obligations under this Agreement that does not comply with
         this Section 9.3 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 Section 9.2. Upon the consummation of any assignment
         to a Purchaser pursuant to this Section 9.3.3, the transferor Lender,
         the Administrative Agent and the Borrowers shall, if the transferor
         Lender or the Purchaser desires that its Loans be evidenced by Notes,
         make appropriate arrangements so that new Notes or, as appropriate,
         replacement Notes are issued to such transferor Lender and new Notes
         or, as appropriate, replacement Notes, are issued to such Purchaser, in
         each case in principal amounts reflecting their respective Commitments,
         as adjusted pursuant to such assignment.

                  9.3.4    Register. The Administrative Agent, acting solely for
         this purpose as an agent of the Borrowers, shall maintain at one of its
         offices in Chicago, Illinois a copy of each Assignment and Assumption
         delivered to it and a register for the recordation of the names and
         addresses of the Lenders, and the Commitments of, and principal amounts
         of the Loans owing to, each Lender pursuant to the terms hereof from
         time to time (the "Register"). The entries in the Register shall be
         conclusive, and the Borrowers, the Administrative Agent 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

                                      -50-

<PAGE>

         Agreement, notwithstanding notice to the contrary. The Register shall
         be available for inspection by any Borrower and any Lender, at any
         reasonable time and from time to time upon reasonable prior notice.

         Section 9.4       Dissemination of Information. The Borrowers authorize
each Lender to disclose to any Participant or Purchaser or any other Person
acquiring an interest in the Loan Documents by operation of law (each a
"Transferee") and any prospective Transferee any and all information in such
Lender's possession concerning the creditworthiness of the Borrowers and their
Subsidiaries, including without limitation any information contained in any
audit reports pertaining to any Borrower's assets; provided that each Transferee
and prospective Transferee agrees to be bound by Section 10.11 of this
Agreement.

         Section 9.5       Tax Treatment. If any interest in any Loan Document
is transferred to any Transferee which is not incorporated under the laws of the
United States or any State thereof, the transferor Lender shall cause such
Transferee, concurrently with the effectiveness of such transfer, to comply with
the provisions of Section 2.15(e).

                                    ARTICLE X

                                  MISCELLANEOUS

         Section 10.1      Notices. 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 MetLife, the Company or Funding, to it at One
         MetLife Plaza, Area 7B, Long Island City, NY 11101, Attention: Tracey
         Dedrick (Fax: (212) 578-0266);

                  (b)      if to the Administrative Agent, to 1 Bank One Plaza,
         Chicago, Illinois 60670, Attention: Mark Goldstein (Fax: (212)
         373-1439); and

                  (c)      if to any Lender, to it at its address (or telecopy
         number) set forth in its Administrative Questionnaire.

Any party hereto may change its address or telecopy number for notices and other
communications hereunder by notice to the other parties hereto. 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.

         Section 10.2      Waivers; Amendments.

                  (a)      No failure or delay by the Administrative Agent or
         any Lender 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. The rights and
         remedies of the Administrative Agent and the Lenders hereunder are
         cumulative and are not exclusive

                                      -51-

<PAGE>

         of any rights or remedies that they would otherwise have. No waiver of
         any provision of this Agreement or consent to any departure by the
         Borrowers therefrom shall in any event be effective unless the same
         shall be permitted by paragraph (b) of this Section, 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 making of a Loan shall not be construed as a waiver of
         any Default, regardless of whether the Administrative Agent or any
         Lender may have had notice or knowledge of such Default at the time.

                  (b)      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 Borrowers and the Required
         Lenders or by the Borrowers and the Administrative Agent with the
         consent of the Required Lenders; provided that no such agreement shall
         (i) increase the Commitment of any Lender without the written consent
         of such Lender, (ii) reduce the principal amount of any Loan 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 of payment of the principal amount of any
         Loan, 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, without the written
         consent of each Lender affected thereby, (iv) change Section 2.16(b) or
         (c) in a manner that would alter the pro rata sharing of payments
         required thereby, without the written consent of each Lender, or (v)
         change any of the provisions of this Section or the definition of
         "Required 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; provided further that no
         such agreement shall amend, modify or otherwise affect the rights or
         duties of the Administrative Agent hereunder without the prior written
         consent of the Administrative Agent.

         Section 10.3      Expenses; Indemnity: Damage; Waiver.

                  (a)      Each Borrower jointly and severally agrees to pay (i)
         all reasonable out-of-pocket expenses incurred by the Administrative
         Agent and its Affiliates, including the reasonable fees, charges and
         disbursements of counsel for the Administrative Agent, in connection
         with the syndication of the credit facilities provided for herein, the
         preparation and administration of this Agreement or any amendments,
         modifications or waivers of the provisions hereof (whether or not the
         transactions contemplated hereby or thereby shall be consummated), and
         (ii) all out-of-pocket expenses incurred by the Administrative Agent or
         any Lender, including the fees, charges and disbursements of any
         counsel for the Administrative Agent or any Lender, in connection with
         the enforcement or protection of its rights in connection with this
         Agreement, including its rights under this Section, or in connection
         with the Loans made hereunder, including all such out-of-pocket
         expenses incurred during any workout, restructuring or negotiations in
         respect of such Loans.

                  (b)      Each Borrower jointly and severally agrees to
         indemnify the Administrative Agent and each Lender, and each Related
         Party of any of the foregoing

                                      -52-

<PAGE>

         Persons (each such Person being called an "Indemnitee") against, and
         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 (i) the use or proposed use of the proceeds of any Loan,
         or (ii) any actual or prospective claim, litigation, investigation or
         proceeding relating thereto, 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 resulted from the gross negligence or
         willful misconduct of such Indemnitee.

                  (c)      To the extent that the Borrowers fail to pay any
         amount required to be paid by it to the Administrative Agent under
         paragraph (a) or (b) of this Section, each Lender severally agrees to
         pay to the Administrative 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 expense or indemnified loss, claim, damage, liability or
         related expense, as the case may be, was incurred by or asserted
         against the Administrative Agent, in its capacity as such.

                  (d)      To the extent permitted by applicable law, the
         Borrowers shall not assert, and each Borrower hereby waives, any claim
         against any Indemnitee, on any theory of liability, for special,
         indirect, consequential or punitive damages (as opposed to direct or
         actual damages) arising out of, in connection with, or as a result of,
         this Agreement or any agreement or instrument contemplated hereby, the
         Transactions, any Loan or the use of the proceeds thereof.

                  (e)      All amounts due under this Section shall be payable
         not later than 10 days after written demand therefor.

         Section 10.4      Survival. All covenants, agreements, representations
and warranties made by the Borrowers 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 making of any
Loans, regardless of any investigation made by any such other party or on its
behalf and notwithstanding that the Administrative 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 the principal of or any accrued interest on any Loan or
any fee or any other amount payable under this Agreement is outstanding and
unpaid and so long as the Commitments have not expired or terminated. The
provisions of Sections 2.13, 2.14, 2.15 and 10.3 and Article VIII shall survive
and remain in full force and effect regardless of the consummation of the
transactions contemplated hereby, the repayment of the Loans, the expiration or
termination of the Commitments or the termination of this Agreement or any
provision hereof.

         Section 10.5      Counterparts; Integration; Effectiveness. This
Agreement may be executed in counterparts (and by different parties hereto on
different counterparts), each of which

                                      -53-

<PAGE>

shall constitute an original, but all of which when taken together shall
constitute a single contract. This Agreement and any separate letter agreements
with respect to fees payable to the Administrative Agent constitute the entire
contract among 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. Except as provided in Section 4.1, this Agreement
shall become effective when it shall have been executed by the Administrative
Agent and when the Administrative Agent shall have received counterparts hereof
which, when taken together, bear the signatures of each of the other parties
hereto, and thereafter shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns. Delivery of an
executed counterpart of a signature page of this Agreement by telecopy shall be
effective as delivery of a manually executed counterpart of this Agreement.

         Section 10.6      Severability. Any provision of this Agreement 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; and the invalidity of a particular provision in
a particular jurisdiction shall not invalidate such provision in any other
jurisdiction.

         Section 10.7      Right of Setoff. Subject to Section 2.16(c), if an
Event of Default shall have occurred and be continuing, each Lender and each of
its Affiliates is hereby authorized at any time and from time to time, to the
fullest extent permitted by law, to set off and apply any and all deposits
(general or special, time or demand, provisional or final) at any time held and
other obligations at any time owing by such Lender or Affiliate to or for the
credit or the account of the relevant Borrower against any of and all the
obligations of such Borrower now or hereafter existing under this Agreement held
by such Lender, irrespective of whether or not such Lender shall have made any
demand under this Agreement and although such obligations may be unmatured. The
rights of each Lender under this Section are in addition to other rights and
remedies (including other rights of setoff) which such Lender may have.

         Section 10.8      Governing Law; Jurisdiction; Consent to Service of
Process.

                  (a)      This Agreement shall be construed in accordance with
         and governed by the law of the State of New York.

                  (b)      Each Borrower hereby irrevocably and unconditionally
         submits, for itself and its property, to the nonexclusive jurisdiction
         of any United States Federal or New York State court sitting in New
         York, New York in any action or proceeding arising out of or relating
         to this Agreement, or for recognition or enforcement of any judgment,
         and each of the parties hereto hereby irrevocably and unconditionally
         agrees that all claims in respect of any such action or proceeding may
         be heard and determined in such New York State or, to the extent
         permitted by law, in such Federal court. Each of the parties hereto
         agrees that a final judgment in any such action or proceeding shall be
         conclusive and may be enforced in other jurisdictions by suit on the
         judgment or in any other manner provided by law. Nothing in this
         Agreement shall affect any right that the Administrative Agent or any
         Lender may otherwise have to bring any action or proceeding relating to
         this Agreement against the Borrowers or their respective properties in
         the courts of any jurisdiction.

                                      -54-

<PAGE>

                  (c)      Each Borrower hereby irrevocably and unconditionally
         waives, to the fullest extent it may legally and effectively do so, any
         objection which it may now or hereafter have to the laying of venue of
         any suit, action or proceeding arising out of or relating to this
         Agreement in any court referred to in paragraph (b) of this Section.
         Each of the parties hereto hereby irrevocably waives, to the fullest
         extent permitted by law, the defense of an inconvenient forum to the
         maintenance of such action or proceeding in any such court.

                  (d)      Each party to this Agreement irrevocably consents to
         service of process in the manner provided for notices in Section 10.1.
         Nothing in this Agreement will affect the right of any party to this
         Agreement to serve process in any other manner permitted by law.

         Section 10.9      WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE
TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF
OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER
BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES
THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT
AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY,
AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

         Section 10.10     Headings. Article and Section headings and the Table
of Contents used herein are for convenience of reference only, are not part of
this Agreement and shall not affect the construction of, or be taken into
consideration in interpreting, this Agreement.

         Section 10.11     Confidentiality. Each of the Administrative Agent and
the Lenders 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, (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, (f) subject to an agreement containing
provisions substantially the same as those of this Section, to any assignee of
or Participant in, or any prospective assignee of or Participant in, any of its
rights or obligations under this Agreement, (g) with the consent of the Company
or (h) to the extent such Information (i) becomes publicly available other than
as a result of a breach of this Section or (ii) becomes available to the
Administrative Agent or any Lender on a nonconfidential basis from a source
other than the Company. In the event that any Lender becomes legally compelled
to disclose any confidential Information pursuant to paragraph (c) of this
Section, such Lender shall give prompt written notice of that fact to the

                                      -55-

<PAGE>

Borrowers prior to the disclosure so that the Borrowers may seek an appropriate
remedy to prevent or limit such disclosure and the Lenders shall cooperate
reasonably (at the expense of the Borrowers) with the Borrowers in seeking such
remedy. For the purposes of this Section, "Information" means all information
received from the Company relating to the Company or its business, other than
any such information that is available to the Administrative Agent or any Lender
on a nonconfidential basis, prior to disclosure by the Company; provided that,
in the case of information received from the Company 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 Section 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 anything in this Agreement to the contrary, the
Administrative Agent, the Lenders, the Borrowers and all other parties to the
transactions contemplated hereunder hereby agree that all parties (and each
employee, representative, or other agent of such parties) may disclose to any
and all persons, without limitation of any kind, the U.S. "tax treatment" or
"tax structure" (in each case, within the meaning of Treasury Regulation section
1.6011-4) of the transactions contemplated hereunder and all materials of any
kind (including opinions or other tax analyses) that are provided to such
parties relating to such U.S. "tax treatment" and "tax structure" (in each case,
within the meaning of Treasury Regulation section 1.6011-4); provided, that to
the extent any document contains Information that relates to the U.S. "tax
treatment" or "tax structure" and contains other information, this paragraph
shall only apply to the information relating to the U.S. "tax treatment" or "tax
structure."

                            [signature pages follow]

                                      -56-

<PAGE>

                  IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorized officers as of the
day and year first above written.

                              METLIFE, INC.

                              /s/ Anthony J. Williamson
                              -------------------------
                              By: Anthony J. Williamson
                              Title: Senior Vice President and Treasurer

                              METROPOLITAN LIFE INSURANCE
                              COMPANY

                              /s/ Anthony J. Williamson
                              -------------------------
                              By: Anthony J. Williamson
                              Title: Senior Vice President and Treasurer

                              METLIFE FUNDING, INC.

                              /s/ Anthony J. Williamson
                              -------------------------
                              By: Anthony J. Williamson
                              Title: Chairman of the Board,  President and Chief
                                     Executive Officer

                              BANK ONE, NA, individually and as
                              Administrative Agent

                              /s/ Gretchen [illegible]
                              ------------------------
                              By: Gretchen [illegible]
                              Title: Director

                                       S-1
                              [TO CREDIT AGREEMENT]

<PAGE>

                              CITIBANK, N.A., individually and as Syndication
                              Agent

                              /s/ David A. Dodge
                              ------------------
                              By: David A. Dodge
                              Title: Managing Director

                                       S-2
                              [TO CREDIT AGREEMENT]

<PAGE>

                              JPMORGAN CHASE BANK, individually and as
                              Syndication Agent

                              /s/ Heather Lindstrom
                              ---------------------
                              By: Heather Lindstrom
                              Title: Vice President

                                       S-3
                              [TO CREDIT AGREEMENT]

<PAGE>

                              WACHOVIA BANK, NATIONAL
                              ASSOCIATION, individually and as Syndication
                              Agent

                              /s/ Thomas L. Stitchberry
                              -------------------------
                              By: Thomas L. Stitchberry
                              Title: Managing Director

                                       S-4
                              [TO CREDIT AGREEMENT]

<PAGE>

                              BANK OF AMERICA, N.A., individually and as
                              Senior Managing Agent

                              /s/ Leslie Nannen
                              -----------------
                              By: Leslie Nannen
                              Title: Vice President

                                       S-5
                              [TO CREDIT AGREEMENT]

<PAGE>

                              CREDIT SUISSE FIRST BOSTON, acting through
                              its Cayman Islands Branch, individually and as
                              Senior Managing Agent

                              /s/ Jay Chall
                              -------------
                              By: Jay Chall
                              Title: Director

                              /s/ Cassandra Droogan
                              ---------------------
                              By: Cassandra Droogan
                              Title: Associate

                                       S-6
                              [TO CREDIT AGREEMENT]

<PAGE>

                              BARCLAYS BANK plc, individually and as Senior
                              Managing Agent

                              /s/ Alison A. McGuigan
                              ----------------------
                              By: Alison A. McGuigan
                              Title: Associate Director

                                       S-7
                              [TO CREDIT AGREEMENT]

<PAGE>

                              DEUTSCHE BANK AG NEW YORK BRANCH,
                              individually and as Senior Managing Agent

                              /s/ Ruth Leung
                              --------------
                              By: Ruth Leung
                              Title: Director

                              /s/ John S. McGill
                              ------------------
                              By: John S. McGill
                              Title: Director

                                       S-8
                              [TO CREDIT AGREEMENT]

<PAGE>

                              FLEET NATIONAL BANK, individually and as
                              Senior Managing Agent

                              /s/ Lawrence C. Bigelow
                              -----------------------
                              By: Lawrence C. Bigelow
                              Title: Managing Director

                                       S-9
                              [TO CREDIT AGREEMENT]

<PAGE>

                              MERRILL LYNCH BANK USA, individually and
                              as Senior Managing Agent

                              /s/ D. Kevin Imlay
                              ------------------
                              By: D. Kevin Imlay
                              Title: Director

                                      S-10
                              [TO CREDIT AGREEMENT]

<PAGE>

                              UBS AG, CAYMAN ISLANDS BRANCH,
                              individually and as Senior Managing Agent

                              /s/ [Illegible]
                              ---------------
                              By: [Illegible]
                              Title: Director

                              /s/ [Illegible]
                              ---------------
                              By: [Illegible]
                              Title: Associate Director

                                      S-11
                              [TO CREDIT AGREEMENT]

<PAGE>

                              HSBC BANK USA, individually and as Managing
                              Agent

                              /s/ Kenneth J. Johnson
                              ----------------------
                              By: Kenneth J. Johnson
                              Title: First Vice President

                                      S-12
                              [TO CREDIT AGREEMENT]

<PAGE>

                              MELLON BANK, N.A., individually and as
                              Managing Agent

                              /s/ [Illegible]
                              ---------------
                              By: [Illegible]
                              Title: Assistant Vice President

                                      S-13
                              [TO CREDIT AGREEMENT]

<PAGE>

                              BNP PARIBAS, individually

                              /s/ Laurent Vanderzyppe
                              -----------------------
                              By: Laurent Vanderzyppe
                              Title: Director

                              /s/ Marguerite L. Lebon
                              -----------------------
                              By: Marguerite L. Lebon
                              Title: Vice President

                                      S-14
                              [TO CREDIT AGREEMENT]

<PAGE>

                              STATE STREET BANK AND TRUST
                              COMPANY, individually

                              /s/ [Illegible]
                              ---------------
                              By: [Illegible]
                              Title: Vice President

                                      S-15
                              [TO CREDIT AGREEMENT]

<PAGE>

                              THE NORTHERN TRUST COMPANY,
                              individually

                              /s/ Eric Dybing
                              ---------------
                              By: Eric Dybing
                              Title: Second Vice President

                                      S-16
                              [TO CREDIT AGREEMENT]

<PAGE>

                              U.S. BANK, National Association, individually

                              /s/ Eric Hartman
                              ----------------
                              By: Eric Hartman
                              Title: Vice President

                                      S-17
                              [TO CREDIT AGREEMENT]

<PAGE>

                              LEHMAN BROTHERS BANK, FSB, individually

                              /s/ Gary T. Taylor
                              ------------------
                              By: Gary T. Taylor
                              Title: Vice President

                                      S-18
                              [TO CREDIT AGREEMENT]

<PAGE>

                              PNC BANK, NATIONAL ASSOCIATION,
                              individually

                              /s/ Donald Davis
                              ----------------
                              By: Donald Davis
                              Title: Vice President

                                      S-19
                              [TO CREDIT AGREEMENT]

<PAGE>

                                  Schedule 2.1
                                   COMMITMENTS

<TABLE>
<CAPTION>
                     Lender                                                         Commitment
                     ------                                                         ----------
<S>                                                                               <C>
Bank One, NA                                                                      $   90,000,000
------------------------------------------------------------------------------------------------
Citibank, N.A.                                                                    $   80,000,000
------------------------------------------------------------------------------------------------
JPMorgan Chase Bank                                                               $   80,000,000
------------------------------------------------------------------------------------------------
Wachovia Bank, National Association                                               $   80,000,000
------------------------------------------------------------------------------------------------
Bank of America, N.A.                                                             $   60,000,000
------------------------------------------------------------------------------------------------
Credit Suisse First Boston (Cayman Islands Branch)                                $   60,000,000
------------------------------------------------------------------------------------------------
Barclays Bank plc                                                                 $   60,000,000
------------------------------------------------------------------------------------------------
Deutsche Bank AG New York Branch                                                  $   60,000,000
------------------------------------------------------------------------------------------------
Fleet National Bank                                                               $   60,000,000
------------------------------------------------------------------------------------------------
Merrill Lynch Bank USA                                                            $   60,000,000
------------------------------------------------------------------------------------------------
UBS AG, Cayman Islands Branch                                                     $   60,000,000
------------------------------------------------------------------------------------------------
HSBC Bank USA                                                                     $   50,000,000
------------------------------------------------------------------------------------------------
Mellon Bank, N.A.                                                                 $   50,000,000
------------------------------------------------------------------------------------------------
BNP Paribas                                                                       $   25,000,000
------------------------------------------------------------------------------------------------
State Street Bank and Trust Company                                               $   25,000,000
------------------------------------------------------------------------------------------------
The Northern Trust Company                                                        $   25,000,000
------------------------------------------------------------------------------------------------
US Bank, N.A.                                                                     $   25,000,000
------------------------------------------------------------------------------------------------
Lehman Brothers Bank, FSB                                                         $   25,000,000
------------------------------------------------------------------------------------------------
PNC Bank, National Association                                                    $   25,000,000
------------------------------------------------------------------------------------------------
         TOTAL:                                                                   $1,000,000,000
                                                                                  ==============
</TABLE>

<PAGE>

                                  Schedule 2.10
                                PRICING SCHEDULE

<TABLE>
<CAPTION>
                            LEVEL I          LEVEL II        LEVEL III         LEVEL IV           LEVEL V
                            STATUS            STATUS          STATUS            STATUS             STATUS
BORROWER DEBT               ------            ------          ------            ------             ------
   RATING                    A+/A1             A/A2            A-/A3           BBB+/Baa1     [less than] BBB+/Baa1
-----------------------------------------------------------------------------------------------------------------
<S>                         <C>              <C>             <C>               <C>           <C>
Applicable                   .06%             .07%             .10%             .125%              .175%
Facility Fee Rate
-----------------------------------------------------------------------------------------------------------------
Applicable                   .19%             .23%             .25%             .275%               .45%
Margin
-----------------------------------------------------------------------------------------------------------------
Applicable                   .05%             .05%             .10%              .10%              .125%
Utilization Fee
Rate
-----------------------------------------------------------------------------------------------------------------
Applicable                  .075%             .10%            .125%              .15%               .25%
Term Out
Premium Rate
-----------------------------------------------------------------------------------------------------------------
</TABLE>

         Subject to the following two sentences, a particular Level Status shall
exist with respect to a Borrower on a particular day if on such day such
Borrower does not qualify for a Level Status with more advantageous pricing and
either the Moody's Rating or the S&P Rating is at least equal to the
corresponding rating specified for such Level Status in the table above. In the
event of a difference in the equivalent "rating level" from S&P and Moody's
resulting in a split of only one level, then the Level Status shall be
determined by reference to the higher of the two Ratings. In the event of a
difference in the equivalent "rating level" from S&P and Moody's resulting in a
split of greater than one level, then the Level Status shall be that Level
Status one above the Level Status determined by reference to the lower of the
two Ratings. The above ratings are in the format of S&P Rating/Moody's Rating.

         For the purposes of this Schedule, the following terms have the
following meanings, subject to the final paragraph of this Schedule:

         "Level Status" means either Level I Status, Level II Status, Level III
Status, Level IV Status or Level V Status.

         "Moody's Rating" means, at any time, the long term unsecured senior,
non-credit enhanced debt rating of a Borrower issued by Moody's and then in
effect.

         "Rating" means Moody's Rating or S&P Rating.

<PAGE>

         "S&P Rating" means, at any time, the long term unsecured senior,
non-credit enhanced debt rating of a Borrower issued by S&P and then in effect.

         The Applicable Margin, Applicable Utilization Fee Rate and Applicable
Term Out Premium Rate shall be determined for each Borrower in accordance with
the foregoing table based on such Borrower's Level Status as determined from its
then-current Moody's and S&P Ratings. The Applicable Facility Fee Rate for all
Borrowers shall be determined in accordance with the foregoing table based on
the Level Status of the Borrower which has the lowest Level Status of all
Borrowers. The Rating in effect on any date for the purposes of this Schedule is
that in effect at the close of business on such date. If at any time a Borrower
has no Moody's Rating or no S&P Rating or such Borrower does not qualify for a
Level Status with more advantageous pricing, Level V Status shall exist with
respect to such Borrower; provided, that if Funding has no Moody's Rating or S&P
Rating, it shall be deemed to have the same Level Status as the Company or
MetLife, whichever has the lower Level Status. For the purpose of this Schedule
2.10 and the Credit Agreement, Level I Status is the highest Level Status and
Level V Status is the lowest Level Status.

<PAGE>
                                  Schedule 3.6

                                DISCLOSED MATTERS

LEGAL PROCEEDINGS

      Sales Practices Claims

      Over the past several years, Metropolitan Life, New England Mutual Life
Insurance Company ("New England Mutual") and General American Life Insurance
Company ("General American") have faced numerous claims, including class action
lawsuits, alleging improper marketing and sales of individual life insurance
policies or annuities. These lawsuits are generally referred to as "sales
practices claims."

      In December 1999, a federal court approved a settlement resolving sales
practices claims on behalf of a class of owners of permanent life insurance
policies and annuity contracts or certificates issued pursuant to individual
sales in the United States by Metropolitan Life, Metropolitan Insurance and
Annuity Company or Metropolitan Tower Life Insurance Company between January 1,
1982 and December 31, 1997. The class includes owners of approximately six
million in-force or terminated insurance policies and approximately one million
in-force or terminated annuity contracts or certificates.

      Similar sales practices class actions against New England Mutual, with
which Metropolitan Life merged in 1996, and General American, which was acquired
in 2000, have been settled. In October 2000, a federal court approved a
settlement resolving sales practices claims on behalf of a class of owners of
permanent life insurance policies issued by New England Mutual between January
1, 1983 through August 31, 1996. The class includes owners of approximately
600,000 in-force or terminated policies. A federal court has approved a
settlement resolving sales practices claims on behalf of a class of owners of
permanent life insurance policies issued by General American between January 1,
1982 through December 31, 1996. An appellate court has affirmed the order
approving the settlement. The class includes owners of approximately 250,000
in-force or terminated policies. Implementation of the General American class
action settlement is proceeding.

      Certain class members have opted out of the class action settlements noted
above and have brought or continued non-class action sales practices lawsuits.
In addition, other sales practices lawsuits have been brought. As of December
31, 2002, there are approximately 420 sales practices lawsuits pending against
Metropolitan Life, approximately 60 sales practices lawsuits pending against New
England Mutual and approximately 35 sales practices lawsuits pending against
General American. Metropolitan Life, New England Mutual and General American
continue to defend themselves vigorously against these lawsuits. Some individual
sales practices claims have been resolved through settlement, won by dispositive
motions, or, in a few instances, have gone to trial. Most of the current cases
seek substantial damages, including in some cases punitive and treble damages
and attorneys' fees. Additional litigation relating to the Company's marketing
and sales of individual life insurance may be commenced in the future.

      The Metropolitan Life class action settlement did not resolve two putative
class actions involving sales practices claims filed against Metropolitan Life
in Canada, and these actions remain pending. In March 2002, a purported class
action complaint was filed in a federal court in Kansas by S-G Metals
Industries, Inc. against New England Mutual. The complaint seeks certification
of a class on behalf of corporations and banks that purchased participating life
insurance policies, as well as persons who purchased participating policies for
use in pension plans or through work site marketing. These policyholders were
not part of the New England Mutual class action settlement noted above. The
action was transferred to a federal court in Massachusetts. New England Mutual
moved to dismiss the case and in November 2002, the federal district court
dismissed the case. S-G Metals has filed a notice of appeal. New England Mutual
intends to continue to defend itself vigorously against the case.
<PAGE>
      The Company believes adequate provision has been made in its consolidated
financial statements for all probable and reasonably estimable losses for sales
practices claims against Metropolitan Life, New England Mutual and General
American.

      Regulatory authorities in a small number of states have had investigations
or inquiries relating to Metropolitan Life's, New England Mutual's or General
American's sales of individual life insurance policies or annuities. Over the
past several years, these and a number of investigations by other regulatory
authorities were resolved for monetary payments and certain other relief. The
Company may continue to resolve investigations in a similar manner.

      Asbestos-Related Claims

      Metropolitan Life is a defendant in thousands of lawsuits seeking
compensatory and punitive damages for personal injuries allegedly caused by
exposure to asbestos or asbestos-containing products. Metropolitan Life has
never engaged in the business of manufacturing, producing, distributing or
selling asbestos or asbestos-containing products nor has Metropolitan Life
issued liability or workers' compensation insurance to companies in the business
of manufacturing, producing, distributing or selling asbestos or
asbestos-containing products. Rather, these lawsuits have principally been based
upon allegations relating to certain research, publication and other activities
of one or more of Metropolitan Life's employees during the period from the
1920's through approximately the 1950's and alleging that Metropolitan Life
learned or should have learned of certain health risks posed by asbestos and,
among other things, improperly publicized or failed to disclose those health
risks. Metropolitan Life believes that it should not have legal liability in
such cases.

      Legal theories asserted against Metropolitan Life have included
negligence, intentional tort claims and conspiracy claims concerning the health
risks associated with asbestos. Although Metropolitan Life believes it has
meritorious defenses to these claims, and has not suffered any adverse monetary
judgments in respect of these claims, due to the risks and expenses of
litigation, almost all past cases have been resolved by settlements.
Metropolitan Life's defenses (beyond denial of certain factual allegations) to
plaintiffs' claims include that: (i) Metropolitan Life owed no duty to the
plaintiffs -- it had no special relationship with the plaintiffs and did not
manufacture, produce, distribute or sell the asbestos products that allegedly
injured plaintiffs; (ii) plaintiffs cannot demonstrate justifiable detrimental
reliance; and (iii) plaintiffs cannot demonstrate proximate causation. In
defending asbestos cases, Metropolitan Life selects various strategies depending
upon the jurisdictions in which such cases are brought and other factors which,
in Metropolitan Life's judgment, best protect Metropolitan Life's interests.
Strategies include seeking to settle or compromise claims, motions challenging
the legal or factual basis for such claims or defending on the merits at trial.
In early 2002 and in early 2003, two trial courts granted motions dismissing
claims against Metropolitan Life on some or all of the above grounds. Other
courts have denied motions brought by Metropolitan Life to dismiss cases without
the necessity of trial. There can be no assurance that Metropolitan Life will
receive favorable decisions on motions in the future. Metropolitan Life intends
to continue to exercise its best judgment regarding settlement or defense of
such cases, including when trials of these cases are appropriate.

      The following table sets forth the total number of asbestos personal
injury claims pending against Metropolitan Life as of the dates indicated, the
number of new claims during the years ended on those dates and the total
settlement payments made to resolve asbestos personal injury claims during those
years:
<PAGE>
<TABLE>
<CAPTION>

                                                               AT OR FOR THE YEARS ENDED
                                                                     DECEMBER 31,
                                                             -----------------------------

                                                              2002       2001       2000
                                                             -------     ------     ------
                                                                  (DOLLARS IN MILLIONS)

<S>                                                         <C>        <C>         <C>
Asbestos personal injury claims at year end (approximate)    106,500     89,000     73,000
Number of new claims during the year (approximate)            66,000     59,500     54,500
Settlement payments during the year(1)                      $   95.1   $  90.7     $   71.1

</TABLE>

----------
(1)   Settlement payments represent payments made by Metropolitan Life during
      the year in connection with settlements made in that year and in prior
      years. Amounts do not include Metropolitan Life's attorneys' fees and
      expenses and do not reflect amounts received from insurance carriers.

      During the fourth quarter of 2002, Metropolitan Life analyzed its claims
experience and reviewed external publications and numerous variables to identify
trends and assessed their impact on its recorded asbestos liability. Certain
publications suggest a trend towards more asbestos-related claims and a greater
awareness of asbestos litigation generally by potential plaintiffs and
plaintiffs' lawyers. Plaintiffs' lawyers continue to advertise heavily with
respect to asbestos litigation. Bankruptcies and reorganizations of other
defendants in asbestos litigation may increase the pressures on remaining
defendants, including Metropolitan Life. Through the first nine months of 2002,
the number of new claims received by Metropolitan Life was lower than those
received during the comparable 2001 period. However, the number of new claims
received by Metropolitan Life during the fourth quarter of 2002 was
significantly higher than those received in the prior year quarter, resulting in
more new claims being received by Metropolitan Life in 2002 than in 2001.
Factors considered also included expected trends in filing cases, the dates of
initial exposure of plaintiffs to asbestos, the likely percentage of total
asbestos claims which included Metropolitan Life as a defendant and experience
in claims settlement negotiations.

      Metropolitan Life also considered views derived from actuarial
calculations it made in the fourth quarter of 2002. These calculations were made
using, among other things, current information regarding Metropolitan Life's
claims and settlement experience, information available in public reports, as
well as a study regarding the possible future incidence of mesothelioma. Based
on all of the above information, including greater than expected claims
experience over the last three years, Metropolitan Life expects to receive more
claims in the future than it had previously expected. Previously, Metropolitan
Life's liability reflected that the increase in asbestos-related claims was a
result of an acceleration in the reporting of such claims; the liability now
reflects that such an increase is also the result of an increase in the total
number of asbestos-related claims expected to be received by Metropolitan Life.
Accordingly, Metropolitan Life increased its recorded liability for
asbestos-related claims by $402 million from approximately $820 million to
$1,225 million at December 31, 2002. This total recorded asbestos-related
liability (after the self-insured retention) is within the coverage of the
excess insurance policies discussed below.

      During 1998, Metropolitan Life paid $878 million in premiums for excess
insurance policies for asbestos-related claims. The excess insurance policies
for asbestos-related claims provide for recovery of losses up to $1,500 million,
which is in excess of a $400 million self-insured retention. The
asbestos-related policies are also subject to annual and per-claim sublimits.
Amounts are recoverable under the policies annually with respect to claims paid
during the prior calendar year. Although amounts paid by Metropolitan Life in
any given year that may be recoverable in the next calendar year under the
policies will be reflected as a reduction in the Company's operating cash flows
for the year in which they are paid, management believes that the payments will
not have a material adverse effect on the Company's liquidity.

      Each asbestos-related policy contains an experience fund and a reference
fund that provides for payments to Metropolitan Life at the commutation date if
the reference fund is greater than zero at commutation or pro rata
<PAGE>
reductions from time to time in the loss reimbursements to Metropolitan Life if
the cumulative return on the reference fund is less than the return specified in
the experience fund. The return in the reference fund is tied to performance of
the Standard & Poor's 500 Index and the Lehman Brothers Aggregate Bond Index. A
claim will be made under the excess insurance policies in 2003 for the amounts
paid with respect to asbestos litigation in excess of the retention. Based on
performance of the reference fund, at December 31, 2002, the loss reimbursements
to Metropolitan Life in 2003 and the recoverable with respect to later periods
will be $42 million less than the amount of the recorded losses. Such foregone
loss reimbursements may be recovered upon commutation depending upon future
performance of the reference fund. The foregone loss reimbursements are
estimated to be $9 million with respect to 2002 claims and $42 million in the
aggregate.

      The $402 million increase in the recorded liability for asbestos claims
less the foregone loss reimbursement adjustment of $42 million ($27 million, net
of income tax) resulted in an increase in the recoverable of $360 million. At
December 31, 2002, a portion ($136 million) of the $360 million recoverable was
recognized in income while the remainder ($224 million) was recorded as a
deferred gain which is expected to be recognized in income in the future over
the estimated settlement period of the excess insurance policies. The $402
million increase in the recorded liability, less the portion of the recoverable
recognized in income, resulted in a net expense of $266 million ($169 million,
net of income tax). The $360 million recoverable may change depending on the
future performance of the Standard & Poor's 500 Index and the Lehman Brothers
Aggregate Bond Index.

      As a result of the excess insurance policies, $1,237 million is recorded
as a recoverable at December 31, 2002 ($224 million of which is recorded as a
deferred gain as mentioned above); the amount includes recoveries expected to be
obtained in 2003 for amounts paid in 2002. If at some point in the future, the
Company believes the liability for probable and estimable losses for
asbestos-related claims should be increased, an expense would be recorded and
the insurance recoverable would be adjusted subject to the terms, conditions and
limits of the excess insurance policies. Portions of the change in the insurance
recoverable would be recorded as a deferred gain and amortized into income over
the estimated remaining settlement period of the insurance policies.

      The Company believes adequate provision has been made in its consolidated
financial statements for all probable and reasonably estimable losses for
asbestos-related claims. The ability of Metropolitan Life to estimate its
ultimate asbestos exposure is subject to considerable uncertainty due to
numerous factors. The availability of data is limited and it is difficult to
predict with any certainty numerous variables that can affect liability
estimates, including the number of future claims, the cost to resolve claims,
the disease mix and severity of disease, the jurisdiction of claims filed, tort
reform efforts and the impact of any possible future adverse verdicts and their
amounts.

      Recent bankruptcies of other companies involved in asbestos litigation, as
well as advertising by plaintiffs' asbestos lawyers, may be resulting in an
increase in the number of claims and the cost of resolving claims, as well as
the number of trials and possible adverse verdicts Metropolitan Life may
experience. Plaintiffs are seeking additional funds from defendants, including
Metropolitan Life, in light of such recent bankruptcies by certain other
defendants. It is likely that bills will be introduced in 2003 in the United
States Congress to reform asbestos litigation. While the Company strongly
supports reform efforts, there can be no assurance that legislative reforms will
be enacted. Metropolitan Life will continue to study its claims experience,
review external literature regarding asbestos claims experience in the United
States and consider numerous variables that can affect its asbestos liability
exposure, including bankruptcies of other companies involved in asbestos
litigation and legislative and judicial developments, to identify trends and to
assess their impact on the recorded asbestos liability.

      The number of asbestos cases that may be brought or the aggregate amount
of any liability that Metropolitan Life may ultimately incur is uncertain.
Accordingly, it is reasonably possible that the Company's total exposure
<PAGE>
to asbestos claims may be greater than the liability recorded by the Company in
its consolidated financial statements and that future charges to income may be
necessary. While the potential future charges could be material in particular
quarterly or annual periods in which they are recorded, based on information
currently known by management, it does not believe any such charges are likely
to have a material adverse effect on the Company's consolidated financial
position.

      Property and Casualty Actions

      Purported class action suits involving claims by policyholders for the
alleged diminished value of automobiles after accident-related repairs have been
filed in Rhode Island, Texas, Georgia and Tennessee against Metropolitan
Property and Casualty Insurance Company. Rhode Island and Texas trial courts
denied plaintiffs' motions for class certification and a hearing on plaintiffs'
motion in Tennessee for class certification is to be scheduled. A settlement has
been reached in the Georgia class action; the Company determined to settle the
case in light of a Georgia Supreme Court decision involving another insurer. The
settlement is being implemented. A purported class action has been filed against
Metropolitan Property and Casualty Insurance Company's subsidiary, Metropolitan
Casualty Insurance Company, in Florida. The complaint alleges breach of contract
and unfair trade practices with respect to allowing the use of parts not made by
the original manufacturer to repair damaged automobiles. Discovery is ongoing
and a motion for class certification is pending. Total loss valuation methods
are the subject of national class actions involving other insurance companies. A
Pennsylvania state court purported class action lawsuit filed in 2001 alleges
that Metropolitan Property and Casualty Insurance Company improperly took
depreciation on partial homeowner losses where the insured replaced the covered
item. The court has dismissed the action. An appeal has been filed. Metropolitan
Property and Casualty Insurance Company and Metropolitan Casualty Insurance
Company are vigorously defending themselves against these lawsuits.

      Demutualization Actions

      Several lawsuits were brought in 2000 challenging the fairness of
Metropolitan Life's plan of reorganization and the adequacy and accuracy of
Metropolitan Life's disclosure to policyholders regarding the plan. These
actions name as defendants some or all of Metropolitan Life, the Holding
Company, the individual directors, the Superintendent and the underwriters for
MetLife, Inc.'s initial public offering, Goldman Sachs & Company and Credit
Suisse First Boston. Five purported class actions pending in the New York state
court in New York County were consolidated within the commercial part. In
addition, there remained a separate purported class action in New York state
court in New York County. On February 21, 2003, the defendants' motions to
dismiss both the consolidated action and separate action were granted; leave to
replead as a proceeding under Article 78 of New York's Civil Practice Law and
Rules has been granted in the separate action. Another purported class action in
New York state court in Kings County has been voluntarily held in abeyance by
plaintiffs. The plaintiffs in the state court class actions seek injunctive,
declaratory and compensatory relief, as well as an accounting and, in some
instances, punitive damages. Some of the plaintiffs in the above described
actions also have brought a proceeding under Article 78 of New York's Civil
Practice Law and Rules challenging the Opinion and Decision of the
Superintendent who approved the plan. In this proceeding, petitioners seek to
vacate the Superintendent's Opinion and Decision and enjoin him from granting
final approval of the plan. This case also is being held in abeyance by
plaintiffs. Another purported class action was filed in New York state court in
New York County on behalf of a purported class of beneficiaries of Metropolitan
Life annuities purchased to fund structured settlements claiming that the class
members should have received common stock or cash in connection with the
demutualization. Metropolitan Life's motion to dismiss this case was granted in
a decision filed on October 31, 2002. Plaintiff has withdrawn her notice of
appeal. Three purported class actions were filed in the United States District
Court for the Eastern District of New York claiming violation of the Securities
Act of 1933. The plaintiffs in these actions, which have been consolidated,
claim that the Policyholder Information Booklets relating to the plan failed to
disclose certain material facts and seek
<PAGE>
rescission and compensatory damages. Metropolitan Life's motion to dismiss these
three cases was denied in 2001. On February 4, 2003, plaintiffs filed a
consolidated amended complaint adding a fraud claim under the Securities
Exchange Act of 1934. A purported class action also was filed in the United
States District Court for the Southern District of New York seeking damages from
Metropolitan Life and the Holding Company for alleged violations of various
provisions of the Constitution of the United States in connection with the plan
of reorganization. In 2001, pursuant to a motion to dismiss filed by
Metropolitan Life, this case was dismissed by the District Court. In January
2003, the United States Court of Appeals for the Second Circuit affirmed the
dismissal. Metropolitan Life, the Holding Company and the individual defendants
believe they have meritorious defenses to the plaintiffs' claims and are
contesting vigorously all of the plaintiffs' claims in these actions.

      In 2001, a lawsuit was filed in the Superior Court of Justice, Ontario,
Canada on behalf of a proposed class of certain former Canadian policyholders
against the Holding Company, Metropolitan Life, and Metropolitan Life Insurance
Company of Canada. Plaintiffs' allegations concern the way that their policies
were treated in connection with the demutualization of Metropolitan Life; they
seek damages, declarations, and other non-pecuniary relief. The defendants
believe they have meritorious defenses to the plaintiffs' claims and will
contest vigorously all of plaintiffs' claims in this matter.

      In July 2002, a lawsuit was filed in the United States District Court for
the Eastern District of Texas on behalf of a proposed class comprised of the
settlement class in the Metropolitan Life sales practices class action
settlement approved in December 1999 by the United States District Court for the
Western District of Pennsylvania. The Holding Company, Metropolitan Life, the
trustee of the policyholder trust, and certain present and former individual
directors and officers of Metropolitan Life are named as defendants. Plaintiffs'
allegations concern the treatment of the cost of the settlement in connection
with the demutualization of Metropolitan Life and the adequacy and accuracy of
the disclosure, particularly with respect to those costs. Plaintiffs seek
compensatory, treble and punitive damages, as well as attorneys' fees and costs.
The defendants' motion to transfer the lawsuit to the Western District of
Pennsylvania was granted on February 14, 2003. The defendants' motion to dismiss
is pending. Plaintiffs have filed a motion for class certification which the
Texas court has adjourned. The defendants believe they have meritorious defenses
to the plaintiffs' claims and will contest them vigorously.

      Race-Conscious Underwriting Claims

      Insurance Departments in a number of states initiated inquiries in 2000
about possible race-conscious underwriting of life insurance. These inquiries
generally have been directed to all life insurers licensed in their respective
states, including Metropolitan Life and certain of its affiliates. The New York
Insurance Department has concluded its examination of Metropolitan Life
concerning possible past race-conscious underwriting practices. Metropolitan
Life has cooperated fully with that inquiry. Four purported class action
lawsuits filed against Metropolitan Life in 2000 and 2001 alleging racial
discrimination in the marketing, sale, and administration of life insurance
policies have been consolidated in the United States District Court for the
Southern District of New York. The plaintiffs seek unspecified monetary damages,
punitive damages, reformation, imposition of a constructive trust, a declaration
that the alleged practices are discriminatory and illegal, injunctive relief
requiring Metropolitan Life to discontinue the alleged discriminatory practices
and adjust policy values, and other relief. Metropolitan Life has entered into
settlement agreements to resolve the regulatory examination and the actions
pending in the United States District Court for the Southern District of New
York. The class action settlement, which has received preliminary approval from
the court, must receive final approval before it can be implemented. A fairness
hearing was held on February 7, 2003. The regulatory settlement agreement is
conditioned upon final approval of the class action settlement. Metropolitan
Life recorded a charge in the fourth quarter of 2001 in connection with the
anticipated resolution of these matters and believes that charge is adequate to
cover the costs associated with these settlements.
<PAGE>
      Sixteen lawsuits involving approximately 125 plaintiffs have been filed in
federal and state court in Alabama, Mississippi and Tennessee alleging federal
and/or state law claims of racial discrimination in connection with the sale,
formation, administration or servicing of life insurance policies. Metropolitan
Life is contesting vigorously plaintiffs' claims in these actions.

      Other

      In 2001, a putative class action was filed against Metropolitan Life in
the United States District Court for the Southern District of New York alleging
gender discrimination and retaliation in the MetLife Financial Services unit of
the Individual segment. The plaintiffs seek unspecified compensatory damages,
punitive damages, a declaration that the alleged practices are discriminatory
and illegal, injunctive relief requiring Metropolitan Life to discontinue the
alleged discriminatory practices, an order restoring class members to their
rightful positions (or appropriate compensation in lieu thereof), and other
relief. Metropolitan Life is vigorously defending itself against these
allegations.

      A lawsuit has been filed against Metropolitan Life in Ontario, Canada by
Clarica Life Insurance Company regarding the sale of the majority of
Metropolitan Life's Canadian operation to Clarica in 1998. Clarica alleges that
Metropolitan Life breached certain representations and warranties contained in
the sale agreement, that Metropolitan Life made misrepresentations upon which
Clarica relied during the negotiations and that Metropolitan Life was negligent
in the performance of certain of its obligations and duties under the sale
agreement. Metropolitan Life is vigorously defending itself against this
lawsuit.

      A putative class action lawsuit is pending in the United States District
Court for the District of Columbia, in which plaintiffs allege that they were
denied certain ad hoc pension increases awarded to retirees under the
Metropolitan Life retirement plan. The ad hoc pension increases were awarded
only to retirees (i.e., individuals who were entitled to an immediate retirement
benefit upon their termination of employment) and not available to individuals
like these plaintiffs whose employment, or whose spouses' employment, had
terminated before they became eligible for an immediate retirement benefit. The
district court denied the parties' cross-motions for summary judgment to allow
for discovery. Discovery has not yet commenced pending the court's ruling as to
the timing of a class certification motion. The plaintiffs seek to represent a
class consisting of former Metropolitan Life employees, or their surviving
spouses, who are receiving deferred vested annuity payments under the retirement
plan and who were allegedly eligible to receive the ad hoc pension increases
awarded in 1977, 1980, 1989, 1992, 1996 and 2001, as well as increases awarded
in earlier years. Metropolitan Life is vigorously defending itself against these
allegations.

      A reinsurer of universal life policy liabilities of Metropolitan Life and
certain affiliates is seeking rescission and has commenced an arbitration
proceeding claiming that, during underwriting, material misrepresentations or
omissions were made. The reinsurer also has sent a notice purporting to increase
reinsurance premium rates. Metropolitan Life and these affiliates intend to
vigorously defend themselves against the claims of the reinsurer, including the
purported rate increase.

      The SEC is conducting an examination at New England Securities. The
examination commenced in March 2003 after the company notified the SEC of an
operational issue involving one of its advisory products.

      In April 2003, a federal court jury in Arizona awarded approximately $85
million to the plaintiff in a case involving a claim for benefits under a
General American individual disability income policy. The defendants, which
include General American, have filed or will file post trial motions and, if
they are denied, will appeal the judgment. A substantial amount of General
American's individual disability income business is reinsured with various
carriers.
<PAGE>
      Various litigation, claims and assessments against the Company, in
addition to those discussed above and those otherwise provided for in the
Company's consolidated financial statements, have arisen in the course of the
Company's business, including, but not limited to, in connection with its
activities as an insurer, employer, investor, investment advisor and taxpayer.
Further, state insurance regulatory authorities and other federal and state
authorities regularly make inquiries and conduct investigations concerning the
Company's compliance with applicable insurance and other laws and regulations.

      Summary

      It is not feasible to predict or determine the ultimate outcome of all
pending investigations and legal proceedings or provide reasonable ranges of
potential losses, except as noted above in connection with specific matters. In
some of the matters referred to above, very large and/or indeterminate amounts,
including punitive and treble damages, are sought. Although in light of these
considerations it is possible that an adverse outcome in certain cases could
have a material adverse effect upon the Company's consolidated financial
position, based on information currently known by the Company's management, in
its opinion, the outcomes of such pending investigations and legal proceedings
are not likely to have such an effect. However, given the large and/or
indeterminate amounts sought in certain of these matters and the inherent
unpredictability of litigation, it is possible that an adverse outcome in
certain matters could, from time to time, have a material adverse effect on the
Company's consolidated net income or cash flows in particular quarterly or
annual periods.
<PAGE>

                                    EXHIBIT A
                            ASSIGNMENT AND ACCEPTANCE

         This Assignment and Assumption (the "Assignment and Assumption") is
dated as of the Effective Date set forth below and is entered into by and
between [Insert name of Assignor] (the "Assignor") and [Insert name of Assignee]
(the "Assignee"). Capitalized terms used but not defined herein shall have the
meanings given to them in the Credit Agreement identified below (as amended, the
"Credit Agreement"), receipt of a copy of which is hereby acknowledged by the
Assignee. The Terms and Conditions set forth in Annex 1 attached hereto are
hereby agreed to and incorporated herein by reference and made a part of this
Assignment and Assumption as if set forth herein in full.

         For an agreed consideration, the Assignor hereby irrevocably sells and
assigns to the Assignee, and the Assignee hereby irrevocably purchases and
assumes from the Assignor, subject to and in accordance with the Standard Terms
and Conditions and the Credit Agreement, as of the Effective Date inserted by
the Administrative Agent as contemplated below, the interest in and to all of
the Assignor's rights and obligations in its capacity as a Lender under the
Credit Agreement and any other documents or instruments delivered pursuant
thereto that represents the amount and percentage interest identified below of
all of the Assignor's outstanding rights and obligations under the respective
facilities identified below (including without limitation any letters of credit,
guaranties and swingline loans included in such facilities and, to the extent
permitted to be assigned under applicable law, all claims (including without
limitation contract claims, tort claims, malpractice claims, statutory claims
and all other claims at law or in equity), suits, causes of action and any other
right of the Assignor against any Person whether known or unknown arising under
or in connection with the Credit Agreement, any other documents or instruments
delivered pursuant thereto or the loan transactions governed thereby) (the
"Assigned Interest"). Such sale and assignment is without recourse to the
Assignor and, except as expressly provided in this Assignment and Assumption,
without representation or warranty by the Assignor.

1.       Assignor: ________________________________________

2.       Assignee: ________________________________________[and is an
         Affiliate/Approved Fund of [identify Lender](1)

3.       Borrowers: MetLife, Inc., Metropolitan Life Insurance Company and
         MetLife Funding, Inc.

4.       Administrative Agent: Bank One, NA , as the agent under the Credit
         Agreement.

5.       Credit Agreement: The  $1,000,000,000  Credit Agreement dated as of
         April 25, 2003 among MetLife, Inc., Metropolitan Life Insurance
         Company, MetLife Funding, Inc., the Lenders party thereto, Bank One,
         NA, as Administrative Agent, and the other agents party thereto.

------------------
(1) Select as applicable.

                                      A-1

<PAGE>

6.       Assigned Interest:

<TABLE>
<CAPTION>
                                  Aggregate Amount of           Amount of                 Percentage Assigned
                                Commitment/Loans for all     Commitment/Loans                     of
Facility Assigned                       Lenders*                Assigned*                 Commitment/Loans(2)
-----------------               ------------------------     ----------------             -------------------
<S>                             <C>                          <C>                          <C>
Revolving Credit                $                            $                            _______%
Commitment
</TABLE>

7.       Trade Date: ___________________________________________(3)

Effective Date: ____________________, 20__ [TO BE INSERTED BY ADMINISTRATIVE
AGENT AND WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER BY THE
ADMINISTRATIVE AGENT.]

         The terms set forth in this Assignment and Assumption are hereby agreed
to:

                                                  ASSIGNOR:
                                                  [NAME OF ASSIGNOR]

                                                  By: __________________________
                                                         Title:

                                                  ASSIGNEE
                                                  [NAME OF ASSIGNEE]

                                                  By: __________________________
                                                         Title:

[Consented to and](4) Accepted:

------------------
(*) Amount to be adjusted by the counterparties to take into account any
payments or prepayments made between the Trade Date and the Effective Date.

(2) Set forth, to at least 9 decimals, as a percentage of the Commitment/Loans
of all Lenders thereunder.

(3) Insert if satisfaction of minimum amounts to be determined as of the Trade
Date.

                                      A-2

<PAGE>

BANK ONE, NA, as Administrative Agent

By: ______________________________________
Title:

[Consented to:](5)

METLIFE, INC.

By: ______________________________________
Title:

------------------
(4) To be added only if the consent of the Administrative Agent is required by
the terms of the Credit Agreement.

(5) To be added only if the consent of MetLife is required by the terms of the
Credit Agreement.

                                       A-3

<PAGE>

                                     ANNEX 1
                            TERMS AND CONDITIONS FOR
                            ASSIGNMENT AND ASSUMPTION

                  1.       Representations and Warranties.

                  1.1      Assignor. The Assignor represents and warrants that
(a) it is the legal and beneficial owner of the Assigned Interest, (b) the
Assigned Interest is free and clear of any lien, encumbrance or other adverse
claim and (c) it has full power and authority, and has taken all action
necessary, to execute and deliver this Assignment and Assumption and to
consummate the transactions contemplated hereby. Neither the Assignor nor any of
its officers, directors, employees, agents or attorneys shall be responsible for
(i) any statements, warranties or representations made in or in connection with
the Credit Agreement or any other Loan Document, (ii) the execution, legality,
validity, enforceability, genuineness, sufficiency, perfection, priority,
collectibility, or value of the Loan Documents or any collateral thereunder,
(iii) the financial condition of the Borrowers, any of their Subsidiaries or
Affiliates or any other Person obligated in respect of any Loan Document, (iv)
the performance or observance by the Borrowers, any of their Subsidiaries or
Affiliates or any other Person of any of their respective obligations under any
Loan Document, (v) inspecting any of the property, books or records of the
Borrowers, or any guarantor, or (vi) any mistake, error of judgment, or action
taken or omitted to be taken in connection with the Loans or the Loan Documents.

                  1.2.     Assignee. The Assignee (a) represents and warrants
that (i) it has full power and authority, and has taken all action necessary, to
execute and deliver this Assignment and Assumption and to consummate the
transactions contemplated hereby and to become a Lender under the Credit
Agreement, (ii) from and after the Effective Date, it shall be bound by the
provisions of the Credit Agreement as a Lender thereunder and, to the extent of
the Assigned Interest, shall have the obligations of a Lender thereunder, (iii)
agrees that its payment instructions and notice instructions are as set forth in
Schedule 1 to this Assignment and Assumption, (iv) confirms that none of the
funds, monies, assets or other consideration being used to make the purchase and
assumption hereunder are "plan assets" as defined under ERISA and that its
rights, benefits and interests in and under the Loan Documents will not be "plan
assets" under ERISA, (v) agrees to indemnify and hold the Assignor harmless
against all losses, costs and expenses (including, without limitation,
reasonable attorneys' fees) and liabilities incurred by the Assignor in
connection with or arising in any manner from the Assignee's non-performance of
the obligations assumed under this Assignment and Assumption, (vi) it has
received a copy of the Credit Agreement, together with copies of financial
statements and such other documents and information as it has deemed appropriate
to make its own credit analysis and decision to enter into this Assignment and
Assumption and to purchase the Assigned Interest on the basis of which it has
made such analysis and decision independently and without reliance on the
Administrative Agent or any other Lender, and (vii) attached as Schedule 1 to
this Assignment and Assumption is any documentation required to be delivered by
the Assignee with respect to its tax status pursuant to the terms of the Credit
Agreement, duly completed and executed by the Assignee and (b) agrees that (i)
it will, independently and without reliance on the Administrative Agent, the
Assignor or any other Lender, and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit decisions in

                                      A-4

<PAGE>

taking or not taking action under the Loan Documents, and (ii) it will perform
in accordance with their terms all of the obligations which by the terms of the
Loan Documents are required to be performed by it as a Lender.

                  2.       Payments. The Assignee shall pay the Assignor, on the
Effective Date, the amount agreed to by the Assignor and the Assignee. From and
after the Effective Date, the Administrative Agent shall make all payments in
respect of the Assigned Interest (including payments of principal, interest,
fees and other amounts) to the Assignor for amounts which have accrued to but
excluding the Effective Date and to the Assignee for amounts which have accrued
from and after the Effective Date.

                  3.       General Provisions. This Assignment and Assumption
shall be binding upon, and inure to the benefit of, the parties hereto and their
respective successors and assigns. This Assignment and Assumption may be
executed in any number of counterparts, which together shall constitute one
instrument. Delivery of an executed counterpart of a signature page of this
Assignment and Assumption by telecopy shall be effective as delivery of a
manually executed counterpart of this Assignment and Assumption. This Assignment
and Assumption shall be governed by, and construed in accordance with, the law
of the State of New York.

                                      A-5

<PAGE>

                          ADMINISTRATIVE QUESTIONNAIRE

     (Schedule to be supplied by Closing Unit or Trading Documentation Unit)

    (For Forms for Primary Syndication call Peterine Svoboda at 312-732-8844)
      (For Forms after Primary Syndication call Jim Bartz at 312-732-1242)

                                      A-6

<PAGE>

              US AND NON-US TAX INFORMATION REPORTING REQUIREMENTS

     (Schedule to be supplied by Closing Unit or Trading Documentation Unit)

    (For Forms for Primary Syndication call Peterine Svoboda at 312-732-8844)
      (For Forms after Primary Syndication call Jim Bartz at 312-732-1242)

                                      A-7

<PAGE>

                                    EXHIBIT B
                                 FORM OF OPINION

                                 April 25, 2003

To the Lenders Referred to Below and
Bank One, NA, as
  Administrative Agent
1 Bank One Plaza
Chicago, Illinois  60670

Dear Sirs:

                  I am an Assistant General Counsel of Metropolitan Life
Insurance Company (the "Company"), a New York stock life insurance company, and
in such capacity have represented the Company, MetLife, Inc. ("MetLife"), a
Delaware corporation, and MetLife Funding, Inc., a Delaware corporation
("Funding" and together with the Company and MetLife, the "Borrowers"), in
connection with the Credit Agreement dated as of April 25, 2003 (the "Credit
Agreement"), among the Borrowers, the lenders named therein and Bank One, NA, as
Administrative Agent, providing for loans to be made by said lenders to the
Borrowers in an aggregate principal amount not to exceed $1,000,000,000. Terms
defined in the Credit Agreement are used herein with the same meanings. This
opinion is being delivered pursuant to Section 4.1(e) of the Credit Agreement.

                  In rendering the opinions expressed below, I have examined
originals or copies, certified or otherwise identified to my satisfaction, of
such documents, corporate records, certificates of public officials and other
instruments and have conducted such other investigations of fact and law as I
have deemed necessary or advisable for purposes of this opinion.

                  In my examination, I have assumed the authenticity of all
documents submitted to me as originals and the conformity with authentic
original documents of all documents submitted to me as copies. When relevant
facts were not independently established, I have relied upon statements of
governmental officials and upon representations made in or pursuant to the
Credit Agreement.

                  In rendering the opinions expressed below, I have assumed,
with respect to the Credit Agreement, that (except, to the extent expressly set
forth in the opinions below, as to the Borrowers):

                  (i)      it has been duly authorized by, has been duly
         executed and delivered by, and constitutes the legal, valid and binding
         and enforceable obligations of, all of the parties thereto;

                  (ii)     all signatories thereto have been duly authorized;
         and

                                      B-1

<PAGE>

                  (iii)    all of the parties thereto are duly organized and
         validly existing and have the power and authority (corporate or other)
         to execute, deliver and perform the Credit Agreement.

                  Upon the basis of the foregoing, I am of the opinion that:

                  1.       (a) MetLife is a corporation duly organized,
         validly existing and in good standing under the laws of Delaware; (b)
         the Company is a stock life insurance company duly organized, validly
         existing and in good standing under the laws of New York; (c) Funding
         is a corporation duly organized, validly existing and in good standing
         under the laws of Delaware; (d) each of the Borrowers has all requisite
         corporate power and authority to carry on its business as now
         conducted; and (e) except where the failure to do so, individually or
         in the aggregate, could not reasonably be expected to result in a
         Material Adverse Change, MetLife and each of its Material Subsidiaries
         is qualified to do business in, and is in good standing in, every
         jurisdiction where such qualification is required.

                  2.       The Transactions are within each Borrower's corporate
         powers and have been duly authorized by all necessary corporate action.
         The Credit Agreement has been duly executed and delivered by each
         Borrower and constitutes a legal, valid and binding obligation of such
         Borrower, enforceable in accordance with its terms, subject to
         applicable bankruptcy, insolvency, reorganization, moratorium or other
         laws affecting creditors' rights generally and subject to general
         principles of equity, including principles of commercial
         reasonableness, good faith and fair dealing, regardless of whether
         considered in a proceeding in equity or at law.

                  3.       The Transactions (a) do not require any consent or
         approval of, 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 organizational documents
         of any Borrower or any order of any Governmental Authority, and (c)
         will not violate or result in a default under any material indenture,
         agreement or other instrument binding upon any Borrower or its assets,
         or give rise to a right thereunder to require any payment to be made by
         any Borrower.

                  4.       There are no actions, suits or proceedings by or
         before any arbitrator or Governmental Authority pending against or, to
         my knowledge, threatened against or affecting MetLife or any of its
         Material Subsidiaries (a) as to which there is a reasonable possibility
         of an adverse determination and that, if adversely determined, is
         reasonably likely, individually or in the aggregate, to result in a
         Material Adverse Change (other than the Disclosed Matters) or (b) that
         involve the Credit Agreement or the Transactions.

                  5.       Neither MetLife nor any of its Material Subsidiaries
         (other than Funding) is an "investment company" as defined in, or
         subject to regulation under, the Investment Company Act of 1940, and
         Funding is an "investment company" as defined in such Act that is
         exempt from the requirements of such Act. Neither MetLife nor any of
         its

                                      B-2

<PAGE>

         Material Subsidiaries is a "holding company" as defined in, or subject
         to regulation under, the Public Utility Holding Company Act of 1935.

                  6.       The Support Agreement was duly authorized by all
         necessary corporate action of the Company and Funding. The Support
         Agreement has been duly executed and delivered by each of the Company
         and Funding and constitutes a legal, valid and binding obligation of
         each of the Company and Funding, enforceable in accordance with its
         terms, subject to applicable bankruptcy, insolvency, reorganization,
         moratorium or other laws affecting creditors' rights generally and
         subject to general principles of equity, including principles of
         commercial reasonableness, good faith and fair dealing, regardless of
         whether considered in a proceeding in equity or at law.

                  The foregoing opinions are subject to the following comments
and qualifications:

                  (A)      The enforceability of Section 10.3 of the Credit
         Agreement may be limited by laws or public policy limiting the
         enforceability of provisions exculpating or exempting a party, or
         requiring indemnification of a party for, liability for its own action
         or inaction.

                  (B)      The enforceability of provisions of the Credit
         Agreement to the effect that terms may not be waived or modified except
         in writing may be limited under certain circumstances.

                  (C)      I express no opinion as to (i) the effect of the laws
         of any jurisdiction in which any Lender is located (other than the
         State of New York) that limit the interest, fees or other charges such
         Lenders may impose, (ii) the last sentence of Section 2.16(c) of the
         Credit Agreement, and (iii) the first sentence of Section 10.8(b) of
         the Credit Agreement, insofar as such sentence relates to the subject
         matter jurisdiction of United States Federal Courts sitting in New
         York, New York to adjudicate any controversy related to the Credit
         Agreement.

                  The foregoing opinions are limited to matters involving the
Federal laws of the United States of America, the law of the State of New York
and the General Corporation Law of the State of Delaware, and I do not express
any opinion as to the laws of any other jurisdiction.

                  This opinion is rendered solely to you in connection with the
above matter. This opinion may not be relied upon by you for any other purpose
or relied upon by any other Person (other than your successors and assigns as
Lenders and Persons that acquire participations in the Loans) without my prior
written consent.

                                Very truly yours,

                                      B-3

<PAGE>

                                    EXHIBIT C
                             FORM OF PROMISSORY NOTE

$_______________                                             ____________, 20___

         The undersigned, for value received, promises to pay to
________________________ (the "Lender"), ________________________ and 00/100
Dollars ($___________) or, if less, the aggregate unpaid amount of all Loans
made by the Lender to the undersigned pursuant to the Credit Agreement referred
to below (as shown on the schedule attached hereto (and any continuation
thereof) or in the records of the Lender), such principal amount to be payable
on the dates set forth in the Credit Agreement.

         The undersigned further promises to pay interest on the unpaid
principal amount of each Loan made by the Lender to the undersigned from the
date of such Loan until such Loan is paid in full, payable at the rate(s) and at
the time(s) set forth in the Credit Agreement. Payments of both principal and
interest are to be made in lawful money of the United States of America.

         This Note evidences indebtedness incurred under, and is subject to the
terms and provisions of, the Credit Agreement, dated as of April 25, 2003 (as
amended or otherwise modified from time to time, the "Credit Agreement"; terms
not otherwise defined herein are used herein as defined in the Credit
Agreement), among MetLife, Inc., Metropolitan Life Insurance Company, MetLife
Funding, Inc., the Lenders named therein and Bank One, NA, as Administrative
Agent for the Lenders, to which Credit Agreement reference is hereby made for a
statement of the terms and provisions under which this Note may or must be paid
prior to its due date or its due date accelerated.

         This Note is made under and governed by the laws of the State of New
York, applicable to contracts made and to be performed entirely within such
State.

                                             ____________________________

                                             By: _______________________________
                                             Name: _____________________________
                                             Title: ____________________________

                                       C-1

<PAGE>

              Schedule attached to Note dated _______________, 20__
               of __________________ payable to _________________

<TABLE>
<CAPTION>
                     Date and           Date and        Interest             Unpaid
                     Amount of          Amount of       Period/Maturity      Principal        Notation
Class of Loan        Loan               Repayment       Date                 Balance          Made by
<S>                  <C>                <C>             <C>                  <C>              <C>
</TABLE>

                               1. EURODOLLAR LOANS

________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________

                                  2. ABR LOANS

________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________

                               3. FIXED RATE LOANS

________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________

                                      C-2<PAGE>

                                                                    EXHIBIT 10.1

--------------------------------------------------------------------------------

                              ACQUISITION AGREEMENT

                                 By and Between

                                ROYAL GROUP, INC.

                                       and

                        ALLEGHANY INSURANCE HOLDINGS LLC

                            Dated as of June 6, 2003

--------------------------------------------------------------------------------

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                              Page
                                                                                                              ----
<S>                                                                                                           <C>
ARTICLE I THE CLOSING...................................................................................        2

     Section 1.1        Sale and Purchase...............................................................        2
     Section 1.2        Transfer of Acquired Assets.....................................................        2
     Section 1.3        Excluded Assets, Excluded Contracts and Retained Liabilities....................        2
     Section 1.4        Quota Share Reinsurance Agreements..............................................        3
     Section 1.5        Administrative Services Agreements..............................................        3
     Section 1.6        Claims Servicing Agreement......................................................        4
     Section 1.7        Renewal Rights Agreement........................................................        4
     Section 1.8        Transition Services Agreement...................................................        4
     Section 1.9        Intellectual Property Agreements................................................        4
     Section 1.10       Employee Leasing Agreement......................................................        4
     Section 1.11       Managing General Agency Agreement...............................................        5
     Section 1.12       Substitution and Indemnification Agreement......................................        5
     Section 1.13       Assignment of Reinsurance Recoverables..........................................        5
     Section 1.14       Terrorism Treaty Cost Allocation................................................        5
     Section 1.15       RSA SLISI Purchase Agreement....................................................        5
     Section 1.16       Closing.........................................................................        5
     Section 1.17       Consideration...................................................................        6
     Section 1.18       Purchase Price Adjustment.......................................................        6
     Section 1.19       Transfer of Unearned Premium Reserves...........................................        9
     Section 1.20       Sharing of Profit Contingency Commissions for the Property Surplus Share
                        Contracts.......................................................................       10
     Section 1.21       Closing Items...................................................................       11

ARTICLE II REPRESENTATIONS AND WARRANTIES OF SELLER.....................................................       14

     Section 2.1        Organization and Standing.......................................................       14
     Section 2.2        Authority.......................................................................       14
     Section 2.3        Noncontravention................................................................       15
     Section 2.4        Litigation......................................................................       15
     Section 2.5        Title to the RSUI Shares........................................................       16
     Section 2.6        Brokers and Finders.............................................................       16

ARTICLE III REPRESENTATIONS AND WARRANTIES RELATING TO ROYAL INSURER AFFILIATES.........................       16

     Section 3.1        Organization and Standing.......................................................       16
     Section 3.2        Authority.......................................................................       16
     Section 3.3        Noncontravention................................................................       17
     Section 3.4        Permits.........................................................................       18
     Section 3.5        Litigation......................................................................       18
     Section 3.6        Compliance with Applicable Law..................................................       18
</TABLE>

                                       i
<PAGE>

<TABLE>
<S>                                                                                                           <C>
ARTICLE IV REPRESENTATIONS AND WARRANTIES RELATING TO RSUI..............................................       19

     Section 4.1        Organization and Standing.......................................................       19
     Section 4.2        Noncontravention................................................................       19
     Section 4.3        Capitalization..................................................................       20
     Section 4.4        Financial Statements............................................................       20
     Section 4.5        Accounts........................................................................       21
     Section 4.6        Working Capital.................................................................       21
     Section 4.7        Administration of Fiduciary Accounts............................................       21
     Section 4.8        Compliance with Applicable Law..................................................       21
     Section 4.9        Permits.........................................................................       22
     Section 4.10       Litigation......................................................................       22
     Section 4.11       All Necessary Assets............................................................       22
     Section 4.12       Absence of Certain Changes......................................................       22
     Section 4.13       Taxes...........................................................................       22
     Section 4.14       Employee Benefit Plans; ERISA...................................................       23
     Section 4.15       Intellectual Property...........................................................       26
     Section 4.16       Material Business Contracts.....................................................       28
     Section 4.17       Intercompany Agreements; Transactions with Affiliates; Intercompany Accounts....       29
     Section 4.18       Insurance Coverage..............................................................       30
     Section 4.19       Books and Records...............................................................       30

ARTICLE V REPRESENTATIONS AND WARRANTIES RELATING TO THE BUSINESS.......................................       30

     Section 5.1        RSUI-Produced Insurance Contracts...............................................       30
     Section 5.2        Producer Relationships..........................................................       31
     Section 5.3        Third Party Reinsurance Contracts...............................................       32

ARTICLE VI REPRESENTATIONS AND WARRANTIES OF PURCHASER..................................................       33

     Section 6.1        Organization and Standing.......................................................       33
     Section 6.2        Authority.......................................................................       33
     Section 6.3        Noncontravention................................................................       34
     Section 6.4        Litigation......................................................................       34
     Section 6.5        Purchase of the RSUI Shares for Investment......................................       35
     Section 6.6        Sufficient Funds and Balance Sheet Support......................................       35
     Section 6.7        Brokers and Finders.............................................................       35

ARTICLE VII REPRESENTATIONS AND WARRANTIES RELATING TO AIHL INSURANCE CO................................       36

     Section 7.1        Organization and Standing.......................................................       36
     Section 7.2        Authority.......................................................................       36
     Section 7.3        Noncontravention................................................................       36
     Section 7.4        Permits.........................................................................       37
     Section 7.5        Compliance with Applicable Law..................................................       37
</TABLE>

                                       ii
<PAGE>

<TABLE>
<S>                                                                                                            <C>
ARTICLE VIII GENERAL COVENANTS..........................................................................       37

     Section 8.1        Conduct of Business Pending the Closing.........................................       37
     Section 8.2        Exclusivity.....................................................................       41
     Section 8.3        Pre-Closing Access and Transition Matters.......................................       41
     Section 8.4        Post-Closing Access.............................................................       42
     Section 8.5        Governmental Entity Consents and Filings; Rating Agencies.......................       43
     Section 8.6        Non-Governmental Consents.......................................................       44
     Section 8.7        Further Assurances..............................................................       46
     Section 8.8        Expenses........................................................................       46
     Section 8.9        Public Announcements............................................................       46
     Section 8.10       Notice of Adverse Developments..................................................       47
     Section 8.11       Policy Form, Rate and Rule Filings..............................................       47
     Section 8.12       Intercompany Balances...........................................................       47
     Section 8.13       Affiliate Agreements............................................................       48
     Section 8.14       Insurance Matters...............................................................       48
     Section 8.15       Resignation of RSUI Directors...................................................       48
     Section 8.16       Disposition of Business.........................................................       48
     Section 8.17       Transfer of Excluded Assets, Excluded Contracts and Retained Liabilities........       48
     Section 8.18       Indemnification of Brokerage....................................................       49
     Section 8.19       Interim Financial Statements....................................................       49
     Section 8.20       Corporate Records...............................................................       49
     Section 8.21       Instruments.....................................................................       49
     Section 8.22       Cooperation.....................................................................       50

ARTICLE IX ADDITIONAL COVENANTS.........................................................................       50

     Section 9.1        Trademarks; Change of Corporate Names...........................................       50
     Section 9.2        Other Intellectual Property Matters.............................................       51
     Section 9.3        Noncompetition and Nonsolicitation by Seller....................................       52
     Section 9.4        Ancillary Agreements; Other Closing Deliveries..................................       55
     Section 9.5        Updates to Seller Disclosure Schedules..........................................       55
     Section 9.6        The American Agency.............................................................       55
     Section 9.7        Capitalization of AIHL Insurance Co.............................................       55
     Section 9.8        Certain Matters.................................................................       55

ARTICLE X TAX MATTERS...................................................................................       56

     Section 10.1       Transfer Taxes..................................................................       56
     Section 10.2       Tax Matters.....................................................................       57
     Section 10.3       Computation of Tax Liabilities..................................................       58
     Section 10.4       Seller's Indemnity for Taxes....................................................       59
     Section 10.5       Assistance and Cooperation......................................................       59
     Section 10.6       Refunds.........................................................................       60
     Section 10.7       Contests........................................................................       60
     Section 10.8       Post-Closing Actions which Affect Seller's Liability for Taxes..................       61
</TABLE>

                                      iii
<PAGE>

<TABLE>
<S>                                                                                                            <C>
     Section 10.9       Section 338(h)(10) Election.....................................................       62
     Section 10.10      Post-Effective Date Taxes.......................................................       64

ARTICLE XI EMPLOYMENT MATTERS...........................................................................       64

     Section 11.1       RSUI Employees..................................................................       64
     Section 11.2       RSUI Employee Benefits..........................................................       66
     Section 11.3       Service Credit..................................................................       67
     Section 11.4       Termination of Employment.......................................................       67

ARTICLE XII REAL ESTATE MATTERS.........................................................................       68

     Section 12.1       Real Property Used in the Business..............................................       68

ARTICLE XIII CONDITIONS TO CLOSING......................................................................       69

     Section 13.1       Conditions of Purchaser and Seller to Closing...................................       69

ARTICLE XIV TERMINATION.................................................................................       72

     Section 14.1       Termination Prior to Closing....................................................       72
     Section 14.2       Effect of Termination...........................................................       73
     Section 14.3       Notice Regarding Termination....................................................       74

ARTICLE XV EXCLUSIONS FROM REPRESENTATIONS AND WARRANTIES; SURVIVAL; INDEMNIFICATION....................       74

     Section 15.1       Exclusions from the Representations and Warranties of Seller....................       74
     Section 15.2       Survival of Representations, Warranties and Covenants...........................       74
     Section 15.3       Seller's Indemnification Obligation.............................................       75
     Section 15.4       Purchaser's Indemnification Obligation..........................................       76
     Section 15.5       Other Limitations on Indemnification............................................       76
     Section 15.6       Notice..........................................................................       77
     Section 15.7       Right to Contest Claims of Third Parties........................................       78
     Section 15.8       Indemnification Payments........................................................       79
     Section 15.9       Exclusive Remedy................................................................       79
     Section 15.10      No Duplication of Recovery......................................................       79
     Section 15.11      Purchase Price Adjustment.......................................................       79

ARTICLE XVI CERTAIN DEFINITIONS AND OTHER MATTERS.......................................................       80

     Section 16.1       Definitions.....................................................................       80
     Section 16.2       Disclosure Schedules............................................................       86

ARTICLE XVII MISCELLANEOUS..............................................................................       86

     Section 17.1       Amendment, Modification and Waiver..............................................       86
     Section 17.2       Entire Agreement................................................................       86
     Section 17.3       Interpretation..................................................................       86
     Section 17.4       Due Investigation...............................................................       87
     Section 17.5       Notices.........................................................................       87
</TABLE>

                                       iv
<PAGE>

<TABLE>
<S>                                                                                                            <C>
     Section 17.6       Governing Law...................................................................       89
     Section 17.7       Descriptive Headings............................................................       89
     Section 17.8       Assignment; Binding Agreement...................................................       89
     Section 17.9       Third Party Beneficiaries.......................................................       89
     Section 17.10      Specific Performance............................................................       89
     Section 17.11      Severability....................................................................       89
     Section 17.12      Counterparts....................................................................       89
     Section 17.13      Consent to Jurisdiction.........................................................       90
     Section 17.14      Waiver of Jury Trial............................................................       90
     Section 17.15      Extension; Waiver...............................................................       90
     Section 17.16      Confidentiality.................................................................       90
</TABLE>

                                       v
<PAGE>

LIST OF EXHIBITS

Exhibit A         List of Royal Insurer Affiliates

Exhibit B         RIC Quota Share Reinsurance Agreement

Exhibit C         RSLIC Quota Share Reinsurance Agreement

Exhibit D         Landmark Quota Share Reinsurance Agreement

Exhibit E         RIC Administrative Services Agreement

Exhibit F         RSLIC Administrative Services Agreement

Exhibit G         RICA Administrative Services Agreement

Exhibit H         Landmark Administrative Services Agreement

Exhibit I         Claims Servicing Agreement

Exhibit J         Renewal Rights Agreement

Exhibit K         Transition Services Agreement Term Sheet

Exhibit L         Transitional Trademark License Agreement

Exhibit M         Service Mark Assignment

Exhibit N         Employee Leasing Agreement

Exhibit O         Managing General Agency Agreement

Exhibit P         Substitution and Indemnification Agreement

Exhibit Q         Assignment of Reinsurance Recoverables

Exhibit R         Terrorism Treaty Cost Allocation

Exhibit S         RSA SLISI Purchase Agreement

                                       vi
<PAGE>

                                LIST OF SCHEDULES

                           SELLER DISCLOSURE SCHEDULES

<TABLE>
<S>                        <C>
Schedule 1.3(a)            Excluded Assets
Schedule 1.3(b)            Excluded Contracts
Schedule 1.3(c)            Certain Retained Liabilities
Schedule 1.19(c)           Reinsurance Treaties
Schedule 1.20(a)           Property Surplus Share Contracts
Schedule 2.3(a)            Seller Noncontravention
Schedule 2.4               Seller Litigation
Schedule 3.3(a)            Royal Insurer Affiliates Noncontravention
Schedule 3.4(a)            Royal Insurer Affiliates Exceptions to Permits
Schedule 3.5               Royal Insurer Affiliates Litigation
Schedule 3.6               Royal Insurer Affiliates Exceptions to Compliance with Applicable Law
Schedule 4.1               RSUI Jurisdictions
Schedule 4.2(a)            RSUI Noncontravention
Schedule 4.3(b)            Equity Interests Owned by RSUI
Schedule 4.5               Accounts of RSUI
Schedule 4.6               Working Capital
Schedule 4.7               Exceptions to Administration of Fiduciary Accounts by RSUI
Schedule 4.8               RSUI Exceptions to Compliance with Applicable Law
Schedule 4.9(a)            RSUI Permits
Schedule 4.10              RSUI Litigation
Schedule 4.11              Exceptions to All Necessary Assets
Schedule 4.12              Changes in Conduct of Business
Schedule 4.13              Tax
Schedule 4.14(a)           Plans
Schedule 4.14(b)           RSUI Employee Contracts
Schedule 4.15(a)           Business Intellectual Property
Schedule 4.15(d)           Exceptions to Business Intellectual Property
Schedule 4.16(a)           Material Business Contracts
Schedule 4.16(b)           Third Party Consents for Acquired Contracts
Schedule 4.16(c)           Breaches of Acquired Contracts
Schedule 4.17(a)           Intercompany Agreements
Schedule 4.17(b)           Affiliate Agreements
Schedule 4.17(c)           Affiliate Agreements Post-Closing
Schedule 4.18              Insurance Policies
Schedule 5.2(a)(i)         Standard Forms of Producer Agreements
Schedule 5.2(a)(ii)        Exceptions to Standard Producer Agreements
Schedule 5.2(b)            Major Producers
Schedule 5.2(c)            Underwriting Authority
Schedule 5.3(a)            Third Party Reinsurance Contracts
Schedule 5.3(b)            Terminated Third Party Reinsurance Contracts
Schedule 5.3(c)            Corporate Treaties
Schedule 5.3(d)            Material Breaches of Third Party Reinsurance Agreements
</TABLE>

                                      vii
<PAGE>

<TABLE>
<S>                        <C>
Schedule 8.1(a)            Exceptions to Conduct of Business Pending the Closing
Schedule 8.6(a)(i)         Seller's Third Party, Nongovernmental Consents
Schedule 8.12(a)           Exceptions to Accounts Receivable or Payable to be Settled Prior to Closing
Schedule 8.15              Resigning RSUI Directors
Schedule 9.1(c)            Royal Group Intellectual Property
Schedule 11.1(a)           RSUI Employees
Schedule 11.1(d)           Assumed RSUI Employee Contract
Schedule 13.1(c)(ii)       Consents
Schedule 16.1(a)           Seller Persons with Knowledge
</TABLE>

                         PURCHASER DISCLOSURE SCHEDULES
<TABLE>
<S>                        <C>
Schedule 6.3(a)            Purchaser Noncontravention
Schedule 7.3               AIHL Insurance Co. Noncontravention
Schedule 7.4               AIHL Insurance Co. Exceptions to Permits
Schedule 8.6(a)(ii)        Purchaser's Third Party, Nongovernmental Consents
Schedule 16.1(b)           Purchaser Persons with Knowledge
</TABLE>

                           JOINT DISCLOSURE SCHEDULES

<TABLE>
<S>                        <C>
Schedule 8.5(a)            Governmental Entity Consents
Schedule 8.5(b)            Governmental Entity Filings
</TABLE>

                                      viii
<PAGE>

                              LIST OF DEFINED TERMS

<TABLE>
<CAPTION>
                                                                                                              Page
<S>                                                                                                           <C>
2003 Bonus Payment......................................................................................       64
Acceptable Reinsurers...................................................................................       32
Acquired Assets.........................................................................................       .2
Acquired Entity.........................................................................................       53
Acquisition.............................................................................................        1
Actions.................................................................................................       15
Actual DAC..............................................................................................       10
Actual NUPR.............................................................................................       10
Adjusted Net Worth Deficit..............................................................................        8
Administrative Services Agreements......................................................................        4
Affiliate...............................................................................................       80
Affiliate Agreements....................................................................................       29
Aggregate Ceding Commission.............................................................................        9
Agreement...............................................................................................        1
AIHL Insurance Co.......................................................................................        3
AIHL Insurance Co. Permits..............................................................................       36
Ancillary Agreements....................................................................................       80
Applicable Law..........................................................................................       80
Applicable Rate.........................................................................................       80
Asserted Liability......................................................................................       78
Assignment of Reinsurance Recoverables..................................................................        5
Assumed Contracts.......................................................................................       80
Audited RSUI Financial Statements.......................................................................       20
Bankruptcy and Equity Exception.........................................................................       80
Books and Records.......................................................................................       81
Business................................................................................................       81
Business Day............................................................................................       81
Business Intellectual Property..........................................................................       26
Business IP Contracts...................................................................................       26
Business Material Adverse Effect........................................................................       81
Cat Cover...............................................................................................       81
Cat Cover Endorsement...................................................................................       10
Ceding Insurers.........................................................................................        9
Claims Histories........................................................................................       42
Claims Notice...........................................................................................       77
Claims Servicing Agreement..............................................................................        4
Closing.................................................................................................        5
Closing Balance Sheet...................................................................................        6
Closing Date............................................................................................        5
Closing Financial Data..................................................................................        6
Closing RSUI Contract List..............................................................................       13
Code....................................................................................................       81
Collected Net Premium...................................................................................        9
</TABLE>

                                       ix
<PAGE>

<TABLE>
<S>                                                                                                            <C>
Competing Business......................................................................................       53
Computer Software.......................................................................................       82
Confidential Information................................................................................       90
Confidentiality Agreement...............................................................................       42
Corporate Treaties......................................................................................       32
Damages.................................................................................................       82
Deferred Acquisition Cost...............................................................................       82
Disclosing Party........................................................................................       90
Effective Date..........................................................................................       82
Employee Leasing Agreement..............................................................................        4
Employment Agreements...................................................................................        1
ERISA...................................................................................................       23
ERISA Affiliate.........................................................................................       23
Estimated DAC...........................................................................................        9
Estimated NUPR..........................................................................................        9
Excluded Assets.........................................................................................        2
Excluded Contracts......................................................................................        3
Extended Closing Date...................................................................................        5
Final Allocation........................................................................................       62
Final Seller's Tax Cost.................................................................................       62
Form....................................................................................................       51
GAAP....................................................................................................       82
Governmental Entity.....................................................................................       82
Guaranty National.......................................................................................        1
HSR Act.................................................................................................       82
In Force................................................................................................       82
Income Tax..............................................................................................       82
Income Tax Return.......................................................................................       82
Indemnified Party.......................................................................................       77
Indemnifying Party......................................................................................       77
Independent Firm........................................................................................       57
Insurance Permit........................................................................................       82
Insurance Policies......................................................................................       30
Intellectual Property...................................................................................       83
Intellectual Property Contracts.........................................................................       83
Intercompany Agreements.................................................................................       29
Investment Broker.......................................................................................       16
Knowledge...............................................................................................       83
Landmark................................................................................................        1
Landmark Administrative Services Agreement..............................................................        4
Landmark Purchase Agreement.............................................................................        1
Landmark Quota Share Reinsurance Agreement..............................................................        3
Latest Balance Sheet....................................................................................        6
Leased Employee.........................................................................................       65
Lien....................................................................................................       83
Losses..................................................................................................       75
</TABLE>

                                       x
<PAGE>

<TABLE>
<S>                                                                                                            <C>
Major Producers.........................................................................................       31
Managing General Agency Agreement.......................................................................        5
Mark Registration.......................................................................................       26
Material Business Contracts.............................................................................       28
Minimum Continued Participation Level...................................................................       71
Net Unearned Premium Reserves...........................................................................       83
Network Partner.........................................................................................       54
Neutral Auditors........................................................................................        7
New Hire................................................................................................       64
Non-Compete Period......................................................................................       51
Non-Owned Intellectual Property.........................................................................       26
NUPR Settlement Date....................................................................................       10
Parallel Treaty.........................................................................................       71
Parent..................................................................................................       22
Parent Group............................................................................................       22
Patents.................................................................................................       83
PBGC....................................................................................................       24
Permits.................................................................................................       83
Permitted Liens.........................................................................................       83
Person..................................................................................................       84
Plan....................................................................................................       23
Plans...................................................................................................       23
Post-Closing Tax Period.................................................................................       84
Pre-Closing Tax Period..................................................................................       84
Producer................................................................................................       31
Producer Agreement......................................................................................       30
Proposed Allocation.....................................................................................       62
Proprietary Software....................................................................................       26
Purchase Price..........................................................................................        6
Purchaser...............................................................................................        1
Purchaser Disclosure Schedules..........................................................................       84
Purchaser Indemnitees...................................................................................       75
Purchaser Performance Amount............................................................................       64
Purchaser's Fee.........................................................................................       35
PwC.....................................................................................................        6
Qualifying Assets.......................................................................................       84
Quota Share Reinsurance Agreements......................................................................        3
Receiving Party.........................................................................................       90
Reinsurance Schedule....................................................................................       31
Reinsured Contracts.....................................................................................       84
Renewal Rights Agreement................................................................................        4
Reserves................................................................................................       84
Resolution Period.......................................................................................        7
Retained Liabilities....................................................................................        3
RIC.....................................................................................................        1
RIC Administrative Services Agreement...................................................................        3
</TABLE>

                                       xi
<PAGE>

<TABLE>
<S>                                                                                                            <C>
RIC Quota Share Reinsurance Agreement...................................................................        3
RICA....................................................................................................        1
RICA Administrative Services Agreement..................................................................        4
Royal & SunAlliance.....................................................................................        5
Royal Group Intellectual Property.......................................................................       52
Royal Insurer Affiliate Permits.........................................................................       18
Royal Insurer Affiliates................................................................................        1
RSA SLISI Purchase Agreement............................................................................        5
RSLIC...................................................................................................        1
RSLIC Administrative Services Agreement.................................................................        3
RSLIC Quota Share Reinsurance Agreement.................................................................        3
RSUI....................................................................................................        1
RSUI Affiliate Owned Intellectual Property..............................................................       26
RSUI Confidential Information...........................................................................       53
RSUI Employee Contracts.................................................................................       23
RSUI Mark...............................................................................................       26
RSUI Owned Intellectual Property........................................................................       26
RSUI Permits............................................................................................       21
RSUI Shares.............................................................................................        2
RSUI-Produced Insurance Contracts.......................................................................       84
SAP.....................................................................................................       84
Schedule 1.3(c) Liabilities.............................................................................        3
Schedule 1.20(a) Contracts..............................................................................       10
Schedule 5.3(a) Contracts...............................................................................       31
Schedule of Adjusted Underwriting Results...............................................................       84
Section 338 Elections...................................................................................       62
Section 338 Forms.......................................................................................       63
Securities Act..........................................................................................       34
Seller..................................................................................................        1
Seller Bonus Payment....................................................................................       64
Seller Disclosure Schedules.............................................................................       84
Seller Indemnitees......................................................................................       76
Seller Performance Amount...............................................................................       64
Seller's Fee............................................................................................       16
Seller's Tax Cost.......................................................................................       62
Service Mark Assignment.................................................................................       50
Sherman Oaks Consent....................................................................................       29
Straddle Period.........................................................................................       84
Subsidiary..............................................................................................       85
Substitution and Indemnification Agreement..............................................................        5
Survival Period.........................................................................................       74
Target Closing Date.....................................................................................        5
Tax.....................................................................................................       85
Tax Claim...............................................................................................       60
Tax Return..............................................................................................       85
Taxes...................................................................................................       85
</TABLE>

                                      xii
<PAGE>

<TABLE>
<S>                                                                                                            <C>
Taxing Authority........................................................................................       85
Terrorism Treaty........................................................................................       85
Third Party Claimant....................................................................................       78
Third Party Reinsurance Contracts.......................................................................       31
Title IV Plan...........................................................................................       24
Trade Secrets...........................................................................................       85
Trademarks..............................................................................................       85
Transfer Taxes..........................................................................................       85
Transferred Employees...................................................................................       65
Transition Period.......................................................................................       64
Transition Services Agreement...........................................................................        4
Transitional Trademark License Agreement................................................................        4
Trust Account...........................................................................................        9
Unaffiliated Reinsurers.................................................................................       85
Unresolved Changes......................................................................................        7
WARN....................................................................................................       67
WARN Act................................................................................................       67
Working Capital Deficit.................................................................................        8
Working Capital Surplus.................................................................................        8
</TABLE>

                                      xiii
<PAGE>

                              ACQUISITION AGREEMENT

                  This ACQUISITION AGREEMENT (this "Agreement"), dated as of
June 6, 2003, is made by and between ROYAL GROUP, INC., a Delaware corporation
("Seller") and ALLEGHANY INSURANCE HOLDINGS LLC, a Delaware limited liability
company ("Purchaser"). Certain capitalized terms used in this Agreement are
defined in Section 16.1 hereof.

                                   WITNESSETH:

                  WHEREAS, Seller owns all of the issued and outstanding shares
of common stock of Royal Specialty Underwriting, Inc., a Georgia company
("RSUI");

                  WHEREAS, RSUI is in the business of underwriting and
administering insurance and reinsurance coverages for Royal Indemnity Company
("RIC"), Royal Surplus Lines Insurance Company ("RSLIC"), Royal Insurance
Company of America ("RICA") and certain other insurer affiliates of Seller
listed on Exhibit A hereto (collectively, the "Royal Insurer Affiliates");

                  WHEREAS, pursuant to the terms and subject to the conditions
set forth in this Agreement, Seller desires to sell, assign, convey, transfer
and deliver to Purchaser, and Purchaser desires to purchase, acquire, accept and
assume from Seller: (i) all of the issued and outstanding shares of common stock
of RSUI; (ii) certain assets used in, and certain of the rights to, the Business
(as defined in Section 16.1 hereof) as provided herein; and (iii) certain
agreements relating to the Business as provided herein (collectively, the
"Acquisition");

                  WHEREAS, as a condition and inducement to Purchaser's
willingness to enter into this Agreement, Purchaser or an Affiliate of Purchaser
and certain key employees have entered into Employment Agreements dated as of
June 4, 2003 and effective upon the Closing Date (the "Employment Agreements");

                  WHEREAS, concurrently with the execution and delivery of this
Agreement, Purchaser and Guaranty National Insurance Company, an Affiliate of
Seller ("Guaranty National") are entering into a stock purchase agreement (such
agreement, together with any and all agreements and instruments to be executed
and delivered pursuant thereto and all schedules and exhibits thereto, the
"Landmark Purchase Agreement"), pursuant to which Purchaser agrees to acquire,
and Guaranty National agrees to sell, all of the issued and outstanding capital
stock of Landmark American Insurance Company ("Landmark");

                  WHEREAS, in connection with the Acquisition, on the Closing
Date, each of Purchaser and Seller desires to cause their respective Affiliates
to enter into certain related agreements as provided herein, each effective as
of July 1, 2003, including, without limitation, the Quota Share Reinsurance
Agreements (as defined herein), the Administrative Services Agreements (as
defined herein) and the Renewal Rights Agreement (as defined herein); and

<PAGE>

                  WHEREAS, in connection with the Acquisition, on the Closing
Date, each of Purchaser and Seller desires to enter into the RSA SLISI Purchase
Agreement (as defined herein).

                  NOW, THEREFORE, in consideration of the foregoing and the
respective representations, warranties, covenants, agreements and conditions set
forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto, intending to be
legally bound, agree as follows:

                                    ARTICLE I

                                   THE CLOSING

                  Section 1.1 Sale and Purchase.

                           (a)      Upon the terms and subject to the conditions
set forth in this Agreement, at the Closing, Seller shall sell, assign, convey,
transfer and deliver to Purchaser, and Purchaser shall purchase, acquire, accept
and assume from Seller, all of its right, title and interest in, to and under
the following (the "Acquired Assets"): 127,500 shares of common stock of RSUI,
representing all of the issued and outstanding shares of common stock of RSUI
(the "RSUI Shares").

                           (b)      At the Closing, each of Seller and Purchaser
shall, and shall cause each of their respective Affiliates to, enter into those
Ancillary Agreements (as defined herein) to which each of such Persons is a
party, including, without limitation, the Renewal Rights Agreement.

                           (c)      The RSUI Shares shall be transferred to
Purchaser free and clear of all Liens.

                           (d)      The consideration to be paid by Purchaser
for the Acquired Assets shall be as set forth in Section 1.17 hereof, subject to
adjustment as provided in Section 1.18 hereof.

                  Section 1.2 Transfer of Acquired Assets. At the Closing, the
RSUI Shares shall be transferred by such instruments of transfer as are
reasonably acceptable to Seller and Purchaser.

                  Section 1.3 Excluded Assets, Excluded Contracts and Retained
Liabilities.

                           (a)      Except as provided in Sections 9.1 or 9.2
below, at the Closing, Seller shall not transfer, and, except as provided in the
Ancillary Agreements, from and after the Closing, RSUI shall not own or be
subject to any obligation under, any Royal Group Intellectual Property or any of
the assets of RSUI or the Business set forth in Schedule 1.3(a) (collectively,
the "Excluded Assets").

                                       2
<PAGE>

                           (b)      At the Closing, Seller shall not transfer,
and, from and after the Closing, RSUI shall not own or be subject to, any
contracts entered into by RSUI or relating to the Business set forth in Schedule
1.3(b) (collectively, the "Excluded Contracts").

                           (c)      Except as provided in the Quota Share
Reinsurance Agreements, the Administrative Services Agreements and the Claims
Servicing Agreement, from and after the Closing, Seller shall indemnify
Purchaser for and shall hold Purchaser and its Affiliates harmless from (i) all
liabilities related to the Excluded Assets, (ii) all liabilities related to the
Excluded Contracts, (iii) all liabilities arising out of claims litigation
relating to RSUI-Produced Insurance Contracts which are not Reinsured Contracts,
whether or not RSUI is named as a party thereto, and (iv) the liabilities and
obligations set forth in Schedule 1.3(c) (the "Schedule 1.3(c) Liabilities," and
together with the liabilities described in clauses (i), (ii) and (iii) above,
the "Retained Liabilities").

                  Section 1.4 Quota Share Reinsurance Agreements.

                           (a)      At the Closing, Seller shall cause RIC to
execute and deliver to an insurance company to be designated by Purchaser, which
insurance company shall be a direct or indirect wholly owned subsidiary of
Purchaser ("AIHL Insurance Co."), and Purchaser shall cause AIHL Insurance Co.
to execute and deliver to RIC, a quota share reinsurance agreement substantially
in the form attached hereto as Exhibit B (the "RIC Quota Share Reinsurance
Agreement").

                           (b)      At the Closing, Seller shall cause RSLIC to
execute and deliver to AIHL Insurance Co., and Purchaser shall cause AIHL
Insurance Co. to execute and deliver to RSLIC, a quota share reinsurance
agreement substantially in the form attached hereto as Exhibit C (the "RSLIC
Quota Share Reinsurance Agreement").

                           (c)      At the Closing, Seller shall cause Landmark
to execute and deliver to AIHL Insurance Co., and Purchaser shall cause AIHL
Insurance Co. to execute and deliver to Landmark, a quota share reinsurance
agreement substantially in the form attached hereto as Exhibit D (the "Landmark
Quota Share Reinsurance Agreement" and together with the RIC Quota Share
Reinsurance Agreement and the RSLIC Quota Share Reinsurance Agreement, the
"Quota Share Reinsurance Agreements").

                  Section 1.5 Administrative Services Agreements.

                           (a)      At the Closing, Seller shall cause RSUI and
RIC to execute and deliver to AIHL Insurance Co., and Purchaser shall cause AIHL
Insurance Co. to execute and deliver to RSUI and RIC, an administrative services
agreement substantially in the form attached hereto as Exhibit E (the "RIC
Administrative Services Agreement").

                           (b)      At the Closing, Seller shall cause RSUI and
RSLIC to execute and deliver to AIHL Insurance Co., and Purchaser shall cause
AIHL Insurance Co. to execute and deliver to RSUI and RSLIC, an administrative
services agreement substantially in the form attached hereto as Exhibit F (the
"RSLIC Administrative Services Agreement").

                                       3
<PAGE>

                           (c)      At the Closing, Seller shall cause RSUI and
RICA to execute and deliver to AIHL Insurance Co., and Purchaser shall cause
AIHL Insurance Co. to execute and deliver to RSUI and RICA, an administrative
services agreement substantially in the form attached hereto as Exhibit G (the
"RICA Administrative Services Agreement").

                           (d)      At the Closing, Seller shall cause RSUI and
Landmark to execute and deliver to AIHL Insurance Co., and Purchaser shall cause
AIHL Insurance Co. to execute and deliver to RSUI and Landmark, an
administrative services agreement substantially in the form attached hereto as
Exhibit H (the "Landmark Administrative Services Agreement", and together with
the RIC Administrative Services Agreement, the RSLIC Administrative Services
Agreement and the RICA Administrative Services Agreement, the "Administrative
Services Agreements").

                  Section 1.6 Claims Servicing Agreement. At the Closing, Seller
shall cause RSUI, RIC, RSLIC, RICA and the Royal Insurer Affiliates listed on
Exhibit A thereto to execute a claims servicing agreement substantially in the
form attached hereto as Exhibit I (the "Claims Servicing Agreement").

                  Section 1.7 Renewal Rights Agreement. At the Closing, Seller
shall, and shall cause each of the Royal Insurer Affiliates to, execute and
deliver to Purchaser, and Purchaser shall execute and deliver to Seller and each
of the Royal Insurer Affiliates, a renewal rights agreement substantially in the
form attached hereto as Exhibit J (the "Renewal Rights Agreement").

                  Section 1.8 Transition Services Agreement. At the Closing,
Seller shall execute and deliver to Purchaser, and Purchaser shall execute and
deliver to Seller, a transition services agreement which shall incorporate the
terms set forth on Exhibit K (the "Transition Services Agreement").

                  Section 1.9 Intellectual Property Agreements.

                           (a)      At the Closing, Royal & SunAlliance USA,
Inc. ("Royal & SunAlliance" ) shall execute and deliver to RSUI, and Seller
shall cause RSUI to execute and deliver to Royal & SunAlliance a transitional
trademark license agreement substantially in the form attached hereto as Exhibit
L (the "Transitional Trademark License Agreement").

                           (b)      At the Closing, Royal & SunAlliance shall
execute and deliver to RSUI, and Seller shall cause RSUI to execute and deliver
to Royal & SunAlliance the Service Mark Assignment (as defined herein)
substantially in the form attached hereto as Exhibit M.

                  Section 1.10 Employee Leasing Agreement. At the Closing,
Seller shall cause RIC to execute and deliver to RSUI, and Seller shall cause
RSUI to execute and deliver to RIC, an employee leasing agreement substantially
in the form attached hereto as Exhibit N (the "Employee Leasing Agreement").

                                       4
<PAGE>

                  Section 1.11 Managing General Agency Agreement. At the
Closing, Seller shall cause RSUI, RIC, RSLIC, RICA and Landmark to execute a
managing general agency agreement substantially in the form attached hereto as
Exhibit O (the "Managing General Agency Agreement").

                  Section 1.12 Substitution and Indemnification Agreement. At
the Closing, Seller shall cause RIC to execute and deliver to AIHL Insurance
Co., and Purchaser shall cause AIHL Insurance Co. to execute and deliver to RIC,
a substitution and indemnification agreement substantially in the form attached
hereto as Exhibit P (the "Substitution and Indemnification Agreement").

                  Section 1.13 Assignment of Reinsurance Recoverables. At the
Closing, Purchaser shall cause AIHL Insurance Co. to conditionally assign to the
Trust Account established under the Quota Share Reinsurance Agreements all AIHL
reinsurance recoverables relating to the catastrophe excess of loss reinsurance
purchased by AIHL Insurance Co. and its Affiliates with respect to the Reinsured
Contracts. Such conditional assignment of reinsurance recoverables shall be
substantially in the form of Exhibit Q hereto (the "Assignment of Reinsurance
Recoverables").

                  Section 1.14 Terrorism Treaty Cost Allocation. Each of Seller
and Purchaser agrees, on behalf of itself and its Affiliates, to the allocation
of the cost of the Terrorism Treaty (and any extension thereof) and to the other
terms and conditions relating to the Terrorism Treaty (and any extension
thereof) set forth in Exhibit R hereto.

                  Section 1.15 RSA SLISI Purchase Agreement. At the Closing,
Seller shall execute and deliver to Purchaser, and Purchaser shall execute and
deliver to Seller, a purchase agreement substantially in the form of Exhibit S
(the "RSA SLISI Purchase Agreement"), pursuant to which Purchaser will acquire,
and Seller will sell, all of the issued and outstanding capital stock of RSA
Surplus Lines Insurance Services, Inc.

                  Section 1.16 Closing.

                           (a)      Subject to Section 1.16(b), the closing of
the transactions contemplated hereunder (the "Closing") will take place at 10:00
a.m., New York City time, on a date (the "Closing Date") to be agreed to by the
parties hereto, which shall be the later of (x) July 1, 2003 (the "Target
Closing Date") or (y) the fifth (5th) Business Day on which the last unfulfilled
or unwaived condition set forth in Section 13.1 hereof (other than any such
condition to be fulfilled at the Closing) shall be fulfilled or waived in
accordance with the terms of this Agreement; provided, that, notwithstanding the
satisfaction or waiver of all conditions to Closing (other than any condition to
be fulfilled at the Closing), the Purchaser shall be entitled to delay the
Closing to a Closing Date not later than July 31, 2003 (the "Extended Closing
Date"). The Closing shall be held at the offices of Skadden, Arps, Slate,
Meagher & Flom LLP, Four Times Square, New York, New York 10036, or such other
place as the parties may mutually agree in writing.

                           (b)      If the Closing does not occur on the Target
Closing Date, then (i) when the Closing occurs, the Closing shall be given
effect as of the Effective

                                       5
<PAGE>

Date, (ii) all of the Ancillary Agreements shall be dated as of the Effective
Date and given effect as of the Effective Date and (iii) at the Closing,
Purchaser shall pay to Seller an amount equal to the net operating expenses of
RSUI paid by RSUI or Seller or an Affiliate of Seller during the period, or
accrued as payable for such period, from July 1, 2003 to the Closing Date to the
extent not payable by RSUI to Seller or an Affiliate of Seller after the Closing
Date in respect of such period under the Ancillary Agreements. If the Closing
does not occur on the Target Closing Date solely by reason of Purchaser's
election to delay the Closing until an Extended Closing Date as provided in
Section 1.16(a) above, then Seller shall deliver to Purchaser on July 1, 2003
the certificate described in Section 13.1(c)(ix) hereof and, upon delivery of
such certificate by Seller to Purchaser, the condition to Closing set forth in
Section 13.1(c)(ix) hereof shall be deemed to be satisfied.

                           (c)      If the Closing Date does not occur on the
Target Closing Date, then, during the period from the Effective Date until the
Closing Date, Seller shall cause RSUI and each Royal Insurer Affiliate (to the
extent that the conduct of each such Royal Insurer Affiliate relates to the
Business) to conduct their operations in accordance with the provisions of
Section 8.1 hereof.

                           (d)      At the Closing, each of the parties shall
deliver or cause to be delivered to the intended recipient the monies, documents
and instruments required to be delivered by or on behalf of such party at or
prior to the Closing pursuant to the terms of this Agreement.

                  Section 1.17 Consideration. The aggregate purchase price to be
paid by Purchaser to Seller at the Closing in consideration of the transfer by
Seller of the Acquired Assets shall be one hundred million dollars
($100,000,000), subject to adjustments as provided in Section 1.18 (the
"Purchase Price"). On the Closing Date, the Purchase Price shall be paid in U.S.
dollars by wire transfer of immediately available funds to the bank account
specified by Seller to Purchaser.

                  Section 1.18 Purchase Price Adjustment.

                           (a)      As soon as practicable, but in no event
later than sixty (60) days following the Closing Date, Seller shall prepare and
deliver to Purchaser (i) a balance sheet of RSUI as of 12:01 a.m. on the Closing
Date (the "Closing Balance Sheet") which shall be audited by Pricewaterhouse
Coopers LLC ("PwC"), (ii) a calculation of GAAP Net Worth of RSUI, as defined in
Section 1.18(g) below, and (iii) a calculation of Working Capital of RSUI, as
defined in Section 1.18(g) below (the Closing Balance Sheet, GAAP Net Worth and
Working Capital being collectively referred to herein as the "Closing Financial
Data"). The Closing Balance Sheet shall be prepared in accordance with GAAP
consistently applied with the accounting principles used to prepare the December
31, 2002 balance sheet included in the Audited RSUI Financial Statements (the
"Latest Balance Sheet"); provided, however, that whether or not required by
GAAP, the Closing Balance Sheet will not give effect to the Employment
Agreements or the Ancillary Agreements. The fees and expenses of PwC incurred in
connection with the audit of the Closing Balance Sheet, as well as the
preparation of the Audited RSUI

                                       6
<PAGE>

Financial Statements and related underwriting review conducted by PwC, shall be
borne fifty percent (50%) by Seller and fifty percent (50%) by Purchaser.

                           (b)      During the preparation of the Closing
Balance Sheet, and the period of any review or dispute contemplated by this
Section 1.18, Purchaser shall (i) provide Seller and Seller's authorized
representatives with reasonable access to all relevant books, records,
workpapers and RSUI Employees, (ii) cooperate with Seller and Seller's
authorized representatives, including the provision of all information necessary
or useful in the preparation of the Closing Balance Sheet, and (iii) be entitled
to freely observe and review the audit, including PwC's workpapers, with full
access to PwC during the entirety of said audit, including during the planning
stage.

                           (c)      After receipt of the Closing Financial Data,
Purchaser shall have forty-five (45) days to review the Closing Financial Data,
together with the workpapers used in the preparation thereof. Purchaser's review
of the Closing Financial Data and therefore any objections thereto shall be
limited to whether such Closing Financial Data was prepared in accordance with
GAAP consistently applied with the Audited RSUI Financial Statements. Unless
Purchaser delivers written notice to Seller on or prior to the 45th day after
Purchaser's receipt of the Closing Financial Data stating that Purchaser objects
to the Closing Balance Sheet, the calculation of GAAP Net Worth or the
calculation of Working Capital, and specifying the nature of such objections and
the reasons therefor, Purchaser shall be deemed to have accepted and agreed to
the Closing Financial Data and the Closing Balance Sheet shall become the Final
Closing Balance Sheet, and the Final Closing Balance Sheet and the calculations
of GAAP Net Worth and Working Capital shall be final, binding and conclusive for
purposes of determining the Final Purchase Price. If Purchaser so notifies
Seller of its objections to the Closing Financial Data, the parties shall,
within twenty (20) days (or such longer period as the parties may agree)
following Seller's receipt of such notice (the "Resolution Period"), attempt to
resolve their differences arising from such objections, and any resolution by
them as to any disputed amounts or methods, principles, practices or policies
employed in the preparation thereof shall be final, binding and conclusive.

                           (d)      Any objections regarding the Closing
Financial Data remaining in dispute at the conclusion of the Resolution Period
("Unresolved Changes") shall be submitted to Deloitte & Touche LLP or Ernst &
Young LLP (the "Neutral Auditors"). All Unresolved Changes shall be submitted to
the Neutral Auditors no later than ten (10) days after conclusion of the
Resolution Period. Each party agrees to execute, if requested by the Neutral
Auditors, a reasonable engagement letter. All fees and expenses relating to the
work, if any, to be performed by the Neutral Auditors shall be borne pro rata by
Seller and Purchaser in proportion to the allocation of the dollar amount of the
Unresolved Changes between Seller and Purchaser made by the Neutral Auditors
such that the prevailing party pays a lesser proportion of the fees and
expenses. The Neutral Auditors shall act as an expert to determine, based on the
provisions of this Section 1.18, only the Unresolved Changes. The Neutral
Auditors' determination of the Unresolved Changes shall be made within thirty
(30) days after the submission of the Unresolved Changes thereto, and shall be
set forth in a written statement delivered to Seller and Purchaser. The Closing
Financial Data shall then be revised to reflect the

                                       7
<PAGE>

Neutral Auditor's determination of the Unresolved Changes, whereupon the Closing
Balance Sheet shall become the Final Closing Balance Sheet, and the Final
Closing Balance Sheet and the calculations of GAAP Net Worth and Working Capital
as determined by the Neutral Auditors shall be final, binding and conclusive for
purposes of determining the Final Purchase Price.

                           (e)      Once the Final Closing Balance Sheet and the
calculations of GAAP Net Worth and Working Capital are available, the Final
Purchase Price shall be determined as follows: (i) first, to the extent that
Working Capital is less than zero, the Purchase Price shall be decreased by an
amount equal to the difference between Working Capital and zero (the "Working
Capital Deficit"); to the extent that Working Capital is more than zero, the
Purchase Price shall be increased by an amount equal to the difference between
Working Capital and zero (the "Working Capital Surplus"); and (ii) second, to
the extent that Adjusted Net Worth (as defined in Section 1.18(g) below), is
less than zero, the Purchase Price shall be decreased by an amount equal to the
difference between Adjusted Net Worth and zero (the "Adjusted Net Worth
Deficit"). If the Final Purchase Price exceeds the Purchase Price, Purchaser
shall pay to Seller in cash, by wire transfer to an account specified by Seller,
the amount equal to the Final Purchase Price less the Purchase Price, together
with simple interest on such amount at the Applicable Rate from the Closing Date
through the date of payment. If the Final Purchase Price is less than the
Purchase Price, Seller shall pay to Purchaser in cash, by wire transfer to an
account specified by Purchaser, the amount equal to the Purchase Price less the
Final Purchase Price, together with simple interest on such amount at the
Applicable Rate from the Closing Date through the date of payment. Such payment
by Purchaser to Seller, or by Seller to Purchaser, as the case may be, shall be
made within five (5) Business Days after the date that the Final Closing Balance
Sheet becomes available.

                           (f)      Purchaser and Seller shall make good faith
efforts to comply with the timing and response requirements set forth in this
Section 1.18, but, in the absence of bad faith, neither party shall be deemed to
have waived its rights under the Purchase Price adjustment provisions as
contemplated herein on the basis of technical violations of timing or response
requirements.

                           (g)      For purposes hereof, (i) GAAP Net Worth is
an amount equal to "Total Stockholder's Equity (Deficit)" as set forth on the
Closing Balance Sheet (excluding any Tax assets and any liability for Taxes),
(ii) Working Capital is an amount computed as (x) "Total Current Assets" as set
forth on the Closing Balance Sheet (excluding any Tax assets, and provided that
the amount of the deposit in respect of the July 2004 meeting at Pebble Beach
resorts described in Schedule 4.16(a) hereto shall be treated as a current asset
for purposes of computing Working Capital) less (y) "Total Current Liabilities"
as set forth on the Closing Balance Sheet (excluding any liability for Taxes),
(iii) if there is a Working Capital Deficit, Adjusted Net Worth shall be an
amount equal to GAAP Net Worth increased by the Working Capital Deficit, and
(iv) if there is a Working Capital Surplus, Adjusted Net Worth shall be an
amount equal to GAAP Net Worth decreased by the Working Capital Surplus.

                                       8
<PAGE>

                  Section 1.19 Transfer of Unearned Premium Reserves.

                           (a)      On the Closing Date, Seller shall estimate
the Net Unearned Premium Reserves ("Estimated NUPR") and cause each of RIC,
RSLIC and Landmark (collectively, the "Ceding Insurers"), to place Qualifying
Assets in an amount equal to their respective portions of the Estimated NUPR,
net of their respective portions of the Aggregate Ceding Commission, into the
trust account established by AIHL Insurance Co. pursuant to Section 9.1 of the
Quota Share Reinsurance Agreements (the "Trust Account"); provided, however,
neither Seller nor any of the Ceding Insurers shall be required to place
Qualifying Assets into the Trust Account in excess of the amounts actually
collected by such Ceding Insurer in respect of the Net Unearned Premium Reserves
at or prior to the Closing Date; and provided, further, with respect to any
premium actually collected by RSUI at or prior to the Closing Date in respect of
the Net Unearned Premium Reserves and not paid to a Ceding Insurer, Seller shall
cause RSUI to place, on the Closing Date, Qualifying Assets in such amount into
the Trust Account.

                           (b)      On the Closing Date, Seller shall cause the
Ceding Insurers to assign to the Trust Account all premium receivables related
to the Reinsured Contracts, net of premium receivables to be ceded to third
party reinsurers relating to such Reinsured Contracts. Premiums which are
actually collected, net of premiums ceded to third party reinsurers, shall be
referred to herein as the "Collected Net Premium". At any time on and after the
Closing Date, the Ceding Insurers and RSUI shall place in the Trust Account all
Collected Net Premium as soon as practicable upon receipt of the Collected Net
Premium, but no later than five (5) Business Days after receipt of such
Collected Net Premium.

                           (c)      For purposes of this Section 1.19,
"Aggregate Ceding Commission" shall be an amount equal to the sum of the
following:

                                    (i)      an amount equal to (x) 6.0%
multiplied by (y) the Estimated NUPR, representing reimbursement of the
estimated Deferred Acquisition Cost (the "Estimated DAC") paid by the Royal
Insurer Affiliates in connection with the Net Unearned Premium Reserves;

                                    (ii)     $15.0 million, representing the
embedded value in the Net Unearned Premium Reserves; and

                                    (iii)    $9.753 million, representing the
cost of the Cat Cover previously paid by the Royal Insurer Affiliates for the
RSUI-Produced Insurance Contracts for the six-month period ending on October 31,
2003; and

                                    (iv)     an amount, representing payment for
a portion of the value of the credit carryforwards existing as of December 31,
2002 in the reinsurance treaties identified on Schedule 1.19 (c) hereto, equal
to (A) $3.75 million less (B) any amount paid to a Royal Insurer Affiliate by a
participant in a treaty identified on Schedule 1.19(c) hereto by reason of such
participant's failure to continue as a participant in such treaty.

                                       9
<PAGE>

                           (d)      As of a date to be agreed by Seller and
Purchaser, but not later than December 31, 2003 (the "NUPR Settlement Date"),
Seller shall cause PwC to compute (i) the actual Net Unearned Premium Reserves
(the "Actual NUPR") and the actual Deferred Acquisition Cost paid by the Royal
Insurer Affiliates in connection with the Actual NUPR (the "Actual DAC").
Promptly upon receipt of PwC's computation of the Actual NUPR and the Actual
DAC, Seller shall forward such computations to Purchaser. In the event that
Actual NUPR exceeds Estimated NUPR, Seller shall cause the Ceding Reinsurers
promptly to remit the difference to Purchaser, and in the event that Estimated
NUPR exceeds Actual NUPR, Purchaser (or an Affiliate of Purchaser) shall
promptly remit the difference to Seller or to such Ceding Reinsurer as may be
designated by Seller. In the event that Actual DAC exceeds Estimated DAC,
Purchaser shall promptly remit the difference to Seller, and in the event that
Estimated DAC exceeds Actual DAC, Seller shall promptly remit the difference to
Purchaser. Payments made in respect of differences between Actual NUPR and
Estimated NUPR and between Actual DAC and Estimated DAC shall include payment of
simple interest on the amount of such difference at the Applicable Rate from the
Closing Date through the date of payment. Payments made pursuant to this Section
1.19(d) shall be subject to offset but only to the extent agreed by Seller and
Purchaser.

                           (e)      In the event that, subsequent to the Closing
Date, Purchaser notifies Seller that the reinsurers party to the treaties set
forth on Schedule 1.19(c) have not agreed to make available to AIHL Insurance
Co. the benefit of the credit carryforwards that existed in such treaties as of
December 31, 2002, Seller shall refund to Purchaser a portion of the $3.75
million payment paid as part of the Aggregate Ceding Commission pursuant to
Section 1.19(c)(iv) above. The amount of the refund shall be proportionate to
the portion of the credit carryforwards existing in the treaties identified on
Schedule 1.19(c) as of December 31, 2002 not made available to AIHL Insurance
Co., and shall include payment of simple interest on such amount at the
Applicable Rate from the Closing Date through the date of payment.

                           (f)      On the Closing Date, the Cat Cover shall be
endorsed over to AIHL Insurance Co. (the "Cat Cover Endorsement"), and AIHL
Insurance Co. shall be solely responsible for all payments to be made in respect
of the Cat Cover from and after November 1, 2003.

                           (g)      Seller and the Ceding Insurers shall
allocate the Net Unearned Premium Reserves and Aggregate Ceding Commission among
the Royal Insurer Affiliates in a fair and equitable manner.

                  Section 1.20 Sharing of Profit Contingency Commissions for the
Property Surplus Share Contracts.

                           (a)      The calculation of the profit contingency
commissions will continue on the same basis as defined in the treaties set forth
on Schedule 1.20(a) (the "Schedule 1.20(a) Contracts") with the results ceded by
the Royal Insurer Affiliates and the results ceded by AIHL Insurance Co. to the
Parallel Treaty (as defined in Section 13.1(c)(x)) being merged for purposes of
the calculation.

                                       10
<PAGE>

                           (b)      According to the terms of the Schedule
1.20(a) Contracts, the premiums ceded to the treaties and the corresponding
paid, outstanding and incurred losses and resulting ceded loss ratio are grouped
together into adjustment periods or compartments for the calculation. These
adjustment periods are defined on a policy/risk attaching basis. All ceded
policies with effective dates within the defined adjustment period are grouped
together. Thus, the calculations are done on a "Policy Year" basis rather than a
calendar year basis. Typically, these adjustment periods correspond to a single
calendar year (January through December). However, for the RSUI Pool the most
recent adjustment period, Part 5, is currently for three years beginning January
1, 2001 and ending December 31, 2003.

                           (c)      While the calculations of the profit
contingency commissions will continue to be made on a consistent basis as
respects the reinsurer participants and will include ceded premium and loss
experience from both the period when Seller owned RSUI and the period when
Purchaser owns RSUI, it will be necessary to further break down the calculations
for each adjustment period into two components: one for the Seller ownership
period and one for the Purchaser ownership period. Since the transfer of the Net
Unearned Premium Reserves will be made on the Effective Date and, from and after
the Effective Date, RSUI-Produced Insurance Contracts will be either 100% ceded
to or issued by AIHL Insurance Co., all ceded earned premium and newly arising
loss experience from and after the Effective Date will be credited to the period
of Purchaser's ownership of RSUI. Similarly, all ceded earned premium for
periods up to and including the Effective Date will be credited to the period of
Seller's ownership of RSUI, as will the ceded loss experience relating to ceded
claims arising from occurrences prior to the Effective Date.

                           (d)      The reinsurers will be billed based upon the
results of the calculation using the combined 2003 RSUI experience (including
results during the period of Seller ownership of RSUI and results during the
period of Purchaser ownership of RSUI). After such billed contingent commissions
have been collected by RSUI, such collected cash amounts will be shared by the
two companies in proportion to their respective percentage of contribution to
the 2003 contingent profit calculation. This apportionment will be made for the
calculation as of December 31, 2003. Thereafter, the total results of the profit
contingency commissions will be retained by AIHL Insurance Co.

                  Section 1.21 Closing Items.

                           (a)      At the Closing, Seller, RSUI or the Royal
Insurer Affiliates, as applicable, shall execute (except as to clauses (xv),
(xvi), (xvii), (xviii), (xix), (xx) and (xxiii) of this Section 1.21(a)) and
deliver to Purchaser the following:

                                    (i)      the Quota Share Reinsurance
         Agreements;

                                    (ii)     the Administrative Services
         Agreements;

                                    (iii)    the Claims Servicing Agreement;

                                       11
<PAGE>

                                    (iv)     the Renewal Rights Agreement;

                                    (v)      the Transition Services Agreement;

                                    (vi)     the Transitional Trademark License
         Agreement;

                                    (vii)    the Service Mark Assignment;

                                    (viii)   the Employee Leasing Agreement;

                                    (ix)     the Managing General Agency
                                             Agreement;

                                    (x)      the Substitution and
         Indemnification Agreement;

                                    (xi)     the Assignment of Reinsurance
         Recoverables;

                                    (xii)    the RSA SLISI Purchase Agreement;

                                    (xiii)   the certificates representing all
         of the RSUI Shares as provided in Section 13.1(c)(viii);

                                    (xiv)    the Cat Cover Endorsement;

                                    (xv)     evidence of compliance with any
         applicable regulatory filings or approvals from which no exemption is
         available as provided in Section 8.5(a);

                                    (xvi)    evidence of compliance with the
         requirements of Section 8.12 regarding the settlement of intercompany
         balances and the termination of Intercompany Agreements;

                                    (xvii)   evidence of compliance with the
         requirements of Section 8.13 regarding the termination of Affiliate
         Agreements;

                                    (xviii)  evidence of the resignations of the
         directors of RSUI set forth on Schedule 8.15;

                                    (xix)    evidence of the transfer or other
         disposition of the Excluded Assets and the Excluded Contracts in
         compliance with the requirements of Section 8.17;

                                    (xx)     evidence of the receipt of all
         consents set forth in Section 13.1(c)(ii);

                                    (xxi)    certificates of a senior officer of
         Seller required by Section 13.1(c)(v) and Section 13.1(c)(ix);

                                    (xxii)   a certificate of Seller satisfying
         the requirements of Treasury Regulation Section 1.1445-2(b)(2);

                                       12
<PAGE>

                                    (xxiii)  a computer generated listing of the
         In Force RSUI-Produced Insurance Contracts as of the Closing Date or
         the closest practicable date prior thereto (the "Closing RSUI Contract
         List"); and

                                    (xxiv)   a certificate signed by the
         secretary of Seller certifying the adoption of resolutions by the Board
         of Directors of Seller authorizing the transactions contemplated
         hereby.

                           (b)      At the Closing, Purchaser, or AIHL Insurance
Co., as applicable, shall execute (except as to clause (x) of this Section
1.21(b)) and deliver to Seller the following:

                                    (i)      the Quota Share Reinsurance
         Agreements;

                                    (ii)     the Administrative Services
         Agreements;

                                    (iii)    the Claims Servicing Agreement;

                                    (iv)     the Renewal Rights Agreement;

                                    (v)      the Transition Services Agreement;

                                    (vi)     the Transitional Trademark License
         Agreement;

                                    (vii)    the Service Mark Assignment;

                                    (viii)   the Substitution and
         Indemnification Agreement;

                                    (ix)     the Assignment of Reinsurance
         Recoverables Agreement;

                                    (x)      evidence of compliance with any
         applicable regulatory filings or approvals from which no exemption is
         available, as provided in Section 8.5(a);

                                    (xi)     a certificate of a senior officer
         of Purchaser required by Section 13.1(b)(iv); and

                                    (xii)    a certificate signed by the
         secretary of Purchaser certifying the adoption of resolutions by the
         Board of Directors of Seller authorizing the transactions contemplated
         hereby.

                                       13
<PAGE>

                                   ARTICLE II

                    REPRESENTATIONS AND WARRANTIES OF SELLER

                  Subject to Section 15.1 hereof, Seller hereby represents and
warrants to Purchaser as of the date of this Agreement (except if another date
is specified in the representation or warranty), that:

                  Section 2.1 Organization and Standing. Seller is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware and has all requisite power and authority to own, lease and
operate its assets and properties and to carry on its business as now being
conducted. Seller is duly qualified or licensed to do business and is in good
standing as a foreign corporation in each jurisdiction in which the nature of
its business or the ownership, leasing or operation of its properties makes such
qualification or licensing necessary, except for those jurisdictions where the
failure to be so qualified or licensed or to be in good standing would not
adversely affect the Business or adversely affect the ability of Seller to
execute and deliver this Agreement or any Ancillary Agreement to which it is a
party, to perform its obligations hereunder and thereunder or to consummate the
transactions contemplated hereby and thereby. Seller has made available to
Purchaser prior to the execution of this Agreement true, correct and complete
copies of its certificates of incorporation and bylaws, as currently in effect.

                  Section 2.2 Authority. Seller has all requisite power and
authority to enter into and deliver this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated hereby, including,
without limitation, the sale of the Acquired Assets. Seller has all requisite
power and authority to execute and deliver the Ancillary Agreements to which it
is a party, to perform its obligations thereunder and to consummate the
transactions contemplated thereby. The execution, delivery and performance of
this Agreement by Seller and the consummation by Seller of the transactions
contemplated hereby, and the execution, delivery and performance of the
Ancillary Agreements to which Seller is a party and the consummation of the
transactions contemplated thereby, have been duly and validly authorized by all
necessary action on the part of Seller and no other proceedings on the part of
Seller (including any proceedings on the part of the stockholders of Seller) are
necessary to authorize the execution, delivery and performance of this
Agreement, the Ancillary Agreements to which Seller is a party or the
consummation of any of the transactions contemplated hereby or thereby. This
Agreement has been duly executed and delivered by Seller and, assuming the due
authorization, execution and delivery of this Agreement by Purchaser,
constitutes a legal, valid and binding obligation of Seller, enforceable against
Seller in accordance with its terms and conditions, subject only to the
Bankruptcy and Equity Exception. On the Closing Date, the Ancillary Agreements
to which Seller is a party will have been duly executed and delivered by Seller
and, assuming the due authorization, execution and delivery of such Ancillary
Agreements by each of the other Persons party thereto, will constitute legal,
valid and binding obligations of Seller, enforceable against Seller and in
accordance with their terms subject only to the Bankruptcy and Equity Exception.

                                       14
<PAGE>

                  Section 2.3 Noncontravention.

                           (a)      Except as set forth in Schedule 2.3(a), the
execution, delivery and performance of this Agreement by Seller does not, and,
as of the Closing Date, the execution, delivery and performance of the Ancillary
Agreements to which it is a party, and the consummation of the transactions
contemplated by this Agreement and such Ancillary Agreements, will not, conflict
with, or result in any breach, violation, impairment or revocation of, or
default (with or without notice or lapse of time, or both) under, or give rise
to the creation of a Lien, a right of termination, cancellation, revocation or
acceleration of any obligation or loss of a benefit under (i) the certificate of
incorporation or bylaws of Seller, (ii) any loan or credit agreement, note,
mortgage, indenture, lease, material agreement, concession, franchise,
contractual license or similar authorization applicable to Seller or by or to
which its properties or assets (including, without limitation, the Acquired
Assets) may be bound or subject, (iii) subject to the governmental filings and
other matters referred to in Section 2.3(b) below, any Applicable Law applicable
to Seller or to which its properties or assets may be bound or subject, (iv) any
order, writ, judgment, injunction, award, decree, law, statute, ordinance, rule
or regulation of any Governmental Entity or any agreement with, or condition
imposed by, any Governmental Entity, in each case, which is binding upon Seller
or its properties or assets in connection with the Business or (v) any Permit
related to the Business, other than, in the case of clauses (ii), (iii), (iv)
and (v), any such conflicts, violations, impairments, revocations, defaults,
Liens, rights or losses which would not adversely affect the Business or
adversely affect the ability of Seller to execute and deliver this Agreement or
the Ancillary Agreements to which it is a party, to perform its obligations
hereunder and thereunder or to consummate the transactions contemplated hereby
and thereby.

                           (b)      Except as set forth in Schedule 8.5(a), no
consent, approval, license, order or authorization of, action by or in respect
of, or registration, declaration or filing with, or notice to, any Governmental
Entity or any other Person is required or necessary to be obtained, made or
given by Seller in connection with (i) its execution and delivery of this
Agreement and the Ancillary Agreements to which it is a party, (ii) the
performance by Seller of its obligations hereunder and thereunder and (iii) the
consummation by Seller of the transactions contemplated hereby and thereby.

                  Section 2.4 Litigation. Except as set forth in Schedule 2.4,
there is no action, order, writ, injunction, judgment or decree outstanding or
any claim, suit, litigation, proceeding, arbitration, inquiry, governmental
audit or investigation (collectively, "Actions") pending, or, to the Knowledge
of Seller, threatened, against Seller, by or before any court, other
Governmental Entity or arbitrator, other than those which would not (x) prevent
or materially delay Seller from consummating the transactions contemplated by
this Agreement and the Ancillary Agreements to which it is a party or (y)
adversely affect the Business.

                                       15
<PAGE>

                  Section 2.5 Title to the RSUI Shares.

                           (a)      The sale and delivery of the RSUI Shares as
contemplated by this Agreement are not subject to any preemptive right or right
of first refusal or other right or restriction.

                           (b)      Seller has good and valid title to the RSUI
Shares, free and clear of all Liens. At the Closing, Purchaser will acquire the
RSUI Shares, free and clear of all Liens.

                  Section 2.6 Brokers and Finders. Except for Goldman, Sachs &
Co., the fees and expenses of which will be paid by Seller (the "Seller's Fee"),
no broker, investment banker, financial advisor or other Person (an "Investment
Broker") is entitled to any broker's, finder's, financial advisor's or similar
fee or commission in connection with the transactions contemplated by this
Agreement based upon arrangements made by or on behalf of Seller or any of its
Affiliates.

                                  ARTICLE III

                         REPRESENTATIONS AND WARRANTIES
                      RELATING TO ROYAL INSURER AFFILIATES

                  Subject to Section 15.1 hereof, Seller hereby represents and
warrants to Purchaser as of the date of this Agreement (except if another date
is specified in the representation or warranty), that:

                  Section 3.1 Organization and Standing. Each of the Royal
Insurer Affiliates is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction in which it is organized and has all
the requisite power and authority to own, lease and operate its assets and
properties and to carry on its business as now being conducted. Each of the
Royal Insurer Affiliates is duly qualified or licensed to do business and is in
good standing as a foreign corporation in each jurisdiction in which the nature
of its business or the ownership, leasing or operation of its properties makes
such qualification or licensing necessary, except for those jurisdictions where
the failure to be so qualified or licensed or to be in good standing would not
adversely affect the Business or adversely affect the ability of any Royal
Insurer Affiliate to execute and deliver any Ancillary Agreement to which it is
a party, to perform its obligations thereunder or to consummate the transactions
contemplated thereby. Seller has made available to Purchaser prior to the
execution of this Agreement true, correct and complete copies of the certificate
of incorporation and bylaws, as currently in effect, for each of the Royal
Insurer Affiliates who are parties to any Ancillary Agreement.

                  Section 3.2 Authority. Each of the Royal Insurer Affiliates
which is a party to any Ancillary Agreement has all requisite power and
authority to execute and deliver the Ancillary Agreements to which it is a
party, to perform its obligations thereunder and to consummate the transactions
contemplated thereby. The execution, delivery and performance of the Ancillary
Agreements by each of the Royal Insurer

                                       16
<PAGE>

Affiliates which is a party thereto, and the consummation of the transactions
contemplated thereby, have been duly and validly authorized by all necessary
action on the part of each such Royal Insurer Affiliate and no other corporate
proceedings on the part of any of such Royal Insurer Affiliates are necessary to
authorize the execution, delivery and performance of such Ancillary Agreements
or the consummation of any of the transactions contemplated thereby. On the
Closing Date, the Ancillary Agreements will have been duly executed and
delivered by each of the Royal Insurer Affiliates which is a party thereto and,
assuming the due authorization, execution and delivery of such Ancillary
Agreements by each of the other parties thereto, will constitute legal, valid
and binding obligations of each Royal Insurer Affiliate which is a party
thereto, enforceable against each such Royal Insurer Affiliate in accordance
with its terms subject only to the Bankruptcy and Equity Exception.

                  Section 3.3 Noncontravention.

                           (a)      Except as set forth in Schedule 3.3(a), as
of the Closing Date, the execution, delivery and performance by each of the
Royal Insurer Affiliates of the Ancillary Agreements to which it is a party and
the consummation of the transactions contemplated thereby, will not conflict
with, or result in any breach, violation, impairment or revocation of, or
default (with or without notice or lapse of time, or both) under, or give rise
to the creation of a Lien, a right of termination, cancellation, revocation or
acceleration of any obligation or loss of a benefit under (i) the certificate of
incorporation or bylaws (or comparable organizational document) of any of the
Royal Insurer Affiliates, (ii) any loan or credit agreement, note, mortgage,
indenture, lease, material agreement, concession, franchise, contractual license
or similar authorization applicable to any of the Royal Insurer Affiliates, or
by or to which any of them or their respective assets or properties (including,
without limitation, the Acquired Assets) may be bound or subject, (iii) subject
to the governmental filings and other matters referred to in Section 3.3(b)
below, any Applicable Law applicable to any of the Royal Insurer Affiliates
which is a party to any Ancillary Agreement or to which its assets or properties
may be bound or subject, (iv) any order, writ, judgment, injunction, award,
decree, law, statute, ordinance, rule or regulation of any Governmental Entity
or any agreement with, or condition imposed by, any Governmental Entity, in each
case, which is binding upon any of the Royal Insurer Affiliates which is a party
to any of the Ancillary Agreements or its respective properties or assets in
connection with the Business or (v) any Permit related to the Business, other
than, in the case of clauses (ii), (iii) (iv) and (v) any such conflicts,
violations, impairments, revocations, defaults, Liens, rights or losses which
would not adversely affect the Business or adversely affect the ability of any
of the Royal Insurer Affiliates to execute and deliver any of the Ancillary
Agreements to which such Royal Insurer Affiliate is a party, to perform its
obligations thereunder or to consummate the transactions contemplated thereby.

                           (b)      Except as set forth in Schedule 8.5(a), no
consent, approval, license, order or authorization of, action by or in respect
of, or registration, declaration or filing with, or notice to, any Governmental
Entity or any other Person is required or necessary to be obtained, made or
given by any of the Royal Insurer Affiliates in connection with (i) the
execution and delivery of the Ancillary Agreements to which it

                                       17
<PAGE>

is a party, (ii) the performance by such Royal Insurer Affiliate of its
obligations thereunder and (iii) the consummation by such Royal Insurer
Affiliates of the transactions contemplated thereby.

                  Section 3.4 Permits.

                           (a)      Except as set forth in Schedule 3.4(a), each
of the Royal Insurer Affiliates has (i) all Permits necessary to perform its
obligations under each Ancillary Agreement to which it is a party and (ii) all
Permits which are necessary for the lawful operation of the Business as
conducted on the date hereof, (collectively, the "Royal Insurer Affiliate
Permits"), and all such Royal Insurer Affiliate Permits are valid and in full
force and effect. Except as set forth in Schedule 3.4(a), there is no action,
proceeding, inquiry or investigation pending or, to the Knowledge of Seller,
threatened for the suspension, cancellation, revocation or nonrenewal of any
such Royal Insurer Affiliate Permit.

                           (b)      None of the Royal Insurer Affiliates is
operating under any agreement or understanding with any Governmental Entity
which requires any of the Royal Insurer Affiliates to take, or refrain from
taking, any action relating to the conduct of the Business which would adversely
affect the Business or the performance of its obligations under each Ancillary
Agreement to which it is a party otherwise permitted by Applicable Law.

                  Section 3.5 Litigation. Except as set forth in Schedule 3.5,
there is no Action pending, or, to the Knowledge of Seller, threatened, against
any of the Royal Insurer Affiliates or any of their respective assets and
properties, by or before any court, other Governmental Entity or arbitrator,
other than those which would not prevent or materially delay any of the Royal
Insurer Affiliates from consummating the transactions contemplated by this
Agreement and the Ancillary Agreements to which it is a party.

                  Section 3.6 Compliance with Applicable Law. Except as set
forth in Schedule 3.6, each Royal Insurer Affiliate is in compliance with (a)
the terms of its certificate or articles of incorporation, bylaws or other
charter or organization documents and (b) all Applicable Laws in the conduct of
the Business, except, in the case of clause (b), where the failure to comply
would not materially adversely affect the Business. Except as set forth in
Schedule 3.6 and except for individual consumer complaints made to Governmental
Entities and forwarded to Royal Insurer Affiliates, to the Knowledge of Seller,
no Royal Insurer Affiliate has received any written notice since January 1,
2000, from any Governmental Entity or arbitrator alleging any violation of, or
default under, any Applicable Law by such Royal Insurer Affiliate with regard to
the In Force RSUI-Produced Insurance Contracts or directing any Royal Insurer
Affiliate to take any remedial action with respect to such Applicable Law.

                                       18
<PAGE>

                                   ARTICLE IV

                 REPRESENTATIONS AND WARRANTIES RELATING TO RSUI

                  Subject to Section 15.1 hereof, Seller hereby represents and
warrants to Purchaser as of the date of this Agreement (except if another date
is specified in the representation or warranty), that:

                  Section 4.1 Organization and Standing. RSUI is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Georgia and has all requisite power and authority to own, lease and
operate its assets and properties and to carry on its business as now being
conducted. RSUI is duly qualified or licensed to do business as a foreign
corporation and is in good standing as a foreign corporation in each
jurisdiction in which the nature of its business or the ownership, leasing or
operation of its properties makes such qualification or licensing necessary,
except for those jurisdictions where the failure to be so qualified or licensed
or to be in good standing would not adversely affect the Business. Schedule 4.1
is a list of all jurisdictions in which RSUI is duly qualified or licensed to do
business as a foreign corporation. Seller has made available to Purchaser prior
to the execution of this Agreement true, correct and complete copies of the
certificate of incorporation and bylaws, as currently in effect, for RSUI.

                  Section 4.2 Noncontravention.

                           (a)      Except as set forth in Schedule 4.2(a), the
execution, delivery and performance of this Agreement does not, and, as of the
Closing Date, the execution, delivery and performance of the Ancillary
Agreements to which it is a party, and the consummation of the transactions
contemplated by this Agreement and such Ancillary Agreements, will not, conflict
with, or result in any breach, violation, impairment or revocation of, or
default (with or without notice or lapse of time, or both) under, or give rise
to the creation of a Lien, a right of termination, cancellation, revocation or
acceleration of any obligation or loss of a benefit under (i) the certificate of
incorporation or bylaws of RSUI, (ii) any loan or credit agreement, note,
mortgage, indenture, lease, material agreement, concession, franchise,
contractual license or similar authorization applicable to RSUI or by or to
which its assets or properties (including, without limitation, the Acquired
Assets) may be bound or subject, (iii) subject to the governmental filings and
other matters referred to in Section 4.2(b) below, any Applicable Law applicable
to RSUI or to which its assets or properties may be bound or subject, (iv) any
order, writ, judgment, injunction, award, decree, law, statute, ordinance, rule
or regulation of any Governmental Entity or any agreement with, or condition
imposed by, any Governmental Entity, in each case, which is binding upon RSUI or
its properties or assets in connection with the Business or (v) any Permit
related to the Business, other than, in the case of clauses (ii), (iii), (iv)
and (v), any such conflicts, violations, impairments, revocations, defaults,
Liens, rights or losses which would not adversely affect the Business.

                                       19
<PAGE>

                           (b)      Except as set forth in Schedule 8.5(a), no
consent, approval, license, order or authorization of, action by or in respect
of, or registration, declaration or filing with, or notice to, any Governmental
Entity or any other Person is required or necessary to be obtained, made or
given by RSUI in connection with (i) its execution and delivery of the Ancillary
Agreements to which it is party, (ii) the performance by RSUI of its obligations
thereunder and (iii) the consummation by RSUI of the transactions contemplated
thereby.

                  Section 4.3 Capitalization.

                           (a)      The authorized capital stock of RSUI
consists of (i) 86,800 shares of preferred stock, no par value, none of which
are issued and outstanding, and (ii) 250,000 shares of common stock, no par
value, of which 127,500 shares are issued and outstanding. No other class of
equity securities, preferred stocks, bonds, debentures, notes, other evidences
of indebtedness for borrowed money or other securities of any kind of RSUI is
authorized, issued or outstanding. All of the outstanding shares of RSUI are
duly authorized, validly issued and are fully paid and non-assessable and are
owned of record and beneficially by Seller free and clear of all Liens.

                           (b)      Except as set forth in Schedule 4.3(b),
except for interests which constitute a part of the Excluded Assets and except
for investment securities owned by RSUI in the ordinary course of business, RSUI
does not own any proprietary interest or equity interest in, or any interest
convertible or exchangeable into a proprietary interest or equity interest in,
any Person.

                           (c)      RSUI has not issued any securities in
violation of any preemptive or similar rights. There are no outstanding options,
warrants, calls, preemptive or other rights, commitments, subscriptions or
agreements of any kind (absolute, contingent or otherwise) to which RSUI is a
party, or by which RSUI is bound to purchase or otherwise receive, nor are there
any securities or instruments of any kind convertible into or exchangeable for,
any capital stock (including, without limitation, outstanding, authorized but
unissued, unauthorized, treasury or other shares thereof) or other equity
interest or evidence of indebtedness for borrowed money of RSUI. Neither RSUI
nor Seller is a party to any agreement with a third party which places any
restriction upon, or which creates any voting trust, proxy, or other agreement
or understanding with respect to, the voting, purchase, redemption, acquisition
or transfer of, or the declaration or payment of any dividend or distribution
on, any shares of capital stock of RSUI. To the Knowledge of Seller, there are
no restrictions upon, or voting trusts, proxies or other agreements or
understandings with respect to, the voting, purchase, redemption, acquisition or
transfer of, or the declaration or payment of any dividend or distribution on,
any shares of capital stock of RSUI.

                  Section 4.4 Financial Statements.

                           (a)      Seller heretofore has delivered to Purchaser
true, correct and complete copies of the audited GAAP balance sheet of RSUI as
of December 31, 2001 and 2002 and the related audited statements of operations
of RSUI, statements of

                                       20
<PAGE>

stockholder's equity and statements of cash flow for the years then ended,
including in each case the related notes and the auditor's report thereon (the
"Audited RSUI Financial Statements"). The Audited RSUI Financial Statements have
been prepared in accordance with GAAP consistently applied throughout the
periods involved (except as may be indicated in the notes thereto regarding the
adoption of new accounting policies) and fairly present in all material respects
the financial position and results of operations of RSUI as a wholly-owned
subsidiary of Seller as of the dates and for the periods indicated therein.

                           (b)      The underwriting results of the Business as
reported in the Schedule of Adjusted Underwriting Results for 2002 and 2001 have
been included in the consolidated accounts of the Royal & SunAlliance without
difference and form part of the audited financial statements of Royal &
SunAlliance.

                  Section 4.5 Accounts. Schedule 4.5 sets forth the names of all
financial and other similar institutions at which RSUI maintains accounts,
deposits or safe deposit boxes of any nature, and the account numbers and the
names of all Persons authorized to draw thereon or make withdrawals therefrom.

                  Section 4.6 Working Capital. Except as set forth on Schedule
4.6, since December 31, 2002, (x) RSUI has not incurred any liabilities that
would not be treated as current liabilities under GAAP consistently applied with
the accounting principles used to prepare the Audited RSUI Financial Statements
and (y) there has not been any capital contribution to RSUI other than a capital
contribution made in cash.

                  Section 4.7 Administration of Fiduciary Accounts. Except as
set forth in Schedule 4.7, RSUI has properly administered, in all material
respects with Applicable Law, all accounts for which it acts as a fiduciary, if
any, including, but not limited to, accounts for which it serves as a trustee,
agent, custodian, personal representative, guardian, conservator or investment
advisor, in accordance with the terms of the governing document and Applicable
Laws. Neither RSUI nor any of its directors, officers or employees has committed
any breach of trust with respect to any such fiduciary account, and the
accounting for each such fiduciary account is true and correct in all material
respects and accurately reflects the assets of such fiduciary account.

                  Section 4.8 Compliance with Applicable Law. Except as set
forth in Schedule 4.8, RSUI is in compliance with (a) the terms of its
certificate or articles of incorporation, bylaws or other charter or
organization documents and (b) all Applicable Laws, except in the case of clause
(b), where the failure to comply would not materially adversely affect the
Business. Except as set forth in Schedule 4.8, RSUI has not received any written
notice since January 1, 2000 from any Governmental Entity or arbitrator alleging
any violation of, or any default under, any Applicable Law by RSUI in the
conduct of the Business or directing RSUI to take any remedial action with
respect to such Applicable Law.

                                       21
<PAGE>

                  Section 4.9 Permits.

                           (a)      Except as set forth on Schedule 4.9(a), RSUI
has (i) all Permits necessary to perform its obligations under each Ancillary
Agreement to which it is a party and (ii) all Permits which are necessary for
the lawful operation of its Business as conducted on the date hereof
(collectively, the "RSUI Permits"), and all such RSUI Permits are valid and in
full force and effect. Except as set forth in Schedule 4.9(a), there is no
action, proceeding, inquiry or investigation pending or, to the Knowledge of
Seller, threatened for the suspension, cancellation, revocation or nonrenewal of
any such Material RSUI Permit. All such RSUI Permits (other than licenses or
qualifications to do business as a foreign corporation which are set forth on
Schedule 4.1) are set forth in Schedule 4.9(a).

                           (b)      RSUI is not operating under any agreement or
understanding with any Governmental Entity which requires RSUI to take, or
refrain from taking, any action relating to the conduct of the Business or the
performance of its obligations under each Ancillary Agreement to which it is a
party otherwise permitted by Applicable Law.

                  Section 4.10 Litigation. Except as set forth in Schedule 4.10,
there is no Action outstanding or pending, or, to the Knowledge of Seller,
threatened, against RSUI or any of its assets and properties, by or before any
court, other Governmental Entity or arbitrator, other than those which (i) would
not (x) prevent or materially delay RSUI from consummating the transactions
contemplated by this Agreement and the Ancillary Agreements to which it is a
party or (y) adversely affect the Business and (ii) do not assert a cause of
action based upon an action allegedly taken in bad faith by RSUI or by any
agent, broker or other Person acting on behalf of RSUI.

                  Section 4.11 All Necessary Assets. Except as set forth in
Schedule 4.11, and except for services to be provided under the Ancillary
Agreements, at the Closing hereunder, RSUI will own, lease or license all
property, assets and rights of any nature necessary to carry on the Business as
presently conducted in all material respects. The exclusion of the Excluded
Assets from the Acquired Assets will not, individually or in the aggregate,
adversely affect the ability of RSUI to carry on the Business immediately
following the Closing as presently conducted in all material respects. This
Section 4.11 does not relate to Intellectual Property assets and rights, which
are the subject of Section 4.15.

                  Section 4.12 Absence of Certain Changes. Except as set forth
in Schedule 4.12, since December 31, 2002, RSUI has conducted the Business only
in the usual and ordinary course consistent with past practice and there has not
been any event, action, occurrence, development, transaction, commitment,
dispute, change, violation, inaccuracy or other condition (financial or
otherwise) of any character (whether or not in the ordinary course of business)
that would materially adversely affect the Business.

                  Section 4.13 Taxes.

                                       22
<PAGE>

                           (a)      Arrowpoint General Partnership ("Parent") is
the common parent of an affiliated group of corporations (within the meaning of
section 1504(a) of the Code) (such group, the "Parent Group") which files
consolidated federal income Tax Returns. From July 1, 1994 through the Closing
Date, Parent has included (or, with respect to the taxable year ending on the
Closing Date, will include) RSUI in its consolidated federal income Tax Return
as a member of the Parent Group.

                           (b)      Other than as set forth on Schedule 4.13:
(i) For all periods ending after June 30, 1994, and for which the relevant
statutes of limitation have not expired, RSUI has filed (or joined in the filing
of) when due (after taking into account all properly requested extensions) all
material Tax Returns required by Applicable Law to be filed with respect to RSUI
and all Taxes shown to be due on such Tax Returns have been paid; (ii) all such
Tax Returns were true, correct and complete in all material respects as of the
time of such filing or after taking into account any changes thereto reflected
on any amended Tax Returns; (iii) there is no action, suit, proceeding,
investigation, audit or claim now pending against, or with respect to, RSUI in
respect of any material Tax or assessment, nor is any claim for additional Tax
or assessment being asserted by any Taxing Authority; (iv) except for the Parent
Group, RSUI has never been a member of an affiliated, consolidated, combined or
unitary group; (v) since July 1, 1994, no claim has been asserted in writing by
any Taxing Authority in a jurisdiction in which RSUI does not currently file a
Tax Return that it is or may be subject to Tax by such jurisdiction; (vi) RSUI
is not a party to any agreement (other than an agreement entered into in the
ordinary course of business for the purchase or lease of assets, the borrowing
of money, the hiring of employees or consultants or other commercial
transactions in the ordinary course of business), whether written or unwritten,
providing for the payment of Taxes, payment for Tax losses, entitlement to
refunds or similar Tax matters; (vii) RSUI has withheld and remitted to its
applicable taxing authorities all Taxes required to be withheld in connection
with any material amounts paid or owing to any employee, creditor, attorney,
independent contractor or other Person; (viii) since July 1, 1994, neither
Parent, Seller, nor RSUI has made, changed or revoked, or permitted to be made,
changed or revoked, any material election or method of accounting with respect
to material Taxes affecting or relating to RSUI, or entered into, or permitted
to be entered into, any closing or other agreement or settlement with respect to
Taxes affecting or relating to RSUI; (ix) no ruling with respect to Taxes (other
than a request for a determination of the status of a qualified plan) has been
requested by or on behalf of RSUI or by Parent with respect to any transaction
involving RSUI that could affect the liability of RSUI for Taxes for any period
after the Closing; (x) RSUI has no liability for the Taxes of any Person (other
than pursuant to Treasury Regulation Section 1.1502-6, or any analogous state,
local or foreign law or regulation) as a transferee or successor; and (xi) the
statutes of limitations for Tax years of RSUI have closed for all such years
ending prior to January 1, 2000.

                  Section 4.14 Employee Benefit Plans; ERISA.

                           (a)      Schedule 4.14(a) contains a true, correct
and complete list, as of the date of this Agreement, of each "welfare plan"
(within the meaning of Section 3(1) of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA")),

                                       23
<PAGE>

each "pension plan" (within the meaning of Section 3(2) of ERISA), and each
other material employee benefit plan, fund, program, agreement or arrangement,
in each case, that is sponsored, maintained or contributed to or required to be
contributed to by Seller or its Affiliates that would be deemed a "single
employer" with Seller under Section 4001(b) of ERISA (an "ERISA Affiliate") for
the benefit of any RSUI Employee, or to which Seller or any ERISA Affiliate is
party, for the benefit of any RSUI Employee (each a "Plan," collectively the
"Plans").

                           (b)      Schedule 4.14(b) contains a true, correct
and complete list as of the date of this Agreement of each employment agreement,
severance agreement and other similar agreement or arrangement relating to
compensation or benefits entered into by and among Seller or any of its
Affiliates and any RSUI Employee (collectively, the "RSUI Employee Contracts").
True, correct and complete copies of each RSUI Employee Contract, including any
amendments thereto, have been delivered or made available by Seller to
Purchaser.

                           (c)      Seller has delivered or made available to
Purchaser true, correct and complete copies of each of the following documents:
(i) each of the Plans, including all amendments thereto, or a written
description of all of the material terms thereof if there is no formal Plan
document, and any related trust agreements, group annuity contracts, insurance
policies or other funding agreements or arrangements; (ii) the most recent
determination letter, if any, from the Internal Revenue Service with respect to
each Plan that is, or is intended to be, qualified under section 401 (a) of the
Code; (iii) the actuarial valuation, if any, for the most recent plan year with
respect to each Plan that is intended to be a tax-qualified defined benefit
retirement plan; (iv) the current summary plan description, if any, and any
modifications or supplements thereto, for each Plan; and (v) the annual
return/report on Form 5500, 5500-C or 5500-R, if any, for each Plan for the most
recent plan year.

                           (d)      No liability under Section 302 or Title IV
of ERISA has been incurred by Seller or any ERISA Affiliate that to the
Knowledge of Seller has not been satisfied in accordance with Applicable Law,
and, to the Knowledge of Seller, no condition exists that presents a material
risk to Seller or any ERISA Affiliate of incurring any such liability. Insofar
as the representation made in this paragraph (d) applies to Sections 4064, 4069
or 4204 of Title IV of ERISA, it is made only with respect to any benefit plan,
agreement or arrangement subject to Title IV of ERISA to which Seller, any of
its Affiliates or any ERISA Affiliate made, or was required to make,
contributions during the five-year period ending on the last day of the most
recent plan year which ended prior to the Closing Date (each a "Title IV Plan").

                           (e)      The Pension Benefit Guarantee Corporation
("PBGC") has not instituted proceedings to terminate any Title IV Plan and no
Title IV Plan has been terminated and to the Knowledge of Seller, no proceeding
is reasonably likely to be initiated by the PBGC to terminate any Title IV Plan.
All premiums (and interest charges and penalties for late payment), if any, due
the PBGC on or prior to the Closing Date with respect to the Title IV Plans have
been or will be paid and neither Seller, any of its Affiliates nor any ERISA
Affiliate has incurred or is reasonably likely to incur any liability to

                                       24
<PAGE>

the PBGC, or to a "section 4042 trustee" (within the meaning of Section 4042 of
ERISA), or any liability under Section 4069 of ERISA with respect to any Title
IV Plan, except for required premium payments to the PBGC.

                           (f)      No Title IV Plan or any other Plan subject
to section 412 of the Code has incurred any "accumulated funding deficiency" (as
defined in Section 302 of ERISA and section 412 of the Code), whether or not
waived, as of the last day of the most recent fiscal year of each Title IV Plan
or Plan which ended prior to the Closing Date. All contributions required to be
made with respect to any Plan on or prior to the Closing Date have been made in
full. For purposes of determining the existence of any such "accumulated funding
deficiency," the actuarial assumptions and methods used under each Plan for the
most recent Plan valuation shall be used.

                           (g)      No Title IV Plan is a "multiemployer pension
plan," as defined in Section 3(37) of ERISA.

                           (h)      To the Knowledge of Seller, each Plan has
been operated and administered in all material respects in accordance with its
terms and in accordance with Applicable Law, including, but not limited to,
ERISA and the Code, and no written notice has been received by Seller or an
Affiliate from any governmental authority questioning or challenging such
compliance. Neither the Seller nor any of its Affiliates has announced, or is
currently obligated to make, any change in benefits which would materially
increase the costs of maintaining any of the Plans or to establish any new
employee benefit plan which will cover any RSUI Employee, except that all RSUI
Employees shall become fully vested in the Pension Plan of RIC as of the Closing
Date, to the extent permitted under Applicable Law. Each Plan intended to be
"qualified" within the meaning of Section 401(a) of the Code has received a
determination letter from the Internal Revenue Service or has applied for a
determination letter from the Internal Revenue Service stating that it is so
qualified. To the Knowledge of Seller, each Plan intended to be "qualified"
within the meaning of Section 401(a) of the Code, in form and operation, is so
qualified.

                           (i)      No RSUI Employee is covered by any
collective bargaining agreement.

                           (j)      To the Knowledge of the Seller, no RSUI
Employee is, on the date of this Agreement, subject to any contract,
arrangement, policy or understanding that in any way could limit such employee's
ability to continue to perform services for such employee's current employer or
RSUI.

                           (k)      RSUI is under no obligation (express or
implied) to modify or change any of the benefits of a Plan, other than provided
in RSUI Employee Contracts and other than vesting all RSUI Employees in the
Pension Plan of RIC, to the extent permitted under Applicable Law.

                           (l)      The transactions contemplated by this
Agreement, including by way of illustration and not by way of limitation, those
referred to in the RSA

                                       25
<PAGE>

SLISI Purchase Agreement, the Quota Share Reinsurance Agreements and the
Landmark Purchase Agreement, will not result in a transfer of assets to the
Purchaser or its Affiliates that have a total fair market value equal to or
greater than one-third (1/3) of the total fair market value of the Parent
Group's assets immediately before the Closing Date.

                           (m)      Neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated thereby will
result in or require RSUI or any RSUI Affiliate on or after the Closing Date to
make any payment to, increase the amount payable to, or accelerate the time of
payment or the vesting of any amount payable to, any Leased Employee (other than
any amounts payable pursuant to the Employment Agreements or any payment that
results from a claim or entitlement to post-retirement medical benefits).

                           (n)      Neither Seller, any of its Affiliates nor
any ERISA Affiliate has incurred any liability, fine, penalty or tax with
respect to any Plan or any other employee benefit plan, fund, program, practice,
agreement or arrangement which is material in amount, and which could reasonably
be expected to be imposed on Purchaser, RSUI, or any of their Affiliates.

                  Section 4.15 Intellectual Property.

                           (a)      Schedule 4.15(a) sets forth: (i) a complete
and accurate list of all Intellectual Property in which RSUI has an ownership
interest and which is used in or relates to the Business ("RSUI Owned
Intellectual Property") and of all Intellectual Property in which one of RSUI's
Affiliates has an ownership interest and which directly impacts or materially
relates to the Business (collectively, the "RSUI Affiliate Owned Intellectual
Property"), indicating the owner thereof, and all applications, registrations
and grants with respect thereto, provided that such list need not identify
non-material Trade Secrets or unregistered copyrights unless such Trade Secrets
or copyrights relate to proprietary Computer Software, (ii) all Intellectual
Property (other than the RSUI Owned Intellectual Property or RSUI Affiliate
Owned Intellectual Property) which is used or necessary for the operation of the
Business (collectively, "Non-Owned Intellectual Property"), indicating the owner
and, if applicable, the licensor and/or licensee thereof, provided that such
list need not identify non material Non-Owned Intellectual Property, and (iii)
all Intellectual Property Contracts (a) to which RSUI is a party and which
directly impact or materially relate to the Business, or (b) which relate to
Intellectual Property included in clauses (i) and (ii) above (collectively,
"Business IP Contracts"). The RSUI Owned Intellectual Property, RSUI Affiliate
Owned Intellectual Property, the Non-Owned Intellectual Property and Business IP
Contracts are collectively referred to herein as the "Business Intellectual
Property".

                           (b)      All Computer Software included in the RSUI
Owned Intellectual Property (collectively, the "Proprietary Software") was
developed either by: (i) RIC or employees of RIC within the scope of their
employment, (ii) third parties as "works-made-for-hire", as that term is defined
under Section 101 of the United States copyright laws, for RIC to written
agreements, or (iii) independent contractors who have assigned their right,
title and interest in and to such Proprietary Software to RIC pursuant

                                       26
<PAGE>

to written agreements. Royal & SunAlliance is the sole and exclusive owner of
the trade name and Trademark "RSUI" (the "RSUI Mark") and United States
Trademark Registration No. 2,525,163 (the "Mark Registration"). RSUI is the sole
and exclusive owner of all RSUI Owned Intellectual Property. Except for (x) the
rights granted by RIC to RSUI with respect to the Proprietary Software and (y)
the rights granted by Royal & SunAlliance to RSUI with respect to the RSUI Mark,
neither RIC, Royal & SunAlliance nor RSUI has granted to any Person any rights
in or to any of the RSUI Owned Intellectual Property or RSUI Affiliate Owned
Intellectual Property.

                           (c)      The RSUI Owned Intellectual Property, RSUI
Affiliate Owned Intellectual Property and, to the Knowledge of Seller, the
Non-Owned Intellectual Property, is valid and enforceable and has not been
cancelled, forfeited, expired or abandoned. There are no Actions or, to the
Knowledge of Seller, threatened Actions in which the validity or enforceability
of the RSUI Owned Intellectual Property, RSUI Affiliate Owned Intellectual
Property or, to the Knowledge of Seller, the Non-Owned Intellectual Property,
has been or is being challenged, and neither RSUI nor any of its Affiliates has
received notice from any Person asserting a basis for such a challenge.

                           (d)      Except as set forth on Schedule 4.15(d), and
except for services to be provided under the Ancillary Agreements, RSUI owns, or
otherwise has the valid right to use through an Intellectual Property Contract
listed on Schedule 4.15(a), and at the Closing hereunder will own or have such
valid right to use, any and all Intellectual Property that is reasonably
necessary to carry on the Business as presently conducted in all respects, free
and clear of any Lien, royalty or other payment obligations (except for
royalties or payments payable in respect of off-the-shelf Computer Software at
standard commercial rates or any other regularly scheduled payment payable under
any such Intellectual Property Contract) and otherwise on commercially
reasonable terms. Except as set forth on Schedule 4.15(d), RSUI's ownership of
or valid rights to use such Intellectual Property that is reasonably necessary
to the conduct of the Business shall not, in each case of ownership or
possession of valid rights, be adversely affected as a result of the Closing and
the consummation of the transactions contemplated hereby.

                           (e)      Seller has made available to Purchaser
complete copies of all Business IP Contracts except for those Business IP
Contracts listed on Schedule 9.1(c). Each of the Business IP Contracts is a
valid and binding obligation of the parties thereto and is in full force and
effect and enforceable against the parties thereto in accordance with its terms.
To Seller's Knowledge, neither RSUI nor any third party is in material breach or
default under any of the Business IP Contracts.

                           (f)      Neither RSUI nor the Business has violated
or infringed, or currently violates or infringes, upon the Intellectual Property
rights of any third party, and neither RSUI nor any of its Affiliates has
received any notice of any such violation or infringement. There are no Actions
or claims pending, instituted, threatened or asserted in writing against RSUI or
any of its Affiliates alleging any violation or infringement by RSUI or the
Business of any Intellectual Property rights of any third party.

                                       27
<PAGE>

                           (g)      No Actions or claims in which RSUI or any of
its Affiliates alleges that any third party is infringing upon, or otherwise
violating, any Business Intellectual Property are pending, and none have been
served, instituted or asserted by RSUI or any of its Affiliates, nor are any
Actions threatened alleging any such violation or infringement.

                           (h)      The Proprietary Software operated by and on
behalf of RSUI and the Business is free of material defects and is in all
material respects in reasonable and usable operating condition. RSUI has taken
commercially reasonable steps to provide for the back-up and recovery of
critical business data that is in electronic form in the event of a disaster or
systems failure.

                  Section 4.16 Material Business Contracts.

                           (a)      Schedule 4.16(a) sets forth a true, correct
and complete list of all of the following contracts in effect as of the date
hereof (excluding the RSUI-Produced Insurance Contracts, the Third Party
Reinsurance Contracts, agreements or arrangements with respect to Producers (as
defined in Section 5.2(b) below), and contracts or agreements relating to
Business Intellectual Property) which relate principally to the Business, or to
which RSUI is a party or by which any of the assets or properties of RSUI are
bound or subject, as each such contract may have been amended, modified or
supplemented (collectively, the "Material Business Contracts"):

                                    (i)      material partnership or joint
         venture contracts;

                                    (ii)     contracts containing any covenant
         or provision limiting the freedom or ability of any Person to compete
         with the Business following the Closing;

                                    (iii)    contracts involving amounts in
         excess of $50,000, relating to the borrowing of money, or the direct or
         indirect guaranty of any obligation for borrowed money, or contracts to
         service the repayment of borrowed money or any other liability in
         respect of indebtedness for borrowed money of any other Person,
         including, without limitation, any contract relating to (A) the
         maintenance of compensating balances, (B) any lines of credit, (C) the
         advance of any funds to any other Person outside the ordinary course of
         business, (D) the payment for property, products or services that are
         not conveyed, delivered or rendered to any such party or (E) any
         obligation to keep-well, make-whole or maintain working capital or
         earnings or perform similar requirements;

                                    (iv)     lease, sublease, rental, licensing,
         use or similar contracts with respect to personal property providing
         for annual rental, license, or use payments in excess of $50,000 or the
         guaranty of any such lease, sublease, rental or other contracts;

                                    (v)      contracts (A) outside the ordinary
         course of business for the purchase, acquisition, sale or disposition
         of any assets or

                                       28
<PAGE>

         properties or (B) for the grant to any Person (excluding RSUI) of any
         option or preferential rights to purchase any assets or properties;

                                    (vi)     contracts (other than employment
         contracts) with any current or former officer, director, shareholder,
         employee, consultant, agent or other representative or, to the
         Knowledge of Seller, with an entity in which any of the foregoing is a
         controlling person;

                                    (vii)    contracts pursuant to which there
         is either a current or future obligation of RSUI to make payments in
         excess of $50,000 in any twelve-month period (other than contracts
         relating to investments in the ordinary course of business and other
         than leases of real property);

                                    (viii)   contracts under which RSUI agrees
         to indemnify any Person other than contracts entered into in the
         ordinary course of business which are not otherwise Material Business
         Contracts;

                                    (ix)     contracts pursuant to which any
         Person has been granted any Lien, other than a Permitted Lien, on any
         assets or properties of RSUI; and

                                    (x)      all written contracts of Seller or
         any of its Affiliates for the deferred payment of the purchase price in
         respect of any Acquired Assets, to the extent such contract is material
         to the Business.

                           (b)      Except for the consent identified on
Schedule 4.16(b) (the "Sherman Oaks Consent"), no Material Business Contract
requires any consent, approval, waiver or authorization by any third party for
the consummation of the transactions contemplated by this Agreement or any
Ancillary Agreement.

                           (c)      Seller has made available to Purchaser true,
correct and complete copies of all of the Material Business Contracts. Each of
the Material Business Contracts is a valid and binding obligation of Seller,
RSUI, or such other Affiliate of Seller as may be party thereto. Except as set
forth in Schedule 4.16(c), neither Seller, RSUI nor any other Affiliate of
Seller party thereto is in material breach or violation of, or default under,
any of the Material Business Contracts.

                  Section 4.17 Intercompany Agreements; Transactions with
Affiliates; Intercompany Accounts.

                           (a)      Schedule 4.17(a) contains a list of all
contracts or other agreements (other than contracts or agreements which relate
to the Excluded Assets and/or Retained Liabilities) in effect as of the date
hereof between Seller or any of its Affiliates (other than RSUI), on the one
hand, and RSUI, on the other hand (collectively, "Intercompany Agreements").

                           (b)      Except as set forth in Schedule 4.17(b),
neither (i) any officer or director of Seller or any officer or director of an
Affiliate of Seller (including

                                       29
<PAGE>

RSUI) nor, to the Knowledge of Seller, any member of any such Person's immediate
family or any entity controlled by one or more of the foregoing, nor (ii) Seller
or any Affiliate of Seller (other than RSUI): (A) is a party to any transaction
with RSUI or relating to the Business or the Acquired Assets which involves
payments of more than $20,000 per year including, without limitation, any
contract (x) providing for the furnishing of services (except in such Person's
capacity as an officer or director) by, (y) providing for the rental of real or
personal property from, or (z) otherwise requiring payments to (other than for
services as officers or directors), any such Person; (B) to the Knowledge of
Seller, owns, directly or indirectly, any material interest in, or is an officer
or director of, any Person that is a competitor of the Business; or (C) has any
claim whatsoever against, or owes any amounts to, RSUI, except for claims in the
ordinary course of business such as for accrued vacation pay, accrued benefits,
reimbursement of ordinary travel and business expenses and similar matters. The
contracts and agreements set forth on Schedule 4.17(b) are herein referred to as
the "Affiliate Agreements".

                           (c)      Except as set forth on Schedule 4.17(c) and
except for obligations and agreements to be performed pursuant to this
Agreement, the Ancillary Agreements and the Landmark Purchase Agreement, there
are no contracts or other agreements or arrangements between Seller or any of
its Affiliates (other than RSUI) and to which RSUI is a party or by which any of
the properties or assets of RSUI would be bound after the Closing.

                  Section 4.18 Insurance Coverage. Schedule 4.18 contains a true
and complete list of all policies of insurance currently maintained relating to
the assets, properties, business, operations, employees, officers or directors
of RSUI which (i) have been issued to RSUI or (ii) are held by Seller or any of
its Subsidiaries (other than RSUI) for the benefit of RSUI showing the policy
type, policy number, the expiration date and coverage for each policy
(collectively the "Insurance Policies").

                  Section 4.19 Books and Records. The Books and Records (i) are
complete and accurate in all material respects and (ii) have been maintained in
accordance with RSUI's customary business practices and with Applicable Law.
Seller has heretofore made available to Purchaser complete and correct copies of
the minute books of RSUI for its inspection.

                                   ARTICLE V

             REPRESENTATIONS AND WARRANTIES RELATING TO THE BUSINESS

                  Subject to Section 15.1 hereof, Seller hereby represents and
warrants to Purchaser as of the date of this Agreement (except if another date
is specified in the representation or warranty), that:

                  Section 5.1 RSUI-Produced Insurance Contracts. All application
forms and policy forms used in underwriting the In Force RSUI-Produced Insurance
Contracts for admitted business are (i) in material compliance (and at their
respective dates of issuance were in material compliance) with Applicable Law,
(ii) on forms approved by

                                       30
<PAGE>

the insurance regulatory authority of the jurisdiction in which they were issued
or (iii) on forms which have been filed with and not objected to by such
authorities within the period provided for objection and any rates or rules with
respect to such In Force RSUI-Produced Insurance Contracts required to be filed
or approved by such applicable insurance regulatory authorities have been so
filed or approved. All such application forms, forms of insurance policies and
rates or rules are utilized in compliance in all material respects with
Applicable Law.

                  Section 5.2 Producer Relationships.

                           (a)      Schedule 5.2(a)(i) lists the standard form
of agreement currently being utilized by RSUI with respect to the insurance
producers of the RSUI-Produced Insurance Contracts (the "Producer Agreement").
Except as set forth in Schedule 5.2(a)(ii), all of the contracts currently in
effect between RSUI and a producer of RSUI-Produced Insurance Contracts are in
all material respects in the form of the Producer Agreement.

                           (b)      Schedule 5.2(b) sets forth a list of the top
ten producers of RSUI-Produced Insurance Contracts during the year ended
December 31, 2002 (the "Major Producers"). As of the date of this Agreement, no
Major Producer has given written notice (including by electronic transmission)
to RSUI that it intends to terminate its Producer Agreement with RSUI. To the
Knowledge of Seller, each producer of In Force RSUI-Produced Insurance Contracts
with which RSUI has a written agreement (a "Producer") is duly licensed (to the
extent that such licenses are required) in each jurisdiction in which the
Producer places or sells insurance on behalf of RSUI, and each such Producer is
duly authorized and appointed by RSUI pursuant to Applicable Law, except for
failures of such Producers to be so authorized and appointed as would not
adversely affect the Business. Except as set forth in Schedule 5.2(b), RSUI is
not in material breach or violation of, or default under, any of its agreements
with Producers. To the Knowledge of Seller, no Producer is the subject of, or
party to, any disciplinary action or proceeding under any Applicable Law. Except
as otherwise set forth in Schedule 5.2(b), since January 1, 2003, no Producer
who individually accounted for more than 5%, and no Producers who in the
aggregate accounted for more than 10%, of the aggregate gross written premiums
of the RSUI-Produced Insurance Contracts for the year ended December 31, 2002
has given written notice of termination or, to the Knowledge of Seller,
threatened termination; provided, however, that no terminations or threatened
terminations by Producers subsequent to the public announcement of the purchase
of RSUI by Purchaser which terminations or threatened terminations result
primarily from the identity of Purchaser or from actions taken by Purchaser
shall be counted toward the foregoing 5% and 10% limitations. Except as set
forth on Schedule 5.2(b), there is no dispute pending or, to the Knowledge of
Seller, threatened against RSUI by any Producer.

                           (c)      Except as set forth in Schedule 5.2(c), RSUI
has no agency contracts, third party administration contacts or other similar
arrangements or commitments, or amendments, supplements or modifications
thereto, under which an

                                       31
<PAGE>

independent party has authority to perform underwriting analysis and issue
insurance policies on behalf of RSUI or otherwise bind RSUI without prior
approval by RSUI.

                  Section 5.3 Third Party Reinsurance Contracts.

                           (a)      Schedule 5.3(a) sets forth a true and
complete list of all reinsurance agreements entered into with Unaffiliated
Reinsurers on a treaty basis by any of the Royal Insurer Affiliates as cedent in
relation to the In Force RSUI-Produced Insurance Contracts (the "Schedule 5.3(a)
Contracts"). The Schedule 5.3(a) Contracts, together with all facultative
reinsurance agreements entered into by any of the Royal Insurer Affiliates as
cedents in relation to the In Force RSUI-Produced Insurance Contracts, are
referred to herein collectively as the "Third Party Reinsurance Contracts".
Seller has separately provided to Purchaser (i) a schedule identifying the
participants in each of the Schedule 5.3(a) Contracts and the level of
participation by each such participant (the "Reinsurance Schedule"), (ii) a copy
of the Cat Cover and (iii) a copy of the Terrorism Treaty. Seller and Purchaser
have separately delivered to one another a list of acceptable reinsurers (the
"Acceptable Reinsurers"). The parties hereto acknowledge and agree that none of
the Corporate Treaties (as defined below) shall be included in the definition of
Third Party Reinsurance Contracts. The parties hereto further acknowledge and
agree that none of the benefits or the burdens of any of the Corporate Treaties
as they relate to the In Force RSUI-Produced Insurance Contracts shall, directly
or indirectly, inure to Purchaser or any of its Affiliates pursuant to this
Agreement or any of the Ancillary Agreements.

                           (b)      Except as set forth in Schedule 5.3(b), or
as expressly contemplated hereunder, none of the Royal Insurer Affiliates or any
reinsurer under any Third Party Reinsurance Contract has given any notice of
termination with respect to any such arrangement or treaty, and there is no
dispute under any such arrangement or treaty regarding the liability for any
claim under the In Force RSUI-Produced Insurance Contracts against any of the
Royal Insurer Affiliates.

                           (c)      For purposes of this Agreement, "Corporate
Treaties" shall mean those treaties purchased for the benefit of the Royal
Insurer Affiliates and their Affiliates, other than the Cat Cover, the Terrorism
Treaty and the Schedule 5.3(a) Contracts. The term "Corporate Treaties" shall
include, without limitation, the reinsurance treaties set forth in Schedule
5.3(c).

                           (d)      Each of the Third Party Reinsurance
Contracts is a valid and binding obligation of the Royal Insurer Affiliate party
thereto. Each of the Third Party Reinsurance Contracts is in full force and
effect enforceable against the parties thereto in accordance with its terms.
Except as set forth in Schedule 5.3(d), none of the Royal Insurer Affiliates
party thereto is in material breach or violation of, or default under, any of
the Third Party Reinsurance Contracts, and, to the Knowledge of Seller, no
condition or state of facts exists that, with notice or the passage of time, or
both, would constitute a default by the Royal Insurer Affiliate party thereto.

                                       32
<PAGE>

                                   ARTICLE VI

                   REPRESENTATIONS AND WARRANTIES OF PURCHASER

                  Purchaser represents and warrants to Seller as of the date of
this Agreement (except if another date is specified in the representation or
warranty) that:

                  Section 6.1 Organization and Standing. Purchaser is a limited
liability company duly organized, validly existing and in good standing under
the laws of Delaware and has all requisite power and authority to carry on its
business as now being conducted. Purchaser is a "United States Person" within
the meaning of Code Section 7701(a)(30).

                  Section 6.2 Authority. Purchaser has all requisite power and
authority to enter into and deliver this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated hereby. Purchaser has
all requisite power and authority to execute and deliver the Ancillary
Agreements to which it is a party, to perform its obligations thereunder and to
consummate the transactions contemplated thereby. The execution, delivery and
performance of this Agreement by Purchaser and the consummation by Purchaser of
the transactions contemplated hereby, and the execution, delivery and
performance of the Ancillary Agreements to which Purchaser is a party and the
consummation of the transactions contemplated thereby, have been duly and
validly authorized by all necessary action on the part of Purchaser and no other
proceedings on the part of Purchaser are necessary to authorize the execution,
delivery and performance of this Agreement, the Ancillary Agreements to which
Purchaser is a party or the consummation of any of the transactions contemplated
hereby or thereby. This Agreement has been duly executed and delivered by
Purchaser and, assuming the due authorization, execution and delivery of this
Agreement by Seller, constitutes a legal, valid and binding obligation of
Purchaser, enforceable against Purchaser in accordance with its terms subject
only to the Bankruptcy and Equity Exception. Each Affiliate of Purchaser which
is a party to any Ancillary Agreement has or on the Closing Date will have all
requisite power and authority to execute and deliver the Ancillary Agreements to
which it is a party, to perform its obligations thereunder and to consummate the
transactions contemplated thereby. The execution, delivery and performance of
the Ancillary Agreements and the consummation of the transactions contemplated
thereby, have or on the Closing Date will have been duly and validly authorized
by all necessary action on the part of any Affiliate of Purchaser which is a
party thereto and no other proceedings on the part of any of the Affiliates of
Purchaser will be necessary to authorize the execution, delivery and performance
of such Ancillary Agreements or the consummation of any of the transactions
contemplated thereby. On the Closing Date, the Ancillary Agreements to which
Purchaser and each of its Affiliates is a party will have been duly executed and
delivered by Purchaser and each such Affiliate and, assuming the due
authorization, execution and delivery of the Ancillary Agreements by each of the
other Persons party thereto, will constitute legal, valid and binding
obligations of Purchaser and any of its Affiliates party thereto, enforceable
against each such Person in accordance with their terms subject only to the
Bankruptcy and Equity Exception.

                                       33
<PAGE>

                  Section 6.3 Noncontravention.

                           (a)      Except as set forth in Schedule 6.3(a), the
execution, delivery and performance of this Agreement by Purchaser does not,
and, as of the Closing Date, the execution, delivery and performance of the
Ancillary Agreements to which it is a party, and the consummation of the
transactions contemplated by this Agreement and such Ancillary Agreements, will
not, conflict with, or result in any breach, violation, impairment or revocation
of, or default (with or without notice or lapse of time, or both) under, or give
rise to the creation of a Lien, a right of termination, cancellation, revocation
or acceleration of any obligation or loss of a benefit under (i) the certificate
of incorporation or bylaws (or comparable organizational documents) of Purchaser
and the certificate of incorporation and bylaws (or comparable organizational
documents) of any Affiliate of Purchaser which is a party to any of the
Ancillary Agreements, (ii) any loan or credit agreement, note, mortgage,
indenture, lease, material agreement, concession, franchise, contractual license
or similar authorization applicable to Purchaser or any Affiliate of Purchaser
which is a party to the Ancillary Agreements or by or to which any of them or
their respective properties or assets may be bound or subject, (iii) subject to
the governmental filings and other matters referred to in Section 6.3(b) below,
any Applicable Law applicable to Purchaser or any Affiliate of Purchaser which
is a party to the Ancillary Agreements or to which their respective properties
or assets may be bound or subject, (iv) any order, writ, judgment, injunction,
award, decree, law, statute, ordinance, rule or regulation of any Governmental
Entity or any agreement with, or condition imposed by, any Governmental Entity,
in each case, which is binding upon Purchaser or any Affiliate of Purchaser
which is a party to the Ancillary Agreements or their respective properties or
assets or (v) any Permit, other than, in the case of clauses (ii), (iii), (iv),
and (v), any such conflicts, violations, impairments, revocations, defaults,
Liens, rights or losses which would not adversely affect the ability of
Purchaser or any of its Affiliates which is a party to the Ancillary Agreements
to execute and deliver this Agreement or the Ancillary Agreements, to perform
its obligations hereunder and thereunder or to consummate the transactions
contemplated hereby and thereby.

                           (b)      Except as set forth in Schedule 8.5(a), no
consent, approval, license, order or authorization of, action by or in respect
of, or registration, declaration or filing with, or notice to, any Governmental
Entity or any other Person is required or necessary to be obtained, made or
given by Purchaser or any Affiliate of Purchaser which is a party to the
Ancillary Agreements in connection with (i) the execution and delivery of this
Agreement and the Ancillary Agreements, (ii) the performance by Purchaser of its
obligations hereunder and thereunder and (iii) the consummation by Purchaser or
any of its Affiliates of the transactions contemplated hereby and thereby.

                  Section 6.4 Litigation. There is no Action pending, or, to the
Knowledge of Purchaser or any of its Affiliates which is a party to any
Ancillary Agreement, threatened, against Purchaser or any of its Affiliates
which is a party to any Ancillary Agreement or their respective assets or
properties, by or before any court, other Governmental Entity or arbitrator,
other than those which would not prevent or materially delay Purchaser or any of
its Affiliates which is a party to any Ancillary Agreement from

                                       34
<PAGE>

consummating the transactions contemplated by this Agreement and the Ancillary
Agreement.

                  Section 6.5 Purchase of the RSUI Shares for Investment.

                           (a)      Purchaser is acquiring the RSUI Shares
solely for its own account for investment and not with the view to, or for
resale in connection with, any distribution thereof in violation of the
Securities Act of 1933, as amended (the "Securities Act"), or any other domestic
or foreign securities law. Purchaser acknowledges that the RSUI Shares are not
registered under the Securities Act and may not be transferred or sold except
pursuant to an applicable exemption therefrom.

                           (b)      Purchaser is an accredited investor within
the meaning of Rule 501 of the Securities Act, has the financial ability to bear
the economic risk of the investment in the RSUI Shares, can afford to sustain a
complete loss of such investment and has no need for liquidity in the investment
in the RSUI Shares.

                           (c)      Purchaser acknowledges that its
representations and warranties contained herein are being relied on by Seller as
a basis for an exemption of the purchase of the RSUI Shares, if any, from
registration requirements of the Securities Act and any applicable state
securities laws.

                  Section 6.6 Sufficient Funds and Balance Sheet Support.
Purchaser has, or will at the Closing have, sufficient funds available (through
existing credit arrangements or otherwise) to pay the Purchase Price and all
fees and expenses related to the transactions contemplated by this Agreement and
the Ancillary Agreements, and to capitalize AIHL Insurance Co. in accordance
with the provisions of Section 9.7 hereof. Notwithstanding anything to the
contrary in this Agreement or in any of the Ancillary Agreements, Purchaser
acknowledges and agrees that its obligation to effect the transactions
contemplated by this Agreement and the other Ancillary Agreements is not subject
to the availability to Purchaser or any of its Affiliates of any reinsurance,
debt or equity or other financing in any amount whatsoever.

                  Section 6.7 Brokers and Finders. Except for Merrill Lynch &
Co., Inc., the fees and expenses of which will be paid by Purchaser (the
"Purchaser's Fee"), no Investment Broker is entitled to any broker's, finder's,
financial advisor's or similar fee or commission in connection with the
transactions contemplated by this Agreement and the Ancillary Agreements based
upon arrangements made by or on behalf of Purchaser or any of its Affiliates.

                                       35
<PAGE>

                                   ARTICLE VII

                         REPRESENTATIONS AND WARRANTIES
                         RELATING TO AIHL INSURANCE CO.

                  Purchaser hereby represents and warrants to Seller that, as of
the Closing Date (except if another date is specified in the representation or
warranty):

                  Section 7.1 Organization and Standing. AIHL Insurance Co. will
be a corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction in which it is organized and will have all the
requisite power and authority to carry on its business as then being conducted.
AIHL Insurance Co. is duly qualified or licensed to do business and will be in
good standing as a foreign corporation in each jurisdiction in which the nature
of its business or the ownership, leasing or operation of its properties makes
such qualification or licensing necessary, except for those jurisdictions where
the failure to be so qualified or licensed or to be in good standing would not
adversely affect AIHL Insurance Co. Purchaser will make available to Seller
prior to the Closing Date true, correct and complete copies of the certificate
of incorporation and bylaws of AIHL Insurance Co.

                  Section 7.2 Authority. As of the Closing Date, AIHL Insurance
Co. will have all requisite power and authority to execute and deliver the
Ancillary Agreements to which it is a party, to perform its obligations
thereunder and to consummate the transactions contemplated thereby. The
execution, delivery and performance by AIHL Insurance Co. of the Ancillary
Agreements to which it is a party, and the consummation of the transactions
contemplated thereby, will have been duly and validly authorized by all
necessary action on the part of AIHL Insurance Co. and no other corporate
proceedings on the part of AIHL Insurance Co. will be necessary to authorize the
execution, delivery and performance of such Ancillary Agreements or the
consummation of any of the transactions contemplated thereby. The Ancillary
Agreements to which AIHL Insurance Co. will be a party will have been duly
executed and delivered by AIHL Insurance Co. and, assuming the due
authorization, execution and delivery of such Ancillary Agreements by each of
the other parties thereto, will constitute legal, valid and binding obligations
of AIHL Insurance Co., enforceable against AIHL Insurance Co. in accordance with
their terms subject only to the Bankruptcy and Equity Exception.

                  Section 7.3 Noncontravention.

                           (a)      Except as set forth in Schedule 7.3, as of
the Closing Date, the execution, delivery and performance of the Ancillary
Agreements to which AIHL Insurance Co. is a party will not, and the consummation
of the transactions contemplated by such Ancillary Agreements will not, conflict
with, or result in any breach, violation, impairment or revocation of, or
default (with or without notice or lapse of time, or both) under, or give rise
to the creation of a Lien, a right of termination, cancellation, revocation or
acceleration of any obligation or loss of a benefit under (i) the certificate of
incorporation and bylaws (or comparable organizational documents) of AIHL
Insurance

                                       36

<PAGE>

Co., (ii) any loan or credit agreement, note, mortgage, indenture, lease,
material agreement, concession, franchise, contractual license or similar
authorization applicable to AIHL Insurance Co. or by or to which any of its
properties or assets may be bound or subject, (iii) any Applicable Law
applicable to AIHL Insurance Co. or to which its properties or assets may be
bound or subject, or (iv) any order, writ, judgment, injunction, award, decree,
law, statute, ordinance, rule or regulation of any Governmental Entity or any
agreement with, or condition imposed by, any Governmental Entity, in each case,
which is binding upon AIHL Insurance Co. or its properties or assets other than,
in the case of clauses (ii), (iii) and (iv), any such conflicts, violations,
impairments, revocations, defaults, Liens, rights or losses which would not
adversely affect the ability of AIHL Insurance Co. to reinsure new business to
be underwritten by RSUI or to execute and deliver the Ancillary Agreements to
which it is a party, to perform its obligations thereunder or to consummate the
transactions contemplated thereby.

                  Section 7.4 Permits. Except as set forth in Schedule 7.4, at
the Closing Date, AIHL Insurance Co. will hold (i) all Insurance Permits
necessary to reinsure new business to be underwritten by RSUI and otherwise to
perform its obligations under each Ancillary Agreement to which it is a party
and (ii) all Insurance Permits necessary for the conduct of its business in each
of the jurisdictions in which it conducts or operates such business as then
conducted (collectively, the "AIHL Insurance Co. Permits"), and all such AIHL
Insurance Co. Permits will be valid and in full force and effect. At the Closing
Date, AIHL Insurance Co. will not be subject to any agreement or understanding
with any Governmental Entity which (x) restricts its ability to reinsure new
business to be underwritten by RSUI or otherwise to perform its obligations
under each Ancillary Agreement to which it is a party or (y) requires AIHL
Insurance Co. to take, or refrain from taking, any action relating to the
foregoing otherwise permitted by Applicable Law.

                  Section 7.5 Compliance with Applicable Law. AIHL Insurance Co.
will be in compliance with (a) the terms of its certificate or articles of
incorporation, bylaws or other charter or organization documents and (b) all
Applicable Laws, except, in the case of clause (b), where the failure to comply
would not materially adversely affect the ability of AIHL Insurance Co. to
execute and deliver the Ancillary Agreements, to perform its obligations
thereunder, or to consummate the transactions contemplated thereby.

                                  ARTICLE VIII

                                GENERAL COVENANTS

                  Section 8.1 Conduct of Business Pending the Closing.

                           (a)      Except as set forth in Schedule 8.1(a),
except as contemplated by this Agreement or by any of the Ancillary Agreements
or by the Landmark Purchase Agreement, and except with the written consent of
Purchaser (which consent shall not be unreasonably withheld or delayed), during
the period from the date hereof to the Closing Date, Seller shall cause RSUI and
each other Affiliate of Seller (provided, however, with respect to sub clauses
(i) through (iii) of this Section 8.1(a),

                                       37

<PAGE>

only to the extent that the conduct of Affiliates of Seller other than RSUI
relate to the Business) to (i) use commercially reasonable efforts to preserve
intact its business organizations and Permits, to keep available the services of
its officers and employees, and to maintain its relationships with and the
goodwill of its agents, brokers, customers, suppliers, regulators, reinsurance
intermediaries and other Persons having business dealings with RSUI or its
Affiliates in connection with the Business, (ii) conduct the Business in the
ordinary course consistent with past practice, (iii) maintain its books, records
and accounts in the usual manner consistent with past practice and (iv) maintain
and keep its properties and equipment relating to the Business in the ordinary
course of business consistent with past practice.

                           (b)      Without limiting the generality of the
foregoing, except as set forth in Schedule 8.1(a), except as contemplated by
this Agreement or by any of the Ancillary Agreements or by the Landmark Purchase
Agreement, and except with the written consent of Purchaser (which consent shall
not be unreasonably withheld or delayed), during the period from the date hereof
to the Closing Date:

                                    (i)      neither Seller nor any of its
         Affiliates (including RSUI) shall (A) enter into, renew, terminate,
         fail to renew, fail to perform any obligations under, waive or release
         any rights under or amend in any material respect any Material Business
         Contract or Business IP Contract, (B) enter into any new contract that
         would be a Material Business Contract, (C) enter into any new contract
         that would be an Intellectual Property Contract which would directly
         impact or materially relate to RSUI or the operation of the Business,
         (D) enter into any other new contract that would be material to RSUI or
         the operation of the Business, including, without limitation, contracts
         relating to the implementation of any new systems applications
         affecting RSUI or the Business, (E) fail to maintain in effect any
         contract or agreement for the maintenance or support of any software or
         equipment used by RSUI or the Business, or (F) exercise any option
         under any lease relating to leased property used by RSUI or the
         Business;

                                    (ii)     neither Seller nor any of its
         Affiliates (including RSUI) shall acquire or dispose of any asset
         relating to RSUI or the Business or that presently does or would at the
         Closing constitute part of the Acquired Assets, in each case, other
         than acquisitions or dispositions in the ordinary course of business;

                                    (iii)    Seller shall not permit RSUI to use
         its own funds to pay, discharge or satisfy any claims, liabilities or
         obligations associated with the Business (absolute, asserted or
         unasserted, contingent or otherwise), other than the payment, discharge
         or satisfaction in the ordinary course of business, and Seller shall
         not make any capital contribution to RSUI except in the form of cash;

                                    (iv)     Seller shall not permit RSUI to
         incur any indebtedness for borrowed money or guarantee such
         indebtedness of another or make any loans or advances or make any
         capital contributions to, or equity investments in, any other Person or
         issue or sell any debt securities, other than

                                       38

<PAGE>

         short-term indebtedness under existing lines of credit in the ordinary
         course of business;

                                    (v)      Seller shall not permit RSUI to
         authorize for issuance, issue, sell, deliver or agree or commit to
         issue, sell or deliver (whether through the issuance or granting of
         options, warrants, call, commitments, subscriptions, rights to purchase
         or otherwise) any stock of any class or series or any other equity
         interest, or any bonds, debentures, notes, surplus notes, other
         evidences of indebtedness for borrowed money or other securities of any
         kind, including, without limitation, any stock options or stock
         appreciation rights or any securities convertible into or exchangeable
         or exercisable for any of the foregoing;

                                    (vi)     Seller shall not permit RSUI to
         acquire (by merger, consolidation, acquisition of stock or assets or
         otherwise) any corporation, partnership or other business organization
         or assets comprising a business or make any material investment, either
         by purchase of stock or other securities, or contribution to capital,
         in any case, in any material amount of property or assets, in or of any
         other Person;

                                    (vii)    neither Seller nor any of its
         Affiliates (including RSUI) shall make any material change in the
         underwriting policies or claims handling practices used by RSUI or any
         of the Royal Insurer Affiliates in connection with the operation of the
         Business as conducted on the date hereof, except as required by
         Applicable Law;

                                    (viii)   neither Seller nor any of its
         Affiliates (including RSUI) shall permit or allow any of the assets or
         properties of RSUI or the Acquired Assets to become subject to any
         Liens, except Permitted Liens;

                                    (ix)     Seller shall not permit RSUI to
         amend or modify its certificate or articles of incorporation, bylaws or
         other charter or organization documents;

                                    (x)      Seller shall not permit RSUI to
         split, combine or reclassify any shares of its capital stock, or
         declare, pay or set aside any sum for any dividend or other
         distribution (whether in cash, stock or property, any combination
         thereof or otherwise) in respect of its capital stock, or redeem,
         purchase or otherwise acquire (or agree to redeem, purchase or
         otherwise acquire) any of its capital stock or any of its other
         securities;

                                    (xi)     Seller shall not permit RSUI to
         adopt a plan of complete or partial liquidation, dissolution,
         rehabilitation, merger, consolidation, restructuring, recapitalization,
         redomestication or other reorganization;

                                    (xii)    Seller shall not permit RSUI to
         purchase or sell securities or other investments, or invest or reinvest
         income and proceeds in

                                       39

<PAGE>

         respect thereof, other than in the ordinary course of business and in
         accordance with Applicable Law;

                                    (xiii)   Seller shall not permit RSUI to
         make or authorize or commit any capital expenditures other than those
         in the ordinary course of business consistent with past practice which
         do not exceed $50,000 individually or $250,000 in the aggregate;

                                    (xiv)    Seller shall not permit RSUI to
         enter into any managing general agency contracts, third party
         administration contracts or other similar arrangements or commitments,
         or amendments, supplements or modifications thereto relating to the
         Business with any independent third party under which such independent
         third party has authority to perform underwriting analysis and issue
         insurance or reinsurance policies on behalf of RSUI or otherwise bind
         RSUI without prior approval by RSUI;

                                    (xv)     neither Seller nor any of its
         Affiliates (including RSUI) shall take any action that would result in
         any of the conditions to Closing set forth in this Agreement not being
         satisfied;

                                    (xvi)    Seller shall not permit RSUI to
         make any material change in its accounting methods or practices or make
         any material change in depreciation or amortization policies or rates
         adopted by it, except such changes as are required by GAAP or SAP;

                                    (xvii)   Seller shall not permit RSUI to,
         directly or indirectly, make any payment, discharge or satisfaction of
         any liability of RSUI before the same became due in accordance with its
         terms, other than in the ordinary course of business consistent with
         past practice, or as fully reflected or reserved against in the Audited
         RSUI Financial Statements or the Closing Balance Sheet;

                                    (xviii)  neither Seller nor any of its
         Affiliates (including RSUI) shall assign, license, sublicense, abandon
         or fail to maintain any Business Intellectual Property except as
         provided and expressly set forth in Section 9.1(a) herein; provided,
         however, that this provision shall not apply to any Royal Group
         Intellectual Property other than the RSUI Mark and the Mark
         Registration; and, provided, further, that for clarification purposes,
         this provision shall not apply to any Business IP Contracts that do not
         directly impact or materially relate to the Business; and

                                    (xix)    neither Seller nor any of its
         Affiliates (including RSUI) shall, nor shall Seller permit RSUI to, as
         applicable, agree in writing or otherwise to take any of the actions
         described above in clauses (i) through (xviii) of this Section 8.1(b).

                                       40

<PAGE>

                  Section 8.2 Exclusivity.

                           (a)      From the date of this Agreement through the
Closing, none of Seller or its Affiliates, or their respective officers,
employees, representatives or agents will, directly or indirectly, solicit,
encourage or initiate any negotiations or discussions with, or provide any
information to, or otherwise cooperate in any manner with, any Person or group
of Persons (other than Purchaser and its Affiliates) concerning any direct or
indirect sale or other disposition of all or any portion of the Business.

                           (b)      Promptly after execution of this Agreement,
Seller shall, and shall cause each of its Affiliates to, use its commercially
reasonable efforts to pursue, pursuant to the terms of any confidentiality
agreements with third parties, the return from (or destruction by) all third
parties and their representatives of all confidential information provided to
them in connection with or concerning the sale of the Business. Seller agrees,
upon Purchaser's written request and at Purchaser's expense, to use commercially
reasonable efforts to enforce any agreements made by third parties pursuant to
confidentiality agreements entered with Seller to treat as confidential
information any non-public information concerning RSUI and the Business provided
to such third parties under such confidentiality agreements; provided, that
Purchaser shall indemnify Seller and hold Seller harmless from any Damages
incurred or suffered by Seller as a result of actions taken by Seller pursuant
to such request.

                           (c)      From the date of this Agreement through the
Closing, neither Purchaser and its Affiliates, on the one hand, nor Seller and
its Affiliates, on the other hand, shall take, nor agree to commit to take, any
action that would impede the ability of Seller or Purchaser, as applicable, to
consummate the transactions contemplated by this Agreement, the Ancillary
Agreements and the Landmark Purchase Agreement.

                  Section 8.3 Pre-Closing Access and Transition Matters.

                           (a)      Prior to the Closing Date, Purchaser shall
be entitled, through its officers, employees, counsel, accountants, actuaries,
consultants and other representatives, to make such further investigation of the
assets, liabilities, business and operations of RSUI and the Business, and to
reasonable access to the Books and Records, Claims Histories (as defined in
Section 8.4 below), contracts, properties, facilities, accounts, actuaries,
consultants, advisors, management and personnel of RSUI and the Business as
Purchaser may reasonably request in connection with the transactions
contemplated by this Agreement, any of the Ancillary Agreements or the Landmark
Purchase Agreement. Any investigation, examination or interview by Purchaser of
RSUI Employees or access pursuant to any of the provisions of this Section
8.3(a) shall be conducted or occur at reasonable times during regular business
hours upon reasonable prior notice. Each of the parties hereto and its employees
and representatives shall cooperate with the other's employees and
representatives, as the case may be, in connection with such review and
examination. Any such investigation, examination or interview shall be subject
to all applicable legal limitations (including attorney-client and work product
privileges, confidentiality and antitrust and fair trade limitations). No
investigation or review by Purchaser or any of its representatives described
above shall

                                       41

<PAGE>

affect or be deemed to modify any of the representations, warranties, covenants
or agreements of Seller set forth in this Agreement, the Ancillary Agreements,
the Landmark Purchase Agreement, the Seller Disclosure Schedules and the other
schedules and exhibits hereto and thereto; it being understood that,
notwithstanding any right of Purchaser and its representatives to fully
investigate the affairs of RSUI and the Business, and notwithstanding any
knowledge of facts determined or determinable by Purchaser and its
representatives pursuant to any such investigation or right of investigation,
Purchaser has the right to rely fully upon the representations, warranties,
covenants and agreements of Seller contained in this Agreement, the Ancillary
Agreements, the Seller Disclosure Schedules and the other schedules and exhibits
hereto and thereto.

                           (b)      Prior to the Closing Date, Seller shall be
entitled, through its officers, employees, counsel, accountants, actuaries,
consultants and other representatives, to make such further investigation of the
assets, liabilities, business and operations of AIHL Insurance Co., and to
reasonable access to the Books and Records, Claims Histories, contracts,
properties, facilities, accounts, actuaries, consultants, advisors, management
and personnel of AIHL Insurance Co. as Seller may reasonably request in
connection with the Quota Share Reinsurance Agreements and Administrative
Services Agreements. Any investigation, examination or interview by Seller of
employees of AIHL Insurance Co. or access pursuant to any of the provisions of
this Section 8.3(b) shall be conducted or occur at reasonable times during
regular business hours upon reasonable prior notice. Each of the parties hereto
and its employees and representatives shall cooperate with the other's employees
and representatives, as the case may be, in connection with such review and
examination. Any such investigation, examination or interview shall be subject
to all applicable legal limitations (including attorney-client and work product
privileges, confidentiality and antitrust and fair trade limitations).

                           (c)      Any such investigation, examination or
interview pursuant to Section 8.3(a) and Section 8.3(b) shall be subject to the
terms and conditions of the letter agreement, dated December 5, 2002, between
Purchaser and Seller (as the same may be amended, the "Confidentiality
Agreement") and shall be subject to all other legal limitations (including
attorney-client and work product privileges, confidentiality and antitrust and
fair trade limitations). Each of the parties hereto shall cooperate in
implementing the provisions of this Section 8.3 so as to not unreasonably
interfere with the business operations of RSUI, the Royal Insurer Affiliates,
Seller, or AIHL Insurance Co.

                  Section 8.4 Post-Closing Access.

                           (a)      Following the Closing Date, Seller and the
Royal Insurer Affiliates shall (i) allow the employees and representatives of
Purchaser, upon reasonable prior notice and during regular business hours, the
right, at Purchaser's expense, to examine and make copies of any Books and
Records relating to the Business which were retained by Seller or any of its
Subsidiaries for any reasonable purpose relating to the Business, including,
without limitation, the preparation or examination of, or dispute relating to,
Purchaser's Tax Returns, regulatory filings and financial statements and the

                                       42

<PAGE>

conduct of any litigation or regulatory dispute, whether pending or threatened,
concerning the conduct of the Business prior to the Closing Date and (ii)
maintain such Books and Records for Purchaser's examination and copying for a
period of not less than ten (10) years following the Closing Date, provided that
after such period Seller shall provide Purchaser with at least twenty (20)
Business Days' written notice prior to destroying or otherwise disposing of any
such Books and Records, at which time and at the option and expense of
Purchaser, Seller shall deliver such Books and Records to Purchaser rather than
destroying the same. In addition, following the Closing Date, Seller and the
Royal Insurer Affiliates shall provide the employees and representatives of
Purchaser, upon reasonable prior notice and during regular business hours, the
right, at Purchaser's expense, to examine and make copies of the claims
histories maintained by Seller and/or the Royal Insurer Affiliates in respect of
business underwritten by RSUI for the Royal Insurer Affiliates (the "Claims
Histories"). For purposes of clause (ii) of the preceding sentence and for
purposes of the last sentence of this Section 8.4(a), the term "Books and
Records" shall be deemed to include the Claims Histories. Access to such Books
and Records shall be at Purchaser's expense and may not unreasonably interfere
with Seller's or any of its Subsidiaries' (or any of their successors') business
operations.

                           (b)      Following the Closing Date, Purchaser shall
(i) allow Seller and the Royal Insurer Affiliates, upon reasonable prior notice
and during regular business hours, through its employees and representatives,
the right, at the expense of Seller, to examine and make copies of the Books and
Records transferred to Purchaser at the Closing for any reasonable business
purpose relating to any of their respective businesses, including, without
limitation, the preparation or examination of the Closing Financial Data, Tax
Returns, regulatory filings and financial statements or the conduct of any
litigation or regulatory dispute, whether pending or threatened, and (ii)
subject to any record retention requirements set forth in the Administrative
Services Agreements, maintain such Books and Records for examination and copying
by Seller and its Subsidiaries for a period of not less than ten (10) years
following the Closing Date; provided that after such period Purchaser shall
provide Seller with at least twenty (20) Business Days' written notice prior to
destroying or disposing of any such Books and Records at which time and at the
option and expense of Seller, Purchaser shall deliver such Books and Records to
Seller, rather than destroying the same. Access to such Books and Records shall
be at Seller's expense and may not unreasonably interfere with Purchaser's or
any of its Affiliates' (or any of their successors') business operations.

                  Section 8.5 Governmental Entity Consents and Filings; Rating
Agencies.

                           (a)      Schedule 8.5(a) sets forth all consents,
approvals and agreements of all Governmental Entities necessary to authorize,
approve or permit the consummation of the transactions contemplated by this
Agreement and the Ancillary Agreements. The parties hereto shall (i) cooperate
and use their respective reasonable best efforts to obtain all such consents,
approvals and agreements at the earliest possible time hereafter, (ii) as
promptly as practicable hereafter, file or submit, or cause to be filed or
submitted, to all Governmental Entities all notices, applications, documents and
other materials necessary in connection with the consummation of such
transactions and (iii)

                                       43

<PAGE>

use their respective reasonable best efforts to respond as promptly as
practicable to all inquiries received from all Governmental Entities for
additional information or documentation in connection with such transactions.
Seller and Purchaser shall promptly advise each other upon receiving any
communication from any Governmental Entity whose consent or approval is required
for consummation of the transactions contemplated by this Agreement or any
Ancillary Agreement which constitutes a reasonable likelihood that any requisite
regulatory approval will not be obtained or that receipt of any such approval
will be materially delayed. Seller and Purchaser shall furnish to the other such
necessary information and reasonable assistance as the other may reasonably
request in connection with its preparation of necessary filings or submissions
to any Governmental Entity. Seller and Purchaser shall provide the other with
copies of all filings and submissions with Governmental Entities and shall
provide the other with a reasonable opportunity to comment upon all such draft
copies. For purposes of this Agreement, the covenant of the parties to use their
"reasonable best efforts" shall not require any party to agree to limit in any
material respect the conduct of its business or to divest itself of any material
assets or properties.

                           (b)      Schedule 8.5(b) sets forth all filings or
submissions to all Governmental Entities to be filed or submitted in connection
with the consummation of the transactions contemplated by this Agreement and the
Ancillary Agreements. The parties hereto agree to use reasonable best efforts to
file or submit, or cause to be filed or submitted, as promptly as practicable
hereafter, all notices, applications, documents and other materials listed on
Schedule 8.5(b). The failure to obtain regulatory approval with respect to the
filings and submissions set forth on Schedule 8.5(b) shall not be considered a
material failure which would otherwise delay or prevent the consummation of the
Closing.

                          (c)      Seller agrees to provide, and to cause its
Affiliates (including RSUI) to provide, to Purchaser such reasonable assistance
as may be requested by Purchaser to allow Purchaser to obtain a rating from A.M.
Best Company, Inc. for the insurance entities into which business underwritten
by RSUI will be placed after the Closing.

                           (d)      Seller agrees to cause its Affiliates
(including RSUI and Landmark) to use their best efforts to obtain as soon as
practicable after the date of execution of this Agreement all required Insurance
Permits as may be necessary to allow Landmark to write insurance business on a
non-admitted basis in all states other than the State of Oklahoma. The failure
to obtain any such Insurance Permits shall not be considered a material failure
which would otherwise delay or prevent the consummation of the Closing.

                  Section 8.6 Non-Governmental Consents.

                           (a)      Seller and Purchaser shall cooperate and use
commercially reasonable efforts to obtain as promptly as practicable following
the date hereof all approvals, consents, waivers or authorizations of
non-governmental Persons necessary to permit consummation of the transactions
contemplated by this Agreement and the

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<PAGE>

Ancillary Agreements, all of which consents are listed on either Schedule
8.6(a)(i) or 8.6(a)(ii), including any required approvals, consents, waivers or
authorizations with respect to (A) the assignment or transfer of rights under
any Material Business Contracts and (B) an assignment or sublicense of any
Business Intellectual Property, except as otherwise provided in Section 9.2(b).
Seller is responsible to obtain consents set forth on Schedule 8.6(a)(i).
Purchaser is responsible to obtain consents set forth on Schedule 8.6(a)(ii).
The out-of-pocket costs and expenses incurred in obtaining such consents shall
be borne by Seller, in the case of the Schedule 8.6(a)(i) consents, and by
Purchaser, in the case of the Schedule 8.6(a)(ii) consents. Purchaser shall be
entitled to participate in any negotiation with any Person whose consent is
required in connection with the assignment or sublicensing or other transfer of
any Material Business Contract or Acquired Intellectual Property and the rights
and obligations thereunder.

                           (b)      Pending obtaining any required consent,
approval, waiver or authorization with respect to a Material Business Contract,
the parties shall cooperate with each other to effect mutually agreeable,
reasonable and lawful arrangements designed to provide Purchaser or its
designated Affiliates with (A) the economic and operational equivalents that
would have been realized by Purchaser or its designated Affiliates had the
applicable Material Business Contract been assigned, subleased or transferred to
Purchaser or its designated Affiliates at Closing or (B) to the extent that such
economic and operational equivalent cannot be provided through Seller or one of
its Affiliates, alternative third party contractual arrangements, which
arrangements shall be determined by Purchaser in its reasonable discretion to be
acceptable. Once consent, approval, waiver or authorization for the assignment,
sublease or transfer of any such Material Business Contract not assigned,
subleased or transferred at the Closing is obtained, Seller shall, and shall
cause the appropriate Affiliate of Seller to, assign, sublease or transfer
promptly such Material Business Contract to Purchaser or its designated
Affiliate. In the event that any such Material Business Contract cannot be
assigned, subleased or transferred or the benefits of use of any such Material
Business Contract cannot be provided to Purchaser or its designated Affiliates
within a reasonable period of time following the Closing, then Purchaser, or its
designated Affiliates on the one hand, and Seller and its Affiliates, on the
other hand, shall enter into such arrangements (including servicing, subleasing,
subcontracting or occupancy) that will provide Purchaser or its designated
Affiliates with (A) the economic and operational equivalents that would have
been realized by Purchaser or its designated Affiliates had the applicable
Material Business Contract been assigned, subleased or transferred to Purchaser
or its designated Affiliates at Closing or (B) to the extent that such economic
and operational equivalent cannot be provided through Seller or one of its
Affiliates, alternative third party contractual arrangements which arrangements
shall be determined by Purchaser in its reasonable discretion to be acceptable.
Without limitation of the foregoing, Seller agrees to indemnify Purchaser and
its Affiliates and to hold Purchaser and its Affiliates harmless from any
Damages incurred or suffered by Purchaser or any of its Affiliates (including
RSUI) as a result of the failure to obtain the Sherman Oaks Consent.

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<PAGE>

                  Section 8.7 Further Assurances.

                           (a)      Upon the terms and subject to the conditions
herein provided, until the Closing Date each of the parties hereto shall use
commercially reasonable efforts to take, or cause to be taken, all actions or
do, or cause to be done, all things or execute any documents necessary, proper
or advisable under Applicable Law to consummate and make effective the
transactions contemplated by this Agreement and the Ancillary Agreements.

                           (b)      On and after the Closing Date, Seller, as
reasonably requested from time to time by Purchaser, and Purchaser, as
reasonably requested from time to time by Seller, shall take all reasonably
appropriate action and execute any additional documents, instruments or
conveyances of any kind (but which shall not, however, contain any additional
representations or warranties) which may be necessary to carry out any of the
provisions hereof or of any Ancillary Agreement, including, without limitation,
putting Purchaser in full possession and operating control of the Acquired
Assets and causing Purchaser to have full unencumbered ownership of all of the
RSUI Shares.

                  Section 8.8 Expenses. Except as otherwise expressly provided
in this Agreement, in any of the Ancillary Agreements or with the Landmark
Purchase Agreement, the parties to this Agreement shall bear their respective
costs and expenses incurred in connection with the preparation, execution and
performance hereof and thereof and the transactions contemplated hereby and
thereby, including, without limitation, all fees and expenses of agents,
representatives, counsel, investment bankers, actuaries and accountants;
provided, however, that Seller and Purchaser shall share equally the cost of all
filing fees in connection with all filings by any of the parties hereto or their
respective Affiliates with Governmental Entities (including the Federal Trade
Commission and the Antitrust Division under the HSR Act). The out of pocket
costs and expenses incurred in connection with obtaining required approvals,
consents, waivers or authorizations of non-governmental Persons will be
allocated as provided in Section 8.6(a) above.

                  Section 8.9 Public Announcements. After the execution of this
Agreement and through the Closing Date, the parties hereto shall consult with
each other prior to making any public announcements which relate to the
transactions contemplated by this Agreement or any of the Ancillary Agreements
and give the other reasonable opportunity to review and comment on such public
disclosure in advance of its release. Notwithstanding anything to the contrary
contained in this Agreement or the Confidentiality Agreement, the parties (and
each employee, representative, or other agent of the parties) may disclose to
any and all persons, without limitation of any kind, the tax treatment and any
facts that may be relevant to the tax structure of the transaction, beginning on
the earliest of (i) the date of the public announcement of discussions relating
to the transaction, (ii) the date of public announcement of the transaction, or
(iii) the date of the execution of this agreement (with or without conditions)
to enter into the transaction, provided, however, that neither party (nor any
employee, representative or other agent thereof) may disclose any information
that is not necessary to understanding

                                       46

<PAGE>

the tax treatment and any facts that may be relevant to the tax structure of the
transaction (including the identity of the parties and any information that
could lead another to determine the identity of the parties), or any other
information to the extent that such disclosure could result in a violation of
any federal or state securities law.

                  Section 8.10 Notice of Adverse Developments. From the date
hereof through the Closing Date (i) Seller shall notify Purchaser promptly of
the occurrence of any event, condition or circumstance of which Seller has
Knowledge that would jeopardize the fulfillment of any condition to the Closing
and (ii) Purchaser shall notify Seller promptly of the occurrence of any event,
condition or circumstance of which Purchaser has Knowledge that would jeopardize
the fulfillment of any condition to the Closing. No disclosure by any party
pursuant to this Section 8.10, however, shall be deemed to amend or supplement
the Seller Disclosure Schedules or the Purchaser Disclosure Schedules or to
prevent or cure any misrepresentation or breach of warranty, nor shall any such
disclosure affect or otherwise limit the remedies available hereunder to the
party receiving such notice. Without limiting the generality of the foregoing,
from the date hereof through the Closing Date, Seller shall promptly notify
Purchaser of any Action of the type required to be described in Schedules 2.4,
3.5 or 4.10 hereof that is commenced or, to its Knowledge, threatened after the
date hereof.

                  Section 8.11 Policy Form, Rate and Rule Filings.

                           (a)      As soon as practicable after the date of
this Agreement, Purchaser shall cause AIHL Insurance Co. to file or submit, or
cause to be filed or submitted, to the insurance regulatory entities in all
applicable states, applications, documents and other materials necessary in
connection with obtaining all policy form, rate and rule filings necessary to
enable AIHL Insurance Co. to issue in its own name contracts or policies similar
to the RSUI-Produced Insurance Contracts. Purchaser agrees it shall cause AIHL
Insurance Co. to use its best efforts to obtain all necessary policy form, rate
and rule filings as soon as practicable after the Effective Date (as such term
is defined in the Quota Share Reinsurance Agreements) and in any event by the
first anniversary of the Effective Date.

                           (b)      Seller agrees to use its best efforts to
cooperate with, or cause its Affiliates to use their best efforts to cooperate
with, AIHL Insurance Co. in obtaining all policy form, rate and rule filings
necessary to enable AIHL Insurance Co. to issue in its own name contracts or
policies similar to the RSUI-Produced Insurance Contracts.

                  Section 8.12 Intercompany Balances.

                           (a)      Except as set forth in Schedule 8.12(a),
Seller shall cause all intercompany accounts receivable or payable (whether or
not currently due or payable) between (x) RSUI, on the one hand, and (y) Seller
or any of its Affiliates, or any of the officers or directors of any of Seller
or any of its Affiliates (other than RSUI or any of the officers or directors of
RSUI), on the other hand, to be settled in full (without any premium or penalty)
at or prior to the Closing, and such settlements shall be reflected in

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<PAGE>

the Closing Balance Sheet. At or prior to the Closing, Seller shall advise
Purchaser as to the amounts of all such intercompany accounts and the method of
settlement thereof. Except as set forth on Schedule 8.12(a), effective at or
prior to Closing, all Intercompany Agreements shall be terminated and discharged
in accordance with their terms, without any further liability or obligation
thereunder.

                           (b)      From and after the Closing, except as set
forth on Schedule 4.17(c) or as fully reflected or reserved against in the
Closing Balance Sheet, and except for obligations and agreements to be performed
pursuant to this Agreement, the Ancillary Agreements and the Landmark Purchase
Agreement, (i) none of RSUI, on the one hand, and Seller and its Affiliates, on
the other hand, shall be subject to any further obligation or liability to the
other of any nature whatsoever, under any Intercompany Agreement or otherwise,
and (ii) none of Purchaser and its Affiliates (including RSUI), on the one hand,
and Seller and its Affiliates, on the other hand, shall be subject to any
further obligation or liability to the other of any nature with regard to the
Business.

                  Section 8.13 Affiliate Agreements. All Affiliate Agreements
shall be terminated and discharged without any further liability or obligation
thereunder effective at or prior to the Closing, upon terms and pursuant to
instruments reasonably satisfactory to Purchaser.

                  Section 8.14 Insurance Matters. Purchaser acknowledges that
RSUI's insurance coverage will be terminated effective as of the Closing Date.
Seller agrees to cooperate with Purchaser in obtaining, at the expense of
Purchaser, replacement insurance coverage to provide insurance coverage to RSUI
effective as of the Closing Date. Without limiting the generality of the
foregoing, Seller shall provide such information, and cause RSUI and any other
Affiliate of Seller, as may be appropriate, to complete and execute such
applications, as may be reasonably necessary to arrange for such replacement
insurance coverage.

                  Section 8.15 Resignation of RSUI Directors. Seller shall cause
each of the directors of RSUI set forth in Schedule 8.15 to submit their letters
of resignation effective as of the Closing Date.

                  Section 8.16 Disposition of Business. Prior to the Closing,
neither Purchaser nor any Affiliate of Purchaser shall publicly announce any
proposal or intention to sell, transfer or otherwise restructure (including, by
way of merger, consolidation, exchange, business combination or any other
transaction) directly or indirectly, any or all of the Acquired Assets or the
Business.

                  Section 8.17 Transfer of Excluded Assets, Excluded Contracts
and Retained Liabilities. Subject to Sections 9.1 and 9.2, to the extent
practicable, Seller shall cause all of the Excluded Assets, the Excluded
Contracts and the Schedule 1.3(c) Liabilities to be transferred by RSUI to
Seller and/or its Affiliates, or otherwise disposed of, liquidated or discharged
prior to Closing, upon terms and pursuant to instruments reasonably satisfactory
to Purchaser. Such transfers, dispositions, liquidations or other discharges of
the Excluded Assets, the Excluded Contracts and the Schedule 1.3(c)

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<PAGE>

Liabilities shall be reflected in the Closing Balance Sheet. To the extent
necessary, Purchaser shall cooperate with Seller to transfer such Excluded
Assets, Excluded Contracts and Schedule 1.3(c) Liabilities to Seller, including
promptly notifying and delivering to Seller any such Excluded Assets if
discovered or received by Purchaser subsequent to the Closing Date.

                  Section 8.18 Indemnification of Brokerage. Seller agrees to
pay the Seller's Fee and to indemnify and hold harmless Purchaser from any claim
or demand for commission or other compensation by any Investment Broker claiming
to have been employed by or on behalf of RSUI, the Seller or any of its
Subsidiaries in connection with the transactions contemplated hereby, and to
bear the cost of legal expenses incurred in defending against any such claim.
Purchaser agrees to pay the Purchaser's Fee and to indemnify and hold harmless
Seller from any claim or demand for commission or other compensation by any
Investment Broker claiming to have been employed by or on behalf of Purchaser or
any of its Affiliates in connection with the transactions contemplated hereby,
and to bear the cost of legal expenses incurred in defending against any such
claim.

                  Section 8.19 Interim Financial Statements. From the date
hereof until the Closing Date, as soon as practicable after they become
available, Seller shall deliver to Purchaser true and complete copies the
quarterly or annual GAAP financial statements relating to RSUI for each
quarterly or annual period ending on or after the date hereof. All such GAAP
financial statements shall be prepared in accordance with GAAP consistently
applied throughout the periods involved (except as may be indicated in the notes
thereto), and shall be delivered to Purchaser within forty-five (45) days after
the end of each calendar quarter or within seventy-five (75) days after the end
of the fiscal year.

                  Section 8.20 Corporate Records. At or prior to the Closing,
Seller shall deliver to RSUI all minute books, stock ledgers, stock books,
canceled or unused stock certificates, corporate seals, books, records
(including but not limited to, for all open Tax periods, any Income Tax Returns,
records and worksheets relating to Taxes, as well as any Tax closing or
settlement agreements and any Tax examinations or similar reports, but excluding
any such records that are part of any consolidated, combined, unitary or similar
Tax Return except to the extent solely related to RSUI), files, personnel
records, policy forms, stationery, software, data, documents and properties of
RSUI that are in the possession of any of Seller or its other Affiliates.

                  Section 8.21 Instruments. Except as specifically provided
elsewhere herein, any monies, checks, drafts, money orders, postal notes and
other instruments received after the Closing by Seller or any of its Affiliates
in payment of any amounts due RSUI (other than amounts due with respect to
Taxes) shall be held in trust therefor and, forthwith after receipt by Seller or
such Affiliates thereof, be transferred and delivered by Seller and such
Affiliates to RSUI and any such instruments made payable to Seller or such
Affiliates when so delivered shall bear all endorsements required to effectuate
the transfer of the same to RSUI.

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<PAGE>

                  Section 8.22 Cooperation. (a) From and after the Closing Date,
Purchaser agrees to cause RSUI (including its directors, officers and employees
and former directors, officers and employees who are employees of Purchaser or
any of its Affiliates) to assist, cooperate and voluntarily participate in the
defense of any legal or regulatory action brought against Seller (or any
Affiliate of Seller) by any third party with regard to the businesses of Seller
or any of its Affiliates as to which any such director, officer or employee has
independent knowledge. Seller agrees to reimburse Purchaser for any
out-of-pocket costs and expenses incurred by Purchaser or any of its Affiliates
in connection with providing such assistance.

                           (b)      From and after the Closing Date, Seller
agrees on behalf of itself and its Affiliates (including directors, officers and
employees and former directors, officers and employees who are employees of
Seller or any of its Affiliates) to assist, cooperate and voluntarily
participate in the defense of any legal or regulatory action brought against
Purchaser, RSUI, AIHL Insurance Co. or any other Affiliate of Purchaser by any
third party with regard to the businesses of Purchaser or any of its Affiliates
as to which any such director, officer or employee has independent knowledge.
Seller agrees to reimburse Purchaser for any out-of-pocket costs and expenses
incurred by Purchaser or any of its Affiliates in connection with providing such
assistance.

                                   ARTICLE IX

                              ADDITIONAL COVENANTS

                  Section 9.1 Trademarks; Change of Corporate Names.

                           (a)      On or prior to the Closing Date, Seller
shall cause Royal & SunAlliance to execute such instruments, in form and
substance reasonably satisfactory to Purchaser, assigning to RSUI all right,
title and interest in and to the RSUI Mark, excluding the Mark Registration
(such instruments, the "Service Mark Assignment"). Within (3) days following the
Closing, Seller shall cause Royal & SunAlliance to cancel the Mark Registration
by filing an instrument of express abandonment with the United States Patent and
Trademark Office. On and after the Closing Date, Seller shall, and shall cause
its Affiliates, as reasonably requested by Purchaser, to execute any additional
documents, instruments or conveyances which may be necessary in order for RSUI
or its successor to register the RSUI Mark with the United States Patent and
Trademark Office (and similar authorities in other jurisdictions) so long as the
subject matter of such registrations does not incorporate the name "Royal" or
the navigator or half-navigator design elements currently used by Royal Insurer
Affiliates.

                           (b)      Change of Corporate Name. As promptly as
practicable following the Closing, but in no event later than six (6) months
following the Closing Date, Purchaser shall, and shall cause its Affiliates to,
cause RSUI to make appropriate filings with all Governmental Entities and any
other applicable registries to change the legal name and any tradename of RSUI
to a name that does not include "Royal", "RSA" or anything confusingly similar
thereto. Seller agrees that the foregoing shall not be

                                       50

<PAGE>

deemed to prohibit RSUI or any of its Affiliates from adopting a new name that
allows for continued use of the acronym "RSUI" or from using "RSUI" in its
corporate name.

                           (c)      Intellectual Property. For the avoidance of
doubt, except as provided in Sections 9.1 or 9.2 or as otherwise provided in any
of the Ancillary Agreements, the parties hereto agree that Purchaser is not
purchasing, acquiring or otherwise obtaining any right, title or interest in, to
or under (i) any Intellectual Property, proprietary Computer Software and IP
Licenses owned by Seller set forth in Schedule 9.1(c) hereto (collectively, the
"Royal Group Intellectual Property"), whether directly or indirectly as a result
of Purchaser's acquisition of the RSUI Shares, or (ii) except as expressly
provided for hereunder or in the Ancillary Agreements (including indirectly as a
result of Purchaser's acquisition of the RSUI Shares), any other Intellectual
Property, including, but not limited to, the names "Royal", "Royal Specialty
Underwriting Inc.", Navigator Logo or any Trademark related thereto or employing
the words "Royal" and "Royal Specialty Underwriting Inc." or any part or
variation thereof or any confusingly similar Trademark. Seller agrees that the
foregoing shall not be deemed to prohibit RSUI or any of its Affiliates from
adopting a new name that allows for continued use of the acronym "RSUI" or from
using "RSUI" or "Specialty Underwriting" in its corporate name.

                  Section 9.2 Other Intellectual Property Matters.

                           (a)      As promptly as practicable following the
date hereof, Seller shall use its commercially reasonable efforts (i) to assist
Purchaser in obtaining new licenses for RSUI's benefit and use following the
Closing of all of the Intellectual Property licensed from a third party that is
listed in Schedule 4.15(a), and (ii) in the event that Purchaser is unable,
despite its commercially reasonable efforts and Seller's assistance, to obtain
any rights to such Intellectual Property prior to the Closing, to enter or
assist Purchaser in entering into any reasonable lawful arrangement designed to
provide RSUI or its designated Affiliates (1) with the benefits of Seller's
license of such Intellectual Property or (2) with economic and operational
equivalents to said Intellectual Property or (3) with alternative third party
contractual arrangements, which arrangements shall be determined by Purchaser in
its reasonable discretion to be acceptable, and shall cause Purchaser to bear
the costs and obligations applicable to RSUI or its designated Affiliates for
their use under Seller's license, the portion of the economic and operational
equivalent attributable to RSUI or its designated Affiliates or the alternative
third party contractual arrangements, whichever is applicable.

                           (b)      In the event that, following the Closing,
Purchaser or Seller identifies additional Intellectual Property (including,
without limitation, Computer Software or Trade Secrets) that is owned or
controlled by Seller and is necessary for the conduct of the Business, Seller
shall, or shall cause its applicable Affiliates, to enter into a license, in
form and substance reasonably satisfactory to both parties, granting RSUI a
non-exclusive, royalty-free license to use such Intellectual Property in
connection with the Business under terms that are, where appropriate, consistent
with those contained in the Administrative Services Information Technology
License.

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<PAGE>

                           (c)      Seller on its own behalf and/or on behalf of
its Affiliates hereby grants RSUI and its Affiliates the limited, perpetual
right to use the form and content of the "Big Shield form" (the "Form") on a
non-exclusive basis in connection with the offering and sale of insurance
products and services in accordance with practices current as of the Closing
Date, as necessary regulatory forms, and in other ways customary to the trade;
provided, however, that neither RSUI nor any of its Affiliates shall have any
right to use the "Big Shield" trademark; and provided, further, that the Form
and the content of the Form are provided on an "as is" basis and without
representations or warranties of any kind. The rights granted under this Section
9.2(c) shall not be transferable without Seller's prior written consent except
for assignments made in connection with a merger, reorganization, sale or other
transfer of all or substantially all of the assets or business of RSUI.

                  Section 9.3 Noncompetition and Nonsolicitation by Seller.

                           (a)      Except as provided in Sections 9.3(c) and
9.3(d) below, for a period of two (2) years following the Closing Date (the
"Non-Compete Period"), neither Seller nor any of its Affiliates shall (for their
own account or for the benefit of any other Person without the prior written
consent of Purchaser), directly or indirectly, as a principal or solely or
jointly with others, or as stockholders, partners, members or other owners in or
of any Person, (i) underwrite any RSUI-Produced Insurance Contract (provided,
however, that Seller and its Affiliates shall not be prohibited by this Section
9.3(a)(i) from underwriting any RSUI-Produced Insurance Contract if RSUI has
tendered written notice of non-renewal of such RSUI-Produced Insurance Contract
and RSUI has not offered to place the subject contract either in an insurance
company affiliated with Purchaser or with a Royal Insurer Affiliate), or (ii)
accept any risk in the United States placed through a wholesale broker for a
policy of insurance of a type underwritten by RSUI as of the Closing Date.

                           (b)      Except as provided in Sections 9.3(c) and
9.3(d) below, Seller further agrees that, during the Non-Compete Period, neither
it nor any of its Affiliates shall underwrite in the United States any policies,
binders and contracts of insurance that provide monoline coverage for the
following types of insurance: (i) directors and officers liability; (ii)
professional liability; and (iii) excess umbrella liability.

                           (c)      Notwithstanding anything to the contrary
contained in this Agreement or in any Ancillary Agreement, Purchaser
acknowledges and agrees that Seller and its Affiliates have been issuing, and
during the Non-Compete Period shall be permitted to continue to issue, (i)
through its retail distribution channel, policies, binders and contracts for the
following types of insurance: (A) property; (B) inland marine; and (C) general
liability, (ii) policies, binders and contracts for errors and omissions
insurance for architects and engineers underwritten by Design Professional
Insurance Company (DPIC), a business unit of Seller, and (iii) umbrella
policies, binders and contracts of insurance written by Seller or any of its
Affiliates that are in excess of Seller's or such Affiliate's own primary
policies, provided and to the extent that such actions described in clauses (i),
(ii) and (iii) above do not involve any use of the Books and Records.

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<PAGE>

                           (d)      The restrictions in paragraphs (a) and (b)
of this Section 9.3 shall not prevent Seller or any of its Affiliates during the
Non-Compete Period from:

                                    (i)      arranging or underwriting cover for
         any client of Seller or any Affiliate or Network Partner as part of a
         multinational insurance program which is administered from a territory
         or territories outside the United States;

                                    (ii)     carrying on inwards reinsurance
         business (provided that neither Seller nor any Affiliate will enter
         into reinsurance arrangements solely for the purpose of defeating the
         effect of the restrictions set forth in paragraphs (a) and (b) of this
         Section 9.3);

                                    (iii)    holding or acquiring for investment
         purposes only any interest in securities of a Person which are listed
         or quoted or traded on any generally recognized market, provided that
         such securities amount to less than ten percent (10%) of the
         outstanding securities of such Person and carry less than ten percent
         (10%) of the voting rights attaching to the outstanding securities of
         that Person; and

                                    (iv)     underwriting any type of insurance
         contracts which are not being underwritten by RSUI as of the Closing
         Date; and

                                    (v)      purchasing an entity or group of
         entities (an "Acquired Entity") that competes in the wholesale market
         with the Business (a "Competing Business") as conducted on the date
         hereof, so long as:

                           (A)      the gross revenues of the Competing Business
                  do not exceed 15% of the gross revenues of the Acquired Entity
                  during the most recent fiscal year of the Acquired Entity
                  ended before the date of acquisition of the Acquired Entity;
                  and

                           (B)      Seller takes appropriate safeguards to
                  further the intent of this Section 9.3, including implementing
                  procedures to ensure that no disclosure of any information
                  relating primarily to the Business is made or otherwise
                  becomes available to the Competing Business or to the Acquired
                  Entity.

                           (e)      During the Non-Compete Period, none of
Seller or its Affiliates shall solicit or hire any Transferred Employee without
the prior written consent of Purchaser; provided, however, that nothing in this
Section 9.3(e) shall prohibit Seller or any of its Affiliates from hiring any
Transferred Employee whose employment has been terminated by Purchaser or an
Affiliate of Purchaser, as applicable, where none of Seller or its Affiliates
has solicited such Transferred Employee for employment prior to the date of the
termination of such Transferred Employee by Purchaser or its Affiliate, as
applicable. (For purposes of this Section 9.3(e), prior to January 1, 2004,
references to "Transferred Employees" shall be deemed to be references to RSUI
Employees and New

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<PAGE>

Hires as defined in Section 11.1 below). In the event that Purchaser has
Knowledge of any solicitation in violation of this Section 9.3(e), Purchaser
shall promptly notify Seller.

                           (f)      The parties to this Agreement acknowledge
that the type and periods of restriction imposed in the provisions of this
Section 9.3 are fair and reasonable and are reasonably required for the
protection of the parties. If any of the restrictions or covenants in paragraphs
(a), (b), (c) (d), or (e) of this Section 9.3 are hereafter construed to be
invalid or unenforceable, the same shall not affect the remainder of the
covenant or covenants, which shall be given full effect, without regard to the
invalid portions.

                           (g)      Seller agrees that the covenants in this
Section 9.3 are for the benefit of Purchaser and its Affiliates (including
RSUI).

                           (h)      Seller agrees that, at no time after the
Closing Date, will it or any of its Affiliates (i) itself use for the purpose of
competing with the Business of RSUI any confidential information of RSUI or the
Business obtained by it while Seller was a stockholder of RSUI and an owner of
the Business (the "RSUI Confidential Information"), or (ii) disclose to any
Person any RSUI Confidential Information; provided, however, that this clause
(ii) shall not preclude the disclosure of such RSUI Confidential Information if
(A) disclosure of such RSUI Confidential Information is in the reasonable
opinion of a Royal Insurer Affiliate necessary in the conduct of its business;
(B) disclosure of such RSUI Confidential Information is reasonably required by
Seller or any of its Affiliates in connection with the performance by Seller and
its Affiliates of their obligations under the Employee Leasing Agreement or
under any other Ancillary Agreement; (C) disclosure of such RSUI Confidential
Information shall be required by Applicable Law or order of any Governmental
Entity, (D) disclosure of such RSUI Confidential Information is, in the
reasonable judgment of Seller or an Affiliate of Seller, required in connection
with any claim against or involving Seller or any of its Affiliates or (E) such
RSUI Confidential Information is publicly available (other than RSUI
Confidential Information known generally to the public as a result of a
violation of this Section 9.3(h) by Seller or any of its Affiliates) or is known
or subsequently developed by the Seller or any of its Affiliates outside of its
affiliation with RSUI or the Business from a source that is not prohibited from
disclosing such RSUI Confidential Information to Seller or any of its Affiliates
by a legal, contractual, fiduciary or other obligation to Purchaser or any of
its Affiliates (including RSUI).

                           (i)      Seller agrees that a monetary remedy for a
breach of the agreements set forth in this Section 9.3 will be inadequate and
impracticable and further agrees that such a breach would cause Purchaser
irreparable harm, and that, in the event of such a breach, Purchaser shall be
entitled to such injunctive relief, including temporary restraining orders and
preliminary and permanent injunctions, as may be determined by a court of
competent jurisdiction.

                           (j)      For purposes of this Section 9.3, "Network
Partner" means any insurance company that is not an Affiliate of Seller that
utilizes the Royal &

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SunAlliance Insurance Group plc global network in order to write business for
its multinational clients.

                  Section 9.4 Ancillary Agreements; Other Closing Deliveries.

                           (a)      Seller shall, and shall cause RSUI and each
of the Royal Insurer Affiliates to, execute and deliver at the Closing each of
the Ancillary Agreements to which it is a party and each other agreement,
document or instrument which is necessary to effect the transactions
contemplated by this Agreement or the Ancillary Agreements.

                           (b)      Purchaser shall, and shall cause its
Affiliates to, execute and deliver at the Closing each of the Ancillary
Agreements to which it is a party and each other agreement, document or
instrument which is necessary to effect the transactions contemplated by this
Agreement or the Ancillary Agreements.

                           (c)      Promptly following the date of this
Agreement, the parties hereto agree to negotiate in good faith the definitive
terms of the Transition Services Agreement.

                           (d)      At the Closing, Seller shall deliver to
Purchaser: (i) evidence of compliance with the requirements of Section 8.12
regarding the settlement of intercompany balances and the termination of
Intercompany Agreements; (ii) evidence of compliance with the requirements of
Section 8.13 regarding the termination of Affiliate Agreements; (iii) a
certificate satisfying the requirements of Treasury Regulation Section
1.1445-2(b)2; (iv) the Closing RSUI Contract List; and (v) the Cat Cover
Endorsement.

                  Section 9.5 Updates to Seller Disclosure Schedules. Seller
shall use reasonable best efforts to provide in writing to Purchaser updates to
Schedule 11.1(a) (RSUI Employees) of the Seller Disclosure Schedules between the
date hereof and the Closing Date.

                  Section 9.6 The American Agency. From and after the Closing
Date, Purchaser agrees to provide, and to cause its Affiliates (including RSUI)
to provide, such reasonable assistance as may be requested from time to time by
Seller in connection with the proposed sale of The American Agency. Seller
agrees to reimburse Purchaser for any out-of-pocket costs and expenses incurred
by Purchaser or any of its Affiliates (including RSUI) in connection with
providing such assistance.

                  Section 9.7 Capitalization of AIHL Insurance Co. Prior to the
Closing, Purchaser will take such action as may be necessary to cause the
policyholders' surplus of AIHL Insurance Co. to be not less than $500,000,000 on
the Closing Date.

                  Section 9.8 Certain Matters.

                           (a)      Purchaser agrees to take such action as may
be necessary to cause AIHL Insurance Co. to perform its obligations under the
Quota Share Reinsurance Agreements with regard to the collateralization of the
Trust provided for thereunder.

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<PAGE>

Purchaser further agrees that, if the policyholders' surplus of AIHL Insurance
Co. reflected in any annual or quarterly statutory filing is less than
$300,000,000 as of the end of the period, Purchaser will, within ten Business
Days after the date of such statutory filing, take such action as may be
necessary to cause the policyholders' surplus of AIHL Insurance Co. to be not
less than $300,000,000.

                           (b)      Purchaser and Seller agree that the
commitments of Purchaser made in Section 9.8(a) above shall be terminated on the
date of filing of AIHL Insurance Co.'s statutory statements for the year ended
December 31, 2004, or on the date of filing of AIHL Insurance Co.'s statutory
statements for a quarterly or annual period ended after December 31, 2004, if,
on such date, (i) AIHL Insurance Co. holds an A.M. Best Insurer's Financial
Strength rating of at least A-, without negative outlook or similar modifier,
(ii) the policyholders' surplus of AIHL Insurance Co. reflected in such
statutory filing is not less than $500,000,000, and (iii) (A) the sum of (x)
unearned premium reserves plus (y) loss and loss adjustment expense reserves
(including reserves for incurred but not reported claims) held by AIHL Insurance
Co. in respect of its obligations under the Quota Share Reinsurance Agreements,
taken as a whole (but, from and after the date of closing of the Landmark
Purchase Agreement, excluding unearned premium reserves and loss and loss
adjustment expense reserves held by AIHL Insurance Co. in respect of its
obligations under the Landmark Quota Share Reinsurance Agreement), does not
exceed 50% of the policyholders' surplus of AIHL Insurance Co. reflected in such
statutory filing and (B) Purchaser shall have delivered to Seller an opinion (in
the case of a statutory filing for an annual period) or a review (in the case of
a statutory filing for a quarterly period) prepared by a nationally recognized
independent actuarial firm supporting the reserves reflected in such statutory
filing. Purchaser further agrees that, until the commitments of Purchaser made
in Section 9.8(a) above are terminated upon fulfillment of the conditions for
such termination set forth in the immediately preceding sentence, Purchaser
shall not dividend or distribute (A) any shares of Purchaser's wholly owned
subsidiaries Capital Transamerica Corporation and Platte River Insurance Company
or any shares of Purchaser's indirect wholly owned subsidiaries Capital
Indemnity Corporation and Capital Specialty Insurance Corporation or (B) any
proceeds of the sale of any of Capitol Transamerica Corporation, Platte River
Insurance Company, Capitol Indemnity Corporation and/or Capitol Specialty
Insurance Corporation.

                                    ARTICLE X

                                   TAX MATTERS

                  Section 10.1 Transfer Taxes. All Transfer Taxes, if any,
arising out of or in connection with the transactions contemplated by this
Agreement shall be borne equally by Seller and Purchaser. The parties shall
cause all appropriate stock Transfer Tax stamps to be affixed to the certificate
or certificates representing the RSUI Shares so sold and delivered. Seller and
Purchaser shall reasonably cooperate in the preparation, execution and filing
of, all Tax Returns, applications or other documents regarding any Transfer
Taxes that become payable in connection with the sale of the Acquired Assets and
the Acquired Intellectual Property pursuant to this Agreement.

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<PAGE>

                  Section 10.2 Tax Matters. Except as provided in Section 10.1
hereof:

                           (a)      Parent or Seller shall file or cause to be
filed when due all Tax Returns that are required to be filed for any Pre-Closing
Tax Period by or with respect to RSUI, and, subject to Section 10.3 hereof,
shall remit (or cause to be remitted) any Taxes due in respect of such Tax
Returns. All such Tax Returns will be prepared in a manner consistent with the
past practice of Seller and RSUI.

                           (b)      Purchaser shall file or cause to be filed
when due all Tax Returns that are required to be filed for any Post-Closing Tax
Period or any Straddle Period by or with respect to RSUI and, subject to
Sections 10.2(d) and 10.3 hereof, Purchaser shall remit (or cause to be
remitted) any Taxes due in respect of such Tax Returns.

                           (c)      Purchaser shall cause RSUI to prepare in a
manner consistent with past practice of RSUI and to deliver to Parent or Seller,
all relevant Tax information relating to RSUI reasonably required to permit
Parent or Seller to file or cause to be filed when due all Tax Returns required
to be filed or caused to be filed by Parent or Seller pursuant to Section
10.2(a) of this Agreement.

                           (d)      In the case of any Tax Return for any
Straddle Period, Purchaser shall provide Seller with copies of the completed Tax
Return for such taxable period and a schedule apportioning the Tax shown on such
Tax Return as between Seller and Purchaser and specifying the amount due to or
from Seller (all computed in accordance with Section 10.3 hereof), together with
such related work papers and other documents as Seller shall reasonably request,
no later than forty-five (45) days before the due date for the filing of such
Tax Return. Seller and its authorized representatives shall have the right to
review the Tax Return and schedule received from Purchaser pursuant to the terms
of this Section 10.2(d). Seller and Purchaser agree to consult each other and
resolve in good faith any issues arising under the terms of this Section 10.2(d)
as a result of the review of any such Tax Returns and schedule received from
Purchaser. If the parties agree upon the contents of the Tax Return and the
schedule, then the Tax Return shall be filed as so agreed and the amount of Tax,
if any, due from Seller shall be paid by Seller to Purchaser no later than two
(2) days prior to the date of filing of such Tax Return or the amount of Tax
due, if any, from Purchaser to Seller shall be paid by Purchaser to Seller no
later than three (3) days after the date of filing of such Tax Return. If the
parties are unable to resolve any dispute as to any Tax Return or accompanying
schedule within thirty (30) days after the provision of such Tax Return or
schedule to the Seller, the parties shall refer the dispute to an independent
mutually agreed upon nationally recognized accounting firm (the "Independent
Firm") to act as an arbitrator to resolve the disagreement prior to the due date
of the filing of such Tax Return. The Independent Firm's determination shall be
final and binding upon the parties, and all fees and expenses relating to the
engagement of the Independent Firm shall be shared equally by Seller and
Purchaser.

                           (e)      Seller or Parent shall cause any Tax sharing
agreement or similar arrangement with respect to Taxes involving RSUI, on the
one hand, and Seller,

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<PAGE>

Parent or any Affiliates of either, on the other hand, to be terminated
effective as of June 30, 2003, so that to the extent any such agreement or
arrangement relates to RSUI after June 30, 2003, none of RSUI, Seller, Parent
nor the Affiliates of any of them shall have any obligation thereunder to the
other, whether to make payment or otherwise, under any such agreement or
arrangement for any past, present or future period, which obligations shall be
governed solely by this Agreement.

                           (f)      Except as otherwise expressly contemplated
by this Agreement, from the date hereof to and including the Closing Date,
neither Parent nor Seller without the prior written consent of Purchaser (which
consent shall not be unreasonably withheld, conditioned or delayed) will permit
RSUI to directly or indirectly (i) make, change or revoke, or permit to be made,
changed or revoked, any material election or method of accounting, with respect
to Taxes affecting RSUI for Post-Closing Tax Periods, or (ii) enter into, or
permit to be entered into, any closing or other agreement or settlement with
respect to Taxes of RSUI affecting or relating to Post-Closing Tax Periods.

                  Section 10.3 Computation of Tax Liabilities.

                           (a)      For purposes of applying this Section 10.3,
when applying the definitions of "Pre-Closing Tax Period," "Post-Closing Tax
Period," "Straddle Period," or "Closing Date," (i) with reference to federal
Income Taxes, the term "Closing Date" as used in such definitions shall mean the
Closing Date, and (ii) with respect to all other Taxes, the term "Closing Date"
as used in such definitions shall mean June 30, 2003.

                           (b)      The Seller will be responsible for all Taxes
attributable to Pre-Closing Tax Periods and the portion of any Straddle Period
ending on the Closing Date, and the Purchaser will be responsible for all Taxes
attributable to any Post-Closing Tax Period and the portion of any Straddle
Period beginning after the Closing Date. To the extent permitted or required by
Applicable Law or administrative practice, and for the purpose of allocating the
parties' responsibility for Taxes hereunder: (i) the taxable period of RSUI that
began on January 1 of the calendar year which includes the Closing Date shall be
treated as closing as of the close of business on the Closing Date;
notwithstanding the foregoing, (ii) all transactions not in the ordinary course
of business and properly allocable thereunder to the portion of the day after
the Closing Date shall be reported on Purchaser's consolidated United States
federal income Tax Return to the extent permitted by Treasury Regulation section
1.1502-76(b)(1)(ii)(B) and shall be similarly reported on other Tax Returns of
Purchaser or its Affiliates to the extent permitted by Applicable Law, (iii) no
election shall be made under Treasury Regulation Section 1.1502-76(b)(2)(ii)
(relating to ratable allocation of a year's items), and (iv) Treasury Regulation
Section 1.1502-76(b)(2)(iii) will be applied to ratably allocate the items
(other than extraordinary items, including, without limiting the generality of
the foregoing, compensation items) for the month that includes the Closing Date.

                           (c)      For purposes of this Agreement, where it is
necessary to apportion between Seller and Purchaser the Tax liability of an
entity for a Straddle Period

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(which is not treated under the immediately preceding sentence as closing on the
Closing Date), such liability shall be apportioned between the period deemed to
end at the close of the Closing Date, and the period deemed to begin at the
beginning of the day following the Closing Date on the basis of an interim
closing of the books, except that Taxes (such as real property Taxes) imposed on
a periodic basis, or that are imposed with respect to the portion of a Straddle
Period occurring after June 30, 2003, shall be allocated on a daily basis. In
determining Seller's liability for Taxes pursuant to this Agreement, Seller
shall be credited with the amount of estimated or actual Taxes paid by or on
behalf of RSUI on or prior to June 30, 2003 or paid on behalf of RSUI on or
prior to the Closing Date. To the extent that Seller's liability for Taxes of
RSUI for a Straddle Period is less than the amount of estimated or actual Taxes
previously paid by or on behalf of RSUI with respect to such Straddle Period,
Purchaser shall pay Seller the difference within three (3) days of the filing of
the Tax Return relating to such Tax. Parent, Seller and the Purchaser further
agree to file all Tax Returns (including, without limitation, all State income
Tax Returns), handle the contest of any audit and otherwise act for all Tax
purposes consistent with the provisions of this Section 10.3.

                  Section 10.4 Seller's Indemnity for Taxes. Notwithstanding
anything contained in this Agreement to the contrary:

                           (a)      Seller shall pay and shall indemnify and
hold harmless the Purchaser, RSUI and their respective Affiliates, successors
and permitted assigns from: (i) all liability for Taxes of RSUI for all
Pre-Closing Tax Periods and the Seller's portion of any Straddle Period (as
determined pursuant to Section 10.2(d) and 10.3 hereof), including any Income
Taxes incurred as a result of the distribution of the Excluded Assets to Seller
or an Affiliate thereof, and any liability of the Parent Group for additional
Taxes arising solely as a result of the Section 338 Elections if elected, as set
forth below; (ii) any additional Taxes of RSUI in any Post-Closing Period as the
result of the disallowance of any deduction pursuant to the application of
Section 280G of the Code for any compensation payment that is the result of the
breach of the representation in Section 4.14(l); (iii) all liability resulting
by reason of the several liability of RSUI pursuant to Treasury Regulations
Section 1.1502-6 or any similar provision of Applicable Law or by reason of RSUI
ever having been a member of any consolidated, combined or unitary group on or
prior to the Closing Date; and (iv) all Losses (as such term is defined in
Section 15.3) attributable to any misrepresentation or breach or non-performance
of warranty or agreement made by the Seller or the Parent in Section 4.13 or
this Article X.

                           (b)      The representations and warranties of Seller
and the agreements of the parties contained in this Article X shall survive the
Closing and shall continue in full force and effect until thirty (30) days after
the expiration of the statute of limitations of the Tax to which the
representation, warranty or agreement relates. There shall be no limit on the
aggregate amount for which Seller shall be liable under Section 10.4(a) hereof
and no deductible shall apply.

                  Section 10.5 Assistance and Cooperation. After the Closing
Date, both Seller and Purchaser shall (and shall cause their respective
Affiliates to) in good faith cooperate with and assist the other in connection
with the preparation of any Tax Returns

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<PAGE>

(including any amended Tax Returns), the determination of the requesting party's
own liability for Taxes, any audit or other examination by any Taxing Authority,
or any judicial or administrative proceedings relating to liability for Taxes.
The party requesting assistance hereunder shall (i) make such request in writing
and (ii) reimburse the other party for the reasonable out-of-pocket expenses
incurred in providing such assistance. In addition, neither party shall dispose
of any Tax workpapers, books or records relating to RSUI during the six-year
period following the Closing Date, and thereafter shall give the other party
written notice before disposing of such items and a reasonable opportunity to
copy or take possession of the same prior to their disposition. Each party shall
be free to dispose of such items after the expiration of the six-year period,
unless such other party provides notice within thirty (30) days of the
expiration of the six-year period that such other party intends to copy or take
possession of such items. Any information obtained pursuant to this Section 10.5
shall be held in strict confidence and shall be used solely in connection with
the reason for which it was requested.

                  Section 10.6 Refunds. Any Tax refund (including any interest
in respect thereof but net of any Tax imposed thereon) received by Purchaser or
its Affiliates, and any amounts credited against Tax to which Purchaser or any
of its Affiliates becomes entitled (including by way of any amended Tax
Returns), that relate to any taxable period, or portion thereof, ending on or
before the Closing Date shall be for the account of Seller, and Purchaser shall
pay over to Seller any such refund or the amount of any such credit within five
(5) days after receipt or entitlement thereto. Purchaser shall pay Seller
interest at the rate prescribed under section 6621(a)(1) of the Code, compounded
daily, on any amount not paid when due pursuant to the preceding sentence. For
purposes of applying this Section 10.6, the term "Closing Date" shall mean (i)
with reference to a refund of federal Income Taxes, (x) if no Section 338
Election is made, the Closing Date, and (y) if the Section 338 Election is made,
June 30, 2003, and (ii) with respect to a refund of all other Taxes, June 30,
2003.

                  Section 10.7 Contests. Notwithstanding anything to the
contrary contained in this Agreement:

                           (a)      After the Closing Date, Purchaser shall
notify Seller in writing within ten (10) days of the date a claim is made or
threatened in writing by any Taxing Authority that, if successful, may
reasonably result in an indemnity payment by Seller under Section 10.4 (a "Tax
Claim"). Such notice shall contain factual information describing in reasonable
detail the nature and basis of such claim and the amount thereof, to the extent
known, and shall include copies of any notice or other document received from
any Taxing Authority in respect of any such asserted Tax liability. Failure by
Purchaser to give such notice to the Seller shall not relieve the Seller of any
liability that it may have on account of its indemnification obligation under
this Article X, except to the extent that the Seller is materially and adversely
prejudiced thereby in the defense of such Tax Claim; provided, however, that
irrespective of whether the Seller is materially or adversely prejudiced, Seller
shall be permitted to reduce any liability it may have on account of its
indemnification obligation under this Article X by the amount of Seller's
actual, out-of-pocket monetary damages that are caused by the Purchaser's
failure to timely give the notice required pursuant to this Section 10.7(a).

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                           (b)      Seller will have the right, at its option,
upon timely notice to Purchaser, to assume at its own expense control of any
audit or other defense of any Tax Claim (other than a Tax Claim relating solely
to Taxes of RSUI for a Straddle Period, which as described below, the parties
shall jointly control) with its own counsel, provided that Seller's notice
acknowledges Seller's indemnification liability for such claim. Seller's right
to control a Tax Claim will be limited to issues in respect of which amounts in
dispute would be paid by Seller or for which Seller would be liable pursuant to
Section 10.4. Costs of defending or contesting such Tax Claims are to be borne
by Seller unless the Tax Claim relates to a Straddle Period, in which event such
costs shall be fairly apportioned as described below. Purchaser and RSUI at
their own expense each shall cooperate with Seller in contesting any Tax Claim,
which cooperation shall include the retention and, upon Seller's request, the
provision of records and information that are reasonably relevant to such Tax
Claim and making employees available on a mutually convenient basis to provide
additional information or explanation of any material provided hereunder.
Notwithstanding the foregoing, Seller shall neither consent nor agree to the
settlement of any Tax Claim with respect to any liability for Taxes that may
affect the liability for any state, federal or foreign income tax of RSUI or any
affiliated group (as defined in section 1504(a) of the Code) of which RSUI is a
member for any Post-Closing Tax Period without the prior written consent of
Purchaser, which consent shall not be unreasonably withheld, conditioned or
delayed, and neither Seller, nor any Affiliate of Seller, shall file an amended
Tax Return that may increase the liability for Taxes of RSUI for any
Post-Closing Tax Period without the prior written consent of Purchaser, which
consent shall not be unreasonably withheld, conditioned or delayed. Purchaser
and Seller shall jointly control all proceedings taken in connection with any
Tax Claims relating solely to a Straddle Period of RSUI and each party shall
bear its own out-of-pocket costs and expenses of the contest and all joint costs
and expenses of the contest shall be borne in the same ratio as the applicable
proposed Tax would be allocated. For purposes of this Section 10.7(b), when
applying the definitions of "Pre-Closing Tax Period," "Post-Closing Tax Period,"
"Straddle Period," or "Closing Date," (i) with reference to Tax Claims involving
federal Income Taxes, the term "Closing Date" as used in such definitions shall
be deemed to be the Closing Date, and (ii) with respect to Tax Claims involving
all other Taxes, the term "Closing Date" as used in such definitions shall be
deemed to be June 30, 2003.

                  Section 10.8 Post-Closing Actions which Affect Seller's
Liability for Taxes.

                           (a)      Purchaser shall not allow or cause RSUI to
take, or fail to take, any action or omit to take any action after the Closing
Date as to which Seller has notified Purchaser in writing on or before the
Closing Date if the taking of such action or the failure to take such action
will increase the Taxes of RSUI for any Pre-Closing Tax Period provided that the
taking of such action or the failure to take such action does not materially
affect the conduct of the Business after the Closing Date.

                           (b)      None of Purchaser or any Affiliate of
Purchaser shall (or shall cause or permit RSUI to) amend, refile or otherwise
modify any Tax Return relating

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<PAGE>

in whole or in part to RSUI with respect to any Pre-Closing Tax Period without
the prior written consent of Seller, which consent may be withheld in the sole
discretion of Seller.

                           (c)      None of Purchaser or any Affiliate of
Purchaser shall (or shall cause or permit RSUI to) carryback for federal, state,
local or foreign Tax purposes to any Pre-Closing Tax Period or to the portion of
any Straddle Period ending before the Closing Date of RSUI, Seller, or any
Affiliate of Seller, any operating losses, net operating losses, capital losses,
tax credits or similar items arising in, resulting from, or generated in
connection with a taxable year of Purchaser or any Affiliate of Purchaser, or
portion thereof, ending on or after the Closing Date.

                           (d)      For purposes of applying this Section 10.8,
when applying the definitions of "Pre-Closing Tax Period," "Post-Closing Tax
Period," "Straddle Period," or "Closing Date," (i) with reference to matters
involving federal Income Taxes, the term "Closing Date" as used in such
definitions shall be deemed to be the Closing Date, and (ii) with respect to
matters involving all other Taxes, the term "Closing Date" as used in such
definitions shall be deemed to be the Effective Date.

                  Section 10.9 Section 338(h)(10) Election.

                           (a)      Within ninety (90) days of the Closing Date,
Purchaser shall furnish Seller with Purchaser's proposed allocation of the
Purchase Price among the RSUI Shares and the other transactions, rights and
obligations contemplated pursuant to this Agreement and the Ancillary
Agreements, the determination of the ADSP (as defined in applicable Treasury
Regulations under Section 338 of the Code) and the allocation of ADSP among the
assets of RSUI and other relevant items (the "Proposed Allocation"). Purchaser
and Seller each agree to consult in good faith with regard to the proposed
determination and the Proposed Allocation, provided that Seller shall accept
Purchaser's final determination of the ADSP and the Proposed Allocation to the
extent that they are reasonable and consistent with Applicable Law (which, when
accepted, shall become the "Final Allocation"). Within thirty (30) days after
the determination of the Final Allocation, Seller shall deliver to Purchaser a
schedule setting forth in reasonable detail the additional amount of cash
("Seller's Tax Cost") that Seller reasonably estimates is necessary to ensure
that the net proceeds derived by Seller from the sale of the RSUI Shares if the
Purchaser elects to make the elections provided for under Section 338(h)(10) of
the Code and any similar elections required to be, or treated as, made under any
applicable state or local Tax laws as a result of the federal election
(collectively, the "Section 338 Elections") is not less than the amount of net
proceeds Seller would have derived from the sale of the RSUI Shares in the
absence of the Section 338 Elections. The Seller's Tax Cost shall be computed
(1) on an after-Tax basis including, without limitation (A) any additional Taxes
imposed on the receipt of additional amounts or attributable to the allocation
of ADSP to anything other than the RSUI Shares and (B) if the Closing does not
take place on the Target Closing Date, any additional federal Income Taxes
(calculated for this purpose taking into account the deductibility of state
Income Taxes imposed on RSUI or the Parent Group in respect of the income
recognized by RSUI after June 30, 2003), and (2) on the basis such that the
after-Tax proceeds to Seller of the receipt of the Final Purchase Price plus the
Seller's Tax Cost equals the

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<PAGE>

amount of after-Tax proceeds the Seller would have received from the sale of the
RSUI Shares in exchange for the Final Purchase Price if the Section 338
Elections were not made and the entire Purchase Price was allocable solely to
the RSUI Shares. Purchaser and Seller each agree to consult in good faith with
regard to the determination and calculation of Seller's Tax Cost, provided that
Purchaser shall accept Seller's final determination of Seller's Tax Cost to the
extent that it is reasonable and consistent with Applicable Law (which, when
accepted, shall become the "Final Seller's Tax Cost").

                           (b)      Within fifteen (15) days after the receipt
by Purchaser of the schedule of Final Seller's Tax Cost, Purchaser shall notify
Seller of Purchaser's decision as to whether to make the Section 338 Elections.
If Purchaser decides to make the Section 338 Elections, Seller agrees to (or to
cause Parent to, if applicable) join with Purchaser in making timely and
irrevocable Section 338 Elections, provided Seller receives the payment of Final
Seller's Tax Cost as provided in Section 10.9(c) hereof. If Purchaser decides to
make the Section 338 Elections, Purchaser shall be solely responsible for
preparing drafts of all forms, attachments and schedules necessary to effectuate
the Section 338 Elections, including, without limitation, IRS Form 8023 or
applicable successor form, and any similar forms or applicable successor forms
under applicable state or local income tax laws (the "Section 338 Forms"), and
Purchaser shall furnish a copy of the draft Section 338 Forms to Seller for
Seller's review and comment, which Seller agrees to do promptly. Seller shall,
and if required, Seller shall cause Parent to, cooperate in good faith with
Purchaser's preparation of the Section 338 Forms, and Seller agrees to promptly
provide (or cause Parent to promptly provide) to Purchaser true, correct and
complete information regarding Seller (or Parent or Parent Group, if applicable)
reasonably requested by Purchaser and necessary to complete the Section 338
Forms.

                           (c)      Thereafter, Purchaser shall deliver to
Seller for execution by Seller (or Parent, if applicable) the final Section 338
Forms. Within five (5) days of delivering the final Section 338 Forms to Seller,
Purchaser shall pay to Seller (by wire transfer in U.S. Dollars of immediately
available funds to the bank account specified by Seller to Purchaser) an amount
equal to Final Seller's Tax Cost, and Seller (or Parent, if applicable) agrees
to and shall simultaneously execute and deliver to Purchaser the final Section
338 Forms.

                           (d)      If Purchaser has paid to Seller Seller's
Final Tax Cost, then Seller agrees that Seller (i) shall, or shall cause Parent
to, report the acquisition of RSUI by Purchaser in a manner consistent with the
making of the Section 338 Elections (ii) shall not, and shall cause Parent and
each member of Parent Group not to, take a position in any Tax Return or audit
or any proceeding before any Taxing Authority or otherwise inconsistent with the
Section 338 Elections, including the determination of the ADSP and the Final
Allocation shown thereon, unless and to the extent required to do so pursuant to
a determination (as defined in Section 1313(a) of the Code or any similar state
or local law).

                           (e)      Purchaser shall bear the costs and expenses
of preparing the Section 338 Forms and the Proposed and Final Allocations.

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                  Section 10.10 Post-Effective Date Taxes. In the event that the
Closing Date occurs after the Effective Date, the parties agree that, for the
avoidance of doubt and in the event of any ambiguity in the interpretation or
application of this Agreement, this Article X shall be interpreted and applied
so that: (i) Seller shall be liable and responsible for (A) all Taxes of RSUI
attributable to all Tax periods ending on or before June 30, 2003, with respect
to any Tax period that begins before the Closing Date, (B) all Taxes of RSUI for
the portion of such Tax periods, if any, prior to and including June 30, 2003,
and (C) the United States federal Income Taxes imposed on Seller and
attributable to the taxable income of RSUI for all taxable periods ending on or
before the Closing Date; provided, however, that in the event the Section 338
Elections are elected, the foregoing shall not be construed to preclude the
Final Seller's Tax Cost from including the United States federal Income Taxes
imposed on Seller and attributable to the taxable income of RSUI for the Tax
period ending on the Closing Date; and (ii) Purchaser shall be liable and
responsible for (X) all Taxes of RSUI attributable to all Tax periods beginning
after June 30, 2003, with respect to any Tax period that begins before the
Closing Date, (Y) all Taxes (other than United States federal Income Taxes) of
RSUI for the portion of such Tax periods beginning after June 30, 2003, and (Z)
the United States federal Income Taxes attributable to the taxable income of
RSUI for all taxable periods beginning after the Closing Date.

                                   ARTICLE XI

                               EMPLOYMENT MATTERS

                  Section 11.1 RSUI Employees.

                           (a)      For the period from the Effective Date
through December 31, 2003 (the "Transition Period"), RSUI shall lease from RIC,
an Affiliate of Seller, pursuant to the Employee Leasing Agreement, the services
of the RSUI Employees identified on Schedule 11.1(a) and those persons who were
not employed by RIC on the Effective Date but who are hired at the request of
RSUI during the Transition Period (a "New Hire").

                           (b)      Seller and Purchaser agree that Seller shall
pay to Purchaser, not less than five (5) Business Days prior to the date on
which the annual payments from the underwriting incentive pool and the incentive
compensation pool for calendar year 2003 are to be made to RSUI Employees in
accordance with the terms of the Annual Incentive Plan for RSUI Employees in
effect as of the Closing Date (the "2003 Bonus Payment"), a portion of the 2003
Bonus Payment (the "Seller Bonus Payment"). The Seller Bonus Payment shall be
determined as follows:

                                    (i)      a computation of the 2003 Bonus
         Payment that would be due to RSUI Employees shall be made on a pro
         forma basis which assumes that the performance levels achieved during
         the first half of calendar year 2003 were replicated in the second half
         of calendar year 2003 (the "Seller Performance Amount");

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                                    (ii)     a computation of the 2003 Bonus
         Payment that would be due to RSUI Employees shall be made on a pro
         forma basis which assumes that the performance levels achieved during
         the second half of calendar year 2003 were replicated in the first half
         of calendar year 2003 (the "Purchaser Performance Amount");

                                    (iii)    the 2003 Bonus Payment shall be
         determined based upon actual results for the full calendar year 2003
         and in accordance with the terms of the Annual Incentive Plan for RSUI
         Employees in effect as of the Closing Date; and

                                    (iv)     the Seller Bonus Payment shall be
         an amount equal to (A) (x) the Seller Performance Amount divided by (y)
         the sum of the Seller Performance Amount plus the Purchaser Performance
         Amount multiplied by (z) the 2003 Bonus Payment, less (B) $584,000.

                           (c)      Purchaser shall cause RSUI or an Affiliate
of RSUI to offer employment on or before January 1, 2004, to each of the RSUI
Employees and New Hires who is actively employed by the Royal Indemnity as of
such date. The terms of such employment, for each such RSUI Employee and New
Hire, shall be substantially equivalent in base salary, bonus compensation, and
benefits in the aggregate to those provided on the Closing Date to such RSUI
Employee or those initially approved by RSUI in the case of any New Hire. Those
RSUI Employees and New Hires who accept such offer of employment shall be
referred to herein as "Transferred Employees".

                           (d)      As of January 1, 2004, Seller will assign,
and RSUI or an Affiliate of RSUI will assume, the RSUI Employee Contract
identified on Schedule 11.1(d), provided the RSUI Employee becomes a Leased
Employee, except that neither RSUI nor an Affiliate of RSUI will assume, and
Seller will retain, all obligations relating to, and shall provide, the special
retirement benefits referred to in Section 4(d)(ii) of such RSUI Employee
Contract. Except as otherwise provided in this Agreement and in the RSUI
Employee Contract which RSUI assumes, nothing in this Agreement shall be
construed as limiting in any way the right of RSUI (or an Affiliate thereof) on
and after January 1, 2004, to terminate the employment of any Transferred
Employee, or to change his or her salary or wages or to modify benefits or other
terms and conditions of employment of any Transferred Employee to the extent
that any such change or modification is made in accordance with the normal
compensation and benefit plan practices of, and apply generally to similarly
situated employees or former employees of, RSUI and its Affiliates. Seller shall
not be responsible for and Purchaser agrees to cause RSUI to indemnify and hold
Seller harmless for any claim which is made for compensation or benefits under
any RSUI Employee Contract that RSUI so assumes, and which relates to any event
or condition which occurs or arises on or after January 1, 2004 (other than an
obligation specifically retained by Seller or an Affiliate of Seller).

                           (e)      Except as otherwise expressly provided in
this Agreement, Purchaser shall cause RSUI to be responsible for, and shall
indemnify and hold harmless Seller and its Affiliates against, any actions,
claims or proceedings (including, but not

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limited to claims alleged under Title VII of the Civil Rights Act of 1964)
brought by or on behalf of any Transferred Employee at any time with respect to
any event occurring or condition arising on or after the Effective Date;
provided, that RSUI shall not be obligated to indemnify and hold harmless Seller
and its Affiliates against any actions, claims or proceedings brought by or on
behalf of any Transferred Employee as a result of an act by RIC or a failure by
RIC to perform its obligations under the Employee Leasing Agreement, in each
case during the Transition Period.

                           (f)      Purchaser shall take such action as may be
necessary to cause RSUI to bear responsibility for and to indemnify and hold
harmless Seller and its Affiliates against, any actions, claims or proceedings
brought by or on behalf of any RSUI Employee or New Hire who becomes a leased
employee in accordance with the Employee Leasing Agreement ("Leased Employee"),
and which relates to any event occurring or condition existing on or following
the Effective Date, other than as a result of an act of RIC or a failure by RIC
to perform its obligations under the Employee Leasing Agreement, in each case
during the Transition Period. Notwithstanding the foregoing, RSUI shall not be
responsible for, or obligated to indemnify and hold harmless Seller and its
Affiliates with respect to any actions, claims or proceeding for which RSUI (or
an Affiliate) is obligated to indemnify RIC under the Employee Leasing
Agreement.

                           (g)      Seller shall be responsible for, and shall
indemnify and hold harmless Purchaser, RSUI and their Affiliates against, any
actions, claims or proceedings brought by or on behalf of any Leased Employee
which relates to any event occurring or condition existing prior to the Closing
Date.

                           (h)      Seller agrees that from the date hereof
through January 1, 2004, neither Seller nor any of its Affiliates (including
RSUI) shall, except as contemplated by this Agreement or by any Ancillary
Agreement or with the consent of Purchaser (1) enter into any employment or
severance agreement with RSUI Employees or New Hires, (2) increase the benefits
payable to RSUI Employees or New Hires under severance or termination pay
policies or agreements in effect on the date hereof, other than as required by
Applicable Law, (3) adopt any new or amend any existing bonus, profit sharing,
compensation, stock option, pension, retirement, deferred compensation,
employment or other employee benefit plan, agreement, trust, fund or other
arrangement for the benefit or welfare of any RSUI Employee, other than to fully
vest all RSUI Employees in the Plans, or in the ordinary course of business or
as required by Applicable Law or this Agreement, (4) increase the compensation
or benefits of any director or officer of RSUI or any RSUI Employee other than
in the ordinary course of business and other than as required by Applicable Law,
(5) enter into any collective bargaining agreement or any other contract with
any labor union or association representing any RSUI Employee unless otherwise
required by applicable law, or (6) permit any RSUI Employee to be transferred,
or permit the services of any RSUI Employee to be shared with Seller or any
Affiliate of Seller other than in a manner consistent with present practice.

                  Section 11.2 RSUI Employee Benefits

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                           (a)      With respect to any RSUI Employee, no assets
of any Plan shall be transferred to Purchaser or to any plan of Purchaser. From
and after the Closing Date, neither RSUI nor any Affiliate of RSUI shall have
responsibility for, or any liability to make contributions to, the Plans.

                           (b)      On and after January 1, 2004, Seller or its
Affiliates shall retain responsibility for, and shall provide all benefits
theretofore accrued under, the Plans, as required by the Plans and Applicable
Law to, any Transferred Employee. Seller shall cause each of the Pension Plan of
RIC, the Non Qualified Partnership Portfolio and the RIC Supplemental Executive
Retirement Plan to be amended effective as of Closing to treat each Transferred
Employee who is an employee as of Closing to be 100% vested in such Transferred
Employee's accrued benefit under such plan. Seller shall cause The Royal &
SunAlliance 401(k) Account and Savings Plan to be amended to the extent
necessary to permit a Transferred Employee to receive a distribution of his or
her account balance at any time after the date he or she becomes a Transferred
Employee. Notwithstanding the foregoing, Seller or its Affiliates shall retain
responsibility for, and shall continue to provide, retiree welfare benefits
accrued under the Plans for any Transferred Employee who, as of the Effective
Date, was eligible to retire and commence receiving retiree welfare benefits.
Retiree welfare benefits shall be provided to such Transferred Employees
commencing as of the date each such Transferred Employee terminates his or her
employment with RSUI or its Affiliates as if such Transferred Employee
terminated employment with RIC on such date, but with years of service credited
as of the Effective Date. This provision shall not in any manner limit the
ability of Seller to modify, amend or terminate its retiree medical plans for
any former employees of RIC, including Transferred Employees. Retiree benefits,
if any, to which a Transferred Employees is eligible under this Section, shall
be in the same form and amount provided to similarly situated employees of
Seller with the same service and age as the applicable Transferred Employee.

                  Section 11.3 Service Credit. Purchaser shall cause RSUI to
give the Transferred Employees full credit, for purposes of eligibility and
vesting, under any employee benefit plan, program or arrangement established by
RSUI or its Affiliates on or after January 1, 2004, for the Transferred
Employees' service with Seller and its Affiliates to the same extent recognized
by Seller and its Affiliates immediately prior to such date. To the extent
required under Applicable Law and to the extent Purchaser deems commercially
reasonable, Purchaser shall cause RSUI to waive all limitations as to
preexisting condition exclusions and waiting periods with respect to
participation and coverage requirements applicable to the Transferred Employees
under any welfare benefit plans that such employees may be eligible to
participate in on and after January 1, 2004.

                  Section 11.4 Termination of Employment. Seller and its
Affiliates shall be responsible for, and assume all liabilities for, the payment
of all applicable severance benefits (and any other applicable similar benefit)
and for any and all notices or payments due pursuant to applicable requirements
of the Worker Adjustment and Retraining Notification Act (the "WARN Act") or any
similar state or local law ("WARN") arising out of, or relating to, any actions
taken on or prior to December 31, 2003 by the Seller

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and its Affiliates with respect to Leased Employees. Purchaser shall cause RSUI
to reimburse Seller for the cost of such severance and/or WARN benefits in
accordance with the payment procedures for severance costs in the Employee
Leasing Agreement. The foregoing shall not require RSUI or any Affiliate to
reimburse Seller for any amount reimbursed or reimbursable to RIC under the
Employee Leasing Agreement. RSUI or its Affiliates shall be responsible for, and
assume all liabilities for, the payment of all applicable severance benefits
(and any other applicable similar benefit) and for any and all notices or
payments due pursuant to the WARN Act or any similar state or local law arising
out of, or relating to, any actions taken on or after January 1, 2004 by RSUI or
its Affiliates with respect to the Transferred Employees. RSUI or its Affiliates
shall be liable for any continuation coverage (including any penalties, excise
taxes or interest resulting from the failure to provide continuation coverage)
required by Section 4980B of the Code due to qualifying events which occur with
respect to Transferred Employees (or their dependents) after January 1, 2004.
Notwithstanding anything to the contrary contained herein, if RSUI or any of
their Affiliates terminates or causes the termination of the employment of any
Transferred Employee at any time within one year of the Effective Date, then,
unless such Transferred Employee's employment is terminated for cause (as
defined below), Purchaser shall cause RSUI or its Affiliates to pay to such
terminated Transferred Employee severance payments in an amount no less than the
severance benefit such Transferred Employee would have been entitled to if the
employee's job had been eliminated through layoff or reduction in force
immediately prior to the Closing Date. For these purposes, the term "cause"
shall mean (i) the failure or refusal of a Transferred Employee to substantially
perform the material duties of his or her employment with RSUI or any Affiliate,
(ii) the commission by the Transferred Employee of a crime involving moral
turpitude or that results in the loss, suspension or forfeiture of any license
or registration required by the Transferred Employee for the performance of his
or her duties, or (iii) the Transferred Employee's willful engagement in conduct
which is materially injurious to the business of RSUI or its Affiliates. A
Transferred Employee shall be deemed to have been terminated by RSUI or its
Affiliates without cause if he or she terminates employment because of a refusal
to accept an offer of employment by RSUI or an Affiliate at a business location
which is more than fifty miles from his or her present location of employment or
if his or her job duties or employment status are materially and adversely
altered by RSUI or an Affiliate, without his or her consent.

                                   ARTICLE XII

                               REAL ESTATE MATTERS

                  Section 12.1 Real Property Used in the Business. RSUI does not
own any real property. All leased real property used in the Business is leased
to RSUI. With respect to the lease relating to the property in Sherman Oaks,
California, the parties hereto acknowledge such lease is guaranteed by RIC on
behalf of RSUI. Purchaser hereby agrees that it will cause AIHL Insurance Co. to
indemnify RIC for any payments it may make under the guaranty after the Closing;
provided, however, that Seller agrees neither Purchaser nor AIHL Insurance Co.
shall be obligated by this Section 12.1 or by the Substitution and
Indemnification Agreement to indemnify RIC for any payments

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made by RIC after the Closing to the extent that such payments relate to Damages
arising from the failure to obtain the Sherman Oaks Consent or which otherwise
relate to matters for which Purchaser is entitled to indemnification pursuant to
the last sentence of Section 8.6(b).

                                  ARTICLE XIII

                              CONDITIONS TO CLOSING

                  Section 13.1 Conditions of Purchaser and Seller to Closing.

                           (a)      The respective obligations of Purchaser and
Seller to effect the Closing are subject to the satisfaction (or waiver by each
such Person) at or prior to the Closing of the conditions that (i) any waiting
period (and any extensions thereof) applicable to the consummation of the
Closing under the HSR Act shall have terminated or expired and (ii) all other
consents and approvals required from Governmental Entities for the consummation
of the Closing and the transactions contemplated hereby listed on Schedule
8.5(a) shall have been obtained and shall be in effect on the Closing Date.

                           (b)      The respective obligations of Seller to
effect the Closing are further subject to the satisfaction (or waiver by Seller)
at or prior to the Closing of the following conditions:

                                    (i)      Purchaser shall have duly performed
         and complied in all material respects with each covenant, agreement and
         condition required by this Agreement to be performed or complied with
         by Purchaser at or prior to the Closing (for the avoidance of doubt,
         representations and warranties shall not be deemed to be covenants,
         agreements or conditions for purposes of this clause (i));

                                   (ii)     No injunction, order, decree or
         judgment shall have been issued by any Governmental Entity of competent
         jurisdiction and be in effect, and no statute, rule or regulation shall
         have been enacted or promulgated by any Governmental Entity and be in
         effect, which, in each case restrains or prohibits the consummation of
         the purchase and sale of the Acquired Assets; and no action or
         proceeding before any court or regulatory authority, domestic or
         foreign, (x) shall have been instituted or threatened by any
         Governmental Entity or (y) shall have been instituted by any other
         Person, which in either case seeks to prevent or delay the consummation
         of the purchase and sale of the Acquired Assets or which challenges the
         validity or enforceability of this Agreement, unless, in either case,
         Purchaser agrees to fully indemnify in accordance with Article XV
         hereof Seller and any Seller Indemnitee from any and all Losses
         resulting from or arising out of such action or proceeding, including
         any settlement thereof, to the extent such damages are not already
         subject to indemnification by Purchaser pursuant to Article XV hereof
         or a separate agreement of the Purchaser;

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                                    (iii)    Seller shall have received a
         certificate signed by the secretary of Purchaser certifying the
         adoption of resolutions by the Board of Directors of Purchaser
         authorizing the transactions contemplated hereby;

                                    (iv)     Seller shall have received a
         certificate of a senior executive officer of Purchaser certifying as to
         the fulfillment of the conditions set forth in Sections 13.1(b)(i)
         hereof, including, without limitation, the fulfillment of the covenant
         set forth in Section 9.7; and

                                    (v)      Seller shall have received copies
         of the Ancillary Agreements duly executed by each party thereto that is
         not Seller or an Affiliate of Seller.

                           (c)      The obligation of Purchaser to effect the
Closing is further subject to the satisfaction (or waiver by Purchaser) at or
prior to the Closing of the following conditions:

                                    (i)      Seller shall have duly performed
         and complied in all material respects with each covenant, agreement and
         condition required by this Agreement to be performed or complied with
         by Seller at or prior to the Closing (for the avoidance of doubt,
         representations and warranties shall not be deemed to be covenants,
         agreements or conditions for purposes of this clause (i));

                                    (ii)     All consents set forth on Schedule
         13(c)(ii) shall have been duly obtained, made or given and shall be in
         full force and effect, without the imposition upon Purchaser, RSUI or
         any of the Affiliates of Purchaser of any material condition,
         restriction or required undertaking or any conditions or restrictions
         which, individually or in the aggregate, (A) materially impair or
         interfere with the ability of Purchaser or RSUI to conduct their
         respective businesses substantially in the manner as such businesses
         are now being conducted, (B) impair or interfere with the ability of
         any Affiliate of Purchaser to conduct its business substantially in the
         manner as such business is now being conducted if such impairment or
         interference, individually or in the aggregate, is material to
         Purchaser's businesses or (C) have or are reasonably likely to have a
         Business Material Adverse Effect;

                                    (iii)    No injunction, order, decree or
         judgment shall have been issued by any Governmental Entity of competent
         jurisdiction and be in effect, and no statute, rule or regulation shall
         have been enacted or promulgated by any Governmental Entity and be in
         effect, which in either case restrains or prohibits the consummation of
         the purchase and sale of the Acquired Assets or imposes material
         limitations on the ability of Purchaser to exercise full rights of
         ownership of the Acquired Assets or on the ability of RSUI to conduct
         the Business, or which requires the divestiture by Purchaser of the
         Acquired Assets, or which requires the divestiture by Purchaser, RSUI
         or any of the Affiliates of Purchaser of any material assets or
         businesses. No action or proceeding before any court or regulatory
         authority, domestic or foreign, (x) shall have been

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         instituted or threatened by any Governmental Entity or (y) shall have
         been instituted by any other Person, which in either case seeks to
         prevent or delay the consummation of the purchase and sale of the
         Acquired Assets, impose material limitations on the ability of
         Purchaser to exercise full rights of ownership of the Acquired Assets
         or on the ability of RSUI to conduct the Business, or which would
         require the divestiture by Purchaser of the Acquired Assets, or which
         would require the divestiture by Purchaser, RSUI or any of the
         Affiliates of Purchaser of any material assets or businesses, or which
         challenges the validity or enforceability of this Agreement, unless, in
         either, case Seller agrees to fully indemnify in accordance with
         Article XV hereof Purchaser and any Purchaser Indemnitee from any and
         all Losses resulting from or arising out of such action or proceeding,
         including any settlement thereof, to the extent such damages are not
         already subject to indemnification by Seller pursuant to Article XV
         hereof or a separate agreement of Seller;

                                    (iv)     Purchaser shall have received a
         certificate signed by the secretary of Purchaser certifying the
         adoption of resolutions by the Board of Directors of Purchaser
         authorizing the transactions contemplated hereby;

                                    (v)      Purchaser shall have received a
         certificate of a senior executive officer of Seller certifying as to
         the fulfillment of the conditions set forth in Section 13.1(c)(i)
         hereof;

                                    (vi)     Purchaser shall have received
         copies of the Ancillary Agreements duly executed by each party thereto
         (including RSUI) that is not Purchaser or an Affiliate of Purchaser;

                                    (vii)    Purchaser shall have received the
         resignation of each of the directors of RSUI set forth in Schedule
         8.15;

                                    (viii)   Seller shall have caused to be
         delivered to Purchaser one or more certificates representing all of the
         RSUI Shares free and clear of all Liens, duly executed in blank, or
         accompanied by stock powers duly executed in blank, in proper form for
         transfer;

                                    (ix)     Since December 31, 2002, no change
         or event shall have occurred and no condition shall exist that,
         individually or in the aggregate, has had or would be reasonably likely
         to have a Business Material Adverse Effect, and Purchaser shall have
         received a certificate dated the date of the Closing Date, signed by
         the chief executive officer or by the chief financial officer of Seller
         on behalf of Seller, to the foregoing effect; and

                                    (x)      At least 90% of the participants
         (by participation level and not by number of participants) (the
         "Minimum Continued Participation Level") in each of the Schedule 5.3(a)
         Contracts (i) shall have waived any change of control provision or net
         retention requirement which, absent such waiver, would permit
         termination, cancellation or commutation of such treaty by reason

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         of the transactions contemplated by this Agreement and/or by any of the
         Ancillary Agreements and (ii) shall have delivered written notice to
         RSUI stating its intention (which need not be a binding commitment) to
         participate at the same or a greater participation level in a parallel
         treaty to be entered into for the benefit of AIHL Insurance Co. on
         substantially the same terms and conditions as the treaty currently in
         effect for the Royal Insurer Affiliates (the "Parallel Treaty");
         provided, however, that if for any one or more of such Schedule 5.3(a)
         Contracts the Minimum Continued Participation Level is not attained and
         a substitute reinsurer (which may be either (A) a new participant which
         is an Acceptable Reinsurer or which is otherwise satisfactory to each
         of Purchaser and Seller, or (B) another participant in the same treaty
         taking on a greater participation, which reinsurer will be deemed to be
         satisfactory to each of Purchaser and Seller) provides written notice
         of its intention to participate in such Schedule 5.3(a) Contract
         (including the related Parallel Treaty), the participation by such
         substitute reinsurer shall be counted toward the Minimum Continued
         Participation Level.

With regard to the condition set forth in Section 13.1(c)(ix), if the Closing
does not occur on the Target Closing Date solely by reason of Purchaser's
election to delay the Closing until an Extended Closing Date as provided in
Section 1.16(a) hereof, then Seller shall deliver to Purchaser on July 1, 2003
the certificate described in Section 13.1(c)(ix) above and, upon delivery of
such certificate by Seller to Purchaser, the condition to Closing set forth in
Section 13.1(c)(ix) above shall be deemed to be satisfied.

                                   ARTICLE XIV

                                   TERMINATION

                  Section 14.1 Termination Prior to Closing. This Agreement may
be terminated at any time prior to the Closing:

                           (a)      by the mutual written consent of Purchaser
and Seller;

                           (b)      by Purchaser, on the one hand, or Seller, on
the other hand, upon written notice given to the other if the Closing has not
taken place on or before October 1, 2003; provided, however, that the right to
terminate this Agreement under this Section 14.1(b) shall not be available to
any party whose failure to fulfill any obligation under this Agreement has been
the cause of, or resulted in, the failure of the Closing to occur on or before
such date;

                           (c)      by Purchaser, on the one hand, or Seller, on
the other hand, (i) upon written notice given to the other if any Governmental
Entity of competent jurisdiction shall have issued a final, unappealable order,
decree or ruling permanently restraining, enjoining or otherwise prohibiting any
of the transactions contemplated by this Agreement or (ii) upon any final action
taken, or any final statute, rule, regulation or order enacted, promulgated or
issued or deemed applicable to the transactions contemplated hereby by any
Governmental Entity that would make consummation of the

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transactions contemplated hereby illegal; provided, however, that the right to
terminate this Agreement under this Section 14.1(c) shall not be available to
any party whose breach of any provision or whose failure to perform any
obligation under this Agreement has been the cause of such order, action,
statute, rule or regulation;

                           (d)      by Purchaser, upon a material breach of any
covenant or agreement on the part of Seller set forth in this Agreement such
that the conditions set forth in Section 13.1(c)(i) hereof would not be
satisfied as of the time of such breach, after affording Seller a 10-day period
after written notice in which to cure such breach; or

                           (e)      by Seller, upon a material breach of any
covenant or agreement on the part of Purchaser set forth in this Agreement such
that the conditions set forth in Section 13.1(b)(i) hereof would not be
satisfied as of the time of such breach, after affording Purchaser a 10-day
period after written notice in which to cure such breach.

                  Section 14.2 Effect of Termination.

                           (a)      Notwithstanding the terms and provisions of
the Confidentiality Agreement, in the event of the termination of this Agreement
as provided in Section 14.1 hereof, this Agreement shall become null and void
and of no further force or effect, and there shall be no liability or obligation
hereunder on the part of Seller or Purchaser or their respective Affiliates, or
any of their respective directors, officers, employees, Affiliates, agents,
representatives, successors or assigns, except (i) for the provisions of this
Agreement relating to the obligations of the parties hereto to keep confidential
and not to use information and data obtained from the other parties hereto and
(ii) the obligations of the parties to this Agreement under Sections 8.8
(Expenses), 8.9 (Public Announcements), and 8.18 (Indemnification of Brokerage)
hereof, Article XVII (Miscellaneous) hereof, and this Section 14.2 shall survive
any such termination. Nothing herein shall relieve any party from liability for
any breach of any of its covenants or agreements or willful breach of its
representations or warranties contained in this Agreement prior to termination
of this Agreement or any obligations hereunder.

                           (b)      If this Agreement is terminated pursuant to
Section 14.1 hereof, neither party shall, until May 31, 2004, directly or
indirectly, through any Subsidiary, Affiliate, officer, director, agent or
otherwise, (i) use any information that is subject to the Confidentiality
Agreement to the detriment (business or otherwise) of the other party, or (ii)
solicit the employment of or employ or retain as a consultant any employee of
the other party or any of its Subsidiaries who is a management or key employee
as of the date hereof or at any time during such period. Furthermore, if this
Agreement is terminated pursuant to Section 14.1 hereof, Purchaser shall not
oppose or seek to prevent or frustrate any transaction or agreement that Seller
or any of its Subsidiaries may propose or enter into relating to the sale of all
or any portion of the Business to any third party. Nothing in this Section 14.2
is intended to, nor shall it be construed as, a waiver or discharge of any of
the rights and obligations under the Confidentiality Agreement of the parties
thereto. Nothing herein shall relieve any party from liability for any breach of
any of its covenants or agreements or willful breach of its

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representations and warranties contained in this Agreement prior to termination
of this Agreement or any obligations thereunder.

                  Section 14.3 Notice Regarding Termination. Any notice
delivered by any party pursuant to Section 14.1 hereof shall be delivered in
accordance with Section 17.5 hereof and shall include a statement of the grounds
for termination.

                                   ARTICLE XV

                 EXCLUSIONS FROM REPRESENTATIONS AND WARRANTIES;
                            SURVIVAL; INDEMNIFICATION

                  Section 15.1 Exclusions from the Representations and
Warranties of Seller. Notwithstanding anything to the contrary in this Agreement
or the Ancillary Agreements or the exhibits or schedules hereto or thereto,
Purchaser acknowledges and agrees that Seller makes no representation or
warranty with respect to, and nothing contained in this Agreement (including
Articles II, III, IV and V hereof), in the Ancillary Agreements or in any other
agreement, document or instrument to be delivered in connection herewith or
therewith is intended or shall be construed to be a representation or warranty
(express or implied) of Seller or any of its Subsidiaries or Affiliates or of
the Business, for any purpose of this Agreement (including Article VIII hereof
and this Article XV), the Ancillary Agreements or any other agreement, document
or instrument to be delivered in connection herewith or therewith, in respect
of: (i) the adequacy or sufficiency of Reserves, (ii) the effect of the adequacy
or sufficiency of Reserves on any line item, asset, liability or equity amount
on any financial document, or (iii) whether or not Reserves were determined in
accordance with any actuarial, statutory or other standard. Further, subject to
the following sentence, Purchaser acknowledges and agrees that no fact,
condition, development or issue relating to the adequacy or sufficiency of
Reserves may be used, directly or indirectly, to demonstrate or support the
breach of any representation or warranty contained in this Agreement, the
Ancillary Agreements or any other agreement, document or instrument to be
delivered in connection with the transactions contemplated hereby or thereby.

                  Section 15.2 Survival of Representations, Warranties and
Covenants.

                           (a)      The representations and warranties of the
parties contained in this Agreement shall survive the Closing and shall continue
in full force and effect until one (1) year following the Closing Date, after
which time such representations and warranties shall terminate and have no
further force or effect, except that (i) the survival of representations and
warranties made by Seller in Article X hereof shall be governed solely by the
provisions of Article X hereof; (ii) the representations and warranties
contained in Section 4.14 (Employee Benefit Plans; ERISA) shall survive until
thirty (30) days after the expiration of the applicable statute of limitations;
and (iii) the representations and warranties contained in Section 2.5 (Title to
the RSUI Shares), Section 2.6 (Brokers and Finders), Section 4.3
(Capitalization) and Section 6.7 (Brokers and Finders) shall survive
indefinitely. The period during which any such representation and warranty
survives is the "Survival Period" for such representation and warranty.

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Notwithstanding the foregoing, any representation or warranty that would
otherwise terminate shall survive with respect to Losses in respect of any
Action of which notice is given pursuant to this Agreement prior to the end of
the Survival Period, until such Action is finally resolved and any related
Losses are paid.

                           (b)      Unless otherwise limited by the terms of
this Agreement, covenants of the parties contained in this Agreement shall
survive the Closing indefinitely.

                           (c)      In the event of a breach of any of such
representations, warranties, covenants or agreements, the party to whom such
representations, warranties, covenants or agreements have been made shall have
all rights and remedies for such breach available to it under the provisions of
this Agreement, whether at law or equity, regardless of any Knowledge of,
disclosure to, or investigation made by or on behalf of, such party on or before
the Closing Date; provided, however, that the Seller shall have no obligation to
indemnify the Purchaser in respect of a breach of representation or warranty
which is specifically disclosed to Purchaser by Seller in writing or as to which
Purchaser otherwise has Knowledge if such breach involves a change or event
which would cause the condition to Purchaser's obligation to effect the Closing
set forth in Section 13.1(c)(ix) not to be satisfied and Purchaser nonetheless
elects to proceed with the Closing.

                  Section 15.3 Seller's Indemnification Obligation.

                           (a)      Subject to the limitations set forth in this
Article XV and other than in respect of Taxes (which shall be governed solely by
Article X hereof), Seller agrees to indemnify, defend and hold harmless
Purchaser and its directors, officers, employees, Affiliates, successors,
permitted assigns, agents and representatives (collectively, the "Purchaser
Indemnitees") from and against any and all liabilities, losses, expenses and
fees, including court costs and reasonable attorneys' fees and expenses
("Losses") arising out of, or resulting from or relating to: (i) any breach as
of the date of this Agreement or as of the Closing Date (A) of the
representations and warranties of Seller set forth in Section 2.5 (Title to the
RSUI Shares), Section 2.6 (Brokers and Finders), Section 4.3 (Capitalization),
Section 4.6 (Working Capital) and Section 4.14 (Employee Benefit Plans; ERISA)
(other than Section 4.14(l), which is governed by Section 10.4(a)(ii)), and (B)
of any of the other representations and warranties of Seller contained in this
Agreement or in any certificate delivered to Purchaser in connection with the
Closing; (ii) any breach or non-performance of any of the covenants or
agreements of Seller contained in this Agreement; (iii) the Retained
Liabilities; and (iv) any and all Actions, judgments, costs and expenses
incidental to the foregoing.

                           (b)      The aggregate amount for which Seller shall
be liable under Section 15.3(a)(i) hereof shall in no event exceed one hundred
percent (100%) of the Final Purchase Price; provided, however, that
indemnification for Losses arising from breaches of any of the representations
and warranties set forth in Section 2.5 (Title to the RSUI Shares), Section 2.6
(Brokers and Finders), Section 4.3 (Capitalization), Section 4.6 (Working
Capital) and Section 4.14 (Employee Benefits; ERISA) shall not be subject

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to any limitation. Seller shall be required to indemnify the Purchaser
Indemnitees pursuant to Section 15.3(a)(i)(B) hereof only when and to the extent
that the aggregate Losses incurred by the Purchaser Indemnitees in connection
with the matters identified therein exceeds two percent (2%) of the Final
Purchase Price; provided that Seller's indemnification for Taxes shall be
governed exclusively by Article X hereof.

                  Section 15.4 Purchaser's Indemnification Obligation.

                           (a)      Subject to the limitations set forth in this
Article XV, Purchaser agrees to indemnify, defend and hold harmless Seller and
its respective directors, officers, employees, Affiliates, successors, permitted
assigns, agents and representatives (collectively, the "Seller Indemnitees")
from and against any and all Losses arising out of, or resulting from or
relating to: (i) any breach as of the date of this Agreement or as of the
Closing Date of (A) the representations and warranties of Purchaser set forth in
Section 6.7 (Brokers and Finders), and (B) any of the other representations and
warranties of Purchaser contained in this Agreement or in any certificate
delivered to Purchaser in connection with the Closing; (ii) any breach or
non-performance of any of the covenants and agreements of Purchaser contained in
this Agreement; (iii) the Acquired Assets; and (iv) any and all Actions,
judgments, costs and expenses incidental to the foregoing.

                           (b)      The aggregate amount for which Purchaser
shall be liable under Section 15.4(a)(i) hereof shall in no event exceed one
hundred percent (100%) of the Final Purchase Price; provided however, that
indemnification for Losses arising out of any breach of the representations and
warranties of Purchaser set forth in Section 6.7 (Brokers and Finders) shall not
be subject to any limitation. Purchaser shall be required to indemnify the
Seller Indemnitees pursuant to Section 15.4(a)(i)(B) hereof only when and to the
extent that the aggregate Losses incurred by the Seller Indemnitees in
connection with the matters identified therein exceeds two percent (2%) of the
Final Purchase Price.

                  Section 15.5 Other Limitations on Indemnification.

                           (a)      The amount of any Losses sustained by a
Purchaser Indemnitee or a Seller Indemnitee shall be reduced (i) by any amount
received by such Purchaser Indemnitee or Seller Indemnitee with respect thereto
under any insurance coverage relating thereto (other than insurance coverage
provided by an Affiliate of such indemnitee) or from any other party alleged to
be responsible therefor, and (ii) by the amount of any Tax benefit actually
realized with respect to the Loss. The Purchaser Indemnitees and the Seller
Indemnitees shall use commercially reasonable efforts to collect any amounts
available under such insurance coverage and from such other party alleged to
have responsibility and to realize any Tax benefit with respect to the Loss. If
a Purchaser Indemnitee or a Seller Indemnitee realizes a Tax benefit or receives
an amount under insurance coverage or from such other party with respect to
Losses sustained at any time subsequent to any indemnification provided pursuant
to this Article XV, then such Purchaser Indemnitee or Seller Indemnitee shall
promptly reimburse the applicable Indemnifying Party for any payment made by
such Indemnifying Party in connection

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with providing such indemnification up to such amount realized or received by
Purchaser Indemnitee or Seller Indemnitee, as applicable. Nothing in this
Section 15.5(a) shall limit in any way the ability of Seller, RSUI or Purchaser
to (i) take (or refrain from taking, as the case may be) any reasonable position
for Tax purposes that Seller, RSUI or Purchaser determines to take (or refrain
from taking) in its sole discretion, or (ii) refrain from pursuing any third
party insurance recovery that Seller, RSUI or Purchaser, as the case may be,
determines would be commercially inadvisable to pursue.

                           (b)      With respect to Losses arising out of the
breach of any representation or warranty contained herein, the Indemnifying
Party shall be obligated to indemnify the Indemnified Party only for those
claims for which the Indemnified Party has given the Indemnifying Party written
notice within the Survival Period relating to such breached representation or
warranty.

                           (c)      Each Indemnified Party shall be obligated to
use its reasonable best efforts to mitigate to the fullest extent practicable
the amount of any Loss for which its it entitled to seek indemnification
hereunder, and the Indemnifying Party shall not be required to make any payment
to an Indemnified Party in respect of such Loss to the extent such Indemnified
Party has failed to comply with the foregoing obligation.

                           (d)      Upon making any indemnification payment, the
Indemnifying Party will, to the extent of such payment, be subrogated to all
rights of the Indemnified Party against any third party in respect of the Loss
to which the payment relates; provided, however, that until the Indemnified
Party recovers full payment of its Loss, any and all claims of the Indemnifying
Party against any such third party on account of said payment are hereby made
expressly subordinated and subjected in right of payment to the Indemnified
Party's rights against such third party. Without limiting the generality of any
other provision hereof, each such Indemnified Party and Indemnifying Party will
duly execute upon request all instruments reasonably necessary to evidence and
perfect the above described subrogation and subordination rights.

                           (e)      Neither Seller nor Purchaser shall have any
right to set off any Losses against any payments to be made by such party or
parties pursuant to this Agreement or the Ancillary Agreements.

                  Section 15.6 Notice. In the event that either a Purchaser
Indemnitee or a Seller Indemnitee wishes to assert a claim for indemnification
under this Article XV, such party seeking indemnification (the "Indemnified
Party") shall deliver written notice (a "Claims Notice") to the other party (the
"Indemnifying Party") no later than ten (10) Business Days after such claim
becomes known to the Indemnified Party, specifying the facts constituting the
basis for, and the amount (if known) of the claim asserted. Failure to deliver a
Claims Notice with respect to a claim in a timely manner as specified in the
preceding sentence shall not release the Indemnifying Party from any of its
obligations under this Article XV, except to the extent the Indemnifying Party
is materially prejudiced by such failure.

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                  Section 15.7 Right to Contest Claims of Third Parties.

                           (a)      If an Indemnified Party asserts, or may in
the future seek to assert, a claim for indemnification hereunder because of an
Action instituted by any Person not a party to this Agreement (a "Third Party
Claimant") that may result in a Loss with respect to which the Indemnified Party
would be entitled to indemnification pursuant to this Article XV (an "Asserted
Liability"), the Indemnified Party shall deliver to the Indemnifying Party a
Claims Notice with respect thereto, which Claims Notice shall, in accordance
with the provisions of Section 15.6 hereof, be delivered as promptly as
practicable and in any event no later than ten (10) Business Days after such
Asserted Liability is actually known to the Indemnified Party. The failure to
deliver a Claims Notice with respect to an Asserted Liability within ten (10)
Business Days of the Indemnified Party's receipt of written notice of such
Asserted Liability shall not release the Indemnifying Party from any of its
obligations under this Article XV except to the extent the Indemnifying Party is
materially prejudiced by such failure.

                           (b)      (i) The Indemnifying Party shall, upon
receipt of such notice and upon its notifying the Indemnified Party in writing
that it shall, either unconditionally or subject to a reservation of rights,
indemnify all Indemnified Parties in respect of such matter, be entitled to
participate in or, at the Indemnifying Party's option, assume at its own expense
the defense, appeal or settlement of such Asserted Liability with respect to
which such indemnity has been invoked with counsel of its own choosing (who
shall be reasonably satisfactory to the Indemnified Party), and the Indemnified
Party shall fully cooperate with the Indemnifying Party in connection therewith
including contesting such Asserted Liability or making any counterclaim against
the Third Party Claimant; provided, however, that if the Indemnifying Party
assumes the defense, appeal or settlement of such Asserted Liability, (i) the
Indemnifying Party shall reimburse the Indemnified Party for out of pocket
expenses incurred by the Indemnified Party (such as travel costs, but not
internal time charges) and (ii) the Indemnified Party shall be entitled to
employ one counsel to represent itself if an actual conflict of interest exists
in the opinion of counsel to the Indemnified Party between the Indemnifying
Party and the Indemnified Party in respect of such Asserted Liability and in
that event the reasonable fees and expenses of such counsel shall be paid by the
Indemnifying Party (it being understood that all Indemnified Parties may employ
not more than one counsel to represent them at the expense of the Indemnifying
Party). Any Indemnified Party is hereby authorized prior to the date on which
its receives written notice from the Indemnifying Party that it intends to
assume the defense, appeal or settlement of such Asserted Liability, to file any
motion, answer or other pleading and take such other action which it shall
reasonably deem necessary to protect its interest or that of the Indemnifying
Party until the date on which the Indemnified Party receives such notice from
the Indemnifying Party, provided that, prior to filing such motion, answer or
other pleading or taking such other action, the Indemnified Party shall have
made reasonable efforts to consult with the Indemnifying Party. In the event
that the Indemnifying Party fails to assume the defense, appeal or settlement of
such Asserted Liability within twenty (20) days after receipt of notice thereof
from the Indemnified Party, such Indemnified Party shall have the right to
undertake the defense or appeal of or settle or compromise such Asserted
Liability on behalf of and for the account and risk of the Indemnifying

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Party, unless and until the Indemnifying Party notifies the Indemnified Party
that it has elected to assume such defense, appeal or settlement. If the
Indemnifying Party fails to assume the defense, appeal or settlement of such
Asserted Liability and the Indemnified Party undertakes such defense, appeal or
settlement, the Indemnified Party shall, upon the request of the Indemnifying
Party, keep the Indemnifying Party advised of relevant developments on a timely
basis.

                           (ii)     Except as set forth in Section 15.7 (b)(i),
no claim or demand may be settled by the Indemnified Party without the consent
of the Indemnifying Party, which consent shall not be unreasonably delayed or
withheld. Unless the claim or demand seeks only dollar damages (all of which are
to be paid by the Indemnifying Party), no such claim or demand may be settled by
the Indemnifying Party without the consent of the Indemnified Party, which
consent shall not be unreasonably delayed or withheld.

                           (iii)    Seller and Purchaser shall make mutually
available to each other all relevant information in their possession relating to
any Asserted Liability and shall cooperate with each other in the defense
thereof.

                  Section 15.8 Indemnification Payments. Any payment hereunder
shall be made by wire transfer of immediately available funds to such account or
accounts as the Indemnified Party shall designate to the Indemnifying Party in
writing.

                  Section 15.9 Exclusive Remedy. Except as specifically provided
in Section 8.18 (Indemnification of Brokerage) hereof and except for the
Seller's indemnification for Taxes (which shall be governed exclusively by
Article X hereof), absent fraud, the indemnification provided for in this
Article XV hereof shall be the exclusive remedy in any action brought by any
party to this Agreement.

                  Section 15.10 No Duplication of Recovery. Any liability for
indemnification under this Agreement or under any Ancillary Agreement or under
the Landmark Purchaser Agreement shall be determined without duplication of
recovery by reason of (i) the state of facts giving rise to such liability
constituting a breach of more than one representation, warranty, covenant or
agreement or (ii) the liability of the Indemnifying Party or any Affiliate
thereof under more than one of this Agreement, an Ancillary Agreement or the
Landmark Purchase Agreement. In the event that the state of facts giving rise to
any liability for indemnification under this Agreement, any Ancillary Agreement
or under the Landmark Purchase Agreement provides an entitlement to
indemnification under more than one of such agreements, the Indemnified Party
may seek indemnification under whichever of such agreements it chooses, but not
under more than one of such agreements.

                  Section 15.11 Purchase Price Adjustment. Purchaser and Seller
agree to treat, to the maximum extent permitted by Applicable Law, any payments
under this Article XV or Article X as an adjustment to the Final Purchase Price
for all Tax purposes.

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                                   ARTICLE XVI

                      CERTAIN DEFINITIONS AND OTHER MATTERS

                  Section 16.1 Definitions. For purposes of this Agreement, the
Seller Disclosure Schedules and the Purchaser Disclosure Schedules, the
following terms shall have the following meanings:

                  "Affiliate" of any Person means another Person that from time
to time, directly or indirectly controls, is controlled by, or is under common
control with, such first Person, where "control" means the possession, directly
or indirectly, of the power to direct or cause the direction of the management
policies of a Person, whether through the ownership of voting securities, by
contract, as trustee or executor, or otherwise. For the purposes of this
Agreement, the term "Affiliated" has a meaning correlative to the foregoing.

                  "Affiliate Agreements" means the agreements set forth on
Schedule 4.17(b).

                  "Ancillary Agreements" means the Quota Share Reinsurance
Agreements, the Administrative Services Agreements, the Claims Servicing
Agreement, the Renewal Rights Agreement, the Transition Services Agreement, the
Transitional Trademark License Agreement, the Service Mark Assignment, the
Employee Leasing Agreement, the Managing General Agency Agreement, the
Substitution and Indemnification Agreement, the Assignment of Insurance
Recoverables Agreement and the RSA SLISI Purchase Agreement, together with any
and all agreements and instruments to be executed and delivered pursuant to each
of the foregoing and all schedules and exhibits to each of the foregoing.

                  "Applicable Law" means any applicable order, law, statute,
regulation, rule, ordinance, writ, injunction, directive, judgment, decree,
principal of common law, constitution or treaty enacted, promulgated, issued,
enforced or entered by any Governmental Entity, including any amendments thereto
that may be adopted from time to time.

                  "Applicable Rate" means the annual yield rate, as of any given
date, of actively traded U.S. Treasury securities having remaining duration to
maturity of three months, as such rate is published under "Treasury Constant
Maturities" in Federal Reserve Statistical Release H.15(519).

                  "Assumed Contracts" shall mean the In Force Contracts as of
the Effective Date, the actual or contingent liabilities and obligations of
which are assumed by AIHL Insurance Co. pursuant to the Quota Share Reinsurance
Agreements, to the extent such liabilities and obligations arise out of, or
relate to, periods on and after the Effective Date.

                  "Bankruptcy and Equity Exception" shall mean, in respect of
any agreement, contract or commitment, any limitation thereon imposed by any
bankruptcy, insolvency, fraudulent conveyance, reorganization, rehabilitation,
moratorium or similar

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law affecting creditors' rights and remedies generally and, with respect to the
enforceability thereof, by general principles of equity, including principles of
commercial reasonableness, good faith and fair dealing (regardless of whether
enforcement is sought in a proceeding at law or in equity).

                  "Books and Records" means the originals or copies of all
customer lists, policy information, insurance contract forms, administrative and
pricing manuals, medical procedure code lists, claim records, sales records,
underwriting records, financial records, compliance records, data files prepared
for or filed with regulators of the Business and premium tax records, each in
the possession or control of RSUI, Seller or any of its Affiliates, or, after
the Closing, Purchaser or any of its Affiliates and used in the operation of the
Business, whether or not stored in hardcopy form or on magnetic or optical media
(to the extent not subject to licensing restrictions), but excluding (i) prior
to the Closing, any such lists, information and records that are prohibited from
being disclosed or transferred by Applicable Law or regulatory requirements and
(ii) any such information that is part of any consolidated, unitary, combined or
similar Tax Return except to the extent directly related to RSUI.

                  "Business" means the business conducted by RSUI and the Royal
Insurer Affiliates relating to the underwriting and administration of the
RSUI-Produced Insurance Contracts for the Royal Insurer Affiliates; provided,
however, the term "Business" shall not include the American Agency (a/k/a
Emergency Medical Services a/k/a the Kansas City Branch) operations, the Royal
Surplus Lines Insurance Services operation in Cherry Hill, New Jersey, nor the
Healthcare D&O losses; for the avoidance of doubt, the term "Business" does not
include any losses or expenses incurred by, or any reserves held by, the Royal
Insurer Affiliates relating to the RSUI-Produced Insurance Contracts.

                  "Business Day" means a Monday, Tuesday, Wednesday, Thursday or
Friday on which banking institutions in the State of New York are not authorized
or obligated by Applicable Law to close.

                  "Business Material Adverse Effect" means a material adverse
effect on the business, financial condition or results of operations of the
Business; provided, however, that the following shall be excluded from the
definition of "Business Material Adverse Effect" and from any determination as
to whether such Business Material Adverse Effect has occurred or may occur: (i)
the effects of changes that are generally applicable to the insurance,
reinsurance and/or brokerage industries; (ii) the effects of changes in general
economic or security market conditions; (iii) the effects of any facts or
circumstances clearly related to, or directly caused by, Purchaser; and (iv) the
effects of any breach of any provision of this Agreement by Purchaser.

                  "Cat Cover" means the catastrophe excess of loss reinsurance
contract by and among RICA, RIC, RSLIC and all Affiliates and Subsidiaries, and
the new corporate entity to succeed Royal & SunAlliance as the owner of RSUI,
effective May 1, 2003.

                  "Code" means the Internal Revenue Code of 1986, as amended.

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                  "Computer Software" means all computer software, databases,
data files, source and object codes, user interfaces, manuals and other
specifications and documentation and all know how relating thereto.

                  "Damages" means all costs, expenses, fines, penalties, losses,
judgments, damages, liabilities and other amounts (including attorneys'
actuaries', accountants' and experts' fees and settlement amounts) arising out
of any suit, claim or proceeding.

                  "Deferred Acquisition Cost" means premium taxes, agents'
commissions net of ceding commissions under third party reinsurance contracts,
assessments for boards and bureaus, guaranty funds and other residual market
assessments, and any other expenses paid by the Royal Insurer Affiliates in
connection with the issuance of the Assumed Contracts.

                  "Effective Date" shall mean the date as to which the Closing
will be given effect for all purposes, which shall be 12:01 a.m. on July 1,
2003.

                  "GAAP" means generally accepted accounting principles in
effect in the United States of America at the time of determination.

                  "Governmental Entity" means any foreign, domestic, federal,
territorial, state or local U.S. or non-U.S. governmental authority,
quasi-governmental authority, instrumentality, court or government
self-regulatory organization, commission, tribunal or organization or any
political or other subdivision, department, branch or representative of any of
the foregoing.

                  "HSR Act" means the Hart-Scott-Rodino Antitrust Improvements
act of 1976, as amended.

                  "In Force" means, with respect to an insurance contract, an
insurance contract which, as of a specified date, has been bound by an insurance
company and has not been canceled or otherwise terminated. For purposes hereof,
references to In Force RSUI-Produced Insurance Contracts without reference to a
specified date shall mean (x) until the Closing Date, In Force RSUI-Produced
Insurance Contracts as of the date hereof, and (y) from and after the Closing
Date, In Force RSUI-Produced Insurance Contracts as of the Closing Date.

                  "Income Tax" means any federal, state, local or foreign
income, alternative, minimum, franchise, profits, or other similar Tax (but only
if determined with respect to net income) or deficiencies with respect thereto
(including interest and penalties thereon and additions thereto).

                  "Income Tax Return" means any Tax Return with respect to
Income Taxes.

                  "Insurance Permit" means any Permit in any jurisdictions to
issue, underwrite, assume, place or otherwise transact the business of
insurance.

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                  "Intellectual Property" means, collectively, (x) all United
States and foreign registered, unregistered and pending (i) Trademarks, (ii)
Computer Software, (iii) copyrights (including, without limitation, those in
Computer Software, and all registrations and applications therefor), (iv)
Patents, (v) Trade Secrets, and (vi) other intellectual property; and (y) all
license, assignment, distribution or other agreements relating to any of the
items set forth in clause (x) above (collectively, "Intellectual Property
Contracts").

                  "Intellectual Property Contracts" shall have the meaning given
to that term in the definition of "Intellectual Property".

                  "Knowledge" with respect to: (i) Seller or any of its
Affiliates which is a party to any Ancillary Agreement means the actual
knowledge of the natural Persons listed in Schedule 16.1(a), and (ii) Purchaser
or any of its Affiliates which is a party to any Ancillary Agreement means the
actual knowledge of the natural Persons listed in Schedule 16.1(b).

                  "Lien" means any mortgage, pledge, lien, encumbrance, charge,
adverse claim (whether pending or, to the Knowledge of the Person against whom
the adverse claim is being asserted, threatened) or restriction of any kind
affecting title or resulting in an encumbrance against property, real or
personal, tangible or intangible, or a security interest of any kind, including,
without limitation, any conditional sale or other title retention agreement, any
lease in the nature thereof, and any filing of or agreement to give any
financing statement under the Uniform Commercial Code (or equivalent statute) of
any jurisdiction (other than a financing statement which is filed or given
solely to protect the interest of a lessor).

                  "Material Business Contract" means any contract required to be
set forth in Schedule 4.16(a).

                  "Net Unearned Premium Reserves" shall mean the aggregate
amount of all unearned premium reserves, calculated as of the Effective Date,
related to all Assumed Contracts, less the unearned premiums to be ceded to
third party reinsurers with respect to such Assumed Contracts.

                  "Patents" means all utility and design patents, registered
designs and invention disclosures (including, without limitation, those relating
to Computer Software), and all grants, registrations and applications therefor.

                  "Permits" shall mean all permits, licenses, authorizations,
variances, exemptions, orders, registrations and approvals of all Governmental
Entities, including, without limitation, Insurance Permits.

                  "Permitted Liens" means (i) Liens for water and sewer charges
and Taxes not yet due and payable or being contested in good faith (and, in each
case, for which adequate accruals or reserves have been established) and (ii)
mechanics', carriers', workers', repairers', materialmen's, warehousemen's and
other similar liens arising or

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incurred in the ordinary course of business with respect to a liability or
obligation that is not yet due or delinquent and that is not material in amount.

                  "Person" means an individual, corporation, partnership, joint
venture, association, limited liability company, trust, unincorporated
organization, or other entity.

                  "Pre-Closing Tax Period" means a taxable year or period ending
on or before the Closing Date.

                  "Post-Closing Tax Period" means a taxable year or period
beginning after the Closing Date.

                  "Purchaser Disclosure Schedules" means the disclosure
schedules delivered by Purchaser to Seller prior to the execution of this
Agreement.

                  "Qualifying Assets" shall mean cash and investments which are
"Acceptable Investments" as such term is defined in the Trust Agreements.

                  "Reinsured Contracts" means (i) all policies, binders and
contracts of insurance written on an admitted basis or a non-admitted basis and
issued in the name of RIC, RSLIC or Landmark by or on behalf of RSUI, as agent,
with an effective date, new or renewal, after the Effective Date, and (ii)
Assumed Contracts.

                  "Reserves" shall mean the reserves, funds or provisions of
Royal Insurer Affiliates for losses, claims, premiums, policy benefits and
expenses in respect of (i) insurance or reinsurance obligations of any of the
Royal Insurer Affiliates (whether for unearned premiums, incurred losses,
technical reserves, incurred loss adjustment expenses, incurred but not reported
losses, loss adjustment expense or otherwise), (ii) reinsurance collectibles or
(iii) other accounts receivable that are of a type included within the line item
"Other Receivables" on the Audited RSUI Financial Statements.

                  "RSUI-Produced Insurance Contracts" means all policies,
binders and contracts of insurance (both direct and assumed) underwritten by
RSUI and issued by any of the Royal Insurer Affiliates.

                  "SAP" shall mean, with respect to any Person, the statutory
accounting principles and practices prescribed or permitted by the domicillary
state of the relevant Person, consistently applied.

                  "Schedule of Adjusted Underwriting Results" means the Schedule
of Adjusted Underwriting Results attached to the Report of Independent Auditors
prepared by PwC and addressed to the managements of Royal & SunAlliance and
Purchaser.

                  "Seller Disclosure Schedules" means the disclosure schedules
delivered by Seller to Purchaser prior to the execution of this Agreement.

                  "Straddle Period" means a taxable year or period beginning on
or before, and ending after, the Closing Date.

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

                  "Tax" or "Taxes" means all federal, state, county, local,
municipal, foreign and other taxes, assessments, duties or similar charges of
any kind whatsoever, including all corporate franchise, income, gross receipts,
occupation, windfall profits, sales, use, ad valorem, value-added, profits,
license, withholding, payroll, employment, excise, insurance premium, real
property, personal property, customs, net worth, capital gains, transfer, stamp,
documentary, social security, disability, environmental, alternative minimum,
estimated, recapture and other taxes, and including all interest, penalties and
additions imposed with respect thereto.

                  "Tax Return" means any and all returns, declarations, reports,
claims for refund, information returns, or other documents or statements
relating to Taxes required to be supplied to any Taxing Authority, including any
schedule or attachment thereto and any amendment or supplement thereof.

                  "Taxing Authority" means any domestic, foreign, federal,
national, state, county or municipal or other local government, any subdivision,
agency, commission or authority thereof, or any quasi-governmental body
exercising regulatory authority with respect to Taxes.

                  "Terrorism Treaty" means the specific aggregate excess of loss
reinsurance contract by and among Royal & SunAlliance, including all of its
Affiliates and Subsidiaries, effective February 28, 2003.

                  "Trade Secrets" means all trade secrets, proprietary and
confidential business information and data, inventions, processes, formulae,
know how, concepts, ideas, research and development, designs, business plans,
strategies, marketing and other information and customer lists.

                  "Trademarks" means all trade names, trade dress, trademarks,
service marks, assumed names, business names and logos, internet domain names
and all registrations and applications therefor, together with all goodwill
symbolized thereby.

                  "Transfer Taxes" means any and all transfer, documentary,
sales, use, gross receipts, stamp, registration, value added, recording, escrow
and other similar Taxes and fees (including any out-of-pocket filing expenses,
penalties and interest) incurred in connection with the transactions
contemplated by this Agreement (including recording and escrow fees and any real
property or leasehold interest transfer or gains tax and any similar Tax).

                  "Unaffiliated Reinsurers" means reinsurers who are not
Affiliates of Seller.

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                  Section 16.2 Disclosure Schedules. The parties hereto
acknowledge and agree that any information set forth in any of the Seller
Disclosure Schedules or any of the Purchaser Disclosure Schedules is considered
disclosed in each and every other of the Seller Disclosure Schedules and the
Purchaser Disclosure Schedules, respectively, as to which such information is
applicable; provided that the disclosure is sufficient to enable a party to this
Agreement to identify the Seller Disclosure Schedules or Purchaser Disclosure
Schedules to which it applies. Any disclosure in any of the Seller Disclosure
Schedules or the Purchaser Disclosure Schedules of any contract, document,
liability, default, breach, violation, limitation, impediment or other matter,
although the provision for such disclosure may require such disclosure only if
such contract, document, liability, default, breach, violation, limitation,
impediment or other matter be "material," shall not be construed against any
party to this Agreement, as an assertion by such party, that any such contract,
document, liability, default, breach, violation, limitation, impediment or other
matter is, in fact, material.

                                  ARTICLE XVII

                                  MISCELLANEOUS

                  Section 17.1 Amendment, Modification and Waiver. This
Agreement may not be amended, modified or waived except by an instrument or
instruments in writing signed and delivered on behalf of each of the parties
hereto.

                  Section 17.2 Entire Agreement. This Agreement and the
Ancillary Agreements (together with the Seller Disclosure Schedules, the
Purchaser Disclosure Schedules, the other schedules hereto and thereto, the
exhibits hereto and thereto, the annexes hereto and thereto and the other
agreements, documents and instruments delivered in connection herewith and
therewith) constitute the entire agreement among the parties with respect to the
subject matter hereof and thereof and supersede all other prior agreements and
understandings (other than the Confidentiality Agreement), both written and
verbal, among the parties or any of them with respect to the subject matter
hereof.

                  Section 17.3 Interpretation.

                           (a)      When a reference is made in this Agreement
to a Section or Article, such reference shall be to a section or article of this
Agreement unless otherwise clearly indicated to the contrary. Whenever the words
"include," "includes" or "including" are used in this Agreement they shall be
deemed to be followed by the words "without limitation." The words "hereof,"
"herein" and "herewith" and words of similar import shall, unless otherwise
stated, be construed to refer to this Agreement as a whole and not to any
particular provision of this Agreement. The meaning assigned to each term used
in this Agreement shall be equally applicable to both the singular and the
plural forms of such term, and words denoting any gender shall include all
genders. Where a word or phrase is defined herein, each of its other grammatical
forms shall have a corresponding meaning.

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                           (b)      The parties have participated jointly in the
negotiation and drafting of this Agreement and the Ancillary Agreements;
consequently, in the event an ambiguity or question of intent or interpretation
arises, this Agreement and each of the Ancillary Agreements shall be construed
as if drafted jointly by the parties thereto, and no presumption or burden of
proof shall arise favoring or disfavoring any party by virtue of the authorship
of any provisions of this Agreement or of any of the Ancillary Agreements.

                  Section 17.4 Due Investigation. Purchaser has conducted its
own independent review and analysis of the Business, operations, technology,
assets, liabilities, results of operations, financial condition and prospects of
RSUI and the Business and acknowledges that Seller has provided Purchaser with
access to the personnel, properties, premises and books and records of RSUI and
the Business for this purpose. In entering into this Agreement and the Ancillary
Agreements, Purchaser has relied solely upon its own investigation and analysis,
and Purchaser acknowledges and agrees (i) that, except for the specific
representations and warranties made by Seller and Affiliates of Seller contained
in this Agreement, the Ancillary Agreements, the Seller Disclosure Schedules and
other schedules and the exhibits hereto and thereto, none of Seller or its
Affiliates nor any of their respective directors, officers, employees,
Affiliates, controlling Persons, agents or representatives, makes or has made
any representation or warranty, either express or implied, as to the accuracy or
completeness of any of the information (including any projections, estimates or
other forward-looking information) provided (including in any management
presentations, information memorandum, supplemental information or other
materials or information with respect to any of the above) or otherwise made
available to Purchaser or any of its directors, officers, employees, Affiliates,
controlling Persons, agents or representatives and (ii) that, to the fullest
extent permitted by Applicable Law, and absent fraud, that Seller and its
Affiliates and their respective directors, officers, employees, Subsidiaries,
controlling Persons, agents or representatives shall not have any liability or
responsibility whatsoever to Purchaser or its Affiliates or any of their
respective directors, officers, employees, Subsidiaries, controlling Persons,
agents or representatives on any basis (including in contract or tort, under
federal or state securities laws or otherwise) based upon any information
provided or made available, or statements made (or any omissions therefrom), to
Purchaser or its Affiliates or any of their respective directors, officers,
employees, Subsidiaries, controlling Persons, agents or representatives,
including in respect of the specific representations and warranties of Seller
set forth in this Agreement, the Ancillary Agreements, the Seller Disclosure
Schedules and other schedules and the exhibits hereto and thereto, except as and
only to the extent expressly set forth herein or therein with respect to such
representations and warranties.

                  Section 17.5 Notices. All notices, requests, claims, demands
and other communications hereunder shall be in writing and shall be given (and
shall be deemed to have been duly given upon receipt) by delivery in Person, by
telecopy (delivery of which is confirmed), by courier (delivery of which is
confirmed) or by registered or certified mail (postage prepaid, return receipt
requested) to the respective parties to this Agreement as follows:

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                  If to Seller:

                           Laura S. Lawrence, Esq.
                           General Counsel
                           Royal Group, Inc.
                           9300 Arrowpoint Blvd.
                           Charlotte, North Carolina 28273
                           Telephone No.: (704) 522-2851
                           Facsimile No.: (704) 522-2313

                           with a copy to (which shall not constitute notice to
                           Seller for purposes of this Section 17.5):

                           Robert J. Sullivan, Esq.
                           Skadden, Arps, Slate, Meagher & Flom LLP
                           Four Times Square
                           New York, New York 10036
                           Telephone No.: (212) 735-3000
                           Facsimile No.: (212) 735-2000

                  If to Purchaser:

                           Robert M. Hart, Esq.
                           Alleghany Corporation
                           375 Park Avenue
                           Suite 3201
                           New York, New York 10152
                           Telephone No.: (212) 752-1356
                           Facsimile No.: (212) 759-8149

                           with a copy to (which shall not constitute notice to
                           Purchaser for purposes of this Section 17.5):

                           Aileen C. Meehan, Esq.
                           Dewey Ballantine LLP
                           1301 Avenue of the Americas
                           New York, New York 10019
                           Telephone No.: (212) 259-8000
                           Telecopy No.: (212) 259-6333

or to such other address as the Person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above. In
no event shall the provision of notice pursuant to this Section 17.5 constitute
notice for service of any writ, process or summons in any suit, action or other
proceeding.

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                  Section 17.6 Governing Law. This Agreement shall be governed
by and construed in accordance with the laws of the State of Delaware,
regardless of the laws that might otherwise govern under applicable principles
of conflicts of laws thereof.

                  Section 17.7 Descriptive Headings. The descriptive article and
section headings herein are inserted for convenience of reference only and are
not intended to be part of or to affect the meaning or interpretation of this
Agreement.

                  Section 17.8 Assignment; Binding Agreement. Neither this
Agreement, nor any rights, interests or obligations hereunder, may be directly
or indirectly assigned, delegated, sublicensed or transferred by any party to
this Agreement, in whole or in part, to any other Person (including any
bankruptcy trustee) by operation of law or otherwise, whether voluntarily or
involuntarily, without the prior written consent of the other party hereto,
except that the Purchaser shall have the right at any time, without such
consent, to assign, in whole or in part, its rights hereunder and under any
Ancillary Agreement to any wholly owned Subsidiary of Purchaser, provided that
such assignment shall not relieve the Purchaser of any of its obligations
hereunder and thereunder. Subject to the foregoing, this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns.

                  Section 17.9 Third Party Beneficiaries. Nothing in this
Agreement, express or implied, is intended to or shall confer upon any Person
other than the parties hereto any rights, benefits or remedies of any nature
whatsoever under or by reason of this Agreement.

                  Section 17.10 Specific Performance. The parties recognize and
agree that if for any reason any of the provisions of this Agreement are not
performed in accordance with their specific terms or are otherwise breached,
immediate and irreparable harm or injury would be caused for which money damages
would not be an adequate remedy. Accordingly, each party agrees that, in
addition to any other available remedies, each other party shall be entitled to
an injunction restraining any violation or threatened violation of any of the
provisions of this Agreement without the necessity of posting a bond or other
form of security. In the event that any action should be brought in equity to
enforce any of the provisions of this Agreement, no party will allege, and each
party hereby waives the defense, that there is an adequate remedy at Law.

                  Section 17.11 Severability. Any term or provision of this
Agreement which is invalid or unenforceable in any jurisdiction shall, as to
that jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining terms
and provisions of this Agreement or affecting the validity or enforceability of
any of the terms or provisions of this Agreement in any other jurisdiction. If
any provision of this Agreement is so broad as to be unenforceable, the
provision shall be interpreted to be only so broad as would be enforceable.

                  Section 17.12 Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same agreement.

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                  Section 17.13 Consent to Jurisdiction. Each of the parties
hereto irrevocably and unconditionally submits to the exclusive jurisdiction of
the state and federal courts located in the State of Delaware for the purposes
of enforcing this Agreement or any of the Ancillary Agreements. The parties
shall take such actions as are within their control to cause any matter
contemplated hereby to be assigned to the Chancery Court of the State of
Delaware. In any action, suit or other proceeding, each of the parties hereto
irrevocably and unconditionally waives and agrees not to assert by way of
motion, as a defense or otherwise any claims that it is not subject to the
jurisdiction of the above courts, that such action or suit is brought in an
inconvenient forum or that the venue of such action, suit or other proceeding is
improper. Each of the parties hereto also agrees that any final and unappealable
judgment against a party hereto in connection with any action, suit or other
proceeding shall be conclusive and binding on such party and that such award or
judgment may be enforced in any court of competent jurisdiction, either within
or outside of the United States. A certified or exemplified copy of such award
or judgment shall be conclusive evidence of the fact and amount of such award or
judgment.

                  Section 17.14 Waiver of Jury Trial. EACH OF THE PARTIES HERETO
HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL
PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY.

                  Section 17.15 Extension; Waiver. At any time prior to the
Closing Date, either party may (a) extend the time for the performance of any of
the obligations or other acts of the other party, (b) waive any inaccuracies in
the representations and warranties contained in this Agreement or in any
document delivered pursuant to this Agreement of the other party or (c) waive
compliance with any of the agreements or conditions contained in this Agreement
of the other party. Any agreement on the part of a party to any such extension
or waiver shall be valid only if set forth in an instrument in writing signed on
behalf of such party. No delay on the part of any party in exercising any right
hereunder shall operate as a waiver thereof, nor shall any waiver on the part of
any party of any such right nor any single or partial exercise of any such right
preclude any further exercise thereof or the exercise of any other such right.

                  Section 17.16 Confidentiality. Each party hereto will hold,
and will use its reasonable best efforts to cause its Affiliates and
representatives to hold, in strict confidence from any Person (other than any
such Affiliates or representatives), this Agreement, the Ancillary Agreements,
the terms and conditions hereof and thereof, and all documents and information
concerning the other party or any of its Affiliates (the "Confidential
Information") furnished to it by the other party (the "Disclosing Party") or
such Disclosing Party's representatives in connection with this Agreement or any
Ancillary Agreement or the transactions contemplated hereby or thereby, except
to the extent that such Confidential Information can be shown to have been (a)
previously known by the party receiving such Confidential Information (the
"Receiving Party"), (b) in the public domain (either prior to or after the
furnishing of such Confidential Information hereunder) through no fault of such
Receiving Party or (c) later acquired by the Receiving Party from another source
if the Receiving Party is not aware that such

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<PAGE>

source is under an obligation to another party hereto to keep such Confidential
Information confidential; provided that, a Receiving Party may make any
disclosure of Confidential Information (i) the use of such Confidential
Information is reasonably required in connection with disclosure of the tax
treatment and any facts that may be relevant to the tax structure of the
transactions contemplated by this Agreement, (ii) with the prior written consent
of the other party, (iii) if compelled to disclose by judicial or administrative
process (including, without limitation, in connection with obtaining the
necessary approvals for this Agreement and the transactions contemplated hereby
of governmental or regulatory authorities) or by other requirements of
Applicable Law or the rules of a national securities exchange or (iv) in
connection with an action or proceeding brought by a party hereto in pursuit of
its rights or in the exercise of its remedies hereunder. In the event a
Receiving Party becomes compelled to disclose Confidential Information as
described in clauses (iii) and (iv) above, such party will provide the
Disclosing Party with prompt notice of such legal proceedings so that the
Disclosing Party may seek an appropriate protective order or other appropriate
relief or waive compliance with the provisions of this Section 17.16. In the
absence of a protective order or a waiver from the Disclosing Party, the
Receiving Party compelled to disclose Confidential Information is permitted to
disclose that portion (and only that portion) of the Confidential Information
that such Receiving Party is legally compelled to disclose; provided, however,
that the Receiving Party must use reasonable efforts to obtain reliable
assurance that confidential treatment will be accorded by any Person to whom any
Confidential Information is disclosed. In the event the transactions
contemplated by this Agreement are not consummated, upon the request of the
other party, each party hereto will, and will cause its Affiliates and their
respective representatives to promptly redeliver or cause to be redelivered all
copies of confidential documents and information furnished by the other party in
connection with this Agreement or any Ancillary Agreement or the transactions
contemplated hereby or thereby and destroy or cause to be destroyed all notes,
memoranda, summaries, analyses, compilations and other writings related thereto
or based thereon prepared by the party furnished such documents and information
or its representatives.

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                  IN WITNESS WHEREOF, each of the parties has caused this
Acquisition Agreement to be executed on its behalf by its officer thereunto duly
authorized, all as of the day and year first above written.

                               ROYAL GROUP, INC

                               By: /s/ Laura S. Lawrence
                                   --------------------------------------------
                                   Name: Laura S. Lawrence
                                   Title: Senior Vice President, General Counsel
                                          & Chief Administrative Officer

                               ALLEGHANY INSURANCE HOLDINGS LLC

                               By: /s/ Weston M. Hicks
                                   --------------------------------------------
                                   Name: Weston M. Hicks
                                   Title: Chief Executive Officer

                                       92

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