Document:

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                                                                   EXHIBIT 10.11

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                              AMENDED AND RESTATED

                    LETTER OF CREDIT REIMBURSEMENT AGREEMENT

                            dated as of April 3, 2001

                                      among

                                   MAX RE LTD.

                                as the Borrower,

                         VARIOUS FINANCIAL INSTITUTIONS,

                                 as the Lenders,

                               FLEET NATIONAL BANK

                                       and

                                  CITIBANK, NA

                                  as Co-Agents,

                                       and

                     BANK OF AMERICA, NATIONAL ASSOCIATION,

                  as Fronting Bank and as Administrative Agent,
                      and LC Administrator for the Lenders

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                                TABLE OF CONTENTS
                                -----------------

ARTICLE I.  DEFINITIONS......................................................2
            SECTION 1.1  Definitions.........................................2
            SECTION 1.2  Other Interpretive Provisions......................17
            SECTION 1.3  Accounting Principles..............................17

ARTICLE II.  AMOUNT AND TERMS OF COMMITMENT.................................18
            SECTION 2.1  Letter of Credit Commitment........................18
            SECTION 2.2  Issuance, Amendment and Renewal of Letters of
                                 Credit.....................................19
            SECTION 2.3  Drawings and Reimbursements........................21
            SECTION 2.4  Repayment of LC Advances...........................23
            SECTION 2.5  Role of the Lenders................................24
            SECTION 2.6  Obligations Absolute...............................25
            SECTION 2.7  Existing Letters of Credit.........................26
            SECTION 2.8  Applicability of ISP98.............................26
            SECTION 2.9  Interest...........................................26
            SECTION 2.10 Payments by the Borrower...........................27
            SECTION 2.11 Warranty...........................................27
            SECTION 2.12 Termination or Reduction of Commitments............27
            SECTION 2.13 Mandatory Reduction/Cash Collateralization of
                                 Letters of Credit..........................28
            SECTION 2.14 Fees...............................................28
            SECTION 2.15 Computation of Fees and Interest...................30
            SECTION 2.16 Sharing of Payments, Etc...........................30
            SECTION 2.17 Commitment Termination Date Extension..............30
            SECTION 2.18 Optional Increase in LC Commitments................32

ARTICLE III.  TAXES, YIELD PROTECTION AND ILLEGALITY........................33
            SECTION 3.1  Taxes..............................................33
            SECTION 3.2  Illegality.........................................34
            SECTION 3.3  Increased Costs and Reduction of Return............35
            SECTION 3.4  Certificates of Lenders............................35
            SECTION 3.5  Substitution of Lenders............................36
            SECTION 3.6  Survival...........................................36

                                       i
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ARTICLE IV.  REPRESENTATIONS AND WARRANTIES.................................36
            SECTION 4.1  Due Organization, Authorization, etc...............36
            SECTION 4.2  Litigation and Contingent Liabilities..............37
            SECTION 4.3  Employee Benefit Plans.............................37
            SECTION 4.4  Regulated Entities.................................37
            SECTION 4.5  Regulations U and X................................37
            SECTION 4.6  Proceeds...........................................37
            SECTION 4.7  Business Locations.................................37
            SECTION 4.8  Accuracy of Information............................38
            SECTION 4.9  Subsidiaries.......................................38
            SECTION 4.10 Insurance Licenses.................................38
            SECTION 4.11 Taxes..............................................38
            SECTION 4.12 Securities Laws....................................39
            SECTION 4.13 Compliance with Laws...............................39
            SECTION 4.14 Financial Condition................................39

ARTICLE V.  AFFIRMATIVE COVENANTS...........................................39
            SECTION 5.1  Reports, Certificates and Other Information........40
            SECTION 5.2  Corporate Existence; Foreign Qualification.........43
            SECTION 5.3  Books, Records and Inspections.....................43
            SECTION 5.4  Insurance..........................................43
            SECTION 5.5  Taxes and Liabilities..............................44
            SECTION 5.6  Compliance with Laws...............................44
            SECTION 5.7  Maintenance of Permits.............................44
            SECTION 5.8  Conduct of Business................................44
            SECTION 5.9  Use of Letters of Credit...........................44
            SECTION 5.10 Further Assurances.................................44

ARTICLE VI. NEGATIVE COVENANTS..............................................44
            SECTION 6.1  Net Worth.  .......................................44
            SECTION 6.2  Unencumbered Reserve Requirement...................45
            SECTION 6.3  Debt...............................................45
            SECTION 6.5  Other Agreements...................................45
            SECTION 6.6  Transactions with Affiliates.......................45
            SECTION 6.7  Liens..............................................45
            SECTION 6.8  Restrictions On Negative Pledge Agreements.........46
            SECTION 6.9  Dividends, Etc.....................................46
            SECTION 6.10 Eligible Investments.  ............................47

ARTICLE VII. EVENTS OF DEFAULT AND THEIR EFFECT.............................47
            SECTION 7.1  Events of Default..................................47
            SECTION 7.2  Effect of Event of Default.........................49
            SECTION 7.3  LC Collateral Account..............................49

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ARTICLE VIII. CONDITIONS....................................................50
            SECTION 8.1  Conditions to Occurrence of the
                                Amendment Effective Date....................50
            SECTION 8.2  Conditions to All Credit Extensions................51

ARTICLE IX.  THE ADMINISTRATIVE AGENT.......................................52
            SECTION 9.1  Appointment and Authorization......................52
            SECTION 9.2  Delegation of Duties...............................52
            SECTION 9.3  Liability of Administrative Agent..................53
            SECTION 9.4  Reliance by Administrative Agent...................53
            SECTION 9.5  Notice of Default..................................54
            SECTION 9.6  Credit Decision....................................54
            SECTION 9.7  Indemnification....................................54
            SECTION 9.8  Administrative Agent in Individual Capacity........55
            SECTION 9.9  Successor Administrative Agent.....................55
            SECTION 9.10 Withholding Tax....................................56

ARTICLE X.  MISCELLANEOUS...................................................57
            SECTION 10.2  Notices...........................................58
            SECTION 10.3  No Waiver; Cumulative Remedies....................59
            SECTION 10.4  Costs and Expenses................................59
            SECTION 10.5  Indemnity.........................................59
            SECTION 10.6  Payments Set Aside................................60
            SECTION 10.7  Successors and Assigns............................60
            SECTION 10.8  Assignments, Participations, etc..................60
            SECTION 10.9  Confidentiality...................................62
            SECTION 10.10 Set-off...........................................62
            SECTION 10.11 Notification of Addresses, Lending Offices, Etc...63
            SECTION 10.12 Counterparts......................................63
            SECTION 10.13 Severability......................................63
            SECTION 10.14 No Third Parties Benefitted.......................63
            SECTION 10.15 Governing Law and Jurisdiction....................63
            SECTION 10.16 Waiver of Jury Trial..............................64
            SECTION 10.17 Currency Indemnity................................64
            SECTION 10.18 Service of Process................................65
            SECTION 10.19 Entire Agreement..................................65

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                             SCHEDULES AND EXHIBITS

SCHEDULE 1.1         Concentration Limits
SCHEDULE 2.1         Commitments
SCHEDULE 4.1         Jurisdictions
SCHEDULE 4.2         Litigation
SCHEDULE 4.7         Locations
SCHEDULE 4.9         Subsidiaries
SCHEDULE 4.10        Insurance Licenses
SCHEDULE 6.7         Liens
SCHEDULE 10.2        Addresses

EXHIBIT A            Form of Compliance Certificate
EXHIBIT B            Form of Borrowing Base Certificate
EXHIBIT C            Form of Assignment and Acceptance
EXHIBIT D            Form of Security Agreement
EXHIBIT E            Form of Letter of Credit
EXHIBIT F            Form of Commitment Increase Request

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<PAGE>

                              AMENDED AND RESTATED
                    LETTER OF CREDIT REIMBURSEMENT AGREEMENT

          THIS AMENDED AND RESTATED  LETTER OF CREDIT  REIMBURSEMENT  AGREEMENT,
dated as of April 3, 2001,  is entered  into by and among Max Re Ltd., a Bermuda
company  (the  "Borrower"),  various  financial  institutions  which are parties
hereto (the "Lenders"),  Bank of America, National Association, as fronting bank
(in such capacity, the "Fronting Bank"), Bank of America,  National Association,
as letter of credit administrator (in such capacity, the "LC Administrator") and
Bank of America,  National Association,  as administrative agent for the Lenders
(in such capacity, the "Administrative Agent").

                              W I T N E S S E T H:
                              - - - - - - - - - -

          WHEREAS, the Borrower,  Bank of America,  National Association,  as LC
Issuer and  Administrative  Agent,  and  various  financial  institutions  party
thereto (the  "Original  Lenders")  entered  into that certain  Letter of Credit
Reimbursement Agreement dated as of February 25, 2000 (as amended or modified at
and in effect  immediately prior to the Amendment  Effective Date, the "Existing
Credit Agreement") whereby Bank of America, National Association issued (and the
Original Lenders participated in) letters of credit to counterparties to support
the Borrower's obligations under Reinsurance Agreements;

          WHEREAS,  the Borrower has  requested the Lenders to amend and restate
the  Existing  Credit  Agreement on the terms and  conditions  set forth in this
Agreement,  to set forth,  among other things,  the terms and  conditions  under
which the Lenders  hereafter  will make credit  extensions to the  Borrower;  it
being the intention of the Borrower,  the Lenders,  the Administrative Agent and
the LC Administrator  that this Agreement and the Credit  Documents  executed in
connection  herewith  shall not effect the  novation of the  obligations  of the
Borrower under the Existing  Credit  Agreement but be merely a restatement  and,
where applicable,  an amendment of and substitution for the terms governing such
obligations hereafter; and

          WHEREAS,  the Credit Extensions  outstanding  immediately prior to the
Amendment Effective Date pursuant to the Existing Credit Agreement shall deem to
be issued and  outstanding  hereunder for all purposes  hereof and of the Credit
Documents after giving effect to the Amendment Effective Date;

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

                                        1
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                                   ARTICLE I.

                                   DEFINITIONS

SECTION 1.1    Definitions.  When used herein the following terms shall have the
               -----------
following meanings:

          ABS means any fixed-income instrument which is rated AAA/Aaa by S&P or
          ---
Moody's or the  equivalent  rating from  another  nationally  recognized  rating
agency that entitles the holder of, or beneficial owner under, the instrument to
the whole or any part of the rights or  entitlements of a holder of a receivable
or other  asset and any other  rights or  entitlements  in  respect of a pool of
receivables  or other  assets or any  money  payable  by  obligors  under  those
receivables  or other assets  (whether or not the money is payable to the holder
of, or beneficial  owner under,  the instrument on the same terms and conditions
as under the  receivables  or other assets) in relation to  receivables or other
assets;  provided  however,  such  receivables  or assets  shall be  limited  to
automobile  loans,  credit card receivables and home equity loans and such other
ABS assets as may be acceptable to the Administrative Agent.

          Administrative Agent means (a) BofA, in its capacity as administrative
          --------------------
agent for the Lenders, and (b) each other Person as shall have subsequently been
appointed as the successor Administrative Agent pursuant to Section 9.9.

          Adjusted  Fair  Market  Value  means,  with  respect  to any  Eligible
          -----------------------------
Investments,  an amount  equal to the product of the Fair  Market  Value of such
Eligible Investments and the applicable percentage with respect to such Eligible
Investment as set forth on Schedule 1.2.

          Affiliate  of any Person  means any other  Person  which,  directly or
          ---------
indirectly,  controls or is controlled  by or is under common  control with such
Person  (excluding any trustee under, or any committee with  responsibility  for
administering, any Plan). A Person shall be deemed to be:

          (a) "controlled  by" any other Person if such other Person  possesses,
     directly or indirectly, power:

               (i) to vote 20% or more of the  securities  having at the time of
          any determination hereunder voting power for the election of directors
          of such Person; or

               (ii) to direct  or cause  the  direction  of the  management  and
          policies of such Person whether by contract or otherwise; or

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          (b)  "controlled  by" or "under common control with" such other Person
     if such other  Person is the  executor,  administrator,  or other  personal
     representative of such Person.

          Agent-Related  Persons  means the Fronting  Bank,  the  Administrative
          ----------------------
Agent, the LC Administrator (and any successor administrative agent or letter of
credit  administrator  arising under Section 9.9), together with its Affiliates,
                                     -----------
and the officers,  directors,  employees,  agents and  attorneys-in-fact of such
Person and Affiliates.

          Agent's  Payment  Office  means the address for  payments set forth on
          ------------------------
Schedule 10.2 in relation to the Administrative  Agent, or such other address as
-------------
the Administrative Agent may from time to time specify.

          Agreement   means  this   Amended  and   Restated   Letter  of  Credit
          ---------
Reimbursement Agreement.

          Amendment  Effective  Date  means  the  date on which  the  conditions
          --------------------------
precedent for the effectiveness of this Agreement specified in Section 8.1 shall
                                                               -----------
be met.

          Annual  Statement  means,  as to  any  Person,  the  annual  financial
          -----------------
statement  of such Person as required to be filed with the  Minister (or similar
Governmental Authority) of such Person's domicile, together with all exhibits or
schedules filed therewith, prepared in conformity with SAP.

          Assignee is defined in Section 10.8(a).
          --------

          Assignment and Acceptance is defined in Section 10.8(a).
          -------------------------

          Attorney  Costs means and includes all fees and  disbursements  of any
          ---------------
law firm or  other  external  counsel,  the  allocated  cost of  internal  legal
services and all disbursements of internal counsel.

          Authorized  Officers  means  those  officers  of  the  Borrower  whose
          --------------------
signatures and incumbency shall have been certified to the Administrative  Agent
pursuant to Section 8.1(d).
            --------------

          Base Rate means, for any day, the higher of: (a) 0.50% per annum above
          ---------
the latest  Federal Funds Rate;  and (b) the rate of interest in effect for such
day as  publicly  announced  from  time  to  time  by  BofA  in  San  Francisco,
California, as its "reference rate." (The "reference rate" is a rate set by BofA
based upon various factors  including  BofA's costs and desired return,  general
economic  conditions  and other  factors,  and is used as a reference  point for
pricing  some  loans,  which may be priced at,  above,  or below such  announced
rate.) Any change in the reference  rate  announced by BofA shall take effect at
the opening of business on the day specified in the public  announcement of such
change.

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          Beneficiary means each Person for whose benefit a Letter of Credit has
          -----------
been issued hereunder.

          BofA means Bank of America,  National Association,  a national banking
          ----
association.

          Borrower is defined in the Preamble.
          --------

          Borrowing Base  Certificate  means a certificate  substantially in the
          ---------------------------
form of  Exhibit B with such  changes  therein as the  Administrative  Agent may
request from time to time.

          Business Day means any day other than a Saturday,  Sunday or other day
          ------------
on which commercial banks in New York City,  Chicago,  or Hamilton,  Bermuda are
authorized or required by law to close.

          Capital Adequacy Regulation means any guideline,  request or directive
          ---------------------------
of any central bank or other Governmental  Authority,  or any other law, rule or
regulation,  whether  or not having  the force of law,  in each case,  regarding
capital adequacy of any bank or of any corporation controlling a bank.

          Capital Stock means, as to any Person, any and all shares,  interests,
          -------------
partnership  interest,  participations,  rights in or other equivalents (however
designated) of such Person's equity interest (however designated).

          Capitalized  Lease  means,  as to any  Person,  any lease  which is or
          ------------------
should be  capitalized  on the balance sheet in accordance  with GAAP,  together
with any other lease which is in substance a financing lease, including, without
limitation,  any lease under which (a) such Person has or will have an option to
purchase the property subject thereto at a nominal amount or an amount less than
a reasonable  estimate of the fair market value of such  property as of the date
the lease is entered into or (b) the term of the lease  approximates  or exceeds
the expected useful life of the property leased thereunder.

          Cash shall mean Dollars held by the Borrower in the Custody Account.
          ----

          Cash Equivalents means, at any time:
          ----------------

          (a) Government Debt, maturing not more than one year after such time;

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          (b) commercial paper, maturing not more than one year from the date of
     issue, which is issued by

               (i) a corporation  (except an Affiliate of the Borrower) rated at
          least  A-1 by S&P or P-1 by  Moody's  or the  equivalent  rating  from
          another nationally recognized agency, or

               (ii) any Lender (or its holding company);

          (c) any  certificate  of deposit or bankers'  acceptance or eurodollar
     time  deposit,  maturing  not more  than one year  after the date of issue,
     which is issued by either

               (i) a financial  institution  which is rated at least BBB- by S&P
          or Baa3 by  Moody's  or 2 or  above  by the  National  Association  of
          Insurance Commissioners, or

               (ii) any Lender; or

          (d) any repurchase agreement with a term of one year or less which

               (i) is entered into with

                    (A) any Lender, or

                    (B) any other commercial banking  institution of the stature
               referred to in clause (c)(i), and
                              -------------

               (ii) is secured by a fully  perfected  Lien in any  obligation of
          the type described in any of clauses (a) through (c) that has a market
          value at the time such  repurchase  agreement  is entered  into of not
          less than 100% of the  repurchase  obligation of such Lender (or other
          commercial banking institution) thereunder;

          (e)  investments  in money  market  funds that  invest  solely in Cash
     Equivalents described in clauses (a) through (d); and
                              -----------         ---

          (f) investments in short-term asset management accounts offered by any
     Lender for the purpose of investing in loans to any corporation (other than
     an Affiliate of the Borrower)  organized under the laws of any state of the
     United  States or of the District of Columbia and rated at least A-1 by S&P
     or P-1 by Moody's.

                                       5
<PAGE>

          Change in Control  shall be deemed to have  occurred  if (a) any sale,
          -----------------
lease,  exchange or other  transfer (in one  transaction  or a series of related
transactions)  of all,  or  substantially  all,  of the  assets of Parent or the
Borrower  occurs;  (b) any  "person" as such term is used in Sections  13(d) and
14(d) of the Securities  Exchange Act of 1934, as amended (the "Exchange  Act"),
is or becomes,  directly or indirectly,  the  "beneficial  owner," as defined in
Rule 13d-3 under the Exchange Act, of securities of Parent that represent 51% or
more of the combined voting power of Parent's then outstanding  securities other
than  Moore  Holdings  and  Capital Z  Partners,  (c)  during  any period of two
consecutive  years,  individuals who at the beginning of such period constituted
the Board of Directors of the Borrower  (together  with any new directors  whose
election by the Board of Directors or whose  nomination by the  stockholders  of
Parent was  approved by a vote of the  directors  of Parent then still in office
who are either  directors at the  beginning of such period or whose  election or
nomination  for election  was  previously  so approved)  cease for any reason to
constitute  a majority of Parent's  Board of  Directors  then in office;  or (d)
Parent ceases to own,  directly or indirectly,  100% of the Capital Stock of and
beneficial  interest  in the  Borrower  entitled  to vote upon  general  matters
submitted to shareholders including election of the board of directors.

          Code means the  Iternal  Revenue  Code of 1986,  as  amended  and any
          ----
successor statute of similar import,  together with the regulations  thereunder,
as amended,  reformed  or  otherwise  modified  and in effect from time to time.
References to sections of the Code shall be construed to also refer to successor
sections.

          Collateral  means all  property  and assets that are from time to time
          ----------
subject to the Security Agreement.

          Commitment   means  the  Tranche  A  Commitments  and  the  Tranche  B
          ----------
Commitments.

          Commitment  Termination  Date means the earliest to occur of (a) April
          -----------------------------
5, 2002 as such date may be extended pursuant to Section 2.17 or (b) the date on
which any Commitment Termination Event occurs.

          Commitment  Termination  Event means (a) the  occurrence  of a Default
          ------------------------------
described in Section 7.1(e) or (b) the  occurrence and  continuance of any other
             --------------
Event of Default  and  either (i) the  Obligations  are  declared  to be due and
payable pursuant to Section 7.2, or (ii) in the absence of such declaration, the
Administrative  Agent,  acting at the direction of the Required  Lenders,  gives
notice to the Borrower that the Commitments have been terminated.

          Compliance  Certificate means a certificate  substantially in the form
          -----------------------
of Exhibit A but with such changes as the Administrative  Agent may from time to
time request for purposes of monitoring the Borrower's compliance herewith.

          Concentration  Limits  means  the  limitations  on  issuers  and other
          ---------------------
investment parameters set forth on Schedule 1.1.
                                   ------------

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          Contingent  Liability means any agreement,  undertaking or arrangement
          ---------------------
by which any  Person  (outside  the  ordinary  course of  business)  guarantees,
endorses,  acts as surety for or otherwise becomes or is contingently liable for
(by direct or indirect agreement,  contingent or otherwise, to provide funds for
payment  by,  to  supply  funds to, or  otherwise  to  invest  in, a debtor,  or
otherwise  to assure a  creditor  against  loss) the Debt,  obligation  or other
liability of any other Person (other than by  endorsements of instruments in the
course of  collection),  or for the payment of dividends or other  distributions
upon the shares of any other Person or  undertakes  or agrees  (contingently  or
otherwise) to purchase,  repurchase,  or otherwise acquire or become responsible
for any Debt,  obligation or liability or any security  therefor,  or to provide
funds  for the  payment  or  discharge  thereof  (whether  in the form of loans,
advances, stock purchases,  capital contributions or otherwise),  or to maintain
solvency,  assets,  level of income,  or other financial  condition of any other
Person,  or to make payment or transfer  property to any other Person other than
for fair value received; provided, however, that obligations of the Borrower and
its  Subsidiaries  under  Reinsurance  Agreements  which are entered into in the
ordinary course of business shall not be deemed to be Contingent Liabilities for
the purposes of this Agreement.  The amount of any Person's obligation under any
Contingent  Liability  shall  (subject to any  limitation  set forth therein) be
deemed to be the outstanding  principal amount (or maximum  permitted  principal
amount,  if larger) of the Debt,  obligation  or other  liability  guaranteed or
supported thereby.

          Contractual  Obligation means, relative to any Person, any obligation,
          -----------------------
commitment or undertaking  under any agreement or other instrument to which such
Person is a party or by which it or any of its property is bound or subject.

          Corporate/Municipal Securities means publicly traded securities (other
          ------------------------------
than preferred stock) issued by a corporation  organized in the United States or
by any state or municipality located in the United States.

          Credit  Documents means this Agreement,  each LC Application,  each LC
          -----------------
Amendment  Application,   the  Security  Agreement  and  all  other  agreements,
instruments,   certificates,  documents,  schedules  or  other  written  indicia
delivered by the Borrower in connection with any of the foregoing.

          Credit  Extension  means the  issuance  of any Letter of Credit or the
          -----------------
amendment  or  extension  of the stated  expiry date of any  existing  Letter of
Credit.

          Custody  Account means account no.  MRLF0010302 at Mellon Bank N.A. as
          ----------------
to which  Mellon Bank N.A. and the  Administrative  Agent have entered into that
certain Control Agreement dated as of February 25, 2000.

                                       7
<PAGE>

          Debt  means,  with  respect  to  any  Person,  at  any  date,  without
          ----
duplication, (a) all obligations of such Person for borrowed money or in respect
of loans or advances;  (b) all  obligations  of such Person  evidenced by bonds,
debentures,  notes or other similar instruments;  (c) all obligations in respect
of letters of credit which have been drawn but not  reimbursed by the Person for
whose account such letter of credit was issued, and bankers'  acceptances issued
for the account of such Person;  (d) all  obligations  in respect of Capitalized
Leases of such  Person;  (e) all net Hedging  Obligations  of such  Person;  (f)
whether  or  not so  included  as  liabilities  in  accordance  with  GAAP,  all
obligations  of such Person to pay the  deferred  purchase  price of property or
services;  (g) Debt of such Person  secured by a Lien on property owned or being
purchased by such Person  (including  Debt arising  under  conditional  sales or
other  title  retention  agreements)  whether  or not such  Debt is  limited  in
recourse; (h) any Debt of another Person secured by a Lien on any assets of such
first Person, whether or not such Debt is assumed by such first Person (it being
understood  that if such Person has not assumed or otherwise  become  personally
liable for any such Debt,  the amount of the Debt of such  person in  connection
therewith shall be limited to the lesser of the face amount of such Debt and the
fair market value of all property of such Person  securing  such Debt);  (i) any
Debt of a partnership in which such Person is a general partner unless such Debt
is nonrecourse to such Person; and (j) all Contingent Liabilities of such Person
whether or not in connection with the foregoing;  provided that, notwithstanding
anything to contrary  contained  herein,  Debt shall not include (x)  contingent
liabilities   arising  out  of  endorsements  of  checks  and  other  negotiable
instruments for deposit or collection in the ordinary course of business or, (y)
unsecured  current  liabilities  incurred in the ordinary course of business and
paid  within 90 days after the due date  (unless  contested  diligently  in good
faith by appropriate  proceedings and, if requested by the Administrative Agent,
reserved  against in conformity with GAAP) other than  liabilities  that are for
money  borrowed or are  evidenced by bonds,  debentures,  notes or other similar
instruments  (except as described in clause (x) above) or (z) any obligations of
such Person under any Reinsurance Agreement.

          Default means any condition or event,  which, after notice or lapse of
          -------
time or both, would constitute an Event of Default.

          Department is defined in Section 4.2.
          ----------               -----------

          Dollar(s)  and the sign "$" means lawful money of the United States of
          ---------                -
America.

          Drawing Request is defined in Section 2.3(a).
          ---------------               --------------

          Drawing Request Date is defined in Section 2.3(a).
          --------------------               --------------

                                       8
<PAGE>

          Eligible Assignee means a Person who is(a) a commercial bank organized
          -----------------
under the laws of the United States, or any state thereof, and having a combined
capital and surplus of at least  $250,000,000;  (b) a commercial  bank organized
under the laws of any other  country which is a member of the  Organization  for
Economic Cooperation and Development (the "OECD"), or a political subdivision of
any such  country,  and  having  a  combined  capital  and  surplus  of at least
$250,000,000,  provided  that  such  bank is  acting  through a branch or agency
located in the United  States;  (c) a Person  that is  primarily  engaged in the
business of commercial banking and that is (i) a Subsidiary of a Lender,  (ii) a
Subsidiary of a Person of which a Lender is a  Subsidiary,  or (iii) a Person of
which a Lender is a  Subsidiary;  or (d) mutual  funds,  pension funds and other
institutional  investors (except an Affiliate of the Borrower) regularly engaged
in the making of commercial loans.

          Eligible  Investments means Cash, Cash  Equivalents,  MBS Investments,
          ---------------------
ABSs,  Corporate/Municipal  Securities,  Government Securities and G7 Securities
which (a) have the required rating as set forth on Schedule 1.2, (b) are capable
                                                   ------------
of being  marked  to market  on a daily  basis  and (c) are held in the  Custody
Account.

          Equity Proceeds means the proceeds of any issuance or sale of stock of
          ---------------
the  Borrower  net  of  attorneys'  fees,   accountants'   fees  and  brokerage,
consultation,  underwriting  and other fees and  expenses  actually  incurred in
connection  with such  issuance  or sale and net of taxes  paid or  payable as a
result thereof.

          ERISA means the Employee  Retirement  Income  Security Act of 1974, as
          -----
amended,  and any  successor  statute  of  similar  import,  together  with  the
regulations promulgated thereunder and under the Code, in each case as in effect
from time to time.  References  to  sections  of ERISA also  refer to  successor
sections.

          Event of Default means any of the events described in Section 7.1.
          ----------------

          Executive  Officer means, as to any Person,  the president,  the chief
          ------------------
financial officer or the chief executive officer.

                                       9
<PAGE>

          Fair Market Value shall mean (a) with  respect to any  publicly-traded
          -----------------
security  (other than those set forth in clause (b)) the closing  price for such
security  on the largest  exchange  on which such  security is traded (or if not
traded on an exchange, then the average of the closing bid and ask prices quoted
over-the-counter)  on the date of the determination (as such prices are reported
in The Wall  Street  Journal  (Midwest  Edition) or if not so  reported,  in any
nationally recognized financial journal or newspaper),  (b) with respect to Cash
and Cash Equivalents,  the amounts thereof, (c) with respect to any Private Fund
Investment,  on any date of calculation,  the amount that would be received with
respect thereto if the entire amount of the applicable  capital or other similar
account  relating  thereto were withdrawn on such date  (regardless of whether a
contractual  right  exists  to make any  withdrawal  on such  date) and (d) with
respect to any  Investment  (other than those set forth in clauses  (a), (b) and
(c)), the price for such  Investment on the date of calculation  obtained from a
generally  recognized  source approved by the  Administrative  Agent or the most
recent bid quotation from such approved  source (or, if no generally  recognized
source exists as to a particular  Investment,  any other source specified by the
Borrower to which the Administrative Agent does not reasonably object).

          Federal  Funds  Rate  means,  for any day,  the rate set  forth in the
          --------------------
weekly   statistical   release   designated  as  H.15(519),   or  any  successor
publication,  published by the Federal  Reserve Bank of New York  (including any
such successor,  "H.15(519)") on the preceding Business Day opposite the caption
"Federal  Funds  (Effective)";  or, if for any  relevant day such rate is not so
published on any such preceding  Business Day, the rate for such day will be the
arithmetic mean as determined by the  Administrative  Agent of the rates for the
last  transaction  in overnight  Federal funds  arranged prior to 9:00 a.m. (New
York City time) on that day by each of three  leading  brokers of Federal  funds
transactions in New York City selected by the Administrative Agent.

          Fee Letter is defined in Section 2.14.
          ----------

          Final  Maturity  Date means the first  anniversary  of the  Commitment
          ---------------------
Termination  Date set forth in clause (a) of the definition  thereof as extended
                               ----------
from time to time pursuant to Section 2.17.
                              ------------

          Fiscal Quarter means any quarter of a Fiscal Year.
          --------------

          Fiscal  Year means any period of twelve  consecutive  calendar  months
          ------------
ending on the last day of December.

          FRB means the Board of Governors of the Federal  Reserve  System,  and
          ---
any Governmental Authority succeeding to any of its principal functions.

          Fronting  Bank means BofA in its  capacity  as an issuer of Letters of
          --------------
Credit in which the Lenders have a Risk Participation.

          G7 Government Securities means any evidence of Debt, maturing not more
          ------------------------
than five years after such time,  issued or guaranteed by any country which is a
member of the G7 other than the United States.

          GAAP means  generally  accepted  accounting  principles set forth from
          ----
time to time in the opinions and  pronouncements  of the  Accounting  Principles
Board and the American  Institute of Certified Public Accountants and statements
and pronouncements of the Financial Accounting Standards Board (or agencies with
similar functions of comparable stature and authority within the U.S. accounting
profession),  which  are  applicable  to the  circumstances  as of the  date  of
determination.

                                       10
<PAGE>

          Governmental  Authority  means any nation or government,  any state or
          -----------------------
other  political  subdivision  thereof,  and any  entity  exercising  executive,
legislative,  judicial,  regulatory or administrative functions of or pertaining
to government.

          Government  Debt means  evidence of Debt issued or  guaranteed  by the
          ----------------
United States Government or any agency thereof.

          Hedging  Obligations  means,  with  respect  to any  Person,  the  net
          --------------------
liability  of such  Person  under  any  futures  contract  or  options  contract
(including  property  catastrophe  futures  and  options),  interest  rate  swap
agreements  and interest  rate collar  agreements  and all other  agreements  or
arrangements  designed  to protect  such  Person  against  catastrophic  events,
fluctuations in interest rates or currency exchange rates.

          Indemnified Liabilities is defined in Section 10.5.
          -----------------------

          Indemnified Person is defined in Section 10.5.
          ------------------               ------------

          Insurance   Code  means,   with   respect  to  the  Borrower  and  its
          ----------------
Subsidiaries,  the  insurance  regulation  of  such  Person's  domicile  and any
successor statute of similar import,  together with the regulations  thereunder,
as amended or otherwise modified and in effect from time to time.  References to
sections of the  Insurance  Code shall be  construed  to also refer to successor
sections.

          Insurance Policies means policies  purchased from insurance  companies
          ------------------
by the Borrower or any of its Subsidiaries for its own account to insure against
its own liability and property loss (including,  without  limitation,  casualty,
liability and workers' compensation insurance).

          Investment  means,  as to any Person,  any  investment  of any Person,
          ----------
whether by means of security purchase, capital contribution,  loan, time deposit
or otherwise, and shall include without limitation Cash and Cash Equivalents.

          Investment Grade Assets means Cash  Equivalents,  Government Debt, MBS
          -----------------------
Investments,  ABSs,  Corporate/Municipal  Securities and G7 Securities which are
rated at least BBB- by S&P or Baa3 by Moody's.

          IRS means the U.S.  Internal  Revenue  Service,  and any  Governmental
          ---
Authority succeeding to any of its principal functions under the Code.

          Issue means,  with respect to any Letter of Credit, to issue, to amend
          -----
or to extend the expiry of, or to renew or  increase  the amount of, such Letter
of Credit;  and the terms "Issued",  "Issuing" and "Issuance" have corresponding
meanings.

                                       11
<PAGE>

          Issuer  means,  with  respect to any  Letter of Credit,  the Person or
          ------
Persons who have issued such Letter of Credit.

          LC Administrator  means BofA's Letter of Credit Operations  located at
          ----------------
231  South  LaSalle  Street,  Chicago,  Illinois  60697,  as  letter  of  credit
administrator  for the Lenders,  together with any replacement LC  Administrator
arising under Section 9.9.

          LC Advance  means each Lender's  participation  in any LC Borrowing in
          ----------
accordance with its Percentage.

          LC Advance Date is defined in Section 2.3(c).
          ---------------               --------------

          LC Amendment Application means an application form for amendment of an
          ------------------------
outstanding  letter  of  credit  as  shall  at  any  time  be in  use  by the LC
Administrator.

          LC Application  means an application form for issuances of a letter of
          --------------
credit as shall at any time be in use by the LC Administrator.

          LC Borrowing  means an extension  of credit  resulting  from a drawing
          ------------
under any Letter of Credit (and, with respect to the Existing Letters of Credit,
each  Lender's  participation  interest  therein)  which  shall  not  have  been
reimbursed by the Borrower on the date when made.

          LC Collateral Account is defined in Section 2.13.
          ---------------------               ------------

          LC Obligations  means, at any time, the sum, without  duplication,  of
          --------------
the Tranche A LC Obligations and the Tranche B LC Obligations.

          LC Related Documents means the Letters of Credit,  the LC Applications
          --------------------
and any other document relating to any Letter of Credit, including any of the LC
Administrator's  standard  form  documents  for  Letter of Credit  issuances  or
amendments.

          Lenders is defined in the Preamble.
          -------                   --------

          Lending Office means, as to any Lender,  the office or offices of such
          --------------
Lender  specified as its "Lending Office" on Schedule 10.2, or such other office
                                             -------------
or offices  as such  Lender may from time to time  notify the  Borrower  and the
Administrative Agent.

          Letter of Credit  means a standby  letter of credit  having  terms and
          ----------------
provisions  which  are  permitted  by this  Agreement  and which  otherwise  are
reasonably satisfactory to the LC Administrator issued pursuant to Section 2.2.
                                                                   -----------

                                       12
<PAGE>

          License(s) is defined in Section 4.10.
          ----------               ------------

          Lien means, when used with respect to any Person,  any interest in any
          ----
real or personal  property,  asset or other right held, owned or being purchased
or acquired  by such  Person for its own use,  consumption  or  enjoyment  which
secures payment or performance of any obligation and shall include any mortgage,
lien,  pledge,  encumbrance,  charge,  retained title of a conditional vendor or
lessor, or other security agreement,  mortgage, deed of trust, chattel mortgage,
assignment,  pledge,  retention  of title,  financing  or similar  statement  or
notice,  or other  encumbrance  arising as a matter of law,  judicial process or
otherwise.

          Margin  Stock  means  "margin  stock"  as  such  term  is  defined  in
          -------------
Regulation U or X of the FRB.

          Material  Adverse Effect means,  the occurrence of an event (including
          ------------------------
any  adverse  determination  in any  litigation,  arbitration,  or  governmental
investigation or proceeding),  which has or could reasonably be expected to have
a materially adverse effect on:

          (a) the assets, business, financial condition,  operation or prospects
     of the Borrower; or

          (b) the ability of the Borrower to perform any of its payment or other
     material obligations under any of the Credit Documents; or

          (c) the legality,  validity,  binding effect or enforceability against
     the Borrower of any Credit  Document that by its terms purports to bind the
     Borrower.

          MBS (Agency Pass-Throughs) means any instrument, issued by the Federal
          --------------------------
National Mortgage  Association,  the Government National Mortgage Association or
the Federal  Home Loan  Mortgage  Corporation,  that  entitles the holder of, or
beneficial owner under, the instrument to the whole or any part of the rights or
entitlements of a mortgagee and any other rights or entitlements in respect of a
pool of mortgages or any money  payable by mortgagors  under those  mortgages in
relation to real estate  mortgages,  and the money  payable to the holder of, or
beneficiary owner under, the instrument is based on actual or scheduled payments
on the underlying mortgages.

          MBS (Agency CMOs) means  collateralized  mortgage  obligations or real
          -----------------
estate mortgage investment conduit pass through  securities,  in any case issued
by the Federal National Mortgage  Association,  the Government National Mortgage
Association or the Federal Home Loan Mortgage Corporation.

                                       13
<PAGE>

          MBS  Investments  means MBS (Agency  CMOs) and MBS  (Non-Agency  CMOs)
          ----------------
which  constitute  TACs,  PACs and  Sequentials  (as such  terms are  defined by
Bloomberg Inc.) and shall not include Support  Tranches (as such term is defined
by Bloomberg Inc.) and MBS (Agency Pass-Throughs). The weighted average duration
of such MBS Investments  shall be less than or equal to seven years. The maximum
weighted average life of any single MBS Investment shall not exceed 12 years. To
the extent MBS  Investments  included within  Eligible  Investments  violate the
restrictions  set forth  herein,  the Fair Market Value of such MBS  Investments
shall be excluded from the Borrowing Base;  provided,  however,  that only those
MBS Investments  having the lowest  aggregate Fair Market Value whose exclusions
will result in compliance shall be excluded from the Borrowing Base.

          MBS  (Non-Agency  CMOs)  means   collateralized   commercial  mortgage
          -----------------------
obligations or commercial real estate mortgage  investment  conduit pass through
securities,  not  issued  by the  Federal  National  Mortgage  Association,  the
Government  National  Mortgage  Association  or the Federal  Home Loan  Mortgage
Corporation.

          Minister   means  the  Minister  of  Finance  of  Bermuda  or  similar
          --------
Governmental Authority in the applicable jurisdiction.

          Moody's means Moody's Investors Service, Inc.
          -------

          Net Worth means,  for any Person,  shareholders  equity  calculated in
          ---------
accordance with GAAP.

          Obligations  means all  obligations and liabilities of the Borrower to
          -----------
the Administrative Agent, the LC Administrator,  the Fronting Bank or any of the
Lenders,  howsoever created,  arising or evidenced,  whether direct or indirect,
absolute or  contingent,  primary or  secondary,  joint or several,  recourse or
nonrecourse or now or hereafter existing or due or to become due, whether for LC
Advances,  interest, fees, expenses,  claims, indemnities or otherwise, under or
in connection with this Agreement, or any other Credit Document.

          Ordinary Course Litigation is defined in Section 4.4.
          --------------------------               -----------

          Organization Documents means, for any corporation,  the certificate or
          ----------------------
articles of  incorporation,  the bylaws,  any  certificate of  determination  or
instrument relating to the rights of preferred shareholders of such corporation,
any shareholder rights agreement, and all applicable resolutions of the board of
directors (or any committee thereof) of such corporation.

          Other Taxes means any present or future stamp or documentary  taxes or
          -----------
any other excise or property  taxes,  charges or similar levies which arise from
any payment made hereunder or from the execution,  delivery or registration  of,
or otherwise with respect to, this Agreement or any other Credit Documents.

          Parent means MaxRe  Capital  Ltd., a Bermuda  company  (f/k/a  Maximus
          ------
Capital Holdings, Ltd.).

                                       14
<PAGE>

          Participants is defined in Section 10.8(d).
          ------------               ---------------

          PBGC means the  Pension  Benefit  Guaranty  Corporation  or any entity
          ----
succeeding to any or all of its functions.

          Percentage  means  as to  any  Lender  at  any  time,  the  percentage
          ----------
equivalent (expressed as a decimal,  rounded to the ninth decimal place) at such
time of such  Lender's  Commitment  divided by the combined  Commitments  of all
Lenders.

          Person  means any  natural  person,  corporation,  partnership,  firm,
          ------
trust,  association,  government,  governmental agency or other entity,  whether
acting in an individual, fiduciary or other capacity.

          Plan means any "employee  pension  benefit plan" or "employee  welfare
          ----
benefit  plan" as such terms are defined in ERISA,  and as to which the Borrower
has or may have any liability,  including any liability by reason of having been
a substantial  employer within the meaning of section 4063 of ERISA for any time
within  the  preceding  five  years  or  by  reason  of  being  deemed  to  be a
contributing sponsor under section 4069 of ERISA.

          Private  Investment  Fund means any  Person  who (a) is an  investment
          -------------------------
vehicle which is not required to be  registered  as an investment  company under
the  Investment  Company Act of 1940, (b) permits  equity  withdrawals  not less
frequently than quarterly,  (c) has Moore Capital  Management Inc. as either its
manager  or  investment  advisor,  (d)  not  less  than  85%  of  such  Person's
investments  are capable of being  marked to market  daily and (e) are held in a
Custody Account.

          Purchase  Money  Debt  means and  includes  (a) Debt  (other  than the
          ---------------------
Obligations)  for the  payment of all or any part of the  purchase  price of any
fixed assets, (b) any Debt (other than the Obligations)  incurred at the time of
or within ten (10) days prior to or after the  acquisition  of any fixed  assets
for the purpose of financing all or any part of the purchase price thereof,  and
(c) any renewals,  extensions, or refinancings thereof, but not any increases in
the principal  amounts  thereof  outstanding at such time,  but  excluding,  for
purposes of this definition, any such Debt constituting a Capitalized Lease.

          Purchase  Money  Lien  means a Lien upon fixed  assets  which  secures
          ---------------------
Purchase Money Debt, but only if such Lien shall at all times be confined solely
to the fixed  assets  the  purchase  price of which  was  financed  through  the
incurrence of the Purchase Money Debt secured by such Lien.

                                       15
<PAGE>

          Reinsurance   Agreements  means  any  agreement,   contract,   treaty,
          ------------------------
certificate or other arrangement whereby the Borrower or any of its Subsidiaries
agrees to assume from or reinsure  another  insurer or reinsurer  all or part of
the  liability  of such  insurer  or  reinsurer  under a policy or  policies  of
insurance issued by such insurer or reinsurer.

          Required Lenders means, at any time,  Lenders then having at least 60%
          ----------------
of the aggregate  amount of the  Commitments  or, if the  Commitments  have been
terminated,  Lenders then holding at least 60% of the then aggregate outstanding
Credit Extensions.

          Requirement of Law for any Person means the Organization  Documents of
          ------------------
such Person, and any law, treaty, rule, ordinance or regulation or determination
of an  arbitrator  or a court  or other  Governmental  Authority,  in each  case
applicable  to or binding  upon such  Person or any of its  property or to which
such Person or any of its property is subject.

          Risk Participation is defined in Section 2.5.
          ------------------               -----------

          SAP means the statutory  accounting  practices prescribed or permitted
          ---
by the  Minister  (or  other  similar  authority)  in  the  Borrower's  or  such
Subsidiary's  domicile  for the  preparation  of  Annual  Statements  and  other
financial reports by insurance  corporations of the same type as the Borrower or
such Subsidiary as the case may be.

          Security  Agreement means the Security  Agreement dated as of February
          -------------------
25, 2000 between the Borrower and the  Administrative  Agent,  as such  Security
Agreement may be amended, modified or supplemented from time to time.

          S&P means  Standard  & Poor's  Ratings  Services,  a  division  of The
          ---
McGraw-Hill Companies, Inc.

          Statutory Financial Statements is defined in Section 4.2(a).
          ------------------------------               --------------

          Subsidiary  means a corporation  of which the indicated  Person and/or
          ----------
its other  Subsidiaries,  individually  or in the  aggregate,  own,  directly or
indirectly,  such  number  of  outstanding  shares  as have  at the  time of any
determination  hereunder  more than 50% of the  ordinary  voting  power.  Unless
otherwise specified, "Subsidiary" shall mean a Subsidiary of the Borrower.

          Taxes  means any and all  present or future  taxes,  levies,  imposts,
          -----
deductions,  charges or withholdings,  and all liabilities with respect thereto,
excluding,  in the case of each Lender and the Administrative  Agent, such taxes
(including  income  taxes or  franchise  taxes) as are imposed on or measured by
each  Lender's  net income by the  jurisdiction  (or any  political  subdivision
thereof) under the laws of which such Lender or the Administrative Agent, as the
case may be, is organized or maintains a lending office.

                                       16
<PAGE>

          Tranche A Borrowing  Base means,  on any date,  an amount equal to the
          -------------------------
sum of the Adjusted Fair Market Value of all Eligible Investments.

          Tranche A Commitment  means, as to any Lender,  the commitment of such
          --------------------
Lender to issue  Tranche A Letters  of Credit  for the  account  of the  Company
pursuant to Section 2.1. The initial  amount of the Tranche A Commitment of each
            -----------
Lender is set forth on Schedule 1.1.
                       ------------

          Tranche  A LC  Obligations  means,  at  any  time,  the  sum,  without
          --------------------------
duplication,  of (a) the  aggregate  undrawn  stated  amount of all  outstanding
Tranche  A Letters  of Credit  plus (b) the  aggregate  unpaid  amount of all LC
Advances with respect to Tranche A Letters of Credit.

          Tranche A Letter of Credit means a Letter of Credit issued pursuant to
          --------------------------
the Tranche A Commitment.

          Tranche B Borrowing Base means,  the sum of (a) 50% of the Fair Market
          ------------------------
Value of all Private Investment Funds plus (b) an amount equal to the difference
between the Tranche A Borrowing Base and the Tranche A LC Obligations.

          Tranche B Commitment  means, as to any Lender,  the commitment of such
          --------------------
Lender to issue  Tranche B Letters  of Credit  for the  account  of the  Company
pursuant to Section 2.1. The initial  amount of the Tranche B Commitment of each
            -----------
Lender is set forth on Schedule 1.1.
                       ------------

          Tranche  B LC  Obligations  means,  at  any  time,  the  sum,  without
          --------------------------
duplication,  of (a) the  aggregate  undrawn  stated  amount of all  outstanding
Tranche  B Letters  of Credit  plus (b) the  aggregate  unpaid  amount of all LC
Advances with respect to Tranche B Letters of Credit.

          Tranche B Letter of Credit means any Letter of Credit issued under the
          --------------------------
Tranche B Commitment.

          Unencumbered  Asset  Reserve  Requirement  is defined in Section  6.2.
          -----------------------------------------                ------------

          Unencumbered  Assets  means  Investment  Grade  Assets of the Borrower
          --------------------
which are not subject to any Liens.

SECTION 1.2    Other Interpretive Provisions.
               -----------------------------

          (a) The  meanings  of  defined  terms are  equally  applicable  to the
     singular and plural forms of the defined terms.

          (b) The words "hereof", "herein",  "hereunder" and similar words refer
     to this  Agreement as a whole and not to any  particular  provision of this
     Agreement; and subsection,  Section, Schedule and Exhibit references are to
     this Agreement unless otherwise specified.

                                       17
<PAGE>

          (c) (i)  The  term  "documents"  includes  any  and  all  instruments,
     documents,   agreements,   certificates,   indentures,  notices  and  other
     writings, however evidenced.

               (ii) The term  "including"  is not limiting and means  "including
          without limitation."

               (iii) In the computation of periods of time from a specified date
          to a later specified date, the word "from" means "from and including";
          the words "to" and "until" each mean "to but excluding",  and the word
          "through" means "to and including."

          (d) Unless  otherwise  expressly  provided  herein,  (i) references to
     agreements  (including  this Agreement) and other  contractual  instruments
     shall  be  deemed  to  include   all   subsequent   amendments   and  other
     modifications  thereto,  but only to the extent such  amendments  and other
     modifications  are not prohibited by the terms of any Credit Document,  and
     (ii)  references  to any  statute  or  regulation  are to be  construed  as
     including all statutory and regulatory provisions consolidating,  amending,
     replacing, supplementing or interpreting the statute or regulation.

          (e) The captions and headings of this Agreement are for convenience of
     reference only and shall not affect the interpretation of this Agreement.

          (f)  This  Agreement  and  other  Credit  Documents  may  use  several
     different  limitations,  tests  or  measurements  to  regulate  the same or
     similar  matters.   All  such  limitations,   tests  and  measurements  are
     cumulative and shall each be performed in accordance with their terms.

          (g) This  Agreement  and the other Credit  Documents are the result of
     negotiations  among and have been reviewed by counsel to the Administrative
     Agent,  the  Borrower  and the other  parties,  and are the products of all
     parties.  Accordingly,  they shall not be construed  against the Lenders or
     the Administrative  Agent merely because of the  Administrative  Agent's or
     Lenders' involvement in their preparation.

SECTION 1.2    Accounting  Principles.  Unless otherwise  defined or the context
               ----------------------
otherwise requires,  all financial and accounting terms used herein or in any of
the Credit  Documents or any  certificate  or other  document  made or delivered
pursuant  hereto shall be defined in accordance with GAAP or SAP, as the context
may require. When used in this Agreement,  the term "financial statements" shall
include the notes and  schedules  thereto.  In addition,  when used herein,  the
terms "best  knowledge  of" or "to the best  knowledge of" any Person shall mean
matters within the actual  knowledge of such Person (or an Executive  Officer of
such  Person) or which  should have been known by such Person  after  reasonable
inquiry.

                                       18
<PAGE>

                                   ARTICLE II.

                         AMOUNT AND TERMS OF COMMITMENT

SECTION 2.1    Letter of Credit Commitment.
               ---------------------------

          (a) Upon and  subject  to the terms  and  conditions  hereof,  (i) the
     Fronting  Bank hereby  agrees to issue  Letters of Credit at the request of
     and for the account of the Borrower from time to time before the Commitment
     Termination  Date and (ii) each Lender  hereby  agrees to issue  Letters of
     Credit at the request of and for the account of the  Borrower  from time to
     time before the Commitment  Termination Date in such Lender's Percentage of
     such aggregate stated amounts of Letters of Credit as the Borrower may from
     time to time request and to purchase Risk Participations in the obligations
     of the Fronting  Bank under  Letters of Credit  Issued by the Fronting Bank
     provided that no Issuer shall be obligated to issue any Letter of Credit if
     as of the date of  issuance  of such  Letter of Credit (A) in the case of a
     Tranche A Letter of Credit, the Tranche A LC Obligations  outstanding shall
     exceed the lesser of (x) the  combined  Tranche A  Commitments  and (y) the
     Tranche A  Borrowing  Base or (B) with  respect to any  Tranche B Letter of
     Credit, the aggregate amount of LC Obligations outstanding shall exceed the
     lesser of (x) the  combined  Tranche B  Commitments  and (y) the  Tranche B
     Borrowing Base.

          (b) No Issuer  shall be under any  obligation  to Issue any  Letter of
     Credit if:

               (i) such issuance would be prohibited under Section 3.2;
                                                           -----------

               (ii) the  Administrative  Agent or LC Administrator  has received
          written notice from the Fronting Bank or the Required Lenders,  as the
          case may be, or the Borrower, on or prior to the Business Day prior to
          the requested  date of Issuance of such Letter of Credit,  that one or
          more of the applicable conditions contained in Section 8.2 is not then
                                                         -----------
          satisfied;

               (iii) the expiry  date of such Letter of Credit is less than five
          Business  Days  prior to the Final  Maturity  Date,  unless all of the
          Lenders have approved such expiry date in writing;

               (iv) in the case of Letters of Credit issued by the Lenders, such
          Letter of Credit is not substantially in the form of Exhibit E hereto,
                                                               ---------
          or is not otherwise in form and substance reasonably acceptable to the
          Administrative  Agent,  the LC  Administrator  and the Fronting  Bank;
          provided that the  Administrative  Agent and the LC Administrator  can
          and will, agree to reasonable changes to such form, not adverse to the
          interests  of  the  Lenders,   requested   by   applicable   insurance
          regulators; or

                                       19
<PAGE>

               (v) such Letter of Credit is denominated in a currency other than
          Dollars.

          (c) The  Letters of Credit  Issued by and the Risk  Participations  of
     each Lender and the reimbursement obligations with respect thereto shall be
     evidenced by one or more  accounts or records  maintained by such Lender in
     the ordinary course of business.  The accounts or records maintained by the
     Administrative  Agent shall be conclusive (absent manifest error) as to the
     amount of the LC Advances  made to the  Borrower  and the Letters of Credit
     Issued  for the  account of the  Borrower,  and the  amounts of  principal,
     interest and fees owing hereunder. Any failure so to record or any error in
     doing so shall not,  however,  limit or otherwise  affect the obligation of
     the  Borrower  hereunder  to pay any amount  owing  with  respect to any LC
     Advance or any Letter of Credit.

SECTION 2.2    Issuance, Amendment and Renewal of Letters of Credit. Each Letter
               ----------------------------------------------------
of Credit shall be Issued upon the  irrevocable  written request of the Borrower
received by the LC  Administrator at least 5 Business Days (or such shorter time
as the Administrative  Agent, the LC Administrator and the Issuer may agree in a
particular  instance in their sole  discretion)  prior to the  proposed  date of
issuance. The LC Administrator shall promptly advise the Administrative Agent of
any such request.  Each such request for issuance of a Letter of Credit shall be
by facsimile, confirmed immediately in an original writing, in the form of an LC
Application,  and  shall  specify  in form  and  detail  satisfactory  to the LC
Administrator:  (i) the proposed date of issuance of the Letter of Credit (which
shall be a Business  Day);  (ii) the face amount of the Letter of Credit;  (iii)
the  expiry  date of the  Letter of  Credit;  (iv) the name and  address  of the
Beneficiary thereof; (v) the documents to be presented by the Beneficiary of the
Letter of Credit in case of any  drawing  thereunder;  (vi) the full text of any
certificate  to  be  presented  by  the  Beneficiary  in  case  of  any  drawing
thereunder;  (vii) whether such Letter of Credit is to be issued by the Fronting
Bank or by the Lenders (it being  agreed that in the event a Lender  advises the
LC Administrator  that such Lender is unable (due to regulatory  restrictions or
other legal impediments) to Issue a Letter of Credit because of its relationship
to the Beneficiary,  such Letter of Credit will be issued by the Fronting Bank);
(viii)  whether such Letter of Credit is to be a Tranche A Letter of Credit or a
Tranche B Letter of Credit;  and (ix) such other matters as the LC Administrator
may require.  The LC Administrator  is hereby  authorized to execute and deliver
each  Letter of Credit to be  Issued  by the  Lenders  on behalf of the  Lenders
provided,  that at the  request of the  Borrower,  such Letter of Credit will be
executed  by each  of the  Lenders.  In the  event  of a  conflict  between  the
provisions of this  Agreement  and the  provisions  of an LC  Application,  this
Agreement shall govern. The LC Administrator  shall use each Lender's Percentage
as its "Commitment Share" under each Letter of Credit Issued by the Lenders. The
LC  Administrator  shall not amend any Letter of Credit Issued by the Lenders to
change  the  "Commitment  Shares"  or add or delete a Lender  liable  thereunder
unless such  amendment  is done in  connection  with an  assignment  pursuant to
Section 10.8 or in connection  with the addition of a Lender pursuant to Section
------------                                                             -------
2.18.
----

                                       20
<PAGE>

          (a) From time to time  while a Letter of  Credit  is  outstanding  and
     prior to the Commitment Termination Date, the Issuer will, upon the written
     request  of the  Borrower  received  by the LC  Administrator  at  least  5
     Business  Days (or such shorter time as the  Administrative  Agent,  the LC
     Administrator  and the Issuer may agree in a  particular  instance in their
     sole discretion) prior to the proposed date of amendment,  amend any Letter
     of Credit Issued by them. The LC  Administrator  shall promptly  advise the
     Administrative  Agent of any such request.  Each such request for amendment
     of a Letter of Credit shall be made by facsimile,  confirmed immediately in
     an original  writing,  made in the form of an LC Amendment  Application and
     shall specify in form and detail satisfactory to the LC Administrator:  (i)
     the Letter of Credit to be amended;  (ii) the proposed date of amendment of
     such Letter of Credit (which shall be a Business Day);  (iii) the nature of
     the proposed amendment; and (iv) such other matters as the LC Administrator
     may  require.  No Issuer shall have any  obligation  to amend any Letter of
     Credit if: (A) such Issuer  would have not been  obligated  at such time to
     Issue or participate in such Letter of Credit in its amended form under the
     terms of this  Agreement;  or (B) the  Beneficiary of such Letter of Credit
     does not accept  the  proposed  amendment  to such  Letter of  Credit.  The
     Lenders and the Fronting  Bank agree,  upon the request of the Borrower and
     as long as no Event of  Default  or  Default  shall  have  occurred  and be
     continuing, to amend any Letter of Credit to extend the expiry date thereof
     to a date not later than the Final Maturity Date. The LC  Administrator  is
     hereby  authorized  to execute and deliver  each  amendment  to a Letter of
     Credit Issued by the Lenders on behalf of the Lenders  provided that,  upon
     request of the Borrower, such amendment will be executed by each Lender.

          (b) The Administrative  Agent shall promptly notify each Lender of the
     receipt of a written  request  from the  Borrower for the issuance of or an
     amendment  to a Letter of Credit and,  with  respect to the  issuance of or
     Risk Participation in a Letter of Credit, the amount of such Lender's share
     of such  Letter of Credit  which  shall equal its  Percentage  thereof.  In
     addition,  at least two Business Days prior to the issuance or amendment of
     any Letter of Credit, the Administrative  Agent will confirm to the Lenders
     (by telephone or in writing) that the  Administrative  Agent has received a
     copy of the LC Application or LC Amendment Application from the Borrower.

          (c) With respect to a request to Issue a Letter of Credit,  unless the
     Administrative   Agent  has  received,   on  or  before  the  Business  Day
     immediately  preceding  the date on which  such  Letter of  Credit  will be
     Issued,  (A) notice from the Fronting Bank or the Required Lenders,  as the
     case may be, or the  Borrower  directing  the  Administrative  Agent not to
     permit the issuance of such Letter of Credit  because such  issuance is not
     then  permitted  under Section  2.1(a) as a result of the  limitations  set
                            ---------------
     forth  therein  or (B) a notice  described  in  Section  2.1(b)(ii),  then,
                                                     -------------------
     subject to the terms and conditions hereof, the LC Administrator  shall, on
     the requested  date,  cause a Letter of Credit to be Issued by the Fronting
     Bank or by the Lenders in accordance  with their  Percentages,  as the case
     may  be,  for  the  account  of the  Borrower  in  accordance  with  the LC
     Administrator's usual and customary business practices. (1)

                                       21
<PAGE>

          (d) The LC Administrator  may, at its election (or at the direction of
     the Administrative Agent, the Fronting Bank or the Required Lenders, as the
     case may be), deliver any notices of termination or other communications to
     any  Beneficiary or  transferee,  and take any other action as necessary or
     appropriate,  at any  time and from  time to  time,  in order to cause  the
     expiry  date of such  Letter of Credit to be a date not later than the five
     Business Days prior to the Final Maturity Date.

          (e) This Agreement shall control in the event of any conflict with any
     LC Related Document (other than any Letter of Credit).

          (f) The LC  Administrator,  concurrently  or  promptly  following  the
     delivery of a Letter of Credit,  or  amendment to or renewal of a Letter of
     Credit, to a Beneficiary,  shall send to the  Administrative  Agent and the
     Lenders a true and complete copy of each such Letter of Credit or amendment
     to or renewal of a Letter of Credit. After giving effect to the Issuance of
     any  Letter of  Credit,  there  shall be no more than 25  Letters of Credit
     outstanding.

SECTION 2.3    Drawings and Reimbursements.
               ---------------------------

          (a)  With   respect  to  each  Letter  of  Credit  for  which  the  LC
     Administrator  receives  a  request  for a  drawing  which  is in form  and
     substance  reasonably  satisfactory  to the LC  Administrator  (a  "Drawing
                                                                         -------
     Request"),  if such Drawing Request is received prior to 10:00 a.m (Chicago
     -------
     time) on any Business Day, such Business Day shall be the "Drawing  Request
                                                                ----------------
     Date" and if such  Drawing  Request is received  after  10:00 a.m  (Chicago
     time) on any Business Day, the following Business Day shall be the "Drawing
                                                                         -------
     Request Date." Upon receiving a Drawing Request, the LC Administrator shall
     ------------
     promptly  notify the Borrower of such Drawing  Request (which notice may be
     oral if immediately confirmed in writing (including by facsimile)) and upon
     receipt of such  notification,  the Borrower shall  promptly  reimburse the
     Administrative Agent on behalf of the Issuer for the amount of such drawing
     by delivering to the LC  Administrator  in immediately  available funds the
     amount of the Drawing  Request.  Nothing  herein  stated  shall be deemed a
     waiver by the Lenders of the obligation of the Borrower to make such prompt
     reimbursement.   To  the  extent   that  funds  are   received  by  the  LC
     Administrator  prior to 3:00 p.m.  (Chicago time) on the first Business Day
     after the Drawing Request Date, the LC  Administrator  shall  promptly,  on
     behalf  of  the  Issuer,   make  an  equivalent  amount  available  to  the
     Beneficiary  of the  related  Letter of Credit on such first  Business  Day
     after the Drawing Request Date and shall  reimburse  itself for such amount
     with the funds provided by the Borrower.

                                       22
<PAGE>

          (b) With  respect to any Drawing  Request,  if  immediately  available
     funds are not received by the LC  Administrator  from the Borrower prior to
     3:00 p.m.  (Chicago  time) on the  first  Business  Day  after the  Drawing
     Request Date in the amount of such Drawing  Request,  the LC  Administrator
     shall promptly notify the Administrative Agent and the Administrative Agent
     shall  notify  each  Lender on the  first  Business  Day after the  Drawing
     Request  Date of such  Drawing  Request  and  such  Lender's  share of such
     Drawing  Request  (which  shall be an  amount  equal  to (i) such  Lender's
     Percentage multiplied by the lesser of (ii)(A) the maximum amount available
     to be drawn under such Letter of Credit and (B) the amount of such  drawing
     which was not  reimbursed by the Borrower  pursuant to Section  2.3(a)) and
                                                            ---------------
     the Borrower shall be deemed to have requested an LC Borrowing in an amount
     equal  to the  amount  of such  drawing  which  was not  reimbursed  by the
     Borrower pursuant to Section.3(a).  Any notice given by the  Administrative
     Agent  to the  Lenders  pursuant  to  this  Section  2.3(b)  may be oral if
                                                 ---------------
     immediately  confirmed in writing  (including by facsimile);  provided that
     (i) the  failure  of the  Administrative  Agent to give any such  notice in
     sufficient  time to enable  any Lender to effect  such  payment at the time
     required  under  Section  2.3(c) or (ii) the failure of the  Administrative
                      ---------------
     Agent to deliver an immediate  confirmation of such notice shall not affect
     the  conclusiveness  or binding effect of such notice or relieve any Lender
     from its obligations under this Section 2.3.
                                     -----------

          (c) Upon receiving a Drawing Request, each Lender shall make available
     to the  Administrative  Agent for the  account of LC  Administrator  at the
     Administrative  Agent's  Payment  Office  by 3:00  p.m.  (Chicago  time) in
     immediately  available  funds on the second  Business Day after the Drawing
     Request Date (such date,  an "LC Advance  Date") its share of such request;
                                   ----------------
     provided  that in the case of a Letter  of Credit  issued  by the  Fronting
     Bank, if a Lender shall fail to make such funds so available,  the Fronting
     Bank shall make such funds  available.  Upon  delivering  such funds to the
     Administrative  Agent pursuant to this Section 2.3(c),  such Lender (or the
                                            --------------
     Fronting Bank, if the Fronting Bank has made such funds available after the
     failure of such Lender to do so) shall be deemed to have made an LC Advance
     to the Borrower in such amount.  To the extent that  immediately  available
     funds are received by the  Administrative  Agent from the Lenders  prior to
     3:00 p.m. (Chicago time) on any LC Advance Date, the  Administrative  Agent
     shall notify the LC Administrator  and the LC Administrator  shall promptly
     make such funds  available  to the  Beneficiary  of the  related  Letter of
     Credit  on such  date.  To the  extent  that the LC  Administrator  has not
     delivered  funds to any  Beneficiary on behalf of a Lender  pursuant to the
     first sentence of Section 2.3(d) and that  immediately  available funds are
                       -------------
     received by the Administrative  Agent from such Lender: (i) after 3:00 p.m.
     on any LC  Advance  Date,  the  LC  Administrator  shall  make  such  funds
     available to such  Beneficiary  on the next Business Day following  such LC
     Advance  Date;  (ii) prior to 3:00 p.m.  on any  Business  Day after the LC
     Advance Date, the LC Administrator shall make those funds available to such
     Beneficiary on such Business Day; and (iii) after 3:00 p.m. on any Business
     Day after the LC Advance Date, the LC Administrator  shall make those funds
     available  to such  Beneficiary  on the next  Business Day  following  such
     Business Day.

                                       23
<PAGE>

          (d)  Unless  the  Administrative  Agent or LC  Administrator  receives
     notice from a Lender prior to any LC Advance Date that such Lender will not
     make available as and when required hereunder to the  Administrative  Agent
     for the account of the Borrower  the amount of such  Lender's LC Advance on
     such LC Advance Date, the Administrative Agent and the LC Administrator may
     assume   that  such  Lender  has  made  such   amount   available   to  the
     Administrative Agent in immediately  available funds on the LC Advance Date
     and the LC Administrator may (but shall not be required),  in reliance upon
     such assumption, make available to the Beneficiary of the related Letter of
     Credit on such date such Lender's LC Advance.  If and to the extent (i) any
     Lender shall not have made its full amount available to the  Administrative
     Agent in immediately  available funds and (ii) the LC Administrator in such
     circumstances has made available to the Beneficiary such amount,  then such
     Lender shall, on the Business Day following such LC Advance Date, make such
     amount  available  to the  Administrative  Agent,  together  with  interest
     thereon until the date made available (i) at the Federal Funds Rate for the
     period  ending two Business Days after such LC Advance Date and (ii) at the
     Base Rate plus 2.00% thereafter;  provided,  however,  that if a Lender has
     failed to make such an amount  available with respect to a Letter of Credit
     issued by the  Fronting  Bank,  the  Fronting  Bank shall make such  amount
     available.  If the Fronting Bank shall fail to make such amount  available,
     it shall pay such interest to the LC Administrator and if a Lender fails to
     make such amount  available,  it shall pay such  interest  to the  Fronting
     Bank.  A notice of the  Administrative  Agent  submitted  to a Lender  with
     respect to amounts owing under Section 2.3(b) shall be  conclusive,  absent
                                    --------------
     manifest error. If such amount is so made available, together with interest
     thereon,  such payment to the  Administrative  Agent shall  constitute such
     Lender's  LC  Advance  on the LC  Advance  Date  for all  purposes  of this
     Agreement.  If such amount,  together  with interest  thereon,  is not made
     available to the Administrative  Agent on the Business Day following the LC
     Advance  Date,  the  Administrative  Agent will notify the Borrower of such
     failure to fund and, upon demand by the Administrative  Agent, the Borrower
     shall   pay  such   amount   to  the   Administrative   Agent  for  the  LC
     Administrator's  account,  together  with  interest  thereon  for  each day
     elapsed since the date of such LC Borrowing,  at a rate per annum equal the
     Base Rate plus 2.00%.

          (e) The failure of any Lender to make any LC Advance on any LC Advance
     Date shall not relieve any other Lender of any obligation hereunder to make
     an LC Advance on such LC  Advance  Date,  and  neither  the  Administrative
     Agent,  the LC  Administrator  nor any Lender shall be responsible  for the
     failure of any other Lender to make any LC Advance on any LC Advance  Date.
     Each  Lender's  obligation  in  accordance  with this  Agreement to make LC
     Advances,  as  contemplated  by this  Section 2.3, as a result of a drawing
                                           -----------
     under a Letter of Credit,  shall be absolute and  unconditional and without
     recourse  to  the  Administrative  Agent,  the  Fronting  Bank  or  the  LC
     Administrator and shall not be affected by any circumstance,  including (i)
     any set-off,  counterclaim,  recoupment,  defense or other right which such
     Lender may have against the Administrative Agent, the LC Administrator, the
     Fronting Bank, the Borrower or any other Person for any reason  whatsoever;
     (ii) the occurrence or continuance of an Event of Default,  an Default or a
     Material  Adverse  Effect;  or (iii) any other  circumstance,  happening or
     event whatsoever,  whether or not similar to any of the foregoing; provided
                                                                        --------
     the LC  Administrator  shall exercise the same care in examining  documents
     and  determining  whether  or not to honor a  Drawing  Request  as it would
     exercise if the LC  Administrator  had Issued such Letter of Credit for its
     own account.  Nothing contained in this Agreement,  and no actions taken by
     the Lenders, the LC Administrator,  the Fronting Bank or the Administrative
     Agent  pursuant  hereto or in  connection  with a Letter of Credit shall be
     deemed to  constitute  the  Lenders,  together  or with the  Administrative
     Agent,  the  Fronting  Bank  and  the  LC  Administrator,   a  partnership,
     association, joint venture or other entity.

                                       24
<PAGE>

SECTION 2.4    Repayment  of LC  Advances.  Upon (and only upon)  receipt by the
               --------------------------
Administrative  Agent  of  immediately  available  funds  from the  Borrower  in
repayment  of any LC  Advances,  the  Administrative  Agent (i) shall deduct and
retain from such  repayment an amount not to exceed the  aggregate  unreimbursed
payments, if any, which were made by the LC Administrator  pursuant to the first
sentence of Section 2.3(d),  and then (ii) shall pay to each Lender, in the same
            --------------
funds as those received by the Administrative Agent, such Lender's Percentage of
any funds remaining after giving effect to clause (i) above;  provided,  that if
the Fronting  Bank has advanced  funds on behalf of a Lender,  the Fronting Bank
shall be repaid out of such funds in full  before any  payment  shall be made to
such  Lender.  The  Borrower  shall  repay any LC  Advances  on the date such LC
Advances were made.

SECTION 2.5    Role of the Lenders.  Each Lender and the Borrower agree that, in
               -------------------
paying any drawing under a Letter of Credit,  neither the LC  Administrator  nor
any Issuer shall have any  responsibility to obtain any document (other than any
sight draft and certificate  expressly  required by such Letter of Credit) or to
ascertain or inquire as to the validity or accuracy of any such  document or the
authority of the Person executing or delivering any such document; provided that
the LC  Administrator  and the  Issuers  shall  exercise  that  standard of care
customarily  exercised by them in the review and  processing  of drawings  under
letters of credit issued by them..

          (a)   No   Agent-Related   Person   nor   any  of   their   respective
     correspondents,  participants  or  assignees  shall be liable to any Lender
     for: (i) any action taken or omitted in connection  herewith at the request
     or with the approval of the Lenders  (including  the Required  Lenders,  as
     applicable);  (ii) any  action  taken or  omitted  in the  absence of gross
     negligence   or   willful   misconduct;   or  (iii)   the  due   execution,
     effectiveness, validity or enforceability of any LC Related Document.

          (b) The Borrower  hereby assumes all risks of the acts or omissions of
     any  Beneficiary  or  transferee  with  respect to its use of any Letter of
     Credit;  provided  that this  assumption is not intended to, and shall not,
              --------
     preclude the  Borrower's  pursuing  such rights and remedies as it may have
     against the Beneficiary or transferee at law or under any other  agreement.
     Neither any  Agent-Related  Person,  any Issuer nor any of their respective
     correspondents,  participants  or assignees  shall be liable or responsible
     for any of the matters  described  in clauses (i) through  (vii) of Section
                                           -----------          ----     -------
     2.6;   provided   that,   anything   in  such   clauses  to  the   contrary
     ---    --------
     notwithstanding,  the Borrower may have a claim against the  Administrative
     Agent or LC Administrator, and the Administrative Agent or LC Administrator
     may be liable to the Borrower,  to the extent,  but only to the extent,  of
     any direct,  as opposed to consequential or exemplary,  damages suffered by
     the  Borrower  which  the  Borrower,  in a final  judgment  of a  court  of
     competent jurisdiction,  proves were caused primarily by the Administrative
     Agent's or LC Administrator's willful misconduct or gross negligence or the
     LC Administrator's  willful failure to pay under any Letter of Credit after
     the   presentation   to  it  by  the  Beneficiary  of  a  sight  draft  and
     certificate(s)  strictly  complying  with the terms and  conditions of such
     Letter of Credit.  In  furtherance  and not in limitation of the foregoing:
     (i) the LC Administrator  may accept documents that appear on their face to
     be in order,  without  responsibility for further  investigation;  and (ii)
     neither the LC  Administrator  nor any Issuer shall be responsible  for the
     validity or  sufficiency  of any  instrument  transferring  or assigning or
     purporting  to  transfer  or assign a Letter  of  Credit  or the  rights or
     benefits  thereunder or proceeds  thereof,  in whole or in part,  which may
     prove to be invalid or ineffective for any reason.

                                       25
<PAGE>

          (c) Concurrently  with the issuance by the Fronting Bank of any Letter
     of Credit and any amendment  thereto,  the Fronting Bank shall be deemed to
     have sold and transferred to each other Lender, and each other Lender shall
     be deemed  irrevocably and  unconditionally  to have purchased and received
     from the Fronting Bank, without recourse or warranty, an undivided interest
     and participation (a "Risk Participation"),  to the extent of such Lender's
     Percentage,  in such  Letter of  Credit  and the  Borrower's  reimbursement
     obligations with respect thereto.

SECTION 2.6    Obligations Absolute.  The obligations of the Borrower under this
               --------------------
Agreement and any LC Related Document to reimburse the Administrative Agent, the
LC Administrator, the Fronting Bank and the Lenders for a drawing under a Letter
of Credit and to repay any LC Borrowing shall be unconditional  and irrevocable,
and shall be paid  strictly in accordance  with the terms of this  Agreement and
each such other  L/C-Related  Document  under all  circumstances,  including the
following:

               (i) any lack of validity or  enforceability  of this Agreement or
          any LC Related Document;

               (ii) any change in the time, manner or place of payment of, or in
          any other term of, all or any of the  obligations  of the  Borrower in
          respect of any Letter of Credit or any other amendment or waiver of or
          any consent to departure from all or any of the LC Related Documents;

               (iii) the existence of any claim, set-off, defense or other right
          that the Borrower may have at any time against any  Beneficiary or any
          transferee  of any  Letter of Credit  (or any Person for whom any such
          Beneficiary or any such transferee may be acting),  the Administrative
          Agent,  the LC  Administrator,  the Fronting  Bank,  any Lender or any
          other  Person,   whether  in  connection  with  this  Agreement,   the
          transactions contemplated hereby or by the LC Related Documents or any
          unrelated transaction;

                                       26
<PAGE>

               (iv) any draft,  demand,  certificate or other document presented
          under any Letter of Credit proving to be forged,  fraudulent,  invalid
          or insufficient  in any respect or any statement  therein being untrue
          or inaccurate in any respect; or any loss or delay in the transmission
          or otherwise of any document required in order to make a drawing under
          any Letter of Credit;

               (v) any payment by the Issuers under any Letter of Credit against
          presentation  of a draft or certificate  that does not strictly comply
          with the terms of such Letter of Credit;  or any  payment  made by the
          Issuers  under any Letter of Credit to any Person  purporting  to be a
          trustee in bankruptcy, debtor-in-possession,  assignee for the benefit
          of  creditors,  liquidator,  receiver  or other  representative  of or
          successor  to any  Beneficiary  or any  transferee  of any  Letter  of
          Credit,  including  any  arising  in  connection  with any  Insolvency
          Proceeding;

               (vi) any exchange,  release or  non-perfection of any collateral,
          or any release or amendment or waiver of or consent to departure  from
          any  guarantee,  for all or any of the  obligations of the Borrower in
          respect of any Letter of Credit; or

               (vii) any other circumstance or happening whatsoever,  whether or
          not similar to any of the foregoing,  including any other circumstance
          that might otherwise constitute a defense available to, or a discharge
          of, the Borrower or a guarantor.

SECTION 2.7    Existing Letters of Credit.  On an after the Amendment  Effective
               --------------------------
Date, the Existing Letters of Credit shall be deemed for all purposes, including
for  purposes  of  the  fees  to be  collected  pursuant  to  Section  2.14  and
reimbursement  of costs and expenses to the extent  provided  herein,  Tranche A
Letters of Credit Issued by the Fronting Bank  outstanding  under this Agreement
and entitled to the benefits of this  Agreement and the other Credit  Documents,
and shall be governed by the applications and agreements  pertaining thereto and
by this  Agreement.  Each Lender shall be deemed to, and hereby  irrevocably and
unconditionally  agrees to,  purchase  from the Fronting  Bank on the  Amendment
Effective Date, without recourse or warranty, an undivided Risk Participation in
each such Existing Letter of Credit and the Borrower's  reimbursement obligation
with respect thereto in an amount equal to such Lender's Percentage.

SECTION 2.8    Applicability of ISP98. Unless otherwise agreed by the Issuer and
               ----------------------
the Borrower when a Letter of Credit is issued and subject to  applicable  laws,
the rules of the  "International  Standby  Practices 1998" (ISP98) or such later
revision as may be  published  by the  International  Chamber of Commerce  shall
apply to each  Letter of Credit;  provided,  that with  respect to the  Existing
Letters of Credit,  such Letters of Credit shall be governed by the rules of the
International Chamber of Commerce set forth therein.

SECTION 2.9    Interest.  LC  Advances  shall  bear  interest  (after as well as
               --------
before  entry  of  judgment  thereon  to the  extent  permitted  by  law) on the
outstanding  principal  amount  thereof from the applicable LC Advance Date at a
rate per annum  equal to the Base Rate plus 2.00% and shall be  immediately  due
and  payable.  To the extent that any LC Advances are made on an LC Advance Date
pursuant  to Section  2.3(c) and such LC Advances  are repaid  with  immediately
             ---------------
available  funds by the  Borrower  on the LC  Advance  Date  prior to 1:00  p.m.
(Chicago time), no interest shall be payable on such LC Advances.

                                       27
<PAGE>

          (a) Anything herein to the contrary  notwithstanding,  the obligations
     of the Borrower to any Lender  hereunder shall be subject to the limitation
     that  payments of interest  shall not be required  for any period for which
     interest is computed  hereunder to the extent (but only to the extent) that
     contracting  for or receiving such payment by such Lender would be contrary
     to the provisions of any law applicable to such Lender limiting the highest
     rate of interest that may be lawfully  contracted for,  charged or received
     by such  Lender,  and in such  event the  Borrower  shall  pay such  Lender
     interest at the highest rate permitted by applicable law. (1)

SECTION 2.10   Payments by the Borrower.
               ------------------------

          (a) All  payments  to be made by the  Borrower  shall be made  without
     set-off, recoupment or counterclaim. Except as otherwise expressly provided
     herein,  all payments by the Borrower  shall be made to the  Administrative
     Agent for the account of the Lenders at the Administrative  Agent's Payment
     Office, and shall be made in dollars and in immediately available funds, no
     later than 1:00 p.m. (Chicago time) on the date specified herein. Except as
     otherwise expressly provided herein, the Administrative Agent will promptly
     distribute, in like funds as received, to each Lender its Percentage of any
     portion of such payment.  Any payment received by the Administrative  Agent
     later than 1:00 p.m.  (Chicago  time) shall be deemed to have been received
     on the  following  Business  Day and any  applicable  interest or fee shall
     continue to accrue.

          (b)  Whenever  any payment is due on a day other than a Business  Day,
     such  payment  shall be made on the  following  Business  Day (unless  such
     following  Business Day is the first Business Day of a calendar  month,  in
     which case such payment shall be made on the preceding  Business  Day), and
     such extension of time shall in such case be included in the computation of
     interest or fees, as the case may be.

          (c) Unless the Administrative  Agent receives notice from the Borrower
     prior to the date on  which  any  payment  is due to the  Lenders  that the
     Borrower  will not make  such  payment  in full as and when  required,  the
     Administrative  Agent may assume that the Borrower has made such payment in
     full to the  Administrative  Agent on such  date in  immediately  available
     funds and the Administrative  Agent may (but shall not be so required),  in
     reliance upon such  assumption,  distribute to each Lender on such due date
     an amount  equal to the amount then due such  Lender.  If and to the extent
     the Borrower has not made such payment in full to the Administrative Agent,
     each Lender shall repay to the  Administrative  Agent on demand such amount
     distributed to such Lender,  together with interest  thereon until the date
     repaid (i) at the Federal Funds Rate for period commencing on the date such
     amount is  distributed  to such Lender and ending two days after  demand by
     the  Administrative  Agent for such  amount  and (ii) at the Base Rate plus
     2.00% thereafter.

                                       28
<PAGE>

SECTION 2.11   Warranty.  The  delivery  of each  Letter of  Credit  Application
               --------
pursuant  to Section 2.3 and each  request  for  amendment  or  extension  of an
             -----------
existing  Letter of Credit  shall  automatically  constitute  a warranty  by the
Borrower to the  Administrative  Agent and each Lender to the effect that on the
date of such requested  Credit Extension that the conditions of Section 8.2 have
                                                                -----------
been satisfied.

SECTION 2.12   Termination or Reduction of  Commitments.  The Borrower may, upon
               ----------------------------------------
not less than five  Business  Days' prior  notice to the  Administrative  Agent,
terminate the Commitments, or permanently reduce the Commitments by an aggregate
minimum  amount of  $5,000,000  or any  multiple of $500,000 in excess  thereof;
unless,   after  giving  effect   thereto  and  to  any   prepayments   or  cash
collateralization  of LC  Obligations  to be made on the effective date thereof,
the  then-outstanding  LC  Obligations  would  exceed the amount of the combined
Commitments  then in effect.  Once reduced in accordance with this Section,  the
Commitments  may not be  increased.  Any reduction of the  Commitments  shall be
applied to each Lender according to its Percentage;  provided that the Tranche A
Commitment  may not be reduced to an amount  less than five times the  Tranche B
Commitment.

SECTION 2.13   Mandatory Reduction/Cash Collateralization of Letters of Credit.
               ---------------------------------------------------------------

          (a) If on any day (i) the Tranche A LC Obligations exceed the combined
     Tranche A Commitments  on such day or the Tranche A LC  Obligations  exceed
     the Tranche A Borrowing  Base on such day, the Borrower  shall  immediately
     deposit into the Custody Account Eligible Investments or reduce the Tranche
     A LC  Obligations,  or  a  combination  of  the  foregoing,  in  an  amount
     sufficient  to eliminate  such excess or (ii) the Tranche B LC  Obligations
     exceed the combined  Tranche B Commitments  on such day or the Tranche B LC
     Obligations  exceed the Tranche B Borrowing  Base on such day, the Borrower
     shall immediately deposit into the Custody Account Private Fund Investments
     or reduce the Tranche B LC Obligations,  or a combination of the foregoing,
     in an amount sufficient to eliminate such excess.

          (b)  On  the  Final  Maturity  Date  or,  if  earlier,  the  date  the
     Obligations  are  accelerated  pursuant to Section 7.2, and until the final
                                                -----------
     expiration  date of any  Letter of  Credit  and  thereafter  so long as any
     Obligations  are payable  hereunder,  the Borrower shall  immediately  cash
     collateralize  such Letters of Credit with Cash and Cash  Equivalents in an
     amount equal to 102% of the  outstanding LC Obligations and such collateral
     shall be placed in a special  collateral  account  pursuant to arrangements
     satisfactory to the Administrative  Agent (the "LC Collateral  Account") at
                                                     ----------------------
     the Administrative Agent's office in the name of the Borrower but under the
     sole dominion and control of the  Administrative  Agent, for the benefit of
     the LC  Administrator  and the  Lenders  and  the  Borrower  shall  have no
     interest  therein  except as set forth in Section 7.3. The Borrower  hereby
                                               -----------
     pledges, assigns and grants to the Administrative Agent, for the benefit of
     the LC  Administrator  and the Lenders,  a security  interest in all of the
     Borrower's right,  title and interest in and to the LC Collateral  Account,
     all funds and Cash Equivalents which may from time to time be on deposit in
     the LC  Collateral  Account to secure the prompt and  complete  payment and
     performance of the  Obligations.  The  Administrative  Agent may invest any
     funds on  deposit  from time to time in the LC  Collateral  Account in Cash
     Equivalents  having a maturity not exceeding 30 days.  Funds earned on such
     Cash Equivalents shall be deposited into the LC Collateral Account.

                                       29
<PAGE>

SECTION 2.14   Fees.
               ----

          (a) Agency  Fees.  The Borrower  shall pay fees to the  Administrative
              ------------
     Agent for the Administrative Agent's own account, as required by the letter
     agreement ("Fee Letter") between the Borrower and the Administrative  Agent
     dated March 28, 2001 and as the Borrower and the  Administrative  Agent may
     agree from time to time.

          (b) Non-Use Fees. The Borrower shall pay to the  Administrative  Agent
              ------------
     for the  account of each Lender a non-use  fee on the actual  daily  unused
     portion of such  Lender's  Commitment,  computed  on a  quarterly  basis in
     arrears on the last  Business Day of each  calendar  quarter based upon the
     daily  utilization  for that quarter as  calculated  by the  Administrative
     Agent, equal to (i) 0.15% per annum in the case of the Tranche A Commitment
     and (ii)  0.30% per annum in the case of the  Tranche  B  Commitment.  Such
     non-use  fee  shall  accrue  from  the  Amendment  Effective  Date  to  the
     Commitment  Termination  Date and  shall be due and  payable  quarterly  in
     arrears  on the  last  Business  Day of each  March,  June,  September  and
     December  commencing  on June 30, 2001 through the  Commitment  Termination
     Date, with the final payment to be made on the Commitment Termination Date.
     The non-use fees  provided in this Section  shall accrue at all times after
     the above-mentioned  commencement date,  including at any time during which
     one or more conditions in Article VIII are not met.

          (c) Letter of Credit Fees.
              ---------------------

               (i) The Borrower  shall pay to the  Administrative  Agent for the
          account  of each  Lender a letter  of  credit  fee for each  Letter of
          Credit requested by the Borrower in an amount per annum of the average
          maximum  stated  amount of such  Letter of Credit  during  such period
          (less any LC  Advance  with  respect  thereto)  equal to (x) 0.45% per
          annum  with  respect  to Tranche A Letters of Credit and (y) 0.90% per
          annum with  respect to  Tranche B Letters  of Credit.  Such  letter of
          credit fees shall be  computed on a quarterly  basis in arrears on the
          last  Business  Day of each  calendar  quarter,  and  shall be due and
          payable  quarterly in arrears on the last  Business Day of each March,
          June,  September and December  commencing on June 30, 2001 through the
          Final  Maturity  Date with the final  payment  to be made on the Final
          Maturity Date.

                                       30
<PAGE>

               (ii) In addition, with respect to each Letter of Credit issued by
          the  Fronting  Bank,  the Borrower  shall pay to the  Fronting  Bank a
          fronting  fee in an amount  per annum on the  average  maximum  stated
          amount of such  Letter  of  Credit  during  such  period  (less any LC
          Advance with respect thereto) equal to 0.125% per annum. Such fronting
          fees shall be  computed  on a  quarterly  basis in arrears on the last
          Business  Day of each  calendar  quarter  and shall be due and payable
          quarterly  in arrears on the last  Business  Day of each March,  June,
          September  and December  commencing on June 30, 2001 through the Final
          Maturity Date with the final payment to be made on the Final  Maturity
          Date.

               (iii)  In  addition,  with  respect  to  each  Letter  of  Credit
          requested by the Borrower or any amendment or extension  thereof,  the
          Borrower agrees to pay to the LC Administrator  such fees and expenses
          as the LC  Administrator  customarily  requires in connection with the
          issuance,   amendment,   transfer,   negotiation,   processing  and/or
          administration of letters of credit.

          (d) Upfront Fees. On the Amendment  Effective Date, the Borrower shall
              ------------
     pay to each  Lender  such  upfront  fees as may have been  agreed to by the
     Borrower and such Lender. (1)

SECTION 2.15   Computation of Fees and Interest.
               --------------------------------

          (a) All  computations  of fees shall be made on the basis of a 360-day
     year and actual days elapsed.  Interest on LC Advances shall be computed on
     the basis of a 365/366-day year and actual days elapsed.  Interest and fees
     shall  accrue  during each period  during  which  interest or such fees are
     computed from the first day thereof to the last day thereof.

          (b) Each determination of an interest rate by the Administrative Agent
     shall be  conclusive  and  binding on the  Borrower  and the Lenders in the
     absence of manifest error.

          (c) Anything herein to the contrary  notwithstanding,  the obligations
     of the Borrower to any Lender  hereunder shall be subject to the limitation
     that  payments of interest  shall not be required  for any period for which
     interest is computed hereunder, to the extent (but only to the extent) that
     contracting  for or receiving such payment by such Lender would be contrary
     to the provisions of any law applicable to such Lender limiting the highest
     rate of interest that may be lawfully  contracted for,  charged or received
     by such  Lender,  and in such  event the  Borrower  shall  pay such  Lender
     interest at the highest rate permitted by applicable law.

SECTION 2.16   Sharing of Payments,  Etc.  If, other than as expressly  provided
               -------------------------
elsewhere  herein,  any Lender shall obtain on account of the LC Obligations any
payment (whether  voluntary,  involuntary,  through the exercise of any right of
set-off,  or  otherwise)  in  excess  of  its  Percentage,   such  Lender  shall
immediately (a) notify the  Administrative  Agent of such fact, and (b) purchase
from the other Lenders such  participations  in the Obligations  held by them as
shall be necessary to cause such  purchasing  Lender to share the excess payment
pro rata with each of them;  provided,  however,  that if all or any  portion of
                             --------   -------
such excess payment is thereafter  recovered from the  purchasing  Lender,  such
purchase  shall to that extent be rescinded and each other Lender shall repay to
the purchasing Lender the purchase price paid therefor,  together with an amount
equal to such paying Lender's  ratable share (according to the proportion of (i)
the amount of such paying Lender's  required  repayment to (ii) the total amount
so recovered from the purchasing Lender) of any interest or other amount paid or
payable by the  purchasing  Lender in respect of the total amount so  recovered.
The Borrower agrees that any Lender so purchasing a  participation  from another
Lender may, to the fullest extent  permitted by law,  exercise all its rights of
payment  (including  the right of set-off,  but  subject to Section  10.10) with
                                                            --------------
respect  to such  participation  as fully  as if such  Lender  were  the  direct
creditor of the Borrower in the amount of such participation. The Administrative
Agent will keep records (which shall be conclusive and binding in the absence of
manifest error) of participations  purchased under this Section and will in each
case notify the Lenders following any such purchases or repayments.

                                       31
<PAGE>

SECTION 2.17   Commitment Termination Date Extension.
               --------------------------------------

          (a) The Borrower may, by notice to the Administrative  Agent given not
     more  than 60 days and not less  than 45 days  prior to the then  scheduled
     Commitment Termination Date, request that the Lenders extend the Commitment
     Termination  Date  for  364  days  after  the  then  scheduled   Commitment
     Termination  Date and extend the Final Maturity Date for one year after the
     then scheduled Final Maturity Date. The  Administrative  Agent shall notify
     the  Lenders  of  its  receipt  of  any  notice  (the  "Extension   Request
                                                             -------------------
     Date")given pursuant to this Section 2.17(a) within two Business Days after
     ----
     the  Administrative  Agent's  receipt  thereof.  Each Lender (a "Consenting
                                                                      ----------
     Lender") may, by irrevocable  notice to the Borrower and the Administrative
     ------
     Agent delivered to the Borrower and the Administrative Agent not later than
     45 days after the Extension Request Date (the "Consent Period"), consent to
                                                    --------------
     such  extension of the Commitment  Termination  Date and the Final Maturity
     Date, which consent may be given or withheld by each Lender in its absolute
     and sole discretion.  Subject to Section 2.17(c), any such extensions shall
                                      ---------------
     take effect on and as of the then scheduled Commitment Termination Date.

          (b)  Withdrawing  Lenders.  No extension  pursuant to Section  2.17(a)
               --------------------                             ----------------
     shall be effective with respect to a Lender tha-t either (i) by a notice (a
     "Withdrawal  Notice")  delivered  to the  Borrower  and the  Administrative
      ------------------
     Agent,  declines to consent to such extension or (ii) has failed to respond
     to the Borrower  and the  Administrative  Agent  within the Consent  Period
     (each such  Lender  giving a  Withdrawal  Notice or failing to respond in a
     timely manner being "Withdrawing Lender").
                          ------------------

          (c)  Replacement  of Withdrawing  Lender.  The Borrower shall have the
               -----------------------------------
     right during the 60 day period  following the end of the Consent  Period to
     replace the Withdrawing  Lender with an existing Lender or a new Lender who
     consents  to  the  extension  of  the   Commitment   Termination   Date  (a
     "Replacement  Lender").  In the event the  Borrower  has not  replaced  the
      -------------------
     Withdrawing  Lender within said 60 day period, the Borrower may request the
     Consenting  Lenders  to  reduce  the  Commitments  by  the  amount  of  the
     Withdrawing Lender's Commitment and extend the Commitment  Termination Date
     and the Final  Maturity Date which consent may be given or withheld by each
     Consenting  Lender  in  its  sole  discretion.  In  the  event  all  of the
     Consenting  Lenders agree to such reduction and extension then,  subject to
     compliance  with  Section 2.2, on and as of the then  scheduled  Commitment
                       -----------
     Termination  Date (x) the Commitment shall be reduced by an amount equal to
     the Commitment of the unreplaced  Withdrawing  Lender, (y) such Withdrawing
     Lender  shall  cease  to be a  Lender  under  this  Agreement  and  (z) the
     Commitment  Termination Date and the Final Maturity Date shall be extended.
     In the event the  Withdrawing  Lender has not been  replaced  or all of the
     Consenting  Lenders  have not  consented  to  reduction  of the  Commitment
     pursuant to this Section 2.17(c),  the Commitment  Termination Date and the
                      ---------------
     Final Maturity Date shall not be extended.

                                       32
<PAGE>

          (d) Assignment by Withdrawing  Lender.  A Withdrawing  Lender shall be
     obliged,  at the request of the  Borrower  and  subject to the  Withdrawing
     Lender  receiving  payment  in full of all  amounts  owing to it under this
     Agreement concurrently with the effectiveness of an assignment,  to assign,
     without  recourse or warranty and by an Assignment and  Acceptance,  all of
     its rights and obligations hereunder to any Replacement Lender nominated by
     the  Borrower  and willing to accept such  assignment;  provided  that such
                                                             --------
     assignee  satisfies  all  the  requirements  of  this  Agreement  and  such
     assignment is consented to by the Administrative Agent, which consent shall
     not be withheld or delayed unreasonably.

          (e) Scheduled Commitment Termination Date. If the scheduled Commitment
              -------------------------------------
     Termination  Date and the Final  Maturity  Date shall have been extended in
     respect of Consenting Lenders and any Replacement Lender in accordance with
     Section 2.17(a), all references herein to the "Commitment Termination Date"
     ---------------
     and the "Final  Maturity  Date" shall refer to the  Commitment  Termination
     Date or the Final Maturity Date as so extended.

SECTION 2.18   Optional  Increase in LC  Commitments.  The  Borrower  may at any
               -------------------------------------
time,  by  means  of a  letter  to the  Administrative  Agent  and  each  Lender
substantially  in the form of Exhibit F, request  that the Lenders  increase the
                              ---------
combined  Commitments by $10,000,000 or an even multiple thereof;  provided that
                                                                   --------
(i) such letter shall be  accompanied  by a  certificate  of the Secretary or an
Assistant  Secretary of the Borrower as to resolutions of the board of directors
of the Borrower  approving such  increase,  (ii) in no event shall the aggregate
amount of the combined Commitments exceed $500,000,000 (or such lesser amount as
determined  pursuant Section 2.12) to without the written consent of all Lenders
                     ------------
and (iii) such increase shall either be an increase of the Tranche A Commitments
or shall be a pro rata increase of the Tranche A  Commitments  and the Tranche B
Commitments.  Each  Lender  shall  have the  option  (in its  sole and  complete
discretion) to subscribe for its  proportionate  share (or more or less than its
proportionate   share)  of  such  increase,   according  to  its   then-existing
Percentage.  Each  Lender  shall  respond to the  Borrower's  request  within 20
Business  Days by submitting a response in the form of Attachment 1 to Exhibit F
                                                                       ---------
to the  Administrative  Agent (and any Lender not responding  within such period
shall be deemed to have declined such  request).  At the option of the Borrower,
any part of the proposed increase not proportionately subscribed may be assumed,
within 10  Business  Days  after  all  Lenders  have  responded  to (or,  by not
responding,  are deemed to have declined) such request,  by one or more existing
Lenders and/or by one or more Persons meeting the  qualifications of an Eligible
Assignee,  in amounts which are acceptable to the Borrower;  it being understood
that any assumption by a Person which is not an existing Lender shall be subject
to consent of the Administrative  Agent (which consent shall not be unreasonably
withheld or delayed)  provided  that after giving  effect to any such  increase,
each Lender shall have the same  percentage  under the Tranche A Commitments and
the Tranche B Commitments.  Any increase in the combined Commitments pursuant to
this  Section  2.18 shall  become  effective on the earliest to occur of (a) the
      -------------
date on which the proposed  increase has been fully subscribed and (b) the date,
which shall not be earlier than the date on which all Lenders have  responded to
(or are deemed to have  declined)  the  Borrower's  request for an increase,  on
which the Borrower notifies the  Administrative  Agent that the Borrower accepts
an increase in the  combined  Commitments  which is less than the full amount of
the requested  increase.  The  Administrative  Agent shall  promptly  notify the
Borrower  and  the  Lenders  of any  increase  in  the  amount  of the  combined
Commitments  pursuant to this Section 2.18 and of the  Commitment and Percentage
                              ------------
of each Lender after giving effect thereto.

                                       33
<PAGE>

                                  ARTICLE III.

                     TAXES, YIELD PROTECTION AND ILLEGALITY

SECTION 3.1    Taxes.
               -----

          (a) Any and all payments by the Borrower to each Lender,  the Fronting
     Bank or the Administrative  Agent under this Agreement and any other Credit
     Document  shall  be made  free and  clear  of,  and  without  deduction  or
     withholding  for any Taxes  except as  required by law.  In  addition,  the
     Borrower shall pay all Other Taxes.

          (b)  The  Borrower  agrees  to  indemnify  and  hold  harmless  the LC
     Administrator,  the Fronting Bank, each Lender and the Administrative Agent
     for the full amount of Taxes or Other Taxes  (including  any Taxes or Other
     Taxes imposed by any  jurisdiction  on amounts  payable under this Section)
     paid by the Lenders,  the Fronting Bank or the Administrative Agent and any
     liability (including  penalties,  interest,  additions to tax and expenses)
     arising  therefrom  or with respect  thereto,  whether or not such Taxes or
     Other  Taxes  were  correctly  or  legally  asserted.  Payment  under  this
     indemnification  shall be made  within 30 days after the date such  Lender,
     the  Fronting  Bank  or  the  Administrative  Agent  makes  written  demand
     therefor.

          (c) If the Borrower shall be required by law to deduct or withhold any
     Taxes or Other Taxes from or in respect of any sum payable hereunder to any
     Lender, the Fronting Bank or the Administrative  Agent,  provided that such
     Person has provided the forms required in Section 9.10, then:
                                               ------------

                                       34
<PAGE>

               (i) the sum payable shall be increased as necessary so that after
          making all required deductions and withholdings  (including deductions
          and  withholdings  applicable  to  additional  sums payable under this
          Section) such Lender, the Fronting Bank or the  Administrative  Agent,
          as the case may be,  receives an amount equal to the sum it would have
          received had no such deductions or withholdings been made;

               (ii) the Borrower shall make such deductions and withholdings;

               (iii) the Borrower shall pay the full amount deducted or withheld
          to the relevant taxing authority or other authority in accordance with
          applicable law; and

               (iv) the  Borrower  shall  also pay,  without  duplication,  each
          Lender, the Fronting Bank or the Administrative  Agent for the account
          of such Person,  at the time interest is paid, all additional  amounts
          which such Person  specifies as  reasonably  necessary to preserve the
          after-tax yield such Person would have received if such Taxes or Other
          Taxes had not been imposed.

          (d) Within 30 days after the date of any  payment by the  Borrower  of
     Taxes or Other Taxes, the Borrower shall furnish the  Administrative  Agent
     the original or a certified copy of a receipt  evidencing  payment thereof,
     or other evidence of payment satisfactory to the Administrative Agent.

          (e) If the  Borrower  is  required  to pay  additional  amounts to any
     Lender, the Fronting Bank or the  Administrative  Agent pursuant to Section
     3.1(c),  then such Person shall use  reasonable  efforts  (consistent  with
     legal and  regulatory  restrictions)  to  change  the  jurisdiction  of its
     Lending  Office  so as to  eliminate  any such  additional  payment  by the
     Borrower  which may  thereafter  accrue,  if such change in the judgment of
     such Person is not otherwise disadvantageous to such Person or inconsistent
     with such Person's internal policies.

          (f) If the  Administrative  Agent,  the  Fronting  Bank or any  Lender
     receives a refund in respect of Taxes or Other  Taxes paid by the  Borrower
     pursuant  to this  Section  3.1,  which in the good faith  judgment of such
     Person is allocable to such payment,  it shall  promptly pay such refund to
     the Borrower,  net of all out-of-pocket expenses of such Person incurred in
     obtaining  such refund,  provided,  however,  that the  Borrower  agrees to
     promptly return such refund to the applicable  Person if it receives notice
     from such Person that such Person is required to repay such refund. Nothing
     contained  herein shall require the  Administrative  Agent or any Lender to
     make its tax returns (or any other information  relating to its taxes which
     it deems confidential) available to the Borrower.

                                       35
<PAGE>

SECTION 3.2    Illegality.
               ----------

          (a)  If  the  Fronting  Bank  or  any  Lender   determines   that  the
     introduction of any Requirement of Law, or any change in any Requirement of
     Law, or in the  interpretation or administration of any Requirement of Law,
     in each  case  after the date  hereof,  has made it  unlawful,  or that any
     central  bank or  other  Governmental  Authority  has  asserted  that it is
     unlawful,  for the Fronting  Bank or any Lender or its  applicable  Lending
     Office to make or  participate  in any Credit  Extensions,  then, on notice
     thereof by the  Fronting  Bank or such Lender to the  Borrower  through the
     Administrative  Agent, the obligation of all Lenders to make or participate
     in Credit  Extensions  shall be suspended  until the Fronting  Bank or such
     Lender  notifies  the  Administrative  Agent  and  the  Borrower  that  the
     circumstances giving rise to such determination no longer exist.

          (b) Before  giving any notice to the  Administrative  Agent under this
     Section,  the  Fronting  Bank or the  affected  Lender  shall  designate  a
     different  Lending  Office with  respect to its Credit  Extensions  if such
     designation  will  avoid the need for  giving  such  notice or making  such
     demand  and will  not,  in the  judgment  of such  Person,  be  illegal  or
     otherwise disadvantageous to such Person or inconsistent with such Person's
     internal policies.

SECTION 3.3    Increased Costs and Reduction of Return.
               ---------------------------------------

          (a) If the Fronting Bank or any Lender  determines that, due to either
     (i) the  introduction of or any change in or in the  interpretation  of any
     law or  regulation,  in each  case  after  the  date  hereof,  or (ii)  the
     compliance  by the  Fronting  Bank or Lender with any  guideline or request
     from any  central  bank or other  Governmental  Authority  (whether  or not
     having the force of law) after the date hereof, there shall be any increase
     in the cost to the  Fronting  Bank or such  Lender of  agreeing  to make or
     making,  funding or maintaining  any Credit  Extensions,  then the Borrower
     shall be liable for, and shall from time to time,  upon demand (with a copy
     of  such  demand  to be  sent  to  the  Administrative  Agent),  pay to the
     Administrative  Agent for the account of the Fronting  Bank or such Lender,
     additional  amounts as are  sufficient to  compensate  such Lender for such
     increased costs;  provided that, to the extent such increased costs are not
     specifically  related to the Obligations,  the Fronting Bank or such Lender
     is charging  such amounts to its customers on a  non-discriminatory  basis,
     provided  further  that the  Borrower  shall  not be  obligated  to pay any
     additional  amounts which were incurred by the Fronting Bank or such Lender
     more than 90 days prior to the date of such request.

          (b) If the Fronting Bank or any Lender shall have  determined that (i)
     the introduction of any Capital Adequacy Regulation, (ii) any change in any
     Capital  Adequacy  Regulation,  (iii) any change in the  interpretation  or
     administration  of any Capital  Adequacy  Regulation by any central bank or
     other   Governmental   Authority   charged  with  the   interpretation   or
     administration  thereof,  or (iv)  compliance  by the Fronting Bank or such
     Lender (or its Lending Office) or any corporation  controlling the Fronting
     Bank or such  Lender  with any Capital  Adequacy  Regulation,  in each case
     after the date  hereof,  affects  or would  affect  the  amount of  capital
     required or expected to be  maintained  by the Fronting Bank or such Lender
     or any corporation controlling the Fronting Bank or such Lender and (taking
     into   consideration   the  Fronting   Bank's  or  such  Lender's  or  such
     corporation's  policies  with respect to capital  adequacy and the Fronting
     Bank's or such  Lender's  desired  return on capital)  determines  that the
     amount of such capital is increased or its rate of return is decreased as a
     consequence of its Commitment, Credit Extensions, or obligations under this
     Agreement,  then,  upon demand of the  Fronting  Bank or such Lender to the
     Borrower  through the  Administrative  Agent, the Borrower shall pay to the
     Fronting  Bank or such  Lender,  from  time  to  time as  specified  by the
     Fronting Bank or such Lender,  additional  amounts sufficient to compensate
     the Fronting  Bank or such Lender for such  increase;  provided that to the
     extent  such  increased   costs  are  not   specifically   related  to  the
     Obligations,  the Fronting  Bank or such Lender is charging such amounts to
     its  customers on a  non-discriminatory  basis,  provided  further that the
     Borrower  shall not be obligated to pay any  additional  amounts which were
     incurred by the Fronting Bank or such Lender more than 90 days prior to the
     date of such request.

                                       36
<PAGE>

SECTION 3.4    Certificates  of Lenders.  Any Person claiming  reimbursement  or
               -------------------------
compensation  under this Article III shall deliver to the Borrower  (with a copy
                         -----------
to the  Administrative  Agent) a certificate  setting forth in reasonable detail
the amount  payable  to such  Person  hereunder  and such  certificate  shall be
conclusive and binding on the Borrower in the absence of manifest error.

SECTION 3.5    Substitution  of Lenders.  Upon the receipt by the Borrower  from
               ------------------------
the  Fronting  Bank  or  any  Lender  (an  "Affected  Lender")  of a  claim  for
compensation  under  Section 3.1,  3.2 or 3.3 the Borrower  may: (a) request the
Affected  Lender to use its reasonable  efforts to obtain a replacement  bank or
financial institution  satisfactory to the Borrower to acquire and assume all or
a ratable part of all of such Affected Lender's Credit Extensions and Commitment
(a  "Substitute  Lender");  (b) request one more of the other Lenders to acquire
and  assume  all or  part  of  such  Affected  Lender's  Credit  Extensions  and
Commitment;  or (c) designate a Substitute  Lender.  Any such  designation  of a
Substitute  Lender under clause (a) or (b) shall be subject to the prior written
consent of the  Administrative  Agent (which  consent shall not be  unreasonably
withheld).

SECTION 3.6    Survival.  The agreements and obligations of the Borrower in this
               --------
Article III shall survive the payment of all other Obligations.

                                   ARTICLE IV.

                         REPRESENTATIONS AND WARRANTIES

          To induce the Lenders to enter into this  Agreement and to make Credit
Extensions hereunder, the Borrower represents and warrants to each Lender that:

                                       37
<PAGE>

SECTION 4.1    Due  Organization,  Authorization,  etc. The Borrower and each of
               ---------------------------------------
its Subsidiaries  (a) is a company duly organized,  validly existing and in good
standing  under  the  laws of its  jurisdiction  of  incorporation,  (b) is duly
qualified  to do  business  and in good  standing  in each  jurisdiction  where,
because of the nature of its activities or  properties,  such  qualification  is
required  except where the failure to qualify would not have a Material  Adverse
Effect,  which jurisdictions are set forth with respect to the Borrower and each
of its Subsidiaries on Schedule 4.1 as revised from time to time by the Borrower
                       ------------
pursuant to Section  5.1(m),  (c) has the requisite  company power and authority
            ---------------
and the  right to own and  operate  its  properties,  to lease the  property  it
operates  under  lease,  and to conduct its  business as now and  proposed to be
conducted,  and (d) has  obtained all material  licenses,  permits,  consents or
approvals  from or by, and has made all filings with,  and given all notices to,
all Governmental  Authorities  having  jurisdiction,  to the extent required for
such  ownership,  operation  and conduct  (including,  without  limitation,  the
consummation of the  transactions  contemplated by this Agreement) as to each of
the  foregoing,  except  where the  failure  to do so would not have a  Material
Adverse Effect. The execution,  delivery and performance by the Borrower of this
Agreement  and the  consummation  of the  transactions  contemplated  hereby and
thereby are within its  corporate  powers and have been duly  authorized  by all
necessary corporate action (including, without limitation, shareholder approval,
if  required).  The  Borrower  has  received  all other  material  consents  and
approvals (if any shall be required) necessary for such execution,  delivery and
performance,  and such  execution,  delivery and performance do not and will not
contravene  or conflict  with, or create a Lien (other than pursuant to the Loan
Documents) or right of termination or acceleration under, any Requirement of Law
or Contractual Obligation binding upon the Borrower.  This Agreement and each of
the Credit  Documents  is (or when  executed and  delivered  will be) the legal,
valid, and binding obligation of the Borrower  enforceable  against the Borrower
in  accordance  with its  respective  terms subject to  bankruptcy,  insolvency,
fraudulent  transfer,  reorganization,  moratorium  and similar  laws of general
applicability  relating to or  affecting  creditors'  rights and general  equity
principles.

SECTION 4.2    Litigation  and Contingent  Liabilities.  (a) Except as set forth
               ---------------------------------------
(including  estimates of the dollar amounts involved) in Schedule 4.2 hereto and
(b) except for claims  which are covered by  Insurance  Policies,  coverage  for
which has not been denied in writing, or which relate to Reinsurance  Agreements
issued by the  Borrower or its  Subsidiaries  or to which it is a party  entered
into by the  Borrower or its  Subsidiaries  in the  ordinary  course of business
(referred  to herein as  "Ordinary  Course  Litigation"),  no claim,  litigation
                          ----------------------------
(including, without limitation,  derivative actions), arbitration,  governmental
investigation  or  proceeding  or inquiry is pending or, to the knowledge of the
Borrower,  threatened  against the Borrower or its Subsidiaries (i) which would,
if adversely determined, have a Material Adverse Effect or (ii) which relates to
any of the transactions  contemplated  hereby. Other than any liability incident
to such claims,  litigation or  proceedings,  the Borrower and its  Subsidiaries
have no material Contingent Liabilities.

                                       38
<PAGE>

SECTION 4.3    Employee Benefit Plans. The Borrower has no Plans.
               ----------------------

SECTION 4.4    Regulated  Entities.  Neither  Parent  nor  the  Borrower  is  an
               -------------------
"investment company" or a company "controlled by an investment company," for the
purpose of the Investment  Company Act of 1940, as amended.  The Borrower is not
subject to regulation  under the Public Utility Holding Act of 1935, the Federal
Power Act, the Interstate  Commerce Act, any public utilities code, or any other
Requirement of Law limiting its ability to incur Debt.

SECTION 4.5    Regulations U and X. The Borrower is not engaged principally,  or
               -------------------
as one of its important activities,  in the business of extending credit for the
purpose of  purchasing  or carrying  margin  stock.  None of the  Borrower,  any
Affiliate  or any Person  acting on its behalf has taken or will take  action to
cause the execution,  delivery or performance of this  Agreement,  the making or
existence  of the  Credit  Extensions  or  the  use of  proceeds  of the  Credit
Extensions to violate Regulations U or X of the FRB.

SECTION 4.6    Proceeds.  Letters of Credit issued hereunder will be used solely
               --------
to secure the Borrower's obligations under Reinsurance  Agreements.  None of the
proceeds of such Letters of Credit will be used in violation of applicable  law,
and none of such proceeds will be used, directly or indirectly, for the purpose,
whether  immediate,  incidental  or  ultimate,  of buying or carrying any margin
stock as defined in Regulation U of the FRB.

SECTION 4.7    Business Locations.  Schedule 4.7 as revised from time to time by
               ------------------
the Borrower  pursuant to Section  5.1(m) lists each of the locations  where the
                                   ------
Borrower and its Subsidiaries maintain an office, a place of business.

SECTION 4.8    Accuracy  of  Information.   All  factual   written   information
               -------------------------
furnished  heretofore  or  contemporaneously  herewith  by or on  behalf  of the
Borrower or Parent to the Administrative Agent or the Lenders for purposes of or
in  connection  with  this  Agreement  or any of the  transactions  contemplated
hereby,  as  supplemented  to the date  hereof,  is and all other  such  factual
written  information  hereafter  furnished  by or on behalf of the  Borrower  or
Parent to the Administrative  Agent or the Lenders will be, true and accurate in
every  material  respect  on the date as of which such  information  is dated or
certified and not incomplete by omitting to state any material fact necessary to
make such information not misleading under the circumstances in which given.

SECTION 4.9    Subsidiaries.  The Borrower has no Subsidiaries  other than those
               ------------
specified on Schedule 4.9.

SECTION 4.10   Insurance Licenses. Schedule 4.10 as revised from time to time by
               ------------------
the Borrower  pursuant to Section 5.1(m) lists all of the jurisdictions in which
                          --------------

                                       38
<PAGE>

the Borrower and its Subsidiaries hold licenses (including,  without limitation,
licenses or certificates of authority from  applicable  insurance  departments),
permits  or  authorizations  to  transact  insurance  and  reinsurance  business
(collectively,  the  "Licenses").  Except as set forth on Schedule  4.10, to the
                      --------                            --------------
best of the Borrower's knowledge, no such License is the subject of a proceeding
for suspension or revocation or any similar proceedings, there is no sustainable
basis for such a suspension or revocation,  and no such suspension or revocation
is threatened by the  Department.  Schedule 4.10 as revised from time to time by
the Borrower pursuant to Section 5.1(m) indicates the line or lines of insurance
                         --------------
which the  Borrower  and its  Subsidiaries  is  permitted  to be engaged in with
respect to each  License  therein  listed.  Neither the  Borrower nor any of its
Subsidiaries  transact any insurance  business,  directly or indirectly,  in any
jurisdiction  other than those  enumerated on Schedule 4.10 as revised from time
                                              -------------
to time by the Borrower  pursuant to Section 5.1(m) hereto,  where such business
                                     --------------
requires  that the  Borrower  or any of its  Subsidiaries  obtain  any  license,
permit, governmental approval, consent or other authorization.

SECTION 4.11   Taxes.  The  Borrower  and its  Subsidiaries  have  filed  by the
               -----
required  filing date all tax returns  that are  required to be filed by it, and
has paid or provided  adequate  reserves for the payment of all material  taxes,
including,   without  limitation,  all  payroll  taxes  and  federal  and  state
withholding taxes, and all assessments payable by it that have become due, other
than (a) those that are not yet delinquent and are being contested in good faith
by  appropriate  proceedings  and with  respect  to  which  reserves  have  been
established,  and are being  maintained,  in  accordance  with GAAP or (b) those
which the failure to file or pay would not have a Material  Adverse  Effect.  On
the Amendment Effective Date there is no ongoing audit by a taxing authority or,
to the  Borrower's  knowledge,  other  governmental  investigation  of  the  tax
liability of the Borrower and there is no unresolved claim by a taxing authority
concerning the  Borrower's tax liability,  for any period for which returns have
been filed or were due. As used in this Section 4.11, the term "taxes"  includes
                                        ------------
all taxes of any nature whatsoever and however denominated,  including,  without
limitation,  excise, import, governmental fees, duties and all other charges, as
well as  additions  to tax,  penalties  and  interest  thereon,  imposed  by any
government or instrumentality,  whether federal, state, local, foreign or other.

SECTION 4.12   Securities Laws.  Neither the Borrower nor any Affiliate,  nor to
               ---------------
the  Borrower's  knowledge  anyone  acting  on behalf  of any such  Person,  has
directly or  indirectly  offered any  interest in the Credit  Extensions  or any
other  Obligation  for sale to,  or  solicited  any  offer to  acquire  any such
interest  from, or has sold any such interest to any Person that would cause the
issuance or sale of the Credit  Extensions to be required to be registered under
the Securities Act of 1933, as amended.

SECTION 4.13   Compliance  with  Laws.  Neither  the  Borrower  nor  any  of its
               ----------------------
Subsidiaries is in violation of any law,  ordinance,  rule,  regulation,  order,
policy, guideline or other requirement of any Governmental Authority,  where the
effect of such violation could reasonably be expected to have a Material Adverse
Effect on the Borrower  and, to the best of the  Borrower's  knowledge,  no such
violation has been alleged and the Borrower and each of its Subsidiaries (i) has
filed in a timely manner all reports,  documents and other materials required to
be filed by it with any Governmental Authority, if such failure to so file could
reasonably be expected to have a Material  Adverse  Effect;  and the information
contained in each of such filings is true,  correct and complete in all material
respects and (ii) has retained all records and documents required to be retained
by it pursuant to any law, ordinance, rule, regulation, order, policy, guideline
or other requirement of any Governmental  Authority, if the failure to so retain
such  records  and  documents  could  reasonably  be expected to have a Material
Adverse Effect.

                                       40
<PAGE>

SECTION 4.14   Financial   Condition.   The   audited   consolidated   financial
               ---------------------
statements  of the Borrower as at December  31, 2000,  copies of which have been
delivered to the Lenders,  are true and correct in all material  respects,  have
been  prepared in  accordance  with GAAP  consistently  applied  throughout  the
periods  involved   (except  as  disclosed   therein)  and  present  fairly  the
consolidated  financial  condition of the Borrower and its  Subsidiaries at such
date and the result of its operations for the periods then ended.

SECTION 4.15   Insurance  Act. The  Borrower  has not received any  direction or
               --------------
other notification by the Minister pursuant to Section 32 of Insurance Act, 1978
of Bermuda.

SECTION 4.16   First Priority Security Interest.  The Administrative  Agent, for
               --------------------------------
the benefit of the Lenders,  has a first priority perfected security interest in
the collateral pledged by the Borrower pursuant to the Security Agreement.

                                   ARTICLE V.

                              AFFIRMATIVE COVENANTS

          Until the LC Obligations  and all other  Obligations are paid in full,
and until the Final Maturity Date, the Borrower agrees that,  unless at any time
the Required Lenders shall otherwise expressly consent in writing, it will:

SECTION 5.1    Reports, Certificates and Other Information.  Furnish or cause to
               -------------------------------------------
be furnished to the Administrative Agent and the Lenders:

          (a) GAAP Financial Statements:
              -------------------------

               (i)  Within 45 days  after  the close of each of the first  three
          Fiscal Quarters of each Fiscal Year (A) of the Borrower, a copy of the
          unaudited   consolidated  balance  sheets  of  the  Borrower  and  its
          Subsidiaries,  as of  the  close  of  such  quarter  and  the  related
          statements  of income  and cash  flows for that  portion of the Fiscal
          Year ending as of the close of such Fiscal  Quarter,  all  prepared in
          accordance  with GAAP  (subject to normal  year-end  adjustments)  and
          accompanied  by  the  certification  of an  Executive  Officer  of the
          Borrower that all such  financial  statements are complete and correct
          and present fairly in accordance with GAAP (subject to normal year-end
          adjustments) the consolidated  results of operations and cash flows of
          the Borrower and its Subsidiaries as at the end of such Fiscal Quarter
          and for the  period  then ended and (B) of the  Parent,  a copy of the
          unaudited consolidated and consolidating balance sheets of the Parent,
          as of the  close of such  quarter  and the  related  consolidated  and
          consolidating  statements of income and cash flows for that portion of
          the Fiscal  Year ending as of the close of such  Fiscal  Quarter,  all
          prepared  in  accordance   with  GAAP  (subject  to  normal   year-end
          adjustments)  and  accompanied  by the  certification  of an Executive
          Officer of the Parent that all such financial  statements are complete
          and correct and present  fairly in  accordance  with GAAP  (subject to
          normal year-end  adjustments) the  consolidated  results of operations
          and cash flows of the Parent as at the end of such Fiscal  Quarter and
          for the period then ended.

                                       45
<PAGE>

               (ii)  Within 90 days after the close of each  Fiscal  Year (A) of
          the  Borrower,  a copy of the annual  audited  consolidated  financial
          statements of the Borrower and its Subsidiaries  consisting of balance
          sheets and statements of income and retained  earnings and cash flows,
          setting  forth in  comparative  form in each case the  figures for the
          previous Fiscal Year, which financial  statements shall be prepared in
          accordance with GAAP, certified without material qualification by KPMG
          Peat  Marwick  or any  other  firm  of  independent  certified  public
          accountants of recognized  national  standing selected by the Borrower
          and  reasonably  acceptable  to the  Required  Lenders  that  all such
          financial  statements  are complete and correct and present  fairly in
          accordance  with  GAAP  the  financial  position  and the  results  of
          operations and cash flows of the Borrower and its  Subsidiaries  as at
          the end of such  year and for the  period  then  ended  and (B) of the
          Parent,  a copy of the  annual  audited  financial  statements  of the
          Parent consisting of consolidated and consolidating balance sheets and
          consolidated  and  consolidating  statements  of income  and  retained
          earnings and cash flows,  setting  forth in  comparative  form in each
          case  the  figures  for the  previous  Fiscal  Year,  which  financial
          statements  shall be  prepared  in  accordance  with  GAAP,  certified
          without material  qualification by KPMG Peat Marwick or any other firm
          of independent  certified  public  accountants of recognized  national
          standing  selected  by the Parent  and  reasonably  acceptable  to the
          Required  Lenders that all such financial  statements are complete and
          correct  and  present  fairly in  accordance  with GAAP the  financial
          position and the results of operations and cash flows of the Parent as
          at the end of such year and for the period then ended.

          (b) Tax Returns.  If requested by the Administrative  Agent, copies of
              -----------
     all federal, state, local and foreign tax returns and reports in respect of
     income, franchise or other taxes on or measured by income (excluding sales,
     use or like taxes) filed by the Borrower and its Subsidiaries.

          (c) SAP Financial Statements.  Within 5 days after the date filed with
              -------------------------
     the Minister for each of its Fiscal Years, but in any event within 120 days
     after the end of each  Fiscal  Year of the  Borrower  a copy of the  Annual
     Statement of the Borrower and each of its Subsidiaries for such Fiscal Year
     prepared in accordance with SAP and accompanied by the  certification of an
     Executive Officer of the Borrower that such financial statement is complete
     and  correct  and  presents  fairly in  accordance  with SAP the  financial
     position of the Borrower or such Subsidiary for the period then ended.

                                       42
<PAGE>

          (d)  Monthly  Report  and  Borrowing  Base  Certificate.  As  soon  as
               --------------------------------------------------
     available,  but in any event within 10 days after the end of each  calendar
     month of each Fiscal  Year,  (i) a report  listing  each of the  Borrower's
     Eligible  Investments and Private Fund  Investments,  (ii) a report listing
     each of Borrower's  Unencumbered  Assets and calculating  the  Unencumbered
     Asset Reserve  Requirement and (iii) a Borrowing Base Certificate  executed
     by an Executive Officer.  For purposes of such report and of completing the
     Borrowing  Base  Certificate,  each  Eligible  Investment  and Private Fund
     Investment  shall be valued  based on its Fair Market  Value as at the last
     Business Day of the calendar  month for which such report or Borrowing Base
     Certificate is being delivered.

          (e) Projections.  As soon as available, but not later than March 31 of
              ------------
     each year,  commencing  with the year 2001, a three-year pr ojection of the
     Borrower's  results covering the  then-current  Fiscal Year and each of the
     next two Fiscal Years.

          (f)  Reports  to  Shareholders.  Promptly  upon the  filing  or making
               -------------------------
     thereof  copies of (i) all financial  statements and reports that Parent or
     the Borrower sends to its  shareholders  or its other holders of Debt; (ii)
     copies of all financial statements and regular, periodic or special reports
     that  Parent or the  Borrower  may make to, or file  with,  any  Government
     Authority.

          (g) Additional Borrowing Base Certificates.  Promptly,  at the request
              --------------------------------------
     of the  Administrative  Agent, a Borrowing Base  Certificate  for any given
     Business Day executed by an Executive Officer of the Borrower.

          (h) Notice of Default,  etc. Immediately after an Executive Officer of
              -----------------------
     the Borrower  knows or has reason to know of the  existence of any Default,
     or any development or other information which would have a Material Adverse
     Effect,  telephonic or  telegraphic  notice  specifying  the nature of such
     Default or development or  information,  including the  anticipated  effect
     thereof, which notice shall be promptly confirmed in writing within two (2)
     Business Days.

          (i)  Other   Information.   The  following   certificates   and  other
               -------------------
     information related to the Borrower:

               (i)  Within  five (5)  Business  Days of  receipt,  a copy of any
          financial examination reports by a Governmental Authority with respect
          to the Borrower or any of its  Subsidiaries  relating to the insurance
          business of the  Borrower  (when,  and if,  prepared);  provided,  the
          Borrower  shall  only  be  required  to  deliver  any  interim  report
          hereunder at such time as Borrower has  knowledge  that a final report
          will not be issued and delivered to the Administrative Agent within 90
          days of any such interim report.

                                       43
<PAGE>

               (ii) Copies of all filings (other than nonmaterial  filings) with
          Governmental  Authorities  by the Borrower or any of its  Subsidiaries
          not later than five (5)  Business  Days after such  filings  are made,
          including,   without  limitation,   filings  which  seek  approval  of
          Governmental  Authorities  with  respect to  transactions  between the
          Borrower or any of its Subsidiaries and its Affiliates.

               (iii)  Within five (5) Business  Days of such  notice,  notice of
          proposed  or  actual  suspension,  termination  or  revocation  of any
          material  License of the  Borrower or any of its  Subsidiaries  by any
          Governmental  Authority or of receipt of notice from any  Governmental
          Authority  notifying  the  Borrower  or any of its  Subsidiaries  of a
          hearing  relating to such a  suspension,  termination  or  revocation,
          including any request by a  Governmental  Authority  which commits the
          Borrower or any of its  Subsidiaries  to take, or refrain from taking,
          any action or which  otherwise  materially  and adversely  affects the
          authority  of the Borrower or any of its  Subsidiaries  to conduct its
          business.

               (iv) Within five (5) Business Days of such notice,  notice of any
          pending or threatened  investigation or regulatory  proceeding  (other
          than routine periodic  investigations  or reviews) by any Governmental
          Authority  concerning  the  business,  practices or  operations of the
          Borrower or any of its Subsidiaries.

               (v)  Promptly,  notice  of any  actual  or,  to the  best  of the
          Borrower's knowledge,  proposed material changes in the Insurance Code
          governing the investment or dividend practices of the Borrower.

               (vi) Promptly, such additional financial and other information as
          the Administrative Agent may from time to time reasonably request.

          (j)  Compliance  Certificates.  Concurrently  with the delivery to the
               ------------------------
     Administrative  Agent  of the  GAAP  financial  statements  under  Sections
                                                                        --------
     5.1(a)(i) and  5.1(a)(ii),  for each Fiscal  Quarter and Fiscal Year of the
     -------------------------
     Borrower,  and at any  other  time no later  than ten  (10)  Business  Days
     following a written request of the  Administrative  Agent, a duly completed
     Compliance Certificate, signed by the chief financial officer, treasurer or
     controller of the Borrower.

          (k) Notice of Litigation,  License, etc. Promptly upon learning of the
              ------------------------------------
     occurrence of any of the following,  written notice thereof, describing the
     same and the steps being taken by the Borrower  with respect  thereto:  (i)
     the  institution  of, or any  adverse  determination  in,  any  litigation,
     arbitration proceeding or governmental proceeding which could, if adversely
     determined,  be reasonably  expected to have a Material  Adverse Effect and
     which  is not  Ordinary  Course  Litigation,(ii)  the  commencement  of any
     dispute  which  might  lead  to  the  modification,  transfer,  revocation,
     suspension or termination of this Agreement or any Credit Document or (iii)
     any event which  could be  reasonably  expected to have a Material  Adverse
     Effect.

                                       44
<PAGE>

          (l)  Insurance  Reports.  Within five (5) Business  Days of receipt of
               ------------------
     such notice by the Borrower, written notice of any cancellation or material
     adverse change in any material Insurance Policy carried by the Borrower.

          (m)  Updated   Schedules.   From  time  to  time,  and  in  any  event
               -------------------
     concurrently  with  delivery  of the  financial  statements  under  Section
                                                                         -------
     5.1(a)(i) and (ii),  revised  Schedules  4.1, 4.7, and 4.10, if applicable,
     ---------     ----                       --------      -----
     showing changes from the Schedules previously delivered.
                              ---------

          (n)  Other  Information.  From  time to time  such  other  information
               ------------------
     concerning the Borrower as the  Administrative  Agent or any Lender through
     the Administrative Agent may reasonably request.

SECTION 5.2    Corporate Existence;  Foreign  Qualification.  Do and cause to be
               --------------------------------------------
done at all  times  all  things  necessary  to (a)  maintain  and  preserve  the
corporate  existence of the Borrower and each of its  Subsidiaries,  (b) be, and
ensure that the Borrower and each of its  Subsidiaries  is, duly qualified to do
business and be in good standing as a foreign  corporation in each  jurisdiction
where the nature of its business makes such  qualification  necessary unless the
failure to be so qualified would not have a Material Adverse Effect,  and (c) do
or cause to be done all things  necessary to preserve and keep in full force and
effect the Borrower's corporate existence.

SECTION 5.3    Books,  Records  and  Inspections.  (a)  Maintain,  and cause its
               ---------------------------------
Subsidiaries to maintain  materially  complete and accurate books and records in
accordance  with GAAP and SAP,  (b)  permit  access at  reasonable  times by the
Administrative  Agent to its books and  records,  (c) permit the  Administrative
Agent or its  designated  representative  to  inspect  at  reasonable  times its
properties and operations,  and (d) permit the  Administrative  Agent to discuss
its  business,  operations  and  financial  condition  with its officers and its
independent accountants.

SECTION 5.4    Insurance. Maintain Insurance Policies to such extent and against
               ---------
such hazards and liabilities as is required by law.

SECTION 5.5    Taxes and  Liabilities.  Pay, and cause each  Subsidiary  to pay,
               ----------------------
when due all material taxes,  assessments and other material  liabilities except
as contested in good faith and by appropriate  proceedings with respect to which
reserves have been  established,  and are being  maintained,  in accordance with
GAAP if and so long as such contest  could not  reasonably be expected to have a
Material Adverse Effect.

                                       45
<PAGE>

SECTION 5.6    Compliance with Laws. Comply, and cause each Subsidiary to comply
               --------------------
(a) with all  federal  and local  laws,  rules and  regulations  related  to its
businesses  (including,  without limitation,  the establishment of all insurance
reserves  required to be established  under SAP and applicable laws  restricting
the  investments  of the  Borrower  and  its  Subsidiaries),  and (b)  with  all
Contractual Obligations binding upon it, except where failure to so comply would
not in the aggregate have a Material Adverse Effect on the Borrower.

SECTION 5.7    Maintenance of Permits.  Maintain,  and cause each  Subsidiary to
               ----------------------
maintain, all permits,  licenses and consents as may be required for the conduct
of its  business by any federal or local  government  agency or  instrumentality
except where  failure to maintain the same could not  reasonably  be expected to
have a Material Adverse Effect.

SECTION 5.8    Conduct of Business. Engage, and cause each Subsidiary to engage,
               -------------------
primarily in the same business or businesses  described in the  Borrower's  2000
Annual Report.

SECTION 5.9    Use of Letters of Credit.  The Borrower shall request  letters of
               ------------------------
credit only to support its obligations under Reinsurance Agreements.

SECTION 5.10   Further   Assurances.   Promptly   upon   the   request   of  the
               --------------------
Administrative  Agent,  the Borrower  shall  execute,  acknowledge,  deliver and
record  and do any and all such  further  acts and  deeds as the  Administrative
Agent may  reasonably  request  from  time to time in order to  insure  that the
obligations of the Borrower  hereunder are secured by a first priority perfected
interest  in the assets of the  Borrower  stated to be pledged  pursuant  to the
Security  Agreement and to perfect and maintain the validity,  effectiveness and
priority of the Security Agreement and the Liens intended to be created thereby.

                                   ARTICLE VI.

                               NEGATIVE COVENANTS

          Until the LC Obligations  and all other  Obligations  are paid in full
and until the Final Maturity Date, the Borrower agrees that,  unless at any time
the Required Lenders shall otherwise expressly consent in writing, it will:

SECTION 6.1    Net Worth.  Not permit  the Net Worth of (a) the  Borrower  to be
               ---------
less than $400,000,000 and (b) the Parent to be less than $325,000,000.

SECTION 6.2    Unencumbered  Reserve  Requirement.  Not permit  the Fair  Market
               ----------------------------------
Value of the Unencumbered  Assets to be less than the greater of (x) $30,000,000
and (y) an amount equal to the amount which would  represent the impact of a 150
basis point increase in the interest rates on the Borrower's Investments.

                                       46
<PAGE>

SECTION 6.3    Debt. Not, and not permit any Subsidiary to, incur any Debt
               ----
other than (a) Debt under this Agreement; (b) Purchase Money Debt provided the
aggregate principal amount outstanding at any time does not exceed $500,000; (c)
Debt pursuant to Capitalized Leases provided such Leases do not cover any
property other than property acquired in connection therewith and the aggregate
principal amount of all such Debt outstanding at any time does not exceed
$1,500,000; (d) Hedging Obligations entered into in the ordinary course of
business in order to hedge currency, commodity or interest rate risks, and not
for purposes of speculation; (e) Debt for issued, but undrawn, letters of credit
which have been issued to reinsurance cedents in the ordinary course of
business; and (f) Debt not included in paragraphs (a) through (e) which does not
exceed at any time, in the aggregate, $1,000,000.

SECTION 6.4    Mergers,  Consolidations  and  Sales.  Not,  and not  permit  any
               ------------------------------------
Subsidiary to, (a) merge or consolidate,  (b) purchase or otherwise  acquire all
or substantially  all of the assets or stock of any class of, or any partnership
or joint  venture  interest in, any other Person  provided that the Borrower may
make any such  purchase  or  acquisition  provided  (i) no  Default  or Event of
Default has occurred  and is  continuing  or would result from such  purchase or
acquisition,  (ii) the Borrower provides the Lenders with a pro forma Compliance
Certificate  giving  effect  to such  purchase  or  acquisition  and  (iii)  the
aggregate  purchase price of all such purchases and acquisitions  after the date
hereof does not exceed $75,000,000,  or (c) sell, transfer,  convey or lease all
or any  substantial  part of its  assets,  other  than (i) any  sale,  transfer,
conveyance  or  lease  in the  ordinary  course  of  business,  (ii) any sale or
assignment of receivables or (iii) any sale,  transfer,  conveyance or lease not
in the ordinary  course of business  provided the aggregate fair market value of
all such sales, transfers,  conveyances or leases after the date hereof does not
exceed $75,000,000.

SECTION 6.5    Other  Agreements.  Not enter into any agreement  containing  any
               -----------------
provision  which would be violated or breached by the performance of obligations
hereunder or under any instrument or document delivered or to be delivered by it
hereunder or in connection herewith.

SECTION 6.6    Transactions with Affiliates.  Not, and not permit any Subsidiary
               ----------------------------
to, enter into, or cause, suffer or permit to exist, directly or indirectly, any
arrangement,  transaction  or contract  with any of its  Affiliates  unless such
arrangement, transaction or contract is on an arm's length basis.

                                       47
<PAGE>

SECTION 6.7    Liens.  Not  create  or  permit  to  exist,  nor allow any of its
               -----
Subsidiaries  to create or permit to exist,  any Lien with respect to any assets
now or  hereafter  existing or  acquired,  except the  following:  (i) Liens for
current taxes not  delinquent or for taxes being  contested in good faith and by
appropriate  proceedings  and with respect to which adequate  reserves have been
established,  and are being maintained, in accordance with GAAP, (ii) easements,
party  wall  agreements,   rights  of  way,   restrictions,   minor  defects  or
irregularities  in title and other similar Liens not interfering in any material
respect  with the ordinary  course of the  business of such Person;  (iii) Liens
incurred  in the  ordinary  course  of  business  in  connection  with  workers'
compensation, unemployment insurance or other forms of governmental insurance or
benefits and Liens pursuant to letters of credit or other security  arrangements
in  connection  with such  insurance or  benefits,  (iv)  mechanics',  workers',
materialmen's,  landlord  liens and other  like Liens  arising  in the  ordinary
course of business in respect of  obligations  which are not delinquent or which
are being  contested  in good  faith  and by  appropriate  proceedings  and with
respect  to  which  adequate  reserves  have  been  established,  and are  being
maintained,  in accordance with GAAP, (v) Liens listed on Schedule 6.7 in effect
                                                          ------------
on the date hereof; (vi) attachments, judgments and other similar Liens for sums
not  exceeding  $5,000,000  (excluding  any portion  thereof which is covered by
insurance so long as the insurer is reasonably  likely to be able to pay and has
accepted a tender of defense and indemnification without reservation of rights);
(vii)  attachments,  judgments and other similar Liens for sums of $5,000,000 or
more (excluding any portion thereof which is covered by insurance so long as the
insurer  is  reasonably  likely to be able to pay and has  accepted  a tender of
defense  and  indemnification   without  reservation  of  rights)  provided  the
execution or other  enforcement of such Liens is  effectively  stayed and claims
secured  thereby are being  actively  contested in good faith and by appropriate
proceedings  and have been  bonded  off;  (viii)  Liens on cash and  Investments
(other than  Collateral)  pursuant to trusts or other security  arrangements  in
connection with  Reinsurance  Agreements and Liens securing Debt permitted under
Section 6.3(e); (ix) Liens in favor of the Administrative  Agent for the benefit
--------------
of the Lenders;  (x) Purchase Money Liens securing Purchase Money Debt permitted
under Section  6.3(b);  (xi) any interest or title of a lessor in assets subject
      ---------------
to any  Capitalized  Lease or  operating  lease  which is  permitted  under this
Agreement; and (xii) Liens not permitted by any other clause of this Section 6.7
                                                                     -----------
securing Debt in an aggregate amount not to exceed $250,000,  provided any Liens
granted  (other  than Liens  pursuant  to Section  6.7(ix)) do not extend to any
                                          ----------------
Collateral  and after giving  effect to all Liens under clauses  (viii)  through
                                                        ---------------
(xii),  there are  Unencumbered  Assets  sufficient  to ensure  compliance  with
-----
Section 6.2.
-----------

SECTION 6.8    Restrictions On Negative Pledge Agreements.  Not create, incur or
               ------------------------------------------
assume any agreement to which it is a signatory, other than this Agreement which
places  any  restrictions  upon the  right of the  Borrower  to sell,  pledge or
otherwise  dispose  of any  material  portion  of its  properties  now  owned or
hereafter  acquired  (other  than with  respect  to  property  secured  by Liens
permitted  under  Section 6.7) except for such  restrictions  imposed under this
Agreement  or by federal or state laws upon the right of the  Borrower  to sell,
pledge or otherwise dispose of securities owned by it.

SECTION 6.9    Dividends,  Etc.  Not (a) declare or pay any  dividends on any of
               ---------------
its Capital Stock,  (b) purchase or redeem any Capital Stock of Parent or any of
its  Subsidiaries  or any  warrants,  options or other rights in respect of such
stock, or (c) set aside funds for any of the foregoing, except that the Borrower
may declare or pay dividends on any of its Capital Stock  provided no Default or
Event of Default has occurred and is  continuing  on the date of or would result
from such declaration or payment.

                                       48
<PAGE>

SECTION 6.10   Eligible Investments. The Borrower shall not permit:
               --------------------

          (a) the minimum weighted average credit quality rating of the Eligible
     Investments to be less than AA/Aa2 or the equivalent; or

          (b) the Eligible Investments to exceed the Concentration Limits;

provided,  however,  that the Borrower shall not be in violation of this Section
6.10 if such  violation  occurs as a result of a change in the Fair Market Value
or ratings of such Eligible Investments (as opposed to a change in the makeup of
such Eligible Investments) unless such deficiency exists for thirty days.

                                  ARTICLE VII.

                       EVENTS OF DEFAULT AND THEIR EFFECT

SECTION 7.1    Events of Default.  Each of the  following  shall  constitute  an
               -----------------
Event of Default under this Agreement:

          (a) Non-Payment of Credit  Extension.  Default in the payment when due
              --------------------------------
     of any Reimbursement Obligation.

          (b)  Non-Payment of Interest,  Fees,  etc.  Default,  and  continuance
               -------------------------------------
     thereof for three (3) Business  Days, in the payment when due of fees or of
     any other amount payable hereunder or under the Credit Documents.

          (c)  Non-Payment  of Other Debt.  (i) Default in the payment  when due
               --------------------------
     (subject  to any  applicable  grace  period),  whether by  acceleration  or
     otherwise,  of any other Debt of, or  guaranteed  by, the  Borrower  if the
     aggregate  amount of Debt of the Borrower  which is  accelerated or due and
     payable,  or  which  (subject  to  any  applicable  grace  period)  may  be
     accelerated or otherwise become due and payable,  by reason of such default
     or defaults is $5,000,000 or more,  or (ii) default in the  performance  or
     observance of any  obligation  or condition  with respect to any such other
     Debt of, or  guaranteed  by, the  Borrower if the effect of such default or
     defaults is to accelerate  the maturity  (subject to any  applicable  grace
     period)  of any such  Debt of  $5,000,000  or more in the  aggregate  or to
     permit  the holder or  holders  of such Debt of  $5,000,000  or more in the
     aggregate,  or any trustee or agent for such holders, to cause such Debt to
     become due and payable prior to its expressed maturity.

          (d) Other Material  Obligations.  Except for obligations covered under
              ---------------------------
     other  provisions of this Article VII,  default in the payment when due, or
                               -----------
     in the  performance  or  observance  of,  any  material  obligation  of, or
     material  condition agreed to by, the Borrower with respect to any material
     purchase or lease obligation of $5,000,000 or more (unless the existence of
     any such  default is being  contested  by the Borrower in good faith and by
     appropriate   proceedings  and  the  Borrower  has   established,   and  is
     maintaining,  adequate  reserves  therefor in  accordance  with GAAP) which
     default continues for a period of 30 days.

                                       49
<PAGE>

          (e) Bankruptcy,  Insolvency,  etc. (i) Parent or the Borrower  becomes
              ------------------------------
     insolvent or generally  fails to pay, or admits in writing its inability to
     pay,  debts as they become due; (ii) there shall be commenced by or against
     any of such  Persons  any case,  proceeding  or other  action (A) under any
     existing or future law of any jurisdiction,  domestic or foreign,  relating
     to  bankruptcy,  insolvency,  supervision,  conservatorship,   liquidation,
     reorganization  or relief of  debtors,  seeking to have an order for relief
     entered  with  respect  to it, or seeking to  adjudicate  it a bankrupt  or
     insolvent,   or  seeking  reorganization,   rehabilitation,   conservation,
     supervision, arrangement, adjustment, winding-up, liquidation, dissolution,
     composition or other relief with respect to it or its debts, obligations or
     liabilities,  or (B) seeking appointment of a receiver, trustee, custodian,
     rehabilitator,   conservator,   supervisor,  liquidator  or  other  similar
     official for it or for all or any substantial  part of its assets,  in each
     case  which (1)  results  in the  entry of an order for  relief or any such
     adjudication  or appointment  or (2) if filed against such Person,  remains
     undismissed,  undischarged  or unstayed  for a period of 60 days;  or (iii)
     there shall be commenced  against any of such Persons any case,  proceeding
     or other action  seeking  issuance of a warrant of  attachment,  execution,
     distraint or similar  process  against all or any  substantial  part of its
     assets  which  results in the entry of an order for any such  relief  which
     shall not have been vacated, discharged, or stayed or bonded pending appeal
     within 60 days from the entry  thereof;  or (iv) any of such Persons  shall
     take any action in furtherance  of, or indicating its consent to,  approval
     of, or  acquiescence  in, any of the acts set forth in  clause(ii) or (iii)
                                                              ---------    -----
     above;  or  (v)  any  Governmental  Authority  shall  issue  any  order  of
     conservation, supervision or any other order of like effect relating to any
     of such Persons.

          (f) Financial  Statements.  Failure by the Borrower to comply with its
              ----------------------
     covenants set forth in Section 5.1 and continuance of such failure for five
     Business Days after notice thereof from the Administrative Agent.

          (g)  Specific  Defaults.  Failure by the  Borrower  to comply with its
                -----------------
     covenants  set forth in  Sections  5.9,  6.1,  6.3,  6.4,  6.6,  6.7(viii),
                              -------------   ---   ---   ---   ---   ---------
     6.7(ix), 6.7(x), 6.7(xi), 6.7 (xii), 6.8 or 6.9.
     -------  ------  -------  --------   ---    ---

          (h) Non-compliance  With Other Provisions.  Failure by the Borrower to
              -------------------------------------
     comply  with or to perform any  provision  of this  Agreement  or the other
     Credit Documents (and not constituting an Event of Default under any of the
     other  provisions of this Article VII) and  continuance of such failure for
     30 days after notice thereof from the Administrative Agent to the Borrower.

          (i) Warranties  and  Representations.  Any warranty or  representation
              --------------------------------
     made by or on behalf of the  Borrower  herein or in any Credit  Document is
     inaccurate  or  incorrect  or is  breached  or false or  misleading  in any
     material respect as of the date such warranty or representation is made; or
     any schedule,  certificate,  financial statement,  report, notice, or other
     instrument  furnished  by or on behalf of  Borrower  to the  Administrative
     Agent or the Lenders is false or misleading in any material  respect on the
     date as of which the facts therein set forth are stated or certified.

                                       50
<PAGE>

          (j)  Employee  Benefit  Plans.  The  Borrower  establishes  any  Plan.
               ------------------------

          (k) Credit  Documents.  The  Security  Agreement  or any other  Credit
              -----------------
     Document  shall  cease to be in full force and effect  with  respect to the
     Borrower,  the Borrower shall fail (subject to any applicable grace period)
     to comply  with or to perform  any  applicable  provision  of the  Security
     Agreement, any action shall be taken by or on behalf of the Borrower or any
     Affiliate  thereof to discontinue any of the Credit Documents or to contest
     the  validity,  binding  nature or  enforceability  of any  thereof  or the
     Administrative  Agent shall fail to have a first priority perfected Lien on
     any collateral granted under the Security Agreement.

          (l) Change in Control. A Change in Control occurs.
              -----------------

          (m) Judgments. A final judgment or judgments which exceed an aggregate
              ---------
     of $5,000,000  (excluding any portion thereof which is covered by insurance
     so long  as the  insurer  is  reasonably  likely  to be able to pay and has
     accepted a tender of defense and  indemnification  without  reservation  of
     rights)  shall be  rendered  against the  Borrower  and shall not have been
     discharged or vacated or had execution thereof stayed pending appeal within
     60 days after entry or filing of such judgment(s).

SECTION 7.2    Effect of Event of Default.  If any Event of Default described in
               --------------------------
Section 7.1(e) shall occur,  all  Obligations  shall become  immediately due and
--------------
payable,  and the Borrower shall become immediately  obligated to deliver to the
Administrative  Agent cash  collateral in an amount equal to the  outstanding LC
Obligations  all without notice of any kind; and, in the case of any other Event
of Default,  the  Administrative  Agent may, and upon the written request of the
Required Lenders shall,  terminate the Commitments  hereunder and declare all or
any portion of the  Obligations  to be due and payable,  and/or  demand that the
Borrower   immediately  deliver  to  the  Administrative  Agent  Cash  and  Cash
Equivalents  in an  amount  equal  to 102%  of the  outstanding  LC  Obligations
whereupon  the  Commitments  shall  terminate  and  all or such  portion  of the
Obligations  shall become  immediately  due and payable,  and/or demand that the
Borrower   immediately  deliver  to  the  Administrative  Agent  Cash  and  Cash
Equivalents in an amount equal to the  outstanding  LC  Obligations  all without
further notice of any kind. The  Administrative  Agent shall promptly advise the
Borrower  of any such  declaration  but  failure  to do so shall not  impair the
effect of such  declaration.  Notwithstanding  the  foregoing,  the effect as an
Event of Default  of any event  described  in  Section  7.1(a) may not be waived
                                               ---------------
except by consent of all of the Lenders and  acknowledged by the  Administrative
Agent in writing.

                                       51
<PAGE>

SECTION 7.3    LC Collateral Account.
               ---------------------

          (a) If at any time after the  Borrower  has been  required  to deposit
     amounts  in the  LC  Collateral  Account  pursuant  to  Section  2.13,  the
     Administrative  Agent  determines  that the  amount  on  deposit  in the LC
     Collateral   Account  is  less  than  the  amount  of  the  outstanding  LC
     Obligations at such time, the Administrative  Agent may demand the Borrower
     to  deposit,  and the  Borrower  shall,  upon such  demand and  without any
     further  notice,  pay to the  Administrative  Agent for  deposit  in the LC
     Collateral Account, funds necessary to cure any shortfall.

          (b) The  Administrative  Agent may,  at any time or from time to time,
     after funds are deposited in the LC Collateral  Account apply such funds to
     the payment of the Obligations  then due and payable by the Borrower to the
     Fronting  Bank,  the Lenders or the  Administrative  Agent under the Credit
     Documents.

          (c)  Neither  the  Borrower  nor any Person  claiming  on behalf of or
     through the Borrower shall have any right to withdraw any of the funds held
     in the LC  Collateral  Account  until  all of  the  Obligations  have  been
     indefeasibly  paid in full, the  Commitments  have been  terminated and all
     Letters of Credit have been terminated or expired,  at which time any funds
     remaining  in  the  LC   Collateral   Account  shall  be  returned  by  the
     Administrative Agent to the Borrower.

                                  ARTICLE VIII.

                                   CONDITIONS

SECTION 8.1    Conditions to Occurrence of the  Amendment  Effective  Date.  The
               -----------------------------------------------------------
occurrence  of the Amendment  Effective  Date shall be subject to receipt by the
Administrative  Agent of all of the following,  each duly executed and dated the
Amendment  Effective Date (or such earlier date as shall be  satisfactory to the
Administrative   Agent),  each  in  form  and  substance   satisfactory  to  the
Administrative Agent (with sufficient copies for each Lender):

          (a) This Agreement. This Agreement executed by each party thereto.
              --------------

          (b) [Intentionally Omitted]

          (c)  Organization  Documents,  Resolutions.  Certified  copies  of the
               -------------------------------------
     Organization   Documents  of  the  Borrower  (or  a  statement   that  such
     Organization  Documents  have not been amended since February 25, 2000) and
     resolutions  of the Board of  Directors  of the  Borrower  authorizing  the
     execution,  delivery and performance,  respectively, of those documents and
     matters  required of it with respect to this  Agreement or the other Credit
     Documents.

                                       52
<PAGE>

          (d) Incumbency and Signatures.  A certificate of an Authorized Officer
              -------------------------
     certifying the names of the  individual or  individuals  authorized to sign
     this  Agreement and the other Credit  Documents,  together with a sample of
     the true signature of each such  individual.  (The Lenders may conclusively
     rely on each such certificate  until formally advised by a like certificate
     of any changes therein.)

          (e)  Opinion of  Counsel.  An  opinion  of  counsel  of the  Borrower,
               -------------------
     addressed  to  the   Administrative   Agent,  the  Fronting  Bank,  the  LC
     Administrator and the Lenders from each of (i) Akin, Gump, Strauss, Hauer &
     Feld, L.L.P.,  New York counsel to the Borrower and (ii) Conyers,  Dill and
     Pearman,  Bermuda  counsel  to the  Borrower,  each in form  and  substance
     satisfactory to the Administrative Agent.

          (f) Certificate.  Certificate of an Executive  Officer dated as of the
              -----------
     Amendment  Effective  Date  stating  that:  (i) that there are no  material
     insurance regulatory proceedings pending or threatened against the Borrower
     in any  jurisdiction;  (ii) no Default  or Event of Default  exists or will
     result  from the initial  Credit  Extension;  and (iii) there has  occurred
     since December 31, 2000, no event or  circumstance  that has resulted or in
     the judgement of such  Executive  Officer  could  reasonably be expected to
     result in a Material Adverse Effect.

          (g)  Other.  Such  other  documents  as the  Administrative  Agent may
               -----
     reasonably request.

SECTION 8.2    Conditions  to  All  Credit  Extensions.  The  obligation  of the
               ---------------------------------------
Lenders  to make  all  Credit  Extensions  shall  be  subject  to the  prior  or
concurrent   satisfaction   (in  form   and   substance   satisfactory   to  the
Administrative Agent) of each of the conditions precedent set forth below:

          (a) LC Application/Borrowing Base Certificate. The Borrower shall have
              -----------------------------------------
     delivered a LC Application and a Borrowing Base Certificate  calculated for
     both Tranche A and Tranche B as of the most recent Business Day.

          (b) No Default.  No Default  shall have  occurred and be continuing or
              ----------
     will result from the making of the Credit  Extensions  and no Default shall
     have occurred and be continuing  under the Credit  Documents or will result
     from the making of the Credit Extensions.

          (c)   Warranties   and   Representations.   (i)  All   warranties  and
                ----------------------------------
     representations  contained in this Agreement (other than Section 4.2 except
                                                              -----------
     in the case of the initial Credit  Extension)  shall be true and correct in
     all material respects as of the date of any Credit Extension, with the same
     effect as though  made on the date of and  concurrently  with the making of
     such  Credit  Extension  (except  where  such  representation  speaks as of
     specified  date)  and  (ii)  all  covenants  contained  herein  and in such
     documents to be performed  by each of the parties  thereto  (other than the
     Administrative  Agent  or the  Lenders)  prior  to the  date of any  Credit
     Extension shall have been performed.

                                       53
<PAGE>

          (d)  Litigation.  (i) No litigation  (including,  without  limitation,
               ----------
     derivative actions), arbitration,  governmental investigation or proceeding
     or inquiry shall be, on the date of any Credit  Extension,  pending,  or to
     the  knowledge  of the  Borrower,  threatened  which  seeks  to  enjoin  or
     otherwise  prevent  the  consummation  of, or to recover  any damages or to
     obtain  material  relief  as a result  of,  the  transactions  contemplated
     hereunder or, in the reasonable  opinion of the Required Lenders,  could be
     reasonably  expected to be materially adverse to any of the parties to this
     Agreement  and which is not  Ordinary  Course  Litigation,  and (ii) in the
     reasonable opinion of the Required Lenders, no material adverse development
     shall have  occurred  in any  litigation  (including,  without  limitation,
     derivative actions), arbitration, government investigation or proceeding or
     inquiry  disclosed  in  Schedule  4.2 which is  likely  to have a  Material
                             -------------
     Adverse Effect.

          (e) Fees.  The fees  referred  to in  Section  2.14  which are due and
              ----                              -------------
     payable  on or prior  to the  Amendment  Effective  Date or the date of any
     Credit Extension shall have been paid to the  Administrative  Agent,  where
     applicable, for the benefit of the Lenders.

          (f) Material  Adverse Effect.  There shall not have occurred any event
              ------------------------
     which, in the reasonable  judgment of the Required  Lenders,  constitutes a
     Material Adverse Effect.

                                   ARTICLE IX.

                            THE ADMINISTRATIVE AGENT

SECTION 9.1    Appointment and Authorization.
               -----------------------------

          (a) Each Lender hereby irrevocably  (subject to Section 9.9) appoints,
                                                          -----------
     designates and authorizes the  Administrative  Agent to take such action on
     its behalf under the  provisions  of this  Agreement  and each other Credit
     Document  and to  exercise  such  powers  and  perform  such  duties as are
     expressly  delegated  to it by the  terms of this  Agreement  or any  other
     Credit  Document,  together with such powers as are  reasonably  incidental
     thereto.  Notwithstanding any provision to the contrary contained elsewhere
     in this Agreement or in any other Credit Document, the Administrative Agent
     shall not have any duties or  responsibilities,  except those expressly set
     forth herein, nor shall the Administrative  Agent have or be deemed to have
     any  fiduciary  relationship  with any  Lender,  and no implied  covenants,
     functions,  responsibilities,  duties,  obligations or liabilities shall be
     read into this  Agreement or any other Credit  Document or otherwise  exist
     against the Administrative Agent.

                                       54
<PAGE>

          (b) The LC  Administrator  shall  act on behalf  of the  Lenders  with
     respect to any Letters of Credit  issued by the  Lenders and the  documents
     associated  therewith  and shall  have all of the  benefit  and  immunities
     provided to the Agent in this  Article IX with respect to any acts taken or
     omissions  suffered by such LC  Administrator in connection with Letters of
     Credit  issued by the  Lenders or  proposed to be issued by the Lenders and
     the  application  and  agreements  for letters of credit  pertaining to the
     Letters of Credit as fully as if the term  "Administrative  Agent", as used
     in this Article IX, included the LC Administrator with respect to such acts
     or omissions.

SECTION 9.2    Delegation of Duties. The Administrative Agent may execute any of
               --------------------
its duties  under this  Agreement  or any other  Credit  Document  by or through
agents,  employees  or  attorneys-in-fact  and  shall be  entitled  to advice of
counsel  concerning all matters  pertaining to such duties.  The  Administrative
Agent shall not be responsible  for the negligence or misconduct of any agent or
attorney-in-fact that it selects with reasonable care.

SECTION 9.3    Liability  of  Administrative  Agent.  None of the  Agent-Related
               ------------------------------------
Persons  shall (a) be liable for any action  taken or omitted to be taken by any
of them under or in connection  with this Agreement or any other Credit Document
or the transactions  contemplated hereby (except for its own gross negligence or
willful  misconduct),  or (b) be responsible in any manner to any of the Lenders
for any recital,  statement,  representation or warranty made by the Borrower or
Affiliate of the Borrower,  or any officer thereof,  contained in this Agreement
or in any other Credit  Document,  or in any certificate,  report,  statement or
other document referred to or provided for in, or received by the Administrative
Agent under or in connection  with, this Agreement or any other Credit Document,
or the validity,  effectiveness,  genuineness,  enforceability or sufficiency of
this Agreement or any other Credit Document,  or for any failure of the Borrower
or any other party to any Credit Document to perform its  obligations  hereunder
or  thereunder.  No  Administrative  Agent-Related  Person  shall be  under  any
obligation  to any Lender to  ascertain  or to inquire as to the  observance  or
performance  of any of the  agreements  contained  in, or  conditions  of,  this
Agreement or any other Credit Document,  or to inspect the properties,  books or
records of the Borrower or any of the Borrower's Affiliates.

SECTION 9.4    Reliance by Administrative Agent.

          (a) The  Administrative  Agent shall be entitled to rely, and shall be
     fully protected in relying, upon any writing, resolution,  notice, consent,
     certificate,  affidavit,  letter, telegram,  facsimile,  telex or telephone
     message,  statement or other document or conversation  believed by it to be
     genuine  and correct  and to have been  signed,  sent or made by the proper
     Person  or  Persons,  and upon  advice  and  statements  of  legal  counsel
     (including  counsel to the  Borrower),  independent  accountants  and other
     experts  selected by the  Administrative  Agent. The  Administrative  Agent
     shall be fully  justified  in failing or refusing to take any action  under
     this Agreement or any other Credit  Document  unless it shall first receive
     such advice or concurrence of the Required  Lenders (and all the Lenders if
     required  pursuant to Section 10.1) as it deems  appropriate  and, if it so
     requests,  it shall first be indemnified to its satisfaction by the Lenders
     against any and all  liability  and expense  which may be incurred by it by
     reason of taking or continuing to take any such action.  The Administrative
     Agent shall in all cases be fully  protected  in acting,  or in  refraining
     from  acting,  under  this  Agreement  or  any  other  Credit  Document  in
     accordance  with a request  or  consent of the  Required  Lenders  and such
     request and any action  taken or failure to act pursuant  thereto  shall be
     binding upon all of the Lenders.

                                       55
<PAGE>

          (b)  For  purposes  of  determining  compliance  with  the  conditions
     specified in Section  8.1,  each Lender that has  executed  this  Agreement
     shall be  deemed  to have  consented  to,  approved  or  accepted  or to be
     satisfied   with,  each  document  or  other  matter  either  sent  by  the
     Administrative  Agent to such Lender for consent,  approval,  acceptance or
     satisfaction,  or required  thereunder to be consented to or approved by or
     acceptable or satisfactory to the Lender.

SECTION 9.5    Notice of Default.  The Administrative  Agent shall not be deemed
               -----------------
to have  knowledge  or  notice  of the  occurrence  of any  Default  or Event of
Default, except with respect to defaults in the payment of LC Advances, interest
and fees required to be paid to the Administrative  Agent for the account of the
LC Administrator,  the Fronting Bank or the Lenders,  unless the  Administrative
Agent shall have received written notice from a Lender or the Borrower referring
to this Agreement,  describing such Default or Event of Default and stating that
such notice is a "notice of default".  The Administrative  Agent will notify the
Lenders of its receipt of any such notice. The  Administrative  Agent shall take
such action with respect to such Default or Event of Default as may be requested
by the Required Lenders in accordance with Article VII; provided,  however, that
                                           -----------  --------   -------
unless and until the  Administrative  Agent has received any such  request,  the
Administrative  Agent may (but shall not be obligated  to) take such action,  or
refrain  from  taking  such  action,  with  respect to such  Default or Event of
Default as it shall deem advisable or in the best interest of the Lenders.

SECTION 9.6    Credit  Decision.  Each  Lender  acknowledges  that  none  of the
               ----------------
Agent-Related Persons has made any representation or warranty to it, and that no
act by the Administrative  Agent hereinafter taken,  including any review of the
affairs of the Borrower,  shall be deemed to constitute  any  representation  or
warranty by any  Agent-Related  Person to any Lender.  Each Lender represents to
the  Administrative  Agent that it has,  independently and without reliance upon
any  Agent-Related  Person and based on such documents and information as it has
deemed  appropriate,  made  its own  appraisal  of and  investigation  into  the
business,  prospects,  operations,  property,  financial and other condition and
creditworthiness  of the  Borrower,  and all  applicable  bank  regulatory  laws
relating to the transactions  contemplated  hereby, and made its own decision to
enter into this Agreement and to extend credit to the Borrower  hereunder.  Each
Lender also represents that it will, independently and without reliance upon any
Agent-Related  Person and based on such  documents and  information  as it shall
deem  appropriate  at the  time,  continue  to  make  its own  credit  analysis,
appraisals and decisions in taking or not taking action under this Agreement and
the  other  Credit  Documents,  and to  make  such  investigations  as it  deems
necessary to inform itself as to the business, prospects,  operations, property,
financial and other condition and  creditworthiness of the Borrower.  Except for
notices,  reports and other documents  expressly herein required to be furnished
to the Lenders by the Administrative  Agent, the Administrative  Agent shall not
have any duty or  responsibility  to provide any Lender with any credit or other
information concerning the business, prospects,  operations, property, financial
and other condition or  creditworthiness of the Borrower which may come into the
possession of any of the Agent-Related Persons.

                                       56
<PAGE>

SECTION 9.7    Indemnification.  Whether  or not the  transactions  contemplated
               ---------------
hereby  are   consummated,   the  Lenders  shall   indemnify   upon  demand  the
Agent-Related  Persons  (to the  extent  not  reimbursed  by or on behalf of the
Borrower  and without  limiting  the  obligation  of the Borrower to do so), pro
rata, from and against any and all Indemnified Liabilities;  provided,  however,
that no Lender shall be liable for the payment to the  Agent-Related  Persons of
any portion of such Indemnified  Liabilities resulting solely from such Person's
gross  negligence or willful  misconduct.  Without  limitation of the foregoing,
each Lender shall reimburse the Administrative Agent upon demand for its ratable
share of any costs or out-of-pocket expenses (including Attorney Costs) incurred
by the  Administrative  Agent in  connection  with the  preparation,  execution,
delivery,  administration,   modification,  amendment  or  enforcement  (whether
through  negotiations,  legal  proceedings  or otherwise) of, or legal advice in
respect of rights or  responsibilities  under, this Agreement,  any other Credit
Document,  or any document  contemplated by or referred to herein, to the extent
that the  Administrative  Agent is not  reimbursed  for such  expenses  by or on
behalf of the  Borrower.  The  undertaking  in this  Section  shall  survive the
payment of all  Obligations  hereunder and the resignation or replacement of the
Administrative Agent.

SECTION 9.8    Administrative  Agent  in  Individual  Capacity.   BofA  and  its
               -----------------------------------------------
Affiliates may make loans to, issue letters of credit for the account of, accept
deposits from,  acquire equity  interests in and generally engage in any kind of
banking,  trust,  financial  advisory,  underwriting  or other business with the
Borrower and its Affiliates as though BofA were not the Administrative  Agent or
the LC Administrator  hereunder and without notice to or consent of the Lenders.
The  Lenders  acknowledge  that,  pursuant  to  such  activities,  BofA  or  its
Affiliates  may receive  information  regarding  the Borrower or its  Affiliates
(including  information  that may be subject to  confidentiality  obligations in
favor of the Borrower) and acknowledge  that the  Administrative  Agent shall be
under no obligation  to provide such  information  to them.  With respect to its
Credit  Extensions,  BofA  shall  have the same  rights  and  powers  under this
Agreement  as any other  Lender and may  exercise the same as though it were not
the  Administrative  Agent or the LC  Administrator,  and the terms "Lender" and
"Lenders" include BofA in its individual capacity.

SECTION 9.9    Successor Administrative Agent. The Administrative Agent may, and
               ------------------------------
at the request of the Required  Lenders shall,  resign as  Administrative  Agent
upon 30 days' notice to the Lenders.  If the Administrative  Agent resigns under
this  Agreement,  the Required  Lenders  shall  appoint from among the Lenders a
successor  agent for the Lenders which  successor agent shall be approved by the
Borrower.  If no successor agent is appointed  prior to the Amendment  Effective
Date of the resignation of the Administrative  Agent, the  Administrative  Agent
may appoint,  after  consulting  with the Lenders and the Borrower,  a successor
agent  from  among  the  Lenders.  Upon the  acceptance  of its  appointment  as
successor agent hereunder, such successor agent shall succeed to all the rights,
powers  and  duties  of  the   retiring   Administrative   Agent  and  the  term
"Administrative  Agent"  shall  mean  such  successor  agent  and  the  retiring
Administrative  Agent's  appointment,  powers and duties as Administrative Agent
shall be  terminated.  After any  retiring  Administrative  Agent's  resignation
hereunder  as  Administrative  Agent,  the  provisions  of this  Article  IX and
                                                                 -----------
Sections  10.4 and 10.5 shall inure to its  benefit as to any  actions  taken or
--------------     ----
omitted  to be  taken  by it  while  it  was  Administrative  Agent  under  this
Agreement.  If no successor  agent has accepted  appointment  as  Administrative
Agent by the date which is 30 days following a retiring  Administrative  Agent's
notice of resignation,  the retiring  Administrative  Agent's  resignation shall
nevertheless thereupon become effective and the Lenders shall perform all of the
duties of the  Administrative  Agent  hereunder  until such time, if any, as the
Required   Lenders   appoint  a   successor   agent  as   provided   for  above.
Notwithstanding  the  foregoing,  however,  BofA  may  not  be  removed  as  the
Administrative  Agent unless BofA shall also  simultaneously  be replaced as "LC
Administrator"  hereunder  pursuant  to  documentation  in  form  and  substance
reasonably satisfactory to BofA.

                                       57
<PAGE>

SECTION 9.10   Withholding Tax. Each of the Lenders and the Administrative Agent
               ---------------
(i) represents  and warrants that on the date hereof (or, if later,  the date it
becomes a party to this  Agreement)  that under  applicable  law and treaties no
U.S.  withholding  tax will be  required  to be  withheld  with  respect  to any
payments  to be made by the  Borrower  hereunder,  (ii) agrees to furnish to the
Administrative  Agent and the Borrower on or before the first scheduled  payment
date after the  Amendment  Effective  Date,  a United  States  Internal  Revenue
Service Form W-8BEN and W-9 or Form W-8ECI and W-8, as appropriate (or successor
forms)  properly  completed  and  executed  and (iii)  agrees to comply with all
applicable  U.S.  laws and  regulations  with  regard  to such  withholding  tax
exemption.

          (a) If any Lender claims exemption from, or reduction of,  withholding
     tax under a United  States tax treaty by providing IRS Form W-8BEN and such
     Lender sells,  assigns,  grants a participation in, or otherwise  transfers
     all or part of the Obligations of the Borrower to such Lender,  such Lender
     agrees to notify the Administrative Agent of the percentage amount in which
     it is no longer the beneficial owner of Obligations of the Borrower to such
     Lender. To the extent of such percentage amount,  the Administrative  Agent
     will treat such Lender's IRS Form 1001 as no longer valid.

          (b) If any Lender  claiming  exemption from United States  withholding
     tax by filing IRS Form W-8EC1 with the Administrative Agent sells, assigns,
     grants  a  participation  in,  or  otherwise  transfers  all or part of the
     Obligations of the Borrower to such Lender, such Lender agrees to undertake
     sole  responsibility  for complying with the withholding  tax  requirements
     imposed by Sections 1441 and 1442 of the Code.

          (c) If  any  Lender  is  entitled  to a  reduction  in the  applicable
     withholding  tax, the  Administrative  Agent may withhold from any interest
     payment to such Lender an amount  equivalent to the applicable  withholding
     tax  after  taking  into  account  such  reduction.  If the  forms or other
     documentation  required by Section (a) of this Section are not delivered to
     the Administrative  Agent, then the Administrative  Agent may withhold from
     any  interest  payment  to such  Lender not  providing  such forms or other
     documentation an amount equivalent to the applicable withholding tax.

                                       58
<PAGE>

          (d) If the  IRS or any  other  Governmental  Authority  of the  United
     States or other jurisdiction  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,  was not
     properly   executed,   or  because   such  Lender   failed  to  notify  the
     Administrative  Agent of a  change  in  circumstances  which  rendered  the
     exemption from, or reduction of,  withholding tax  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 or otherwise,  including  penalties and interest,  and including any
     taxes  imposed  by  any   jurisdiction   on  the  amounts  payable  to  the
     Administrative  Agent  under  this  Section,  together  with all  costs and
     expenses  (including  Attorney Costs).  The obligation of the Lenders under
     this  Section  shall  survive  the  payment  of  all  Obligations  and  the
     resignation or replacement of the Administrative Agent.

SECTION 9.11   Co-Agents.  None of the Lenders  identified on the facing page or
               ---------
signature pages of this Agreement as a "co-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
the Lenders so  identified  as a "co-agent"  shall have or be deemed to have any
fiduciary relationship with any Lender. Each Lender acknowledges that it has not
relied,  and will not rely,  on any of the Lenders so  identified in deciding to
enter into this Agreement or in taking or not taking action hereunder.

                                   ARTICLE X.

                                  MISCELLANEOUS

SECTION 10.1   Amendments  and Waivers.  No amendment or waiver of any provision
               ------------------------
of this Agreement or any other Credit  Document,  and no consent with respect to
any  departure by the  Borrower  therefrom,  shall be effective  unless the same
shall be in writing and signed by the Required Lenders (or by the Administrative
Agent at the written  request of the  Required  Lenders)  and the  Borrower  and
acknowledged by the  Administrative  Agent,  and then any such waiver or consent
shall be effective  only in the specific  instance and for the specific  purpose
for which given; provided,  however, that no such waiver,  amendment, or consent
                 --------   -------
shall,  unless in writing  and signed by all the Lenders  and the  Borrower  and
acknowledged by the Administrative Agent, do any of the following:

                                       59
<PAGE>

          (a) increase or extend the  Commitment  to issue  Letters of Credit or
     the  Commitment  of any  Lender (or  reinstate  any  Commitment  terminated
     pursuant to Section  7.2) or extend the expiry date of any Letter of Credit
     to a date after the Final Maturity Date;

          (b)  postpone or delay any date fixed by this  Agreement  or any other
     Credit  Document  for any payment of LC Advances,  interest,  fees or other
     amounts due to the Lenders  (or any of them)  hereunder  or under any other
     Credit Document;

          (c) reduce the amount of, or the rate of interest specified herein on,
     any  Reimbursement  Obligation,  or  any  fees  or  other  amounts  payable
     hereunder or under any other Credit Document;

          (d) change  the  percentage  of the  Commitments  or of the  aggregate
     unpaid  principal  amount of the LC  Obligations  which is required for the
     Lenders or any of them to take any action hereunder;

          (e) release the  Security  Agreement  or release all or a  substantial
     part of the Collateral  granted  thereunder  except in accordance  with the
     terms thereof; or

          (f) amend this Section,  or any provision herein providing for consent
     or other action by all Lenders;

and, provided  further,  that no amendment,  waiver or consent shall,  unless in
writing  and signed by the  Administrative  Agent in  addition  to the  Required
Lenders or all the Lenders,  as the case may be,  affect the rights or duties of
the  Administrative  Agent under this Agreement or any other Credit Document and
no  amendment  of  any  provision  relating  to the LC  Administrator  shall  be
effective without the written consent of the LC  Administrator.  Notwithstanding
the foregoing the Fee Letter may be amended, or rights of privileges  thereunder
waived, in writing, executed by the parties thereto.

SECTION 10.2   Notices. All notices,  requests and other communications shall be
               -------
               in writing  (including,  unless the context  expressly  otherwise
               provides,  by facsimile  transmission,  provided  that any matter
               transmitted by the Borrower by facsimile (i) shall be immediately
               confirmed  by a  telephone  call to the  recipient  at the number
               specified on Schedule 10.2,  and (ii) shall be followed  promptly
                            -------------
               by delivery of a hard copy original thereof) and mailed, faxed or
               delivered,  to the  address or  facsimile  number  specified  for
               notices on Schedule  10.2; or, as directed to the Borrower or the
                          --------------
               Administrative   Agent,   to  such  other  address  as  shall  be
               designated  by  such  party  in a  written  notice  to the  other
               parties,  and as  directed  to any  other  party,  at such  other
               address as shall be designated by such party in a written  notice
               to the Borrower and the Administrative Agent.

                                       60
<PAGE>

          (a)  All  such  notices,   requests  and  communications  shall,  when
     transmitted by overnight  delivery,  or faxed,  be effective when delivered
     for  overnight  (next-day)  delivery,  or  transmitted  in legible  form by
     facsimile machine,  respectively,  or, if delivered,  upon delivery, except
     that  notices  pursuant  to Article II or IX shall not be  effective  until
     actually received by the Administrative  Agent and/or the LC Administrator,
     as applicable.

          (b) Any agreement of the  Administrative  Agent,  the LC Administrator
     and the Lenders herein to receive certain notices by telephone or facsimile
     is solely  for the  convenience  and at the  request of the  Borrower.  The
     Administrative  Agent,  the LC  Administrator  and  the  Lenders  shall  be
     entitled to rely on the  authority of any Person  purporting to be a Person
     authorized  by the  Borrower  to give such  notice  and the  Administrative
     Agent, the LC Administrator and the Lenders shall not have any liability to
     the Borrower or other Person on account of any action taken or not taken by
     the  Administrative  Agent, the LC Administrator or the Lenders in reliance
     upon such telephonic or facsimile notice. The obligation of the Borrower to
     repay the Obligations  shall not be affected in any way or to any extent by
     any  failure by the  Administrative  Agent,  the LC  Administrator  and the
     Lenders to receive  written  confirmation  of any  telephonic  or facsimile
     notice or the receipt by the Administrative Agent, the LC Administrator and
     the  Lenders  of a  confirmation  which  is  at  variance  with  the  terms
     understood  by the  Administrative  Agent,  the LC  Administrator  and  the
     Lenders to be contained in the telephonic or facsimile notice.

SECTION 10.3   No Waiver;  Cumulative  Remedies.  No failure to exercise  and no
               --------------------------------
               delay in exercising, on the part of the Administrative Agent, the
               LC  Administrator  or any  Lender,  any right,  remedy,  power or
               privilege hereunder, shall operate as a waiver thereof; nor shall
               any single or partial  exercise  of any right,  remedy,  power or
               privilege  hereunder  preclude  any  other  or  further  exercise
               thereof or the  exercise  of any other  right,  remedy,  power or
               privilege.

SECTION 10.4   Costs and Expenses. The Borrower shall:
               ------------------

          (a)  whether  or  not  the   transactions   contemplated   hereby  are
     consummated,   pay  or  reimburse  BofA   (including  in  its  capacity  as
     Administrative  Agent and LC Administrator)  within ten Business Days after
     demand  for all costs  and  expenses  incurred  by BofA  (including  in its
     capacity as Administrative Agent and LC Administrator),  in connection with
     the negotiation,  preparation,  delivery,  syndication,  administration and
     execution of, and any amendment,  supplement, waiver or modification to (in
     each case, whether or not consummated), this Agreement, any Credit Document
     and any other documents prepared in connection  herewith or therewith,  and
     the  consummation  of the  transactions  contemplated  hereby and  thereby,
     including  reasonable  Attorney  Costs  incurred by BofA  (including in its
     capacity as Administrative Agent) with respect thereto; and

          (b) pay or reimburse the Administrative  Agent, the Lenders and the LC
     Administrator  within  ten  Business  Days  after  demand for all costs and
     expenses (including Attorney Costs) incurred by them in connection with the
     enforcement,  attempted  enforcement,  or  preservation  of any  rights  or
     remedies  under this  Agreement  or any other  Credit  Document  during the
     existence of an Event of Default or after  acceleration  of the Obligations
     (including in connection with any "workout" or restructuring  regarding the
     Obligations,  and  including  in any  insolvency  proceeding  or  appellate
     proceeding)  provided  that the  parties  shall  to the  extent  of  common
     interests use a single counsel.

                                       61
<PAGE>

SECTION 10.5   Indemnity.  Whether or not the transactions  contemplated  hereby
               ---------

are consummated, the Borrower shall indemnify and hold the Agent-Related Persons
and each  Lender  and each of its  respective  officers,  directors,  employees,
counsel,  agents and attorneys-in-fact  (each, an "Indemnified Person") harmless
                                                   ------------------
from  and  against  any  and  all  liabilities,  obligations,  losses,  damages,
penalties, actions, judgments, suits, costs, charges, expenses and disbursements
(including  Attorney  Costs) of any kind or nature  whatsoever  which may at any
time  (including  at any time  following  repayment of the  Obligations  and the
termination,   resignation  or  replacement  of  the  Administrative   Agent  or
replacement  of any Lender) be imposed on,  incurred by or asserted  against any
such  Person in any way  relating  to or arising  out of this  Agreement  or any
document contemplated by or referred to herein, or the transactions contemplated
hereby, or any action taken or omitted by any such Person under or in connection
with  any  of the  foregoing,  including  with  respect  to  any  investigation,
litigation  or  proceeding  (including  any  Insolvency  Proceeding or appellate
proceeding) related to or arising out of this Agreement or the Credit Extensions
or the use of the proceeds thereof,  whether or not any Indemnified  Person is a
party thereto (all the foregoing,  collectively, the "Indemnified Liabilities");
                                                      -----------------------
provided,   that  the  Borrower  shall  have  no  obligation  hereunder  to  any
--------
Indemnified Person with respect to Indemnified Liabilities resulting solely from
the gross  negligence or willful  misconduct  of such  Indemnified  Person.  The
agreements in this Section shall survive payment of all other Obligations.

SECTION 10.6   Payments  Set Aside.  To the  extent  that the  Borrower  makes a
               -------------------
payment to the  Administrative  Agent, the Fronting Bank or the Lenders,  or the
Administrative  Agent,  the Fronting Bank or the Lenders exercise their right of
set-off,  and such  payment or the  proceeds of such set-off or any part thereof
are subsequently  invalidated,  declared to be fraudulent or  preferential,  set
aside or required  (including  pursuant to any  settlement  entered  into by the
Administrative  Agent, the Fronting Bank or such Lender in its discretion) to be
repaid  to a  trustee,  receiver  or any other  party,  in  connection  with any
Insolvency Proceeding or otherwise,  then (a) to the extent of such recovery the
obligation or part thereof originally  intended to be satisfied shall be revived
and  continued  in full force and effect as if such payment had not been made or
such set-off had not occurred,  and (b) each Lender  severally  agrees to pay to
the  Administrative  Agent upon demand its Percentage of any amount so recovered
from or repaid by the Administrative Agent.

                                       62
<PAGE>

SECTION 10.7   Successors and Assigns. The provisions of this Agreement shall be
               ----------------------
               binding  upon and inure to the benefit of the parties  hereto and
               their respective  successors and permitted  assigns,  except that
               the  Borrower  may not  assign or  transfer  any of its rights or
               obligations  under  this  Agreement  without  the  prior  written
               consent of the  Administrative  Agent, the Fronting Bank and each
               Lender.

SECTION 10.8   Assignments, Participations, etc.

          (a) Any Lender may,  with the written  consent of the Borrower (at all
     times  other than  during the  existence  of an Event of  Default)  and the
     Administrative  Agent,  which consents shall not be unreasonably  withheld,
     and the  Fronting  Bank,  at any time  assign and  delegate  to one or more
     Eligible Assignees (provided that no written consent of the Borrower or the
     Administrative  Agent shall be required in connection  with any  assignment
     and delegation by a Lender to an Eligible  Assignee that is an Affiliate of
     such Lender) (each an  "Assignee")  all, or any ratable part of all, of the
                             --------
     LC  Obligations,  the  Commitments  and the other rights and obligations of
     such Lender hereunder,  provided, however, that (w) the aggregate principal
                             -----------------
     amount of the  Commitment  assigned  by any  Lender to  someone  other than
     another  Lender shall be in a minimum amount of $5,000,000 (or if less, the
     entire Commitment then held by such Lender), (x) after giving effect to any
     such assignment by a Lender, the aggregate amount of the Commitments and/or
     LC Obligations held by such assigning Lender is at least $5,000,000 (unless
     such Lender has assigned the entire Commitment and LC Obligations then held
     by it), (y) after giving  effect to any such  assignment  by a Lender,  the
     Assignee Percentage under the Tranche A Commitment and Tranche B Commitment
     is the same and the  Percentage of the assignor  Lender under the Tranche A
     Commitment  and the Tranche B Commitment is the same,  and (z) the Assignee
     provides the Administrative  Agent and the Borrower with the form specified
     in Section 9.10. The Borrower and the Administrative  Agent may continue to
     deal solely and directly with such Lender in  connection  with the interest
     so  assigned to an Assignee  until (i) written  notice of such  assignment,
     together with payment instructions,  addresses and related information with
     respect to the  Assignee,  shall have been  given to the  Borrower  and the
     Administrative Agent by such Lender and the Assignee;  (ii) such Lender and
     its Assignee  shall have  delivered to the Borrower and the  Administrative
     Agent an Assignment  and  Acceptance in the form of Exhibit C  ("Assignment
                                                         ----------   ----------
     and  Acceptance") and (iii) the assignor Lender or Assignee has paid to the
      --------------
     Administrative Agent a processing fee in the amount of $3,500.

          (b) From and after the date that the Administrative Agent notifies the
     assignor Lender that it has received (and provided its consent with respect
     to)  an   executed   Assignment   and   Acceptance   and   payment  of  the
     above-referenced  processing  fee, (i) the Assignee  thereunder  shall be a
     party hereto and, to the extent that rights and obligations  hereunder have
     been assigned to it pursuant to such Assignment and Acceptance,  shall have
     the rights and obligations of a Lender under the Credit Documents, and (ii)
     the  assignor  Lender  shall,  to the extent  that  rights and  obligations
     hereunder  and under the other Credit  Documents  have been  assigned by it
     pursuant to such  Assignment and  Acceptance,  relinquish its rights and be
     released from its obligations under the Credit Documents.

                                       63
<PAGE>

          (c) Immediately upon each Assignee's making its processing fee payment
     under the Assignment and  Acceptance,  this Agreement shall be deemed to be
     amended to the  extent,  but only to the extent,  necessary  to reflect the
     addition of the Assignee and the resulting  adjustment  of the  Commitments
     arising therefrom.  The Commitment  allocated to each Assignee shall reduce
     such Commitments of the assigning Lender pro tanto.
                                              --- -----

          (d) Any Lender may at any time sell to one or more commercial banks or
     other   Persons  not   Affiliates   of  the   Borrower  (a   "Participant")
                                                                   -----------
     participating  interests  in any LC  Obligations,  the  Commitment  of that
     Lender and the other  interests of that Lender (the  "originating  Lender")
                                                           -------------------
     hereunder and under the other Credit Documents; provided, however, that (i)
     the  originating  Lender's  obligations  under this Agreement  shall remain
     unchanged,  (ii) the originating Lender shall remain solely responsible for
     the   performance  of  such   obligations,   (iii)  the  Borrower  and  the
     Administrative  Agent shall  continue to deal solely and directly  with the
     originating  Lender in connection with the originating  Lender's rights and
     obligations under this Agreement and the other Credit  Documents,  and (iv)
     no Lender shall  transfer or grant any  participating  interest under which
     the  Participant  has rights to approve any amendment to, or any consent or
     waiver with respect to, this Agreement or any other Credit Document, except
     to the extent such  amendment,  consent or waiver would  require  unanimous
     consent of the Lenders as described in the first  proviso to Section  10.1.
                                                -----  -------    -------------
     In the case of any such participation, the Participant shall be entitled to
     the benefit of Sections 3.1, 3.3 and 10.5 to the extent the Lender  selling
                    ------------- ---     ----
     such  participation  would be so  entitled  as though it were also a Lender
     hereunder,  and if amounts  outstanding  under this  Agreement  are due and
     unpaid,  or shall have been  declared  or shall have become due and payable
     upon the  occurrence  of an Event of  Default,  each  Participant  shall be
     deemed  to have the  right  of  set-off  in  respect  of its  participating
     interest in amounts owing under this Agreement to the same extent as if the
     amount of its participating  interest were owing directly to it as a Lender
     under  this  Agreement.  All  participations  shall be pro rata  among such
     Lender's Tranche A Commitment and Tranche B Commitment.

          (e) Notwithstanding any other provision in this Agreement,  any Lender
     may at any time  create a  security  interest  in,  or  pledge,  all or any
     portion of its  rights  under and  interest  in this  Agreement  and any LC
     Obligation  held by it in favor of any Federal Reserve Lender in accordance
     with Regulation A of the FRB or U.S. Treasury  Regulation 31 CFR ss.203.14,
     and such Federal Reserve Bank may enforce such pledge or security  interest
     in any manner permitted under applicable law.

                                       64
<PAGE>

SECTION 10.9   Confidentiality.  Each  Lender  agrees  to take and to cause  its
               ---------------
Affiliates to take normal and  reasonable  precautions  and exercise due care to
maintain the confidentiality of all information  identified as "confidential" or
"secret"  by  the  Borrower  and  provided  to it by  the  Borrower,  or by  the
Administrative  Agent on such  Borrower's  behalf,  under this  Agreement or any
other Credit  Document,  and neither it nor any of its Affiliates  shall use any
such  information  other  than  in  connection  with or in  enforcement  of this
Agreement and the other Credit  Documents or in connection  with other  business
now or  hereafter  existing or  contemplated  with the  Borrower;  except to the
extent such  information  (a) was or becomes  generally  available to the public
other  than as a result  of  disclosure  by the  Lender,  or (b) was or  becomes
available on a  non-confidential  basis from a source  other than the  Borrower,
provided that such source is not bound by a  confidentiality  agreement with the
Borrower known to the Lender;  provided,  however,  that any Lender may disclose
such  information  (i) at the  request or  pursuant  to any  requirement  of any
Governmental  Authority to which the Lender is subject or in connection  with an
examination of such Lender by any such  authority;  (ii) pursuant to subpoena or
other  court  process;  (iii)  when  required  to do so in  accordance  with the
provisions of any applicable  Requirement of Law; (iv) to the extent  reasonably
required  in  connection   with  any  litigation  or  proceeding  to  which  the
Administrative  Agent, any Lender or their  respective  Affiliates may be party;
(v) to the extent  reasonably  required in  connection  with the exercise of any
remedy  hereunder  or under any other  Credit  Document;  (vi) to such  Lender's
independent auditors and other professional  advisors;  (vii) to any Participant
or Assignee, actual or potential, provided that such Person agrees in writing to
keep such  information  confidential  to the same extent required of the Lenders
hereunder;  (viii) as to any Lender or its  Affiliate,  as  expressly  permitted
under the terms of any other document or agreement regarding  confidentiality to
which  the  Borrower  is party or is  deemed  party  with  such  Lender  or such
Affiliate;  and (ix) to its Affiliates  which are either such Lender's parent or
it or its parent's wholly owned Subsidiary or, with the prior written consent of
the Borrower which shall not be unreasonably withheld, its other Affiliates.

SECTION 10.10  Set-off.  In addition  to any rights and  remedies of the Lenders
               -------
provided  by law,  if an Event of Default  exists or the  Obligations  have been
accelerated,  the Fronting  Bank and each Lender is  authorized  at any time and
from time to time,  without prior notice to the Borrower,  any such notice being
waived by the  Borrower 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 by,  and other  indebtedness  at any time  owing by, the
Fronting  Bank  and such  Lender  to or for the  credit  or the  account  of the
Borrower  against any and all  Obligations  owing to the Fronting  Bank and such
Lender,  now  or  hereafter  existing,   irrespective  of  whether  or  not  the
Administrative  Agent the  Fronting  Bank and such Lender shall have made demand
under this Agreement or any Credit Document and although such Obligations may be
contingent  or unmatured.  The Fronting  Bank and each Lender agree  promptly to
notify the  Borrower  and the  Administrative  Agent after any such  set-off and
application  made by such Person;  provided,  however,  that the failure to give
                                   --------   -------
such notice shall not affect the validity of such set-off and application.

SECTION 10.11  Notification  of  Addresses,  Lending  Offices,  Etc. Each Lender
               -----------------------------------------------------
shall notify the  Administrative  Agent in writing of any changes in the address
to which notices to the Lender  should be directed,  of addresses of any Lending
Office,  of payment  instructions  in respect of all  payments  to be made to it
hereunder and of such other  administrative  information  as the  Administrative
Agent shall reasonably request.

                                       65
<PAGE>

SECTION 10.12  Counterparts.  This  Agreement  may be  executed in any number of
               ------------
separate  counterparts,  each of  which,  when so  executed,  shall be deemed an
original,  and all of said  counterparts  taken  together  shall  be  deemed  to
constitute but one and the same instrument.

SECTION 10.13  Severability. The illegality or unenforceability of any provision
               ------------
of this Agreement or any instrument or agreement required hereunder shall not in
any way  affect  or impair  the  legality  or  enforceability  of the  remaining
provisions of this Agreement or any instrument or agreement required hereunder.

SECTION 10.14  No Third Parties  Benefitted.  This Agreement is made and entered
               ----------------------------
into  for  the  sole  protection  and  legal  benefit  of the  Borrower,  the LC
Administrator,  the Fronting Bank, the Lenders, the Administrative Agent and the
Agent-Related  Persons, and their permitted successors and assigns, and no other
Person shall be a direct or indirect legal beneficiary of, or have any direct or
indirect cause of action or claim in connection  with,  this Agreement or any of
the other Credit Documents.

SECTION 10.15  Governing Law and Jurisdiction.
               ------------------------------

          (a) THIS  AGREEMENT  SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
     WITH,  THE LAW OF THE STATE OF NEW YORK  PROVIDED  THAT THE  ADMINISTRATIVE
     AGENT, THE LC ADMINISTRATOR AND THE LENDERS SHALL RETAIN ALL RIGHTS ARISING
     UNDER FEDERAL LAW.

          (b) ANY LEGAL ACTION OR PROCEEDING  WITH RESPECT TO THIS  AGREEMENT OR
     ANY OTHER CREDIT  DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW
     YORK OR OF THE UNITED STATES FOR THE SOUTHERN  DISTRICT OF NEW YORK, AND BY
     EXECUTION  AND  DELIVERY  OF  THIS  AGREEMENT,  EACH OF THE  BORROWER,  THE
     ADMINISTRATIVE  AGENT,  THE FRONTING  BANK,  THE LC  ADMINISTRATOR  AND THE
     LENDERS  CONSENTS,  FOR  ITSELF  AND IN  RESPECT  OF ITS  PROPERTY,  TO THE
     NON-EXCLUSIVE  JURISDICTION  OF THOSE  COURTS.  EACH OF THE  BORROWER,  THE
     ADMINISTRATIVE  AGENT,  THE FRONTING  BANK,  THE LC  ADMINISTRATOR  AND THE
     LENDERS  IRREVOCABLY  WAIVES ANY OBJECTION,  INCLUDING ANY OBJECTION TO THE
     LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON  CONVENIENS,  WHICH IT
                                                ---------------------
     MAY NOW OR HEREAFTER  HAVE TO THE BRINGING OF ANY ACTION OR  PROCEEDING  IN
     SUCH  JURISDICTION  IN RESPECT OF THIS  AGREEMENT OR ANY  DOCUMENT  RELATED
     HERETO. THE BORROWER,  THE ADMINISTRATIVE  AGENT, THE FRONTING BANK, THE LC
     ADMINISTRATOR  AND THE LENDERS EACH WAIVE PERSONAL  SERVICE OF ANY SUMMONS,
     COMPLAINT  OR OTHER  PROCESS  AND  IRREVOCABLY  CONSENT  TO THE  SERVICE OF
     PROCESS BY REGISTERED MAIL, POSTAGE PREPAID OR BY ANY OTHER MEANS PERMITTED
     BY NEW YORK OR FEDERAL LAW.

                                       66
<PAGE>

SECTION 10.16  Waiver of Jury Trial.  THE BORROWER,  THE LC  ADMINISTRATOR,  THE
               --------------------
FRONTING  BANK,  THE  LENDERS  AND THE  ADMINISTRATIVE  AGENT EACH  WAIVE  THEIR
RESPECTIVE  RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON
OR ARISING OUT OF OR RELATED TO THIS AGREEMENT,  THE OTHER CREDIT DOCUMENTS,  OR
THE TRANSACTIONS  CONTEMPLATED HEREBY OR THEREBY,  IN ANY ACTION,  PROCEEDING OR
OTHER  LITIGATION  OF ANY TYPE  BROUGHT BY ANY OF THE PARTIES  AGAINST ANY OTHER
PARTY OR ANY AGENT-RELATED PERSON, PARTICIPANT OR ASSIGNEE, WHETHER WITH RESPECT
TO  CONTRACT  CLAIMS,   TORT  CLAIMS,  OR  OTHERWISE.   THE  BORROWER,   THE  LC
ADMINISTRATOR,  THE FRONTING BANK, THE LENDERS AND THE ADMINISTRATIVE AGENT EACH
AGREE  THAT ANY SUCH  CLAIM OR CAUSE OF ACTION  SHALL BE TRIED BY A COURT  TRIAL
WITHOUT A JURY.  WITHOUT LIMITING THE FOREGOING,  THE PARTIES FURTHER AGREE THAT
THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION
AS TO ANY ACTION,  COUNTERCLAIM OR OTHER  PROCEEDING WHICH SEEKS, IN WHOLE OR IN
PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT OR THE OTHER
CREDIT DOCUMENTS OR ANY PROVISION HEREOF OR THEREOF.  THIS WAIVER SHALL APPLY TO
ANY  SUBSEQUENT  AMENDMENTS,  RENEWALS,  SUPPLEMENTS  OR  MODIFICATIONS  TO THIS
AGREEMENT AND THE OTHER CREDIT DOCUMENTS.

SECTION 10.17  Currency Indemnity. If, for the purposes of obtaining judgment in
               ------------------
any court in any jurisdiction  with respect to any Credit  Document,  it becomes
necessary  to convert  into the  currency of such  jurisdiction  (the  "Judgment
                                                                        --------
Currency")  any amount due under any Credit  Document in any currency other than
--------
the Judgment Currency (the "Currency Due"), then conversion shall be made at the
                            ------------
rate of exchange prevailing on the Business Day before the day on which judgment
is  given.  For this  purpose,  "rate of  exchange"  means the rate at which the
Administrative Agent is able, on the relevant date, to purchase the Currency Due
with the Judgment  Currency in accordance  with its normal  practice at its main
branch in San Francisco,  California. In the event that there is a change in the
rate of exchange prevailing between the Business Day before the day on which the
judgment is given and the date of payment of the amount due, the Borrower  will,
on the day of payment,  pay such  additional  amount,  if any, or be entitled to
receive reimbursement of such amount, if any, as may be necessary to ensure that
the amount paid on such date is the amount in the Judgment  Currency  which when
converted  at the rate of  exchange  prevailing  on the date of  payment  is the
amount then due under any Credit  Document in the Currency Due. If the amount of
the Currency Due which the  Administrative  Agent is so able to purchase is less
than the amount of the Currency  Due  originally  due to it, the Borrower  shall
indemnify and save the  Administrative  Agent  harmless from and against loss or
damage arising as a result of such  deficiency.  This indemnity shall constitute
an obligation  separate and independent from the other obligations  contained in
any Credit  Document,  shall give rise to a separate  and  independent  cause of
action, shall apply irrespective of any indulgence granted by the Administrative
Agent  from  time  to  time  and  shall   continue  in  full  force  and  effect
notwithstanding  any  judgment  or order for a  liquidated  sum in respect of an
amount due under any Credit Document or under any judgment or order.

                                       67
<PAGE>

SECTION 10.18  Service of Process.  On or prior to the Amendment Effective Date,
               ------------------
the Borrower shall appoint CT Corporation System (the "Process Agent"),  with an
office on the date hereof at 111 8th Avenue,  New York,  New York 10011,  United
States, as its agent to receive on its behalf and its property service of copies
of the summons and  complaints  and any other process which may be served in any
such action or  proceeding,  provided that a copy of such process is also mailed
by registered or certified mail, postage prepaid, to the Borrower at its address
specified  pursuant  to Section  10.2.  Such  service  may be made by mailing or
                        -------------
delivering a copy of such  process to the Borrower in care of the Process  Agent
at the Process  Agent's  above  address,  and the  Borrower  hereby  irrevocably
authorizes  and directs the Process  Agent to accept such service on its behalf.
The  Borrower  agrees to  indemnify  the Process  Agent in  connection  with all
matters  relating to its appointment as agent of the Borrower for such purposes,
to enter into any  agreement  relating to such  appointment  which such  Process
Agent may customarily  require,  and to pay such Process Agent's  customary fees
upon demand. As an alternative method of service,  the Borrower also irrevocably
consents to the service of any and all process in any such action or  proceeding
by the  mailing  of  copies  of such  process  to the  Borrower  at its  address
specified  pursuant to Section 10.2.  Nothing in this Section 10.18 shall affect
                       -------------                  -------------
the right of the  Administrative  Agent or any Lender to serve legal  process in
any other  manner  permitted  by law or affect  the right of the  Administrative
Agent or any Lender to bring any action or proceeding  against the Borrower,  or
any of its properties in the courts of any other jurisdiction.

SECTION 10.19  Entire Agreement. This Agreement,  together with the other Credit
               ----------------
Documents,  embodies the entire agreement and understanding  among the Borrower,
the LC  Administrator,  the Fronting  Bank,  the Lenders and the  Administrative
Agent, and supersedes all prior or contemporaneous agreements and understandings
of such Persons,  verbal or written,  relating to the subject  matter hereof and
thereof.

                                       68
<PAGE>

               MAX RE LTD.

               By:
                      ----------------------------------------------------------
               Title:
                      ----------------------------------------------------------

                                      S-1
<PAGE>

                   BANK OF AMERICA, NATIONAL
                   ASSOCIATION, as
                   Administrative Agent, LC
                   Administrator, Fronting
                   Bank and Lender

                   By:
                      --------------------------------------------------------
                   Title:
                         -----------------------------------------------------

                                      S-2
<PAGE>

                   FLEET NATIONAL BANK

                   By:
                       -------------------------------------------------------
                   Title:
                         -----------------------------------------------------

                                      S-3
<PAGE>

                   CITIBANK, N.A.

                   By:
                      --------------------------------------------------------
                   Title:
                         -----------------------------------------------------

                                      S-4
<PAGE>

<TABLE>
<CAPTION>

                                                    SCHEDULE 1.1

                                                CONCENTRATION LIMITS

                                                  Limitation per                      Limitation per
                                            Issue (as Percentage                Issuer (as Percentage
                                                   of all such                         of all such
Eligible Investments                         Eligible Investments)              Eligible Investments)
--------------------                         ---------------------              ---------------------
<S>                                          <C>                                <C>
ABS                                          7.5%                                        N/A

Corporate/Municipal                          N/A                                         7.5%
Securities

MBS (Non Agency CMOs)                        5%                                          7.5%

G7 Securities                                N/A                                         7.5%

</TABLE>
<TABLE>
<CAPTION>

                                          SCHEDULE 1.2

                                   BORROWING BASE CALCULATION

Eligible Investments                                 Applicable Percentage of Fair Market Value
--------------------                                 ------------------------------------------
<S>                                                  <C>

Cash and Cash Equivalents                            98%

Government Debt with maturities                      98%
of more than one year but less
than five year

Government Debt with maturities                      95%
of five years or more

MBS (Agency Pass-Throughs) rated                     90%
AA- by S&P or Aa3 by Moody's or
better

MBS (Agency CMOs) rated AA- by                       90%
S&P or Aa3 by Moody's or better

MBS (Non-Agency CMOs) rated AAA                      90%
by S&P or Aaa by Moody's

MBS (Non-Agency CMOs) rated AA-                      87.5%
by S&P or Aa3 by Moody's or better

ABS                                                  95%

G7 Securities issued by the Governments              95%
of Germany or the United Kingdom

G7 Securities issued by the Governments              93%
of France, Japan or Canada

G7 Securities issued by the Government               92%
of Italy

Corporate/Municipal Securities rated                 94%
AAA by S&P or Aaa by Moody's

Corporate/Municipal Securities rated at              93%
least AA- by S&P or Aa3 by Moody's

Corporate/Municipal Securities rated at              92%
A- by S&P or A3 by Moody's
</TABLE>
<PAGE>

<TABLE>
<CAPTION>

                                       SCHEDULE 2.1

                                        COMMITMENTS

                                Tranche A              Tranche B
Lender                          Commitment             Commitment            Percentage
------                          ----------             ----------            ----------
<S>                             <C>                    <C>                   <C>
Bank of America,                $ 90,000,000           $10,000,000           33.333333334%
National Association

Fleet National Bank             $ 90,000,000           $10,000,000           33.333333333%

Citibank, NA                    $ 90,000,000           $10,000,000           33.333333333%
                                ------------           -----------           -------------

         TOTAL                  $270,000,000           $30,000,000          100.000000000%
</TABLE>
<PAGE>

                                  SCHEDULE 4.1

                                  JURISDICTIONS

Max Re Ltd
----------
Bermuda

Max Re Europe Limited
---------------------

Ireland
<PAGE>

                                  SCHEDULE 4.2
                                  ------------

                                   LITIGATION

None
<PAGE>

                                  SCHEDULE 4.7
                                  ------------

                                    LOCATIONS

Ascot House
Hamilton, Bermuda

Max Re Europe Limited
Commerzbank House
Guild St 1 FFC
Dublin, 1
Ireland
<PAGE>

                                  SCHEDULE 4.9

                                  SUBSIDIARIES

Max Re Europe Limited
<PAGE>

                                  SCHEDULE 4.10

                               INSURANCE LICENSES

                 Bermuda licence for General Business Insurance

Borrower is licensed as a Class IV,  General and  long-term  Insurer in Bermuda,
which allows writing of all property, casualty, life, and health lines.

Max Re Europe Limited has applied for a reinsurance  license in Ireland and such
application is currently awaiting approval.
<PAGE>

                                  SCHEDULE 6.7

                                      LIENS

None
<PAGE>

                                  SCHEDULE 10.2

                                    ADDRESSES

LENDING OFFICES,
----------------
ADDRESSES FOR NOTICES
---------------------

BANK OF AMERICA, NATIONAL ASSOCIATION,
-------------------------------------
as Administrative Agent, Fronting Bank,
LC Administrator and Lender

Lending Letter of Credit Office:

231 South LaSalle Street
Letter of Credit Operations/#1580
Chicago, Illinois  60697
Attention:        Manager - Standby Letter of Credit Unit
Facsimile:        (312) 987-6828

Notices (other than notices of Credit Extensions):

Bank of America, National Association
231 South LaSalle Street
Chicago, Illinois  60697
Attention:        Debra Basler
Telephone:        (312) 828-3734
Facsimile:        (312) 987-0889

FLEET NATIONAL BANK
-------------------

Notices:

Fleet National Bank
Mail Code CT MO 0250
777 Main Street
Hartford, CT 06115
Attention:        Anson Harris
Telephone:        (860) 986-7518
Facsimile:        (860) 986-1264
<PAGE>

CITIBANK, N.A.
--------------

Notices:

Citibank, N.A.
388 Greenwich Street
22nd Floor
New York, New York 10013
Attention:        Mike A.  Taylor
Telephone:        (212) 816-4033
Facsimile:        (212) 816-4144

MAX RE LTD.
----------

Notices:

Max Re Ltd.
P.O. Box HM 2565
Ascot House
28 Queen Street
Hamilton, Bermuda
Attention:        Keith Hynes, Chief Financial Officer
Telephone:        (441) 296-8800
Facsimile:        (441) 296-8811<PAGE>

                                                            Exhibit 4.1

                           UNIGRAPHICS SOLUTIONS INC.
                              2001 INCENTIVE PLAN

1.   Plan.  This Unigraphics Solutions Inc. 2001 Incentive Plan (the "Plan") has
     been adopted by Unigraphics Solutions Inc., a Delaware corporation (the
     "Company"), to be effective as of the Effective Date stated below for the
     purpose stated in paragraph 2 below.

2.   Objectives.  This Plan is designed to attract and retain key Employees (as
     hereinafter defined), to attract and retain qualified directors of the
     Company, to encourage the sense of proprietorship of such employees and
     Directors, and to stimulate the active interest of such persons in the
     development and financial success of the Company and its Subsidiaries.
     These objectives are to be accomplished by making Awards (as hereinafter
     defined) under this Plan and thereby providing Participants (as hereinafter
     defined) with a proprietary interest in the growth and performance of the
     Company and its Subsidiaries.

3.   Definitions.  As used herein, the terms set forth below shall have the
     following respective meanings:

               "Annual Director Award Date" means, for each year beginning with
     the year that includes the Effective Date, the first business day of the
     month next succeeding the date upon which the annual meeting of
     stockholders of the Company is held in such year.

               "Authorized Officer" means the Chairman of the Board of the
     Company or the President of the Company (or any other senior officer of the
     Company to whom the Chairman of the Board or the President shall delegate
     the authority to execute any Award Agreement).

               "Award" means an Employee Award or a Director Award.

               "Award Agreement" means any Employee Award Agreement or Director
     Award Agreement.

               "Board" means the Board of Directors of the Company.

               "Cash Award" means an award denominated in cash.

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

               "Committee" means the Compensation Committee of the Board or such
     other committee of the Board as is designated by the Board to administer
     the Plan.  If at any time no Committee shall be in office, then the
     functions of the Committee specified in the Plan shall be exercised by the
     Board.

               "Common Stock" means the Class A Common Stock, par value $.01 per
     share, of the Company.

               "Director" means an individual serving as a member of the Board.

               "Director Award" means the grant of a Director Option.

               "Director Award Agreement" means a written agreement between the
     Company and a Participant who is a Non-employee Director setting forth the
     terms, conditions and limitations applicable to a Director Award.

               "Director Options" means Nonqualified Options granted to Non-
     employee Directors pursuant to the applicable terms, conditions and
     limitations specified in paragraph 9 hereof.

               "Disability" means, with respect to a Non-employee Director, the
     inability to perform the duties of a Director for a continuous period of
     more than three months by reason of any medically determinable physical or
     mental impairment.

                                       1
<PAGE>

               "Dividend Equivalents" means, with respect to shares of
     Restricted Stock that are to be issued at the end of the Restriction
     Period, an amount equal to all dividends and other distributions (or the
     economic equivalent thereof) that are payable to stockholders of record
     during the Restriction Period on a like number of shares of Common Stock.

               "Effective Date" means May 16, 2001.

               "Employee" means an employee of the Company or any of its
     Subsidiaries or any corporation which directly or indirectly owns shares
     representing more than 50% of the combined voting power of the shares of
     all classes or series of capital stock of the Company which have the right
     to vote generally on matters submitted to a vote of the stockholders of the
     Company.

               "Employee Award" means the grant of any Option, SAR, Stock Award,
     Cash Award or Performance Award, whether granted singly, in combination or
     in tandem, to a Participant who is an Employee pursuant to such applicable
     terms, conditions and limitations as the Committee may establish in order
     to fulfill the objectives of the Plan.

               "Employee Award Agreement" means a written agreement between the
     Company and a Participant who is an Employee setting forth the terms,
     conditions and limitations applicable to an Employee Award.

               "Exchange Act" means the Securities Exchange Act of 1934, as
     amended from time to time.

               "Fair Market Value" of a share of Common Stock means, as of any
     relevant date, (i) if shares of Common Stock are listed on a national
     securities exchange, the mean between the highest and lowest sales price
     per share of Common Stock on the consolidated transaction reporting system
     for the principal national securities exchange on which shares of Common
     Stock are listed on that date, or, if there shall have been no such sale so
     reported on that date, on the last preceding date on which such a sale was
     so reported, (ii) if shares of Common Stock are not so listed but are
     quoted on the Nasdaq National Market, the mean between the highest and
     lowest sales price per share of Common Stock reported by the Nasdaq
     National Market on that date, or, if there shall have been no such sale so
     reported on that date, on the last preceding date on which such a sale was
     so reported or (iii) if shares of Common Stock are not so listed or quoted
     but are traded in the over-the-counter market, the mean between the closing
     bid and asked price on that date, or, if there are no quotations available
     for such date, on the last preceding date on which such quotations shall be
     available, as reported by the Nasdaq Stock Market, or, if not reported by
     the Nasdaq Stock Market, by the National Quotation Bureau Incorporated.

               "Incentive Option" means an Option that is intended to comply
     with the requirements set forth in Section 422 of the Code.

               "Non-employee Director" has the meaning set forth in paragraph
     4(b) hereof.

               "Nonqualified Stock Option" means an Option that is not an
     Incentive Option.

               "Option" means a right to purchase a specified number of shares
     of Common Stock at a specified price.

               "Participant" means an Employee or Director to whom an Award has
     been made under this Plan.

               "Performance Award" means an award made pursuant to this Plan to
     a Participant who is an Employee that is subject to the attainment of one
     or more Performance Goals.

               "Performance Goal" means a standard established by the Committee,
     to determine in whole or in part whether a Performance Award shall be
     earned.

               "Restricted Stock" means any Common Stock that is restricted or
     subject to forfeiture provisions.

                                       2
<PAGE>

               "Restriction Period" means a period of time beginning as of the
     date upon which an Award of Restricted Stock is made pursuant to this Plan
     and ending as of the date upon which the Common Stock subject to such Award
     is no longer restricted or subject to forfeiture provisions.

               "Rule 16b-3" means Rule 16b-3 promulgated under the Exchange Act,
     or any successor rule.

               "SAR" means a right to receive a payment, in cash or Common
     Stock, equal to the excess of the Fair Market Value or other specified
     valuation of a specified number of shares of Common Stock on the date the
     right is exercised over a specified strike price (in each case, as
     determined by the Committee).

               "Stock Award" means an award in the form of shares of Common
     Stock or units denominated in shares of Common Stock.

               "Subsidiary" means (i) in the case of a corporation, any
     corporation of which the Company directly or indirectly owns shares
     representing more than 50% of the combined voting power of the shares of
     all classes or series of capital stock of such corporation which have the
     right to vote generally on matters submitted to a vote of the stockholders
     of such corporation and (ii) in the case of a partnership or other business
     entity not organized as a corporation, any such business entity of which
     the Company directly or indirectly owns more than 50% of the voting,
     capital or profit interests (whether in the form of partnership interests,
     membership interests or otherwise).

4.   Eligibility.

     (a)  Employees.  Employees eligible for Employee Awards under this Plan are
          those who hold positions of responsibility and whose performance, in
          the judgment of the Committee, can have a significant effect on the
          success of the Company and its Subsidiaries, or whose services to the
          Company can, in the Committee's sole determination, be better
          recruited or retained through participation in the Plan.

     (b)  Directors.  Directors eligible for Director Awards under this Plan are
          those who are not employees of the Company or any of its Subsidiaries
          or any corporation which directly or indirectly owns shares
          representing more than 50% of the combined voting power of the shares
          of all classes or series of capital stock of the Company which have
          the right to vote generally on matters submitted to a vote of the
          stockholders of the Company ("Non-employee Directors").

5.   Common Stock Available for Awards.  Subject to the provisions of paragraph
     15 hereof, there shall be available for Awards under this Plan, granted
     wholly or partly in Common Stock (including rights or options that may be
     exercised for or settled in Common Stock), an aggregate of 4,500,000 shares
     of Common Stock, of which an aggregate of not more than 100,000 shares
     shall be available for Director Awards and the remainder shall be available
     for Employee Awards.  The number of shares of Common Stock that are the
     subject of Awards under this Plan, that are forfeited or terminated, expire
     unexercised, are settled in cash in lieu of Common Stock or in a manner
     such that all or some of the shares covered by an Award are not issued to a
     Participant or are exchanged for Awards that do not involve Common Stock,
     shall again immediately become available for Awards hereunder.  The
     Committee may from time to time adopt and observe such procedures
     concerning the counting of shares against the Plan maximum as it may deem
     appropriate.  The Board and the appropriate officers of the Company shall
     from time to time take whatever actions are necessary to file any required
     documents with governmental authorities, stock exchanges and transaction
     reporting systems to ensure that shares of Common Stock are available for
     issuance pursuant to Awards.

6.   Administration.

     (a)  This Plan, as it applies to Participants who are Employees but not
          with respect to Participants who are Non-employee Directors, shall be
          administered by the Committee.

     (b)  Subject to the provisions hereof, insofar as this Plan relates to the
          Employee Awards, the Committee shall have full and exclusive power and
          authority to administer this Plan and to take all

                                       3
<PAGE>

          actions that are specifically contemplated hereby or are necessary or
          appropriate in connection with the administration hereof. Insofar as
          this Plan relates to Employee Awards, the Committee shall also have
          full and exclusive power to interpret this Plan and to adopt such
          rules, regulations and guidelines for carrying out this Plan as it may
          deem necessary or proper, all of which powers shall be exercised in
          the best interests of the Company and in keeping with the objectives
          of this Plan. The Committee shall have full power and authority to
          create subplans under this Plan to the extent the Committee deems
          necessary or advisable to comply with the laws of any foreign country
          in connection with Employee Awards made to Employees who are residents
          of such country. The Committee may, in its discretion, provide for the
          extension of the exercisability of an Employee Award, accelerate the
          vesting or exercisability of an Employee Award, eliminate or make less
          restrictive any restrictions contained in an Employee Award, waive any
          restriction or other provision of this Plan or an Employee Award or
          otherwise amend or modify an Employee Award in any manner that is
          either (i) not adverse to the Participant to whom such Employee Award
          was granted or (ii) consented to by such Participant. The Committee
          may correct any defect or supply any omission or reconcile any
          inconsistency in this Plan or in any Employee Award in the manner and
          to the extent the Committee deems necessary or desirable to further
          the purposes of the Plan. Any decision of the Committee in the
          interpretation and administration of this Plan shall lie within its
          sole and absolute discretion and shall be final, conclusive and
          binding on all parties concerned. The functions of the Committee
          specified in the Plan shall be exercised by the Board, if and to the
          extent that no Committee exists which has the authority to so
          administer the Plan.

     (c)  No member of the Committee or officer of the Company to whom the
          Committee has delegated authority in accordance with the provisions of
          paragraph 7 of this Plan shall be liable for anything done or omitted
          to be done by him or her, by any member of the Committee or by any
          officer of the Company in connection with the performance of any
          duties under this Plan, except for his or her own willful misconduct
          or as expressly provided by statute.

7.   Delegation of Authority.  The Committee may delegate to the Chairman of the
     Board and to other senior officers of the Company its duties under this
     Plan pursuant to such conditions or limitations as the Committee may
     establish, except that the Committee may not delegate to any person the
     authority to grant Awards to, or take other action with respect to,
     Participants who are subject to Section 16 of the Exchange Act or Section
     162(m) of the Code.

8.   Employee Awards.

     (a)  The Committee shall determine the type or types of Employee Awards to
          be made under this Plan and shall designate from time to time the
          Employees who are to be the recipients of such Awards.  Each Employee
          Award may be embodied in an Employee Award Agreement, which shall
          contain such terms, conditions and limitations as shall be determined
          by the Committee in its sole discretion and shall be signed by the
          Participant to whom the Employee Award is made and by an Authorized
          Officer for and on behalf of the Company.  Employee Awards may consist
          of those listed in this paragraph 8(a) hereof and may be granted
          singly, in combination or in tandem.  Employee Awards may also be made
          in combination or in tandem with, in replacement of, or as
          alternatives to, grants or rights under this Plan or any other
          employee plan of the Company or any of its Subsidiaries, including the
          plan of any acquired entity; provided that no Option may be issued in
          exchange for the cancellation of an Option with a lower exercise
          price. An Employee Award may provide for the grant or issuance of
          additional, replacement or alternative Employee Awards upon the
          occurrence of specified events, including the exercise of the original
          Employee Award granted to a Participant.  All or part of an Employee
          Award may be subject to conditions established by the Committee, which
          may include, but are not limited to, continuous service with the
          Company and its Subsidiaries, achievement of specific business
          objectives, increases in specified indices, attainment of specified
          growth rates and other comparable measurements of performance.  Upon
          the termination of employment by a Participant who is an Employee, any
          unexercised, deferred, unvested or unpaid Employee Awards shall be
          treated as set forth in the applicable Employee Award Agreement.

                                       4
<PAGE>

          (i)  Stock Option.  An Employee Award may be in the form of an Option.
               An Option awarded pursuant to this Plan may consist of an
               Incentive Option or a Nonqualified Option.  The price at which
               shares of Common Stock may be purchased upon the exercise of an
               Incentive Option shall be not less than the Fair Market Value of
               the Common Stock on the date of grant.  The price at which shares
               of Common Stock may be purchased upon the exercise of a
               Nonqualified Option shall be not less than, but may exceed, the
               Fair Market Value of the Common Stock on the date of grant.
               Subject to the foregoing provisions, the terms, conditions and
               limitations applicable to any Options awarded pursuant to this
               Plan, including the term of any Options and the date or dates
               upon which they become exercisable, shall be determined by the
               Committee.

          (ii) Stock Appreciation Right.  An Employee Award may be in the form
               of an SAR.  The terms, conditions and limitations applicable to
               any SARs awarded pursuant to this Plan, including the term of any
               SARs and the date or dates upon which they become exercisable,
               shall be determined by the Committee.

         (iii) Stock Award.  An Employee Award may be in the form of a Stock
               Award.  The terms, conditions and limitations applicable to any
               Stock Awards granted pursuant to this Plan shall be determined by
               the Committee.

          (iv) Cash Award.  An Employee Award may be in the form of a Cash
               Award.  The terms, conditions and limitations applicable to any
               Cash Awards granted pursuant to this Plan shall be determined by
               the Committee.

          (v)  Performance Award.  Without limiting the type or number of
               Employee Awards that may be made under the other provisions of
               this Plan, an Employee Award may be in the form of a Performance
               Award.  A Performance Award shall be paid, vested or otherwise
               deliverable solely on account of the attainment of one or more
               pre-established, objective Performance Goals established by the
               Committee prior to the earlier to occur of (x) 90 days after the
               commencement of the period of service to which the Performance
               Goal relates and (y) the elapse of 25% of the period of service
               (as scheduled in good faith at the time the goal is established),
               and in any event while the outcome is substantially uncertain.  A
               Performance Goal is objective if a third party having knowledge
               of the relevant facts could determine whether the goal is met.
               Such a Performance Goal may be based on one or more business
               criteria that apply to the individual, one or more business units
               of the Company, or the Company as a whole, and may include one or
               more of the following: increased revenue, net income, stock
               price, market share, earnings per share, return on equity, return
               on assets or decrease in costs.  Unless otherwise stated, such a
               Performance Goal need not be based upon an increase or positive
               result under a particular business criterion and could include,
               for example, maintaining the status quo or limiting economic
               losses (measured, in each case, by reference to specific business
               criteria).  In interpreting Plan provisions applicable to
               Performance Goals and Performance Awards, it is the intent of the
               Plan to conform with the standards of Section 162(m) of the Code
               and Treasury Regulations (S) 1.162-27(e)(2)(i), and the Committee
               in establishing such goals and interpreting the Plan shall be
               guided by such provisions.  Prior to the payment of any
               compensation based on the achievement of Performance Goals, the
               Committee must certify in writing that applicable Performance
               Goals and any of the material terms thereof were, in fact,
               satisfied.  Subject to the foregoing provisions, the terms,
               conditions and limitations applicable to any Performance Awards
               made pursuant to this Plan shall be determined by the Committee.

     (b)  Notwithstanding anything to the contrary contained in this Plan, the
          following limitations shall apply to any Employee Awards made
          hereunder:

          (i)  no Participant may be granted, during any one-year period,
               Employee Awards consisting of Options or SARs that are
               exercisable for more than 300,000 shares of Common Stock;

                                       5
<PAGE>

          (ii) no Participant may be granted, during any one-year period,
               Employee Awards consisting of shares of Common Stock or units
               denominated in such shares (other than any Employee Awards
               consisting of Options or SARs) covering or relating to more than
               100,000 shares of Common Stock (the limitation set forth in this
               clause (ii), together with the limitation set forth in clause (i)
               above, being hereinafter collectively referred to as the "Stock
               Based Awards Limitations"); and

         (iii) no Participant may be granted Employee Awards consisting of
               cash or in any other form permitted under this Plan (other than
               Employee Awards consisting of Options or SARs or otherwise
               consisting of shares of Common Stock or units denominated in such
               shares) in respect of any one-year period having a value
               determined on the date of grant in excess of $4,000,000.

9.   Director Awards.  Each Non-employee Director of the Company shall be
     granted Director Awards in accordance with this paragraph 9 and subject to
     the applicable terms, conditions and limitations set forth in this Plan and
     the applicable Director Award Agreement.  Notwithstanding anything to the
     contrary contained herein, Director Awards shall not be made in any year in
     which a sufficient number of shares of Common Stock are not available to
     make such Awards under this Plan.

     (a)  Automatic Director Options.  On the date of his or her initial
          election to the Board, each Non-employee Director shall be
          automatically awarded a Director Option that provides for the purchase
          in aggregate under this Plan or any other stock plan of the Company
          then in effect of 5,000 shares of Common Stock.  In addition, on each
          Annual Director Award Date, each Non-employee Director shall
          automatically be granted a Director Option that provides for the
          purchase, in aggregate under this Plan or any other stock plan of the
          Company then in effect, of 5,000 shares of Common Stock.  In the event
          that a Non-employee Director is elected after the Effective Date
          otherwise than by election at an annual meeting of stockholders of the
          Company, on the date of his or her election, such Non-employee
          Director shall automatically be granted a Director Option that
          provides for the purchase of a number of shares of Common Stock
          (rounded up to the nearest whole number), in aggregate under this Plan
          or any other stock plan of the Company then in effect, equal to the
          product of (i) 5,000 and (ii) a fraction the numerator of which is the
          number of days between the election of such Non-employee Director and
          the next scheduled Annual Director Award Date (or, if no such date has
          been scheduled, the first anniversary of the immediately preceding
          Annual Director Award Date) and the denominator of which is 365.  Each
          Director Option shall have a term of ten years from the date of grant,
          notwithstanding any earlier termination of the status of the holder as
          a Non-employee Director.  The purchase price of each share of Common
          Stock subject to a Director Option shall be equal to the Fair Market
          Value of the Common Stock on the date of grant.  All Director Options
          shall vest and become exercisable in increments of one-third of the
          total number of shares of Common Stock that are subject thereto
          (rounded up to the nearest whole number) on the first and second
          anniversaries of the date of grant and of all remaining shares of
          Common Stock that are subject thereto on the third anniversary of the
          date of grant.  All unvested Director Options shall be forfeited if
          the Non-employee Director resigns as a Director without the consent of
          a majority of the other Directors.

     (b)  Elective Director Options.  In addition to the Director Options
          automatically awarded pursuant to the immediately preceding paragraph,
          a Non-employee Director may make an annual election to receive, in
          lieu of all or any portion of the Director's fees he would otherwise
          be entitled to receive in cash during the next year (including both
          annual retainer and meeting fees), Director Options that provide for
          the purchase of a number of shares of Common Stock (rounded up to the
          nearest whole number), in aggregate under this Plan or any other stock
          plan of the Company then in effect, equal to the product of (x) three
          times (y) a fraction the numerator of which is equal to the dollar
          amount of fees the Non-employee Director elects to forego in the next
          year in exchange for Director Options and the denominator of which is
          equal to the Fair Market Value of the Common Stock on the effective
          date of the election.  Each annual election made by a Non-employee
          Director pursuant to this paragraph 9(b), (i) shall take the form of a
          written document signed by such Non-employee Director and filed with
          the Secretary of the Company, (ii) shall designate the dollar amount
          of the fees the Non-employee Director elects to forego in the next
          year in exchange

                                       6
<PAGE>

          for Director Options and (iii) to the extent provided by the Committee
          in order to ensure that the Award of the Director Options is exempt
          from Section 16 by virtue of Rule 16b-3, shall be irrevocable and
          shall be made prior to the date as of which such Award of Director
          Options is to be effective. An Award of Director Options at the
          election of a Non-employee Director shall be effective on the next
          Annual Director Award Date.

          Any Award of Director Options shall be embodied in a Director Award
          Agreement, which shall contain the terms, conditions and limitations
          set forth above and shall be signed by the Participant to whom the
          Director Options are granted and by an Authorized Officer for and on
          behalf of the Company.

10.  Payment of Awards.

     (a)  General.  Payment of Employee Awards may be made in the form of cash
          or Common Stock, or a combination thereof, and may include such
          restrictions as the Committee shall determine, including, in the case
          of Common Stock, restrictions on transfer and forfeiture provisions.
          If payment of an Employee Award is made in the form of Restricted
          Stock, the Employee Award Agreement relating to such shares shall
          specify whether they are to be issued at the beginning or end of the
          Restriction Period.  In the event that shares of Restricted Stock are
          to be issued at the beginning of the Restriction Period, the
          certificates evidencing such shares (to the extent that such shares
          are so evidenced) shall contain appropriate legends and restrictions
          that describe the terms and conditions of the restrictions applicable
          thereto.  In the event that shares of Restricted Stock are to be
          issued at the end of the Restricted Period, the right to receive such
          shares shall be evidenced by book entry registration or in such other
          manner as the Committee may determine.

     (b)  Deferral.  With the approval of the Committee, payments in respect of
          Employee Awards may be deferred, either in the form of installments or
          a future lump-sum payment.  The Committee may permit selected
          Participants to elect to defer payment of some or all types of
          Employee Awards in accordance with procedures established by the
          Committee.  Any deferred payment of an Employee Award, whether elected
          by the Participant or specified by the Employee Award Agreement or by
          the Committee, may be forfeited if and to the extent that the Employee
          Award Agreement so provides.

     (c)  Dividends and Interest.  Rights to dividends or Dividend Equivalents
          may be extended to and made part of any Employee Award consisting of
          shares of Common Stock or units denominated in shares of Common Stock,
          subject to such terms, conditions and restrictions as the Committee
          may establish.   The Committee may also establish rules and procedures
          for the crediting of interest on deferred cash payments and Dividend
          Equivalents for Employee Awards consisting of shares of Common Stock
          or units denominated in shares of Common Stock.

     (d)  Substitution of Awards.  At the discretion of the Committee, a
          Participant who is an Employee may be offered an election to
          substitute an Employee Award for another Employee Award or Employee
          Awards of the same or different type.

11.  Stock Option Exercise.  The price at which shares of Common Stock may be
     purchased under a Director Option shall be paid in full at the time of
     exercise in cash.  The price at which shares of Common Stock may be
     purchased under an Option which is an Employee Award shall be paid in full
     at the time of exercise in cash or, if elected by the optionee, the
     optionee may purchase such shares by means of tendering Common Stock or
     surrendering another Award, including Restricted Stock, valued at Fair
     Market Value on the date of exercise, or any combination thereof.  The
     Committee shall determine acceptable methods for Participants who are
     Employees to tender Common Stock or other Employee Awards; provided that
     any Common Stock that is or was the subject of an Employee Award may be so
     tendered only if it has been held by the Participant for six months.  The
     Committee may provide for procedures to permit the exercise or purchase of
     such Awards by use of the proceeds to be received from the sale of Common
     Stock issuable pursuant to an Employee Award.  Unless otherwise provided in
     the applicable Award Agreement, in the event shares of Restricted Stock are
     tendered as consideration for the exercise of an Option, a number of the
     shares issued upon the exercise of the Option, equal to the number of
     shares of Restricted Stock used as

                                       7
<PAGE>

     consideration therefore, shall be subject to the same restrictions as the
     Restricted Stock so submitted as well as any additional restrictions that
     may be imposed by the Committee.

12.  Tax Withholding.  The Company shall have the right to deduct applicable
     taxes from any Employee Award payment and withhold, at the time of delivery
     or vesting of cash or shares of Common Stock under this Plan, an
     appropriate amount of cash or number of shares of Common Stock or a
     combination thereof for payment of taxes required by law or to take such
     other action as may be necessary in the opinion of the Company to satisfy
     all obligations for withholding of such taxes.  The Committee may also
     permit withholding to be satisfied by the transfer to the Company of shares
     of Common Stock theretofore owned by the holder of the Employee Award with
     respect to which withholding is required.  If shares of Common Stock are
     used to satisfy tax withholding, such shares shall be valued based on the
     Fair Market Value when the tax withholding is required to be made.  The
     Committee may provide for loans, on either a short term or demand basis,
     from the Company to a Participant who is an Employee to permit the payment
     of taxes required by law.

13.  Amendment, Modification, Suspension or Termination.  The Board or the
     Compensation Committee may amend, modify, suspend or terminate this Plan
     for the purpose of meeting or addressing any changes in legal requirements
     or for any other purpose permitted by law except that (i) no amendment or
     alteration that would adversely affect the rights of any Participant under
     any Award previously granted to such Participant shall be made without the
     consent of such Participant, and (ii) no amendment or alteration shall be
     effective prior to its approval by the stockholders of the Company to the
     extent such approval is required by applicable legal requirements.
     Notwithstanding the foregoing, the Committee is authorized to amend this
     Plan to the extent it deems necessary or advisable in order for the Plan to
     comply, qualify or be registered under the laws of any foreign
     jurisdiction, subject to clauses (i) and (ii) of this paragraph 13.

14.  Assignability.  Unless otherwise determined by the Committee and provided
     in the Award Agreement, no Award or any other benefit under this Plan
     constituting a derivative security within the meaning of Rule 16a-1(c)
     under the Exchange Act shall be assignable or otherwise transferable except
     by will or the laws of descent and distribution.  The Committee may
     prescribe and include in applicable Award Agreements other restrictions on
     transfer.  Any attempted assignment of an Award or any other benefit under
     this Plan in violation of this paragraph 14 shall be null and void.

15.  Adjustments.

     (a)  The existence of outstanding Awards shall not affect in any manner the
          right or power of the Company or its stockholders to make or authorize
          any or all adjustments, recapitalizations, reorganizations or other
          changes in the capital stock of the Company or its business or any
          merger or consolidation of the Company, or any issue of bonds,
          debentures, preferred or prior preference stock (whether or not such
          issue is prior to, on a parity with or junior to the Common Stock) or
          the dissolution or liquidation of the Company, or any sale or transfer
          of all or any part of its assets or business, or any other corporate
          act or proceeding of any kind, whether or not of a character similar
          to that of the acts or proceedings enumerated above.

     (b)  In the event of any subdivision or consolidation of outstanding shares
          of Common Stock, declaration of a dividend payable in shares of Common
          Stock or other stock split, then (i) the number of shares of Common
          Stock reserved under this Plan, (ii) the number of shares of Common
          Stock covered by outstanding Awards in the form of Common Stock or
          units denominated in Common Stock, (iii) the exercise or other price
          in respect of such Awards, (iv) the appropriate Fair Market Value and
          other price determinations for such Awards, (v) the number of shares
          of Common Stock covered by Director Options automatically granted
          pursuant to paragraph 9 hereof, and (vi) the Stock Based Awards
          Limitations (as defined in paragraph 8(b) hereof) shall each be
          proportionately adjusted by the Board to reflect such transaction.  In
          the event of any other recapitalization or capital reorganization of
          the Company, any consolidation or merger of the Company with another
          corporation or entity, the adoption by the Company of any plan of
          exchange affecting the Common Stock or any distribution to holders of
          Common Stock of securities or property (other than normal cash
          dividends or dividends payable in Common Stock), the Board shall make
          appropriate adjustments to (i) the number of shares of Common Stock
          covered by

                                       8
<PAGE>

          Awards in the form of Common Stock or units denominated in Common
          Stock, (ii) the exercise or other price in respect of such Awards,
          (iii) the appropriate Fair Market Value and other price determinations
          for such Awards, (iv) the number of shares of Common Stock covered by
          Director Options automatically granted pursuant to paragraph 9 hereof,
          and (v) the Stock Based Awards Limitations to give effect to such
          transaction shall each be proportionately adjusted by the Board to
          reflect such transaction; provided that such adjustments shall only be
          such as are necessary to maintain the proportionate interest of the
          holders of the Awards and preserve, without exceeding, the value of
          such Awards. In the event of a corporate merger, consolidation,
          acquisition of property or stock, separation, reorganization or
          liquidation, the Board shall be authorized to issue or assume Awards
          by means of a substitution of new Awards, as appropriate, for
          previously issued Awards or an assumption of previously issued Awards
          as part of such adjustment.

16.  Restrictions.  No Common Stock or other form of payment shall be issued
     with respect to any Award unless the Company shall be satisfied based on
     the advice of its counsel that such issuance will be in compliance with
     applicable federal and state securities laws. Certificates evidencing
     shares of Common Stock delivered under this Plan (to the extent that such
     shares are so evidenced) may be subject to such stop transfer orders and
     other restrictions as the Committee may deem advisable under the rules,
     regulations and other requirements of the Securities and Exchange
     Commission, any securities exchange or transaction reporting system upon
     which the Common Stock is then listed or to which it is admitted for
     quotation and any applicable federal or state securities law.  The
     Committee may cause a legend or legends to be placed upon such certificates
     (if any) to make appropriate reference to such restrictions.

17.  Unfunded Plan.  Insofar as it provides for Awards of cash, Common Stock or
     rights thereto, this Plan shall be unfunded.  Although bookkeeping accounts
     may be established with respect to Participants who are entitled to cash,
     Common Stock or rights thereto under this Plan, any such accounts shall be
     used merely as a bookkeeping convenience.  The Company shall not be
     required to segregate any assets that may at any time be represented by
     cash, Common Stock or rights thereto, nor shall this Plan be construed as
     providing for such segregation, nor shall the Company, the Board or the
     Committee be deemed to be a trustee of any cash, Common Stock or rights
     thereto to be granted under this Plan.  Any liability or obligation of the
     Company to any Participant with respect to an Award of cash, Common Stock
     or rights thereto under this Plan shall be based solely upon any
     contractual obligations that may be created by this Plan and any Award
     Agreement, and no such liability or obligation of the Company shall be
     deemed to be secured by any pledge or other encumbrance on any property of
     the Company.  Neither the Company nor the Board nor the Committee shall be
     required to give any security or bond for the performance of any obligation
     that may be created by this Plan.

18.  Governing Law.  This Plan and all determinations made and actions taken
     pursuant hereto, to the extent not otherwise governed by mandatory
     provisions of the Code or the securities laws of the United States, shall
     be governed by and construed in accordance with the laws of the State of
     Delaware, without regard to its choice or conflicts of laws
     principles.1264737v2

                                       9

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