Document:

EXECUTION COUNTERPART

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                      AMENDED AND RESTATED CREDIT AGREEMENT

                                   dated as of

                                 August 31, 2001

                                     between

       XL CAPITAL LTD, XL INSURANCE LTD, MID OCEAN LIMITED and XL RE, LTD
                (Formerly known as XL MID OCEAN REINSURANCE LTD),
                          as Borrowers and Guarantors,

                             The BANKS Party Hereto

                                       and

                            THE CHASE MANHATTAN BANK,
                             as Administrative Agent

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

                                  $100,000,000

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

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                                TABLE OF CONTENTS

                                                                            Page

Section 1.  Definitions and Accounting Matters.................................1
        1.01  Certain Defined Terms............................................1
        1.02  Accounting Terms; GAAP and SAP..................................15
        1.03  Currencies and Types of Loans...................................15

Section 2.  Commitments, Loans and Prepayments................................15
        2.01  Loans...........................................................15
        2.02  Borrowings of Loans.............................................16
        2.03  Changes of Commitments; Reduction of Maximum Loan Amounts.......16
        2.04  Fees............................................................16
        2.05  Lending Offices.................................................17
        2.06  Several Obligations.............................................17
        2.07  Evidence of Debt................................................17
        2.08  Optional Prepayments............................................18
        2.09  Mandatory Prepayments...........................................18

Section 3.  Payments of Principal and Interest................................19
        3.01  Repayment of Loans..............................................19
        3.02  Interest........................................................19

Section 4.  Payments; Pro Rata Treatment; Computations; Etc...................20
        4.01  Payments........................................................20
        4.02  Pro Rata Treatment..............................................21
        4.03  Computations....................................................22
        4.04  Minimum Amounts.................................................22
        4.05  Certain Notices.................................................22
        4.06  Non-Receipt of Funds by the Administrative Agent................23
        4.07  Sharing of Payments, Etc........................................24

Section 5.  Yield Protection, Etc.............................................26
        5.01  Additional Costs................................................26
        5.02  Limitation on Types and Currencies of Loans.....................28
        5.03  Treatment of Affected Loans.....................................28
        5.04  Compensation....................................................29
        5.05  Taxes...........................................................30
        5.06  Replacement of Banks............................................31

                      AMENDED AND RESTATED CREDIT AGREEMENT

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                                      -ii-

Section 6.  Guarantee.........................................................31
        6.01  The Guarantee...................................................31
        6.02  Obligations Unconditional.......................................32
        6.03  Reinstatement...................................................33
        6.04  Subrogation.....................................................33
        6.05  Remedies........................................................33
        6.06  Continuing Guarantee............................................33
        6.07  Rights of Contribution..........................................33
        6.08  General Limitation on Guarantee Obligations.....................34

Section 7.  Conditions Precedent..............................................35
        7.01  Effective Date..................................................35
        7.02  Initial and Subsequent Loans....................................36

Section 8.  Representations and Warranties....................................36
        8.01  Organization; Powers............................................36
        8.02  Authorization; Enforceability...................................36
        8.03  Governmental Approvals; No Conflicts............................37
        8.04  Financial Condition; No Material Adverse Change.................37
        8.05  Properties......................................................38
        8.06  Litigation and Environmental Matters............................38
        8.07  Compliance with Laws and Agreements.............................38
        8.08  Investment and Holding Company Status...........................39
        8.09  Taxes...........................................................39
        8.10  ERISA...........................................................39
        8.11  Disclosure......................................................39
        8.12  Use of Credit...................................................39
        8.13  Subsidiaries....................................................40
        8.14  Withholding Taxes...............................................40
        8.15  Stamp Taxes.....................................................40
        8.16  Legal Form......................................................40

Section 9.  Covenants of the Borrowers........................................41
        9.01  Financial Statements and Other Information......................41
        9.02  Notices of Material Events......................................43
        9.03  Preservation of Existence and Franchises........................43
        9.04  Insurance.......................................................43
        9.05  Maintenance of Properties.......................................43

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                                     -iii-

         9.06  Payment of Taxes and Other Potential Charges and
                 Priority Claims Payment of Other Current Liabilities.........43
         9.07  Financial Accounting Practices.................................44
         9.08  Compliance with Applicable Laws................................44
         9.09  Use of Proceeds................................................45
         9.10  Continuation of and Change in Businesses.......................45
         9.11  Visitation.....................................................45
         9.12  Mergers........................................................45
         9.13  Dispositions...................................................45
         9.14  Liens..........................................................46
         9.15  Transactions with Affiliates...................................48
         9.16  Ratio of Total Funded Debt to Total Capitalization.............48
         9.17  Consolidated Net Worth.........................................48
         9.18  Indebtedness...................................................48
         9.19  Claims Paying Ratings..........................................49
         9.20  Private Act....................................................49

Section 10.  Events of Default................................................49

Section 11.  The Administrative Agent.........................................51
        11.01  Appointment, Powers and Immunities.............................51
        11.02  Reliance by Administrative Agent...............................52
        11.03  Defaults.......................................................53
        11.04  Rights as a Bank...............................................53
        11.05  Indemnification................................................53
        11.06  Non-Reliance on Administrative Agent and Other Banks...........54
        11.07  Failure to Act.................................................54
        11.08  Resignation of Administrative Agent............................54

Section 12.  Miscellaneous....................................................55
        12.01  Waiver.........................................................55
        12.02  Notices........................................................55
        12.03  Expenses, Etc..................................................56
        12.04  Amendments, Etc................................................56
        12.05  Successors and Assigns.........................................57
        12.06  Survival.......................................................60
        12.07  Captions.......................................................61
        12.08  Counterparts...................................................61

                      AMENDED AND RESTATED CREDIT AGREEMENT

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                                      -iv-

         12.09  Governing Law; Submission to Jurisdiction.....................61
         12.10  Waiver of Jury Trial..........................................62
         12.11  Treatment of Certain Information; Confidentiality.............62
         12.12  Judgment Currency.............................................63
         12.13  European Monetary Union.......................................64

                      AMENDED AND RESTATED CREDIT AGREEMENT
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SCHEDULE I   - Commitments
SCHEDULE II  - Indebtedness and Liens
SCHEDULE III - Litigation
SCHEDULE IV  - Environmental Matters
SCHEDULE V   - Subsidiaries

EXHIBIT A-1  - Form of Opinion of Paul S. Giordano, Esq., Counsel to XL Capital
EXHIBIT A-2  - Form of Opinion of Special U.S. Counsel to the Obligors
EXHIBIT A-3  - Form of Opinion of Special Bermuda Counsel to XL Insurance
               and XL Re
EXHIBIT A-4  - Form of Opinion of Special Cayman Islands Counsel to XL Capital
               and Mid Ocean
EXHIBIT B    - Form of Opinion of Special New York Counsel to Chase
EXHIBIT C    - Form of Assignment and Acceptance

                      AMENDED AND RESTATED CREDIT AGREEMENT
<PAGE>

              AMENDED AND RESTATED CREDIT AGREEMENT dated as of August 31, 2001,
between XL CAPITAL LTD, a company incorporated under the laws of the Cayman
Islands, British West Indies ("XL CAPITAL"), XL INSURANCE LTD, a Bermuda limited
liability company ("XL INSURANCE"), MID OCEAN LIMITED, a corporation duly
organized and validly existing under the laws of the Cayman Islands, British
West Indies ("MID OCEAN") and XL RE, LTD (formerly known as XL MID OCEAN
REINSURANCE LTD), a Bermuda limited liability company ("XL RE" and, together
with XL Capital, XL Insurance and Mid Ocean, each a "BORROWER" and each a
"GUARANTOR" and, collectively, the "BORROWERS" and the "GUARANTORS"; the
Borrowers and the Guarantors being collectively referred to as the "OBLIGORS"),
the BANKS party hereto, and THE CHASE MANHATTAN BANK, as Administrative Agent.

              WHEREAS, the Obligors, the Administrative Agent, and certain of
the Banks are parties to a Credit Agreement dated as of September 2, 1997 (as
heretofore amended and supplemented and in effect immediately prior to the
effectiveness of this Agreement, the "EXISTING CREDIT AGREEMENT");

              WHEREAS, the parties hereto wish to amend the Existing Credit
Agreement in certain respects to make certain modifications thereto, and to
restate the Existing Credit Agreement in its entirety as so amended, it being
the intention of the parties hereto that the loans outstanding under the
Existing Credit Agreement on the Effective Date (as defined below) shall
continue and remain outstanding hereunder and not be repaid on the Effective
Date;

              NOW, THEREFORE, the parties hereto agree as follows:

              Section 1. DEFINITIONS AND ACCOUNTING MATTERS.

              1.01 CERTAIN DEFINED TERMS. As used herein, the following terms
shall have the following meanings (all terms defined in this Section 1.01 or in
other provisions of this Agreement in the singular to have the same meanings
when used in the plural and VICE VERSA):

              "ADMINISTRATIVE AGENT'S ACCOUNT" shall mean, for each Currency, an
account in respect of such Currency designated by the Administrative Agent in a
notice to XL Capital and the Banks.

              "ADMINISTRATIVE QUESTIONNAIRE" shall mean an Administrative
Questionnaire in a form supplied by the Administrative Agent.

              "AFFILIATE" shall mean, with respect to a specified Person,
another Person that directly, or indirectly, Controls or is Controlled by or is
under common Control with the Person specified.

              "AGREED FOREIGN CURRENCY" shall mean at any time any of Australian
Dollars, English Pounds Sterling, Japanese Yen, New Zealand Dollars and, with
the agreement of each

                      AMENDED AND RESTATED CREDIT AGREEMENT

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                                      -2-

Bank, any other Foreign Currency, so long as at such time (a) such Currency is
dealt with in the London (or, in the case of English Pounds Sterling, Paris)
interbank deposit market, (b) such Currency is freely transferable and
convertible into Dollars in the London foreign exchange market and (c) no
central bank or other governmental authorization in the country of issue of such
Currency is required to permit use of such Currency by any Bank for making any
Loan hereunder and/or to permit any Borrower to borrow and repay the principal
thereof and to pay the interest thereon, unless such authorization has been
obtained and is in full force and effect.

              "APPLICABLE FACILITY FEE RATE" AND "APPLICABLE MARGIN" shall mean,
during any period when any Rating Group set forth below is applicable, with
respect to any facility fee payable hereunder or any Type of Loan outstanding
hereunder, the percentage set forth below opposite such fee or Type of Loan
under such Rating Group:

   ============================ ============== =============== ==============
                                Rating Group    Rating Group   Rating Group
           Fee or Loan                I              II             III
   ---------------------------- -------------- --------------- --------------
          Facility Fee             0.070%          0.100%         0.150%
   ---------------------------- -------------- --------------- --------------

       Eurocurrency Loans          0.155%          0.225%         0.325%
   ---------------------------- -------------- --------------- --------------
         Base Rate Loans           0.000%          0.000%         0.000%
   ============================ ============== =============== ==============

For the purposes of this Agreement, any change in the Applicable Facility Fee
Rate or Applicable Margin for any facility fee or any outstanding Loans by
reason of (a) a change in the Standard & Poor's Rating shall become effective on
the date of announcement or publication of a change in such rating or, in the
absence of such announcement or publication, on the effective date of such
changed rating and (b) any other change in the Rating Group shall become
effective on the date of the occurrence of the event that resulted in such
change in the Rating Group.

              "APPLICABLE LENDING OFFICE" shall mean, for each Bank and for each
Type and Currency of Loan, the "Lending Office" of such Bank (or of an Affiliate
of such Bank) designated for such Type and Currency of Loan in the
Administrative Questionnaire submitted by such Bank or such other office of such
Bank (or of an Affiliate of such Bank) as such Bank may from time to time
specify to the Administrative Agent and XL Capital as the office by which its
Loans of such Type and Currency are to be made and maintained.

              "ASSIGNMENT AND ACCEPTANCE" shall mean an assignment and
acceptance entered into by a Bank and an assignee (with the consent of any
Person whose consent is required by

                      AMENDED AND RESTATED CREDIT AGREEMENT
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                                      -3-

Section 12.05(b) hereof), and accepted by the Administrative Agent, in the form
of Exhibit C hereto or any other form approved by the Administrative Agent.

              "BANK" shall mean each of the lenders that is a signatory hereto
identified under the caption "BANKS" on the signature pages hereto or that,
pursuant to Section 12.05(b) hereof, shall become a "Bank" hereunder.

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

              "BASE RATE" shall mean, for any day, a rate per annum equal to the
higher of (a) the Prime Rate in effect on such day and (b) the Federal Funds
Rate in effect on such day plus 1/2 of 1%. Any change in the Base Rate due to a
change in the Prime Rate or the Federal Funds Rate shall be effective from and
including the effective date of such change in the Prime Rate or the Federal
Funds Rate, respectively.

              "BASE RATE LOANS" shall mean Loans denominated in Dollars that
bear interest at rates based upon the Base Rate.

              "BASLE ACCORD" shall mean the proposals for risk-based capital
framework described by the Basle Committee on Banking Regulations and
Supervisory Practices in its paper entitled "International Convergence of
Capital Measurement and Capital Standards" dated July 1988, as amended, modified
and supplemented and in effect from time to time or any replacement thereof.

              "BERMUDA COMPANIES LAW" shall mean the Companies Act of 1981, as
amended, and the regulations promulgated thereunder.

              "BERMUDA INSURANCE LAW" shall mean the Insurance Act of 1978, as
amended, and the regulations promulgated thereunder.

              "BORROWER JURISDICTION" shall mean (a) Bermuda, (b) the Cayman
Islands and (c) any other country (i) where any Borrower is licensed or
qualified to do business or (ii) from or through which payments hereunder are
made by any Borrower.

              "BUSINESS DAY" shall mean any day (a) that is not a Saturday,
Sunday or other day on which commercial banks in New York City, the Cayman
Islands, British West Indies or

                      AMENDED AND RESTATED CREDIT AGREEMENT
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                                      -4-

Bermuda are authorized or required by law to remain closed, (b) if such day
relates to a borrowing of, a payment or prepayment of principal of or interest
on, a continuation or conversion of or into, or the Interest Period for, a
Eurocurrency Loan or to a notice by a Borrower with respect to any such
borrowing, payment, prepayment, continuation, conversion, or Interest Period,
that is also a day on which dealings in deposits denominated in the Currency of
such Loan are carried out in the London interbank market and (c) if such day
relates to a borrowing of, a payment or prepayment of principal of or interest
on, or the Interest Period for, any Loan denominated in any Foreign Currency or
a notice by a Borrower with respect to any such borrowing, payment, prepayment
or Interest Period, that is also a day on which commercial banks settle payments
in the Principal Financial Center for the Currency in which such Loan is
denominated and in which the London foreign exchange market settles payments in
such Currency.

              "CAPITAL LEASE OBLIGATIONS" shall mean, for any Person, all
obligations of such Person to pay rent or other amounts under any lease of (or
other arrangement conveying the right to use) Property to the extent such
obligations are required to be classified and accounted for as a capital lease
on a balance sheet of such Person under GAAP, and the amount of such obligations
shall be the capitalized amount thereof determined in accordance with GAAP.

              "CHANGE IN CONTROL" shall mean the occurrence of any of the
following events or conditions: (a) any Person or group of Persons (as used in
Sections 13 and 14 of the Securities Exchange Act of 1934, and the rules and
regulations thereunder) shall have become the beneficial owner (as defined in
rules promulgated by the SEC) of more than 40% of the voting securities of XL
Capital; (b) the sale, lease, exchange or other transfer (in one transaction or
a series of related transactions) of all, or substantially all, of the assets of
XL Capital; or (c) a majority of the members of XL Capital's board of directors
are persons who are then serving on the board of directors without having been
elected by the board of directors or having been nominated for election by its
shareholders.

              "CHASE" shall mean The Chase Manhattan Bank.

              "CLASS" shall have the meaning assigned to such term in Section
1.03 hereof.

              "CODE" shall mean the Internal Revenue Code of 1986, as amended
from time to time.

              "COMMITMENT" shall mean, as to each Bank, the obligation of such
Bank to make Loans pursuant to Section 2.01 hereof in an aggregate principal
amount at any one time outstanding up to but not exceeding the amount set
opposite such Bank's name on Schedule I hereto under the caption "Commitment"
(as the same may at any time or from time to time be

                      AMENDED AND RESTATED CREDIT AGREEMENT

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                                      -5-

reduced pursuant to Section 2.03 hereof or be increased or reduced pursuant to
Section 12.05 hereof).

              "COMMITMENT TERMINATION DATE" shall mean September 2, 2002;
PROVIDED that, if such date is not a Business Day, the Commitment Termination
Date shall be the next preceding Business Day.

              "CONSOLIDATED NET WORTH" shall mean, at any date, the consolidated
stockholders' equity of XL Capital and its Subsidiaries.

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

              "CURRENCY" shall mean Dollars or any Foreign Currency.

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

              "DOLLAR EQUIVALENT" shall mean, with respect to any Loan
denominated in any Foreign Currency, the amount of Dollars that would be
required to purchase the amount of the Foreign Currency of such Loan on the date
such Loan is requested (or (i) in the case of any determination made under
Section 2.01(c) hereof, on the date of any borrowing referred to in said Section
2.01(c) and (ii) in the case of any determination made under Section 2.09 or
redenomination under the last sentence of Section 4.01 hereof, on the date of
determination or redenomination therein referred to), based upon the spot
selling rate at which Chase offers to sell such Foreign Currency for Dollars in
the London foreign exchange market at approximately 11:00 a.m. London time for
delivery two Business Days later.

              "DOLLARS" and "$" shall mean lawful money of the United States of
America.

              "EFFECTIVE DATE" shall mean the date on which the conditions
specified in Section 7.01 are satisfied (or waived in accordance with Section
12.04).

              "ENVIRONMENTAL LAWS" shall mean any Law, whether now existing or
subsequently enacted or amended, relating to (a) pollution or protection of the
environment, including natural resources, (b) exposure of Persons, including but
not limited to employees, to Hazardous Materials, (c) protection of the public
health or welfare from the effects of products, by-products,

                      AMENDED AND RESTATED CREDIT AGREEMENT

<PAGE>
                                      -6-

wastes, emissions, discharges or releases of Hazardous Materials or (d)
regulation of the manufacture, use or introduction into commerce of Hazardous
Materials, including their manufacture, formulation, packaging, labeling,
distribution, transportation, handling, storage or disposal.

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

              "EQUITY RIGHTS" shall mean, with respect to any Person, any
outstanding subscriptions, options, warrants, commitments, preemptive rights or
agreements of any kind (including, without limitation, any stockholders' or
voting trust agreements) for the issuance, sale, registration or voting of, or
outstanding securities convertible into, any additional shares of capital stock
of any class, or partnership or other ownership interests of any type in, such
Person.

              "ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time, and the regulations promulgated and the
rulings issued thereunder.

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

              "ERISA EVENT" shall mean (a) any "reportable event", as defined in
Section 4043 of ERISA or the regulations issued thereunder with respect to a
Plan (other than an event for which the 30-day notice period is waived); (b) the
existence with respect to any Plan of an "accumulated funding deficiency" (as
defined in Section 412 of the Code or Section 302 of ERISA), whether or not
waived; (c) the filing pursuant to Section 412(d) of the Code or Section 303(d)
of ERISA of an application for a waiver of the minimum funding standard with
respect to any Plan; (d) the incurrence by any Borrower or any of such
Borrower's ERISA Affiliates of any liability under Title IV of ERISA with
respect to the termination of any Plan; (e) the receipt by any Borrower or any
ERISA Affiliate from the PBGC or a plan administrator of any notice relating to
an intention to terminate any Plan or Plans or to appoint a trustee to
administer any Plan; (f) the incurrence by any Borrower or any of its ERISA
Affiliates of any liability with respect to the withdrawal or partial withdrawal
from any Plan or Multiemployer Plan; or (g) the receipt by any Borrower or any
ERISA Affiliate of any notice, or the receipt by

                      AMENDED AND RESTATED CREDIT AGREEMENT

<PAGE>
                                      -7-

any Multiemployer Plan from any Borrower or any ERISA Affiliate of any notice,
concerning the imposition of Withdrawal Liability or a determination that a
Multiemployer Plan is, or is expected to be, insolvent or in reorganization,
within the meaning of Title IV of ERISA.

              "EUROCURRENCY BASE RATE" shall mean, with respect to any
Eurocurrency Loan in Dollars or any Agreed Foreign Currency for the Interest
Period therefor:

              (a) the arithmetic mean, as calculated by the Administrative
       Agent, of the respective rates per annum (rounded upwards, if necessary,
       to the nearest 1/16 of 1%) of the rates appearing on the Screen at
       approximately 11:00 a.m. London time (or as soon thereafter as
       practicable) two Business Days prior to the first day of the Interest
       Period for such Loan as LIBOR for such Currency having a term comparable
       to such Interest Period; or

              (b) if the Screen shall cease to report such LIBOR or, in the
       reasonable judgment of the Majority Banks, shall cease accurately to
       reflect such LIBOR (as reported by any publicly available source of
       similar market data selected by the Majority Banks that, in the
       reasonable judgment of the Majority Banks, accurately reflects LIBOR for
       such Currency), the Eurocurrency Base Rate shall mean, with respect to
       such Eurocurrency Loan for such Interest Period the rate per annum
       (rounded upwards, if necessary, to the nearest 1/16 of 1%), as determined
       by the Administrative Agent, quoted by the Reference Bank at
       approximately 11:00 a.m. London time (or as soon thereafter as
       practicable) two Business Days prior to the first day of the Interest
       Period for such Eurocurrency Loan for the offering by the Reference Bank
       to leading banks in the London (or, in the case of Loans denominated in
       English Pounds Sterling, Paris) interbank market of deposits denominated
       in such Currency having a term comparable to such Interest Period and in
       an amount equal to $1,000,000 (or the Foreign Currency Equivalent
       thereof).

              "EUROCURRENCY LOANS" shall mean Loans made to any Borrower in
Dollars or any Agreed Foreign Currency, which Loans bear interest at rates based
on rates referred to in the definition of "Eurocurrency Base Rate" in this
Section 1.01.

              "EUROCURRENCY RATE" shall mean, for any Eurocurrency Loan for the
Interest Period therefor, a rate per annum (rounded upwards, if necessary, to
the nearest 1/100 of 1%) determined by the Administrative Agent to be equal to
the Eurocurrency Base Rate for such Loan for such Interest Period multiplied by
the Reserve Rate (if any) for such Interest Period.

              "EVENT OF DEFAULT" shall have the meaning assigned to such term in
Section 10 hereof.

                      AMENDED AND RESTATED CREDIT AGREEMENT
<PAGE>
                                      -8-

              "FEDERAL FUNDS RATE" shall mean, for any day, the rate per annum
(rounded upwards, if necessary, to the nearest 1/100 of 1%) equal to the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank of New York on the Business Day
next succeeding such day, PROVIDED that (a) if the day for which such rate is to
be determined is not a Business Day, the Federal Funds Rate for such day shall
be such rate on such transactions on the next preceding Business Day as so
published on the next succeeding Business Day and (b) if such rate is not so
published for any Business Day, the Federal Funds Rate for such Business Day
shall be the average rate charged to Chase on such Business Day on such
transactions as determined by the Administrative Agent.

              "FINANCIAL OFFICER" shall mean, with respect to any Obligor, a
principal financial officer of such Obligor.

              "FOREIGN CURRENCY" shall mean at any time any Currency other than
Dollars.

              "FOREIGN CURRENCY EQUIVALENT" shall mean, with respect to any
amount in Dollars, the amount of any Foreign Currency that could be purchased
with such amount of Dollars using the reciprocal of the foreign exchange rate(s)
specified in the definition of the term "Dollar Equivalent", as determined by
the Administrative Agent.

              "FRB" shall mean the Board of Governors of the Federal Reserve
System (or any successor thereto).

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

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

              "GUARANTEE" shall mean with respect to any Person, without
duplication, any obligations of such Person (other than endorsements in the
ordinary course of business of negotiable instruments for deposit or collection)
guaranteeing or intended to guarantee any Indebtedness of any other Person in
any manner, whether direct or indirect, and including without limitation any
obligation, whether or not contingent, (i) to purchase any such Indebtedness or
any property constituting security therefore for the purpose of assuring the
holder of such Indebtedness, (ii) to advance or provide funds or other support
for the payment or

                      AMENDED AND RESTATED CREDIT AGREEMENT

<PAGE>
                                      -9-

purchase of any such Indebtedness or to maintain working capital, solvency or
other balance sheet condition of such other Person (including without limitation
keepwell agreements, maintenance agreements, comfort letters or similar
agreements or arrangements) for the benefit of any holder of Indebtedness of
such other Person, (iii) to lease or purchase property, securities or services
primarily for the purpose of assuring the holder of such Indebtedness, or (iv)
to otherwise assure or hold harmless the holder of such Indebtedness against
loss in respect thereof. The amount of any Guarantee hereunder shall (subject to
any limitations set forth therein) be deemed to be an amount equal to the
outstanding principal amount of the Indebtedness in respect of which such
Guarantee is made. The terms "GUARANTEE" and "GUARANTEED" used as a verb shall
have a correlative meaning.

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

              "HEDGING AGREEMENT" shall mean any interest rate protection
agreement, foreign currency exchange agreement, commodity price protection
agreement or other interest or currency exchange rate or commodity price hedging
arrangement.

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

                      AMENDED AND RESTATED CREDIT AGREEMENT
<PAGE>
                                      -10-

              "INTEREST PERIOD" shall mean:

              (a) with respect to any Eurocurrency Loan, the period commencing
       on the date such Loan is made and ending on the numerically corresponding
       day in the first, second, third, or sixth calendar month thereafter, as
       XL Capital may select as provided in Section 4.05 hereof, except that
       each Interest Period that commences on the last Business Day of a
       calendar month (or on any day for which there is no numerically
       corresponding day in the appropriate subsequent calendar month) shall end
       on the last Business Day of the appropriate subsequent calendar month;

              (b) with respect to any Base Rate Loan, the period commencing on
       the date such Base Rate Loan is made and ending on the earlier of the
       first Quarterly Date thereafter or the Commitment Termination Date.

Notwithstanding the foregoing: (i) if any Interest Period for any Loan would
otherwise end after the Commitment Termination Date in existence at the time
such Interest Period is selected, such Interest Period shall not be available
hereunder; (ii) each Interest Period that would otherwise end on a day that is
not a Business Day shall end on the next succeeding Business Day (or, in the
case of an Interest Period for a Eurocurrency Loan, if such next succeeding
Business Day falls in the next succeeding calendar month, on the next preceding
Business Day); and (iii) notwithstanding clauses (i) and (ii) above, no Interest
Period for any Eurocurrency Loan shall have a duration of less than one month
and, if the Interest Period for any Eurocurrency Loan would otherwise be a
shorter period, such Interest Period shall not be available hereunder.

              "LAW" shall mean any law (including common law), constitution,
statute, treaty, regulation, rule, ordinance, order, injunction, writ, decree or
award of any Governmental Authority.

              "LETTER OF CREDIT AGREEMENT" shall mean the Letter of Credit and
Reimbursement Agreement dated as of June 29, 2001 between the Obligors, the
lenders party thereto and Chase, as administrative agent for such lenders.

              "LIBOR" shall mean, for any Currency, the rate at which deposits
in such Currency are offered to lending banks in the London (or, in the case of
English Pounds Sterling, Paris) interbank market.

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

                      AMENDED AND RESTATED CREDIT AGREEMENT
<PAGE>
                                      -11-

              "LOANS" shall mean Loans provided for by Section 2.01 hereof which
may be Base Rate Loans or Eurocurrency Loans.

              "LOCAL TIME" shall mean, with respect to any Loan denominated in
or any payment to be made in any Currency, the local time in the Principal
Financial Center for the Currency in which such Loan is denominated or such
payment is to be made.

              "MAJORITY BANKS" shall mean Banks having more than 50% of the
aggregate amount of the Commitments or, if the Commitments shall have
terminated, Banks holding more than 50% of the aggregate unpaid principal amount
of the Loans.

              "MARGIN STOCK" shall mean "margin stock" within the meaning of
Regulations T, U and X of the FRB.

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

              "MULTIEMPLOYER PLAN" shall mean a multiemployer plan as defined in
Section 4001(a)(3) of ERISA.

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

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

              "PERSON" shall mean any natural person, corporation, limited
liability company, trust, joint venture, association, company, partnership,
Governmental Authority or other entity.

              "PLAN" shall mean any employee pension benefit plan (other than a
Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section
412 of the Code or Section 302 of ERISA and in respect of which any Borrower or
any ERISA Affiliate is (or, if such plan were

                      AMENDED AND RESTATED CREDIT AGREEMENT

<PAGE>
                                      -12-

terminated, would under Section 4069 of ERISA be deemed to be) an "employer" as
defined in Section 3(5) of ERISA.

              "POST-DEFAULT RATE" shall mean, in respect of any principal of any
Loan or any other amount under this Agreement that is not paid when due (whether
at stated maturity, by acceleration, by optional or mandatory prepayment or
otherwise), a rate per annum equal to 2% PLUS the Base Rate as in effect from
time to time (PROVIDED that, if the amount so in default is principal of a
Eurocurrency Loan and the due date thereof is a day other than the last day of
such Interest Period therefor, the "Post-Default Rate" for such principal shall
be, for the period from and including such due date to but excluding the last
day of such Interest Period, 2% plus the interest rate for such Loan as provided
in Section 3.02 hereof and, thereafter, the rate provided for above in this
definition).

              "PRIME RATE" shall mean the rate of interest from time to time
announced by Chase at its principal office in New York, New York as its prime
commercial lending rate.

              "PRINCIPAL FINANCIAL CENTER" shall mean, in the case of any
Currency, the principal financial center of the country that issues such
Currency, as determined by the Administrative Agent.

              "PRIVATE ACT" shall mean separate legislation enacted in Bermuda
with the intention that such legislation apply specifically to a Borrower, in
whole or in part.

              "PROPERTY" shall mean any right or interest in or to property of
any kind whatsoever, whether real, personal or mixed and whether tangible or
intangible.

              "QUARTERLY DATES" shall mean the last Business Day of January,
April, July and October in each year, the first of which shall be the first such
day after the date hereof.

              "RATING GROUP" shall mean any of Rating Group I, Rating Group II
or Rating Group III.

              "RATING GROUP I" shall mean (a) no Event of Default has occurred
and is continuing and the Standard & Poor's Rating is at or above AA; "RATING
GROUP II" shall mean (a) Rating Group I is not in effect and (b) no Event of
Default has occurred and is continuing and (c) the Standard & Poor's Rating is
at or above A; and "RATING GROUP III" shall mean neither Rating Group I nor
Rating Group II is in effect.

              "REFERENCE BANK" shall mean Chase.

                      AMENDED AND RESTATED CREDIT AGREEMENT
<PAGE>
                                      -13-

              "REGISTER" shall have the meaning assigned to such term in Section
12.05 hereof.

              "REGULATIONS A, D, U AND X" shall mean, respectively, Regulations
A, D, U and X of the FRB, as the same may be modified and supplemented and in
effect from time to time.

              "REGULATORY CHANGE" shall mean, with respect to any Bank, any
change after the date hereof in Federal, state or foreign law or regulations
(including, without limitation, Regulation D) or the adoption or making after
such date of any interpretation, directive or request applying to a class of
banks including such Bank of or under any Federal, state or foreign law or
regulations (whether or not having the force of law and whether or not failure
to comply therewith would be unlawful) by any court or governmental or monetary
authority charged with the interpretation or administration thereof.

              "RELATED PARTIES" shall mean, with respect to any specified
Person, such Person's Affiliates and the respective directors, officers,
employees, agents and advisors of such Person and such Person's Affiliates.

              "RESERVE RATE" shall mean a fraction (expressed as a decimal), the
numerator of which is the number one and the denominator of which is the number
one minus the aggregate of the maximum reserve percentages (including any
marginal, special, emergency or supplemental reserves) expressed as a decimal
established by the FRB to which member banks of the Federal Reserve System in
New York City with deposits exceeding $1,000,000,000 are subject with respect to
eurocurrency funding (currently referred to as "Eurocurrency Liabilities" in
Regulation D). Such reserve percentages shall include those imposed pursuant to
Regulation D. The Reserve Rate shall be adjusted automatically on and as of the
effective date of any change in any reserve percentage.

              "REVOLVING CREDIT AGREEMENT" shall mean the 364-Day Credit
Agreement dated as of June 29, 2001 between the Obligors, the lenders party
thereto and Chase, as administrative agent for such lenders.

              "SAP" shall mean, as to each Borrower and each Subsidiary that
offers insurance products, the statutory accounting practices prescribed or
permitted by the relevant Governmental Authority for such Borrower's or such
Subsidiary's domicile for the preparation of its financial statements and other
reports by insurance corporations of the same type as such Borrower or such
Subsidiary in effect on the date such statements or reports are to be prepared,
except if otherwise notified by XL Capital as provided in Section 1.02.

              "SCREEN" shall mean, for any Currency, the relevant display page
for LIBOR for such Currency (as determined by the Administrative Agent) on the
Telerate Service or on any

                      AMENDED AND RESTATED CREDIT AGREEMENT

<PAGE>
                                      -14-

successor or substitute page of such Service, or any successor to or substitute
for such Service, providing rate quotations comparable to those currently
provided on such page of such Service, as determined by the Administrative Agent
from time to time for purposes of providing quotations of interest rates
applicable to deposits of such Currency in the London interbank market.

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

              "STANDARD & POOR'S" shall mean Standard & Poor's Ratings Services,
a division of The McGraw-Hill Companies, Inc., or any successor thereto.

              "STANDARD AND POOR'S RATING" shall mean, as at any date, the
claims-paying rating of XL Re most recently published by Standard & Poor's.

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

              "TAXES" shall have the meaning assigned to such term in Section
5.05(a) hereof.

              "TOTAL FUNDED DEBT" shall mean, at any time, all Indebtedness of
XL Capital and its Subsidiaries which would at such time be classified in whole
or in part as a liability on the consolidated balance sheet of XL Capital in
accordance with GAAP.

              "TRANSACTIONS" shall mean the execution, delivery and performance
by the Obligors of this Agreement, the borrowing of Loans and the use of the
proceeds thereof.

              "TYPE" shall have the meaning assigned to such term in Section
1.03 hereof.

              "WHOLLY OWNED SUBSIDIARY" shall mean, with respect to any Person,
any corporation, partnership or other entity of which all of the equity
securities or other ownership interests (other than, in the case of a
corporation or other similar legal entity, directors' qualifying shares or
shares held by residents of the jurisdiction in which such corporation or other
similar legal entity is organized as required by the law of such jurisdiction)
are directly or indirectly owned or controlled by such Person or one or more
Wholly Owned Subsidiaries of such Person or by such Person and one or more
Wholly Owned Subsidiaries of such Person.

                      AMENDED AND RESTATED CREDIT AGREEMENT
<PAGE>
                                      -15-

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

              1.02 ACCOUNTING TERMS; GAAP AND SAP. Except as otherwise expressly
provided herein, all terms of an accounting or financial nature shall be
construed in accordance with GAAP or SAP, as the context requires, each as in
effect from time to time; PROVIDED that, if XL Capital notifies the
Administrative Agent that the Borrowers request an amendment to any provision
hereof to eliminate the effect of any change occurring after the date hereof in
GAAP or SAP, as the case may be, or in the application thereof on the operation
of such provision (or if the Administrative Agent notifies the Borrowers that
the Majority Banks request an amendment to any provision hereof for such
purpose), regardless of whether any such notice is given before or after such
change in GAAP or SAP, as the case may be, or in the application thereof, then
such provision shall be interpreted on the basis of GAAP or SAP, as the case may
be, as in effect and applied immediately before such change shall have become
effective until such notice shall have been withdrawn or such provision amended
in accordance herewith.

              1.03 CURRENCIES AND TYPES OF LOANS. Loans hereunder are
distinguished by "Currency" and by "Type". The "Currency" of a Loan refers to
the Currency in which such Loan is denominated. The "Type" of a Loan refers to
whether such Loan is a Base Rate Loan or a Eurocurrency Loan, each of which
constitutes a Type. Loans may be identified by one or more of their Currency and
Type.

              Section 2. COMMITMENTS, LOANS AND PREPAYMENTS.

              2.01 LOANS.

              (a) Each Bank severally agrees, on the terms and conditions of
this Agreement, to make loans to any Borrower in Dollars or in any Agreed
Foreign Currency during the period from and including the date hereof to but not
including the Commitment Termination Date in an aggregate principal amount at
any one time outstanding up to but not exceeding the amount of the Commitment of
such Bank as in effect from time to time. Subject to the terms and conditions of
this Agreement, during such period the Borrowers may borrow, prepay, repay and
reborrow the amount of the Commitments.

              (b) If, after giving effect to any Loan to be made under this
Section 2.01, more than four separate Interest Periods in respect of Loans
denominated in any single Currency would be outstanding at the same time (for
which purpose Interest Periods described in different lettered clauses of the
definition of the term "Interest Period" shall be deemed to be different
Interest

                      AMENDED AND RESTATED CREDIT AGREEMENT

<PAGE>
                                      -16-

Periods even if they are coterminous), then such Loan shall not be required to
be made hereunder.

              (c) For purposes of determining (i) whether the amount of any
borrowing of Loans, together with all other Loans then outstanding, would exceed
the aggregate amount of Commitments, (ii) under Section 2.03(b) hereof, the
aggregate unutilized amount of the Commitments and (iii) under Section 7.02
hereof, the outstanding aggregate principal amount of Loans, the outstanding
principal amount of any Loan that is denominated in any Foreign Currency shall
be deemed to be the Dollar Equivalent (determined as of the date of borrowing of
such Loan) of the amount in the Foreign Currency of such Loan of the amount in
the Currency of such Loan.

              2.02 BORROWINGS OF LOANS. XL Capital shall give the Administrative
Agent notice of each borrowing of Loans hereunder as provided in Section 4.05
hereof. Not later than 11:00 a.m. Local Time on the date specified for each
borrowing of Loans hereunder, each Bank shall make available the amount of the
Loan or Loans to be made by it on such date to the Administrative Agent, at the
Administrative Agent's Account for the Currency in which such Loan is
denominated, in immediately available funds, for account of the relevant
Borrower. The amount so received by the Administrative Agent shall, subject to
the terms and conditions of this Agreement, be made available to the relevant
Borrower by depositing the same, in immediately available funds, in an account
of such Borrower designated by XL Capital.

              2.03 CHANGES OF COMMITMENTS; REDUCTION OF MAXIMUM LOAN AMOUNTS.

              (a) The aggregate amount of the Commitments shall be automatically
reduced to zero on the Commitment Termination Date.

              (b) The Borrowers shall have the right at any time or from time to
time (i) so long as no Loans are (or at the time will be) outstanding, to
terminate the Commitments and (ii) to reduce the aggregate unutilized amount of
the Commitments; PROVIDED that (x) XL Capital shall give notice of each such
termination or reduction as provided in Section 4.05 hereof and (y) each partial
reduction of Commitments shall be in an aggregate amount at least equal to
$10,000,000 (or a larger integral multiple of $1,000,000).

              (c) The Commitments once terminated or reduced may not be
reinstated.

              2.04 FEES.

              (a) FACILITY FEE. XL Capital shall pay to the Administrative Agent
for account of each Bank a facility fee on the daily average amount of such
Bank's Commitment (whether used

                      AMENDED AND RESTATED CREDIT AGREEMENT

<PAGE>
                                      -17-

or unused), for the period from and including the date hereof to but not
including the earlier of the date such Commitment is terminated and the
Commitment Termination Date, at a rate per annum equal to the Applicable
Facility Fee Rate. Accrued facility fee shall be payable on each Quarterly Date
and on the earlier of the date the Commitments are terminated and the Commitment
Termination Date.

              (b) UTILIZATION FEE. XL Capital shall pay to the Administrative
Agent for account of each Bank, during any period that the aggregate outstanding
principal amount of Loans exceeds 50% of the aggregate amount of the
Commitments, a utilization fee on the daily average aggregate outstanding
principal amount of such Bank's Loans at a rate per annum equal to 0.025% per
annum. Accrued utilization fee shall be payable on each Quarterly Date and on
the earlier of the date the Commitments are terminated and the Commitment
Termination Date interest on such Bank's Loans are payable.

              2.05 LENDING OFFICES. The Loans of each Type and Currency made by
each Bank shall be made and maintained at such Bank's Applicable Lending Office
for Loans of such Type and Currency.

              2.06 SEVERAL OBLIGATIONS. The failure of any Bank to make any Loan
to be made by it on the date specified therefor shall not relieve any other Bank
of its obligation to make its Loan on such date, and neither any Bank nor the
Administrative Agent shall be responsible for the failure of any other Bank to
make a Loan to be made by such other Bank.

              2.07 EVIDENCE OF DEBT.

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

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

              (c) The entries made in the accounts maintained pursuant to clause
(a) or (b) of this Section 2.07 shall be PRIMA FACIE evidence of the existence
and amounts of the obligations recorded therein; PROVIDED that the failure of
any Bank or the Administrative Agent to maintain

                      AMENDED AND RESTATED CREDIT AGREEMENT

<PAGE>
                                      -18-

such accounts or any error therein shall not in any manner affect the obligation
of the Borrowers to repay the principal of, interest on, and other amounts in
respect of, Loans in accordance with the terms of this Agreement.

              (d) Any Bank may request that Loans made by it be evidenced by a
promissory note of each Borrower. In such event the Borrowers shall prepare,
execute and deliver to such Bank a promissory note payable to the order of such
Bank.

              2.08 OPTIONAL PREPAYMENTS. Subject to Sections 3.02, 4.04 and 5.04
hereof, Loans may be prepaid at any time or from time to time, PROVIDED that, XL
Capital shall give the Administrative Agent notice of each such prepayment as
provided in Section 4.05 hereof (and, upon the date specified in any such notice
of prepayment, the amount to be prepaid shall become due and payable hereunder).

              2.09 MANDATORY PREPAYMENTS.

              (a) Upon the receipt by the Administrative Agent of a Currency
Valuation Notice (as defined below) and on each Quarterly Date, the
Administrative Agent shall promptly determine the aggregate outstanding
principal amount of all Loans (for which purpose the outstanding principal
amount of any Loan that is denominated in any Foreign Currency shall be deemed
to be the Dollar Equivalent (determined as of the Business Day on which the
Administrative Agent shall have received such Currency Valuation Notice prior to
11:00 a.m. New York time (or, if received by the Administrative Agent after such
time on any Business Day, as of the next succeeding Business Day) or as of such
Quarterly Date, as the case may be, of the amount in the Foreign Currency of
such Loan). Upon making such determination, the Administrative Agent shall
promptly notify the Banks and XL Capital thereof.

              (b) If, on the date of such determination the aggregate
outstanding principal amount of all Loans exceeds 105% of the aggregate amount
of the Commitments as then in effect, the Borrowers shall, if requested by the
Majority Banks (through the Administrative Agent), prepay the Loans in an amount
so that after giving effect thereto the aggregate outstanding principal amount
of the Loans does not exceed the Commitments; PROVIDED that, any such payment
shall be accompanied by any amounts payable under Sections 3.02 and 5.04 hereof.

              For purposes of this Section 2.09, "CURRENCY VALUATION NOTICE"
shall mean a notice given by the Majority Banks to the Administrative Agent
stating that such notice is a "Currency Valuation Notice" and requesting that
the Administrative Agent determine the aggregate outstanding principal amount of
all Loans.

                      AMENDED AND RESTATED CREDIT AGREEMENT
<PAGE>
                                      -19-

              Anything in this Section 2.09 to the contrary notwithstanding, the
Administrative Agent shall not be required to make more than one valuation
determination pursuant to Currency Valuation Notices within any rolling three
month period.

              Section 3. PAYMENTS OF PRINCIPAL AND INTEREST.

              3.01 REPAYMENT OF LOANS. Each Borrower hereby promises to pay to
the Administrative Agent for account of each Bank the principal of each Loan
made by such Bank to such Borrower, and each Loan shall mature, on the last day
of the Interest Period therefor.

              3.02 INTEREST. Each Borrower hereby promises to pay to the
Administrative Agent for account of each Bank interest on the unpaid principal
amount of each Loan made by such Bank to such Borrower for the period from and
including the date of such Loan to but excluding the date such Loan shall be
paid in full, at the following rates per annum:

              (a) if such Loan is a Base Rate Loan, the Base Rate (as in effect
       from time to time);

              (b) if such Loan is a Eurocurrency Loan, the Eurocurrency Rate for
       such Loan for the Interest Period therefor PLUS the Applicable Margin.

Notwithstanding the foregoing, each Borrower hereby promises to pay to the
Administrative Agent for account of each Bank interest at the applicable
Post-Default Rate on any principal of any Loan made by such Bank and on any
other amount payable by such Borrower hereunder to or for account of such Bank,
that shall not be paid in full when due (whether at stated maturity, by
acceleration, by mandatory prepayment or otherwise), for the period from and
including the due date thereof to but excluding the date the same is paid in
full. Accrued interest on each Loan shall be payable (i) on the last day of the
Interest Period therefor and, if such Interest Period is longer than three
months (in the case of a Eurocurrency Loan), at three-month intervals following
the first day of such Interest Period, and (ii) in the case of any Loan, upon
the payment or prepayment thereof (but only on the principal amount so paid or
prepaid), except that interest payable at the Post-Default Rate shall be payable
from time to time on demand. Promptly after the determination of any interest
rate provided for herein or any change therein, the Administrative Agent shall
give notice thereof to the Banks to which such interest is payable and to XL
Capital.

                      AMENDED AND RESTATED CREDIT AGREEMENT
<PAGE>
                                      -20-

              Section 4. PAYMENTS; PRO RATA TREATMENT; COMPUTATIONS; ETC.

              4.01 PAYMENTS.

              (a) Except to the extent otherwise provided herein, all payments
of principal and interest on any Loan and other amounts to be paid by any
Borrower under this Agreement shall be made in the Currency in which such Loan
or other amount is denominated, in immediately available funds, without
deduction, set-off or counterclaim, to the Administrative Agent at the
Administrative Agent's Account for the Currency in which such Loan or other
amount is denominated, not later than 11:00 a.m. Local Time on the date on which
such payment shall become due (each such payment made after such time on such
due date to be deemed to have been made on the next succeeding Business Day),
PROVIDED that if a new Loan is to be made by any Bank to any Borrower on a date
any Borrower is to repay any principal of an outstanding Loan of such Bank and
in the same Currency, such Bank shall apply the proceeds of such new Loan to the
payment of the principal to be repaid and only an amount equal to the difference
between the principal to be borrowed and the principal to be repaid shall be
made available by such Bank to the Administrative Agent as provided in Section
2.02 hereof or paid by such Borrower to the Administrative Agent pursuant to
this Section 4.01, as the case may be. All amounts owing under this Agreement
(including facility fees and utilization fees, but not including principal of,
and interest on, Loans denominated in any Foreign Currency) are payable in
Dollars. Notwithstanding the foregoing, if any Borrower shall fail to pay any
principal of any Loan when due (whether at stated maturity, by acceleration, by
mandatory prepayment or otherwise), the unpaid portion of such Loan shall, if
such Loan is not denominated in Dollars, automatically be redenominated in
Dollars on the due date thereof (or, if such due date is a day other than the
last day of the Interest Period therefor, on the last day of such Interest
Period) in an amount equal to the Dollar Equivalent thereof on the date of such
redenomination and such principal shall be payable on demand; and if any
Borrower shall fail to pay any interest on any Loan that is not denominated in
Dollars, such interest shall automatically be redenominated in Dollars on the
due date thereof (or, if such due date is a day other than the last day of the
Interest Period therefor, on the last day of such Interest Period) in an amount
equal to the Dollar Equivalent thereof on the date of such redenomination and
such interest shall be payable on demand.

              (b) Subject to the proviso to the first sentence of Section
4.01(a) above, any Bank for whose account any such payment is to be made may
(but shall not be obligated to) debit the amount of any such payment that is not
made by such time to any ordinary deposit account of any Borrower with such Bank
(with notice to XL Capital and the Administrative Agent).

                      AMENDED AND RESTATED CREDIT AGREEMENT
<PAGE>
                                      -21-

              (c) Each Borrower shall, at the time of making each payment under
this Agreement for account of any Bank, specify to the Administrative Agent
(which shall so notify the intended recipient(s) thereof) the Loans or other
amounts payable by such Borrower hereunder to which such payment is to be
applied (and in the event that such Borrower fails to so specify, or if an Event
of Default has occurred and is continuing, the Administrative Agent may
distribute such payment to the Banks for application in such manner as it or the
Majority Banks, subject to Section 4.02 hereof, may determine to be
appropriate).

              (d) Each payment received by the Administrative Agent under this
Agreement for account of any Bank shall be paid by the Administrative Agent
promptly to such Bank, in immediately available funds, for account of such
Bank's Applicable Lending Office for the Loan or other obligation in respect of
which such payment is made.

              (e) If the due date of any payment under this Agreement would
otherwise fall on a day that is not a Business Day, such date shall be extended
to the next succeeding Business Day, and interest shall be payable for any
principal so extended for the period of such extension.

              4.02 PRO RATA TREATMENT. Except to the extent otherwise provided
herein:

              (a) each borrowing under Section 2.01 hereof shall be made from
       the Banks pro rata according to their respective Commitments;

              (b) each payment of facility fee under Section 2.04(a) hereof
       shall be made for account of the Banks, and each termination or reduction
       of the amount of the Commitments under Section 2.03 hereof shall be
       applied to the respective Commitments of the Banks, pro rata according to
       the amounts of their respective Commitments;

              (c) Eurocurrency Loans denominated in the same Currency and having
       the same Interest Period shall (other than as provided in Section 5.03
       hereof) be allocated pro rata among the Banks according to their
       respective Commitments;

              (d) each payment or prepayment by any Borrower of principal of
       Loans of any Type and denominated in any Currency shall be made for
       account of the Banks pro rata in accordance with the respective unpaid
       principal amounts of the Loans of such Type and denominated in such
       Currency held by them; and

              (e) each payment by any Borrower of interest and utilization fees
       on Loans of any Type and denominated in any Currency shall be made for
       account of the Banks pro rata in accordance with the amounts of interest
       and utilization fees on Loans of such Type and denominated in such
       Currency then due and payable to them.

                      AMENDED AND RESTATED CREDIT AGREEMENT
<PAGE>
                                      -22-

              4.03 COMPUTATIONS. Interest on Eurocurrency Loans (other than
Loans in English Pounds Sterling), facility fee and utilization fee shall be
computed on the basis of a year of 360 days and actual days elapsed (including
the first day but excluding the last day) occurring in the period for which
payable and interest on Base Rate Loans and Eurocurrency Loans in English Pounds
Sterling shall be computed on the basis of a year of 365 or 366 days, as the
case may be, and actual days elapsed (including the first day but excluding the
last day) occurring in the period for which payable. Notwithstanding the
foregoing, for each day that the Base Rate is calculated by reference to the
Federal Funds Rate, interest on Base Rate Loans shall be computed on the basis
of a year of 360 days and actual days elapsed.

              4.04 MINIMUM AMOUNTS. Except for mandatory prepayments made
pursuant to Section 2.09 hereof, each borrowing and partial prepayment of
principal of Loans shall be in an aggregate amount at least equal to $5,000,000
or a larger integral multiple of $1,000,000 or, in the case of Eurocurrency
Loans denominated in any Agreed Foreign Currency, the Foreign Currency
Equivalent thereof (rounded downwards to the nearest 1,000 units of such Foreign
Currency). Borrowings or prepayments of Loans of different Types or denominated
in different Currencies or, in the case of Eurocurrency Loans, having different
Interest Periods at the same time hereunder shall be deemed separate borrowings
and prepayments for purposes of this Section 4.04, one for each Type, Currency
or Interest Period. In addition, the aggregate principal amount of Eurocurrency
Loans having the same Interest Period shall be in an amount at least equal to
$5,000,000 or a larger integral multiple of $1,000,000 or, in the case of
Eurocurrency Loans denominated in any Agreed Foreign Currency, the Foreign
Currency Equivalent thereof (rounded downwards to the nearest 1,000 units of
such Foreign Currency) and, if (i) any Eurocurrency Loans denominated in Dollars
would otherwise be in a lesser principal amount for any period, such Loans shall
be Base Rate Loans during such period and (ii) any Eurocurrency Loans
denominated in any Foreign Currency would otherwise be in a lesser principal
amount for any period, such Loans shall be unavailable hereunder.

              4.05 CERTAIN NOTICES. Notices by XL Capital to the Administrative
Agent of terminations or reductions of the Commitments, of reductions of
borrowings and optional prepayments of Loans, of Types and Currencies of Loans
and of the duration of Interest Periods shall be irrevocable and shall be
effective only if received by the Administrative Agent not later than 10:00 a.m.
New York time (or, in the case of borrowings or prepayment of, or duration of
Interest Periods for, Eurocurrency Loans denominated in a Foreign Currency,
London time) on the number of Business Days prior to the date of the relevant
termination, reduction, borrowing or prepayment or the first day of such
Interest Period specified below:

                      AMENDED AND RESTATED CREDIT AGREEMENT
<PAGE>
                                      -23-

                                                     Number of
                                                     Business
                  Notice                             Days Prior
                  ------                             ----------

         Borrowing or prepayment of
         Base Rate Loans                             same day

         Borrowing or prepayment of,
         or duration of Interest
         Period for, Eurocurrency Loans
         denominated in Dollars                             3

         Borrowing or prepayment of,
         or duration of Interest
         Period for, Eurocurrency Loans
         denominated in a Foreign
         Currency                                           5

Each such notice of termination or reduction of the Commitments shall specify
the amount of the Commitments to be terminated or reduced. Each such notice of
borrowing or optional prepayment shall specify the Loans to be borrowed or
prepaid and the amount (subject to Section 4.04 hereof), Type and Currency of
each Loan to be borrowed or prepaid, the date of borrowing or optional
prepayment (which shall be a Business Day), the Interest Period of the Loans to
be borrowed or prepaid. The Administrative Agent shall promptly notify the Banks
of the contents of each such notice.

              4.06 NON-RECEIPT OF FUNDS BY THE ADMINISTRATIVE AGENT. Unless the
Administrative Agent shall have been notified by a Bank or any Borrower (the
"PAYOR") prior to the date on which the Payor is to make payment to the
Administrative Agent of (in the case of any Bank) the proceeds of a Loan to be
made by such Bank hereunder or (in the case of a Borrower) a payment to the
Administrative Agent for account of one or more of the Banks hereunder (such
payment being herein called the "REQUIRED PAYMENT"), which notice shall be
effective upon receipt, that the Payor does not intend to make the Required
Payment to the Administrative Agent, the Administrative Agent may assume that
the Required Payment has been made and may, in reliance upon such assumption
(but shall not be required to), make the amount thereof available to the
intended recipient(s) on such date; and, if the Payor has not in fact made the
Required Payment to the Administrative Agent, the recipient(s) of such payment
shall, on demand, repay to the Administrative Agent the amount so made available
together with interest thereon in respect of each day during the period
commencing on the date (the "ADVANCE DATE") such amount was so made available by
the Administrative Agent until but not including

                      AMENDED AND RESTATED CREDIT AGREEMENT

<PAGE>
                                      -24-

the date the Administrative Agent recovers such amount at a rate per annum equal
to the greater of (a) the Federal Funds Rate for such day and (b) a rate
determined by the Administrative Agent in accordance with banking industry rules
on interbank compensation and, if such recipient(s) shall fail promptly to make
such payment, the Administrative Agent shall be entitled to recover such amount,
on demand, from the Payor, together with interest as aforesaid, PROVIDED that if
neither the recipient(s) nor the Payor shall return the Required Payment to the
Administrative Agent within three Business Days of the Advance Date, then,
retroactively to the Advance Date, the Payor and the recipient(s) shall each be
obligated to pay interest on the Required Payment as follows:

              (i) if the Required Payment shall represent a payment to be made
       by any Borrower to the Banks, such Borrower and the recipient(s) shall
       each be obligated retroactively to the Advance Date to pay (without
       duplication) interest in respect of the Required Payment at the
       Post-Default Rate (without duplication of the obligation of such Borrower
       under Section 3.02 hereof to pay interest on the Required Payment at the
       Post-Default Rate), it being understood that the return by the
       recipient(s) of the Required Payment to the Administrative Agent shall
       not limit such obligation of such Borrower under said Section 3.02 to pay
       interest at the Post-Default Rate in respect of the Required Payment; and

              (ii) if the Required Payment shall represent proceeds of a Loan to
       be made by the Banks to any Borrower, the Payor and such Borrower shall
       each be obligated retroactively to the Advance Date to pay (without
       duplication) interest in respect of the Required Payment at the rate
       applicable to such Loan pursuant to Section 3.02 hereof, it being
       understood that the return by such Borrower of the Required Payment to
       the Administrative Agent shall not limit any claim such Borrower may have
       against the Payor in respect of such Required Payment.

              4.07 SHARING OF PAYMENTS, ETC.

              (a) Each Borrower agrees that, in addition to (and without
limitation of) any right of set-off, banker's lien or counterclaim a Bank may
otherwise have, each Bank shall be entitled, at its option (to the fullest
extent permitted by law), to set-off and apply any deposit (general or special,
time or demand, provisional or final), or other indebtedness, held by it for the
credit or account of such Borrower at any of such Bank's offices, in Dollars or
in any other currency, against any principal of or interest on any of such
Bank's Loans or any other amount payable to such Bank hereunder, that is not
paid when due (regardless of whether such deposit or other indebtedness is then
due to such Borrower), in which case it shall promptly notify XL Capital and the
Administrative Agent thereof, PROVIDED that such Bank's failure to give such
notice shall not affect the validity thereof.

                      AMENDED AND RESTATED CREDIT AGREEMENT
<PAGE>
                                      -25-

              (b) If any Bank shall obtain from any Borrower payment of any
principal of or interest on any Loan and denominated in any Currency owing to it
or payment of any other amount under this Agreement through the exercise of any
right of set-off, banker's lien or counterclaim or similar right or otherwise
(other than from the Administrative Agent as provided herein), and, as a result
of such payment, such Bank shall have received a greater percentage of the
principal of or interest on the Loans denominated in such Currency (the
"APPLICABLE LOANS") or such other amounts then due hereunder by such Borrower to
such Bank than the percentage received by any other Bank to which principal of
or interest on the Applicable Loans or such other amounts is then due hereunder
by such Borrower, it shall promptly purchase from such other Banks
participations in (or, if and to the extent specified by such Bank, direct
interests in) the Applicable Loans or such other amounts, respectively, owing to
such other Banks (or in interest due thereon, as the case may be) in such
amounts, and make such other adjustments from time to time as shall be
equitable, to the end that all such Banks shall share the benefit of such excess
payment (net of any expenses that may be incurred by such Bank in obtaining or
preserving such excess payment) pro rata in accordance with the unpaid principal
of and/or interest on the Applicable Loans or such other amounts, respectively,
owing to each of such Banks. To such end all such Banks shall make appropriate
adjustments among themselves (by the resale of participations sold or otherwise)
if such payment is rescinded or must otherwise be restored.

              (c) Each Borrower agrees that any Bank so purchasing such a
participation (or direct interest) may exercise all rights of set-off, banker's
lien, counterclaim or similar rights with respect to such participation as fully
as if such Bank were a direct holder of Loans or other amounts (as the case may
be) owing to such Bank in the amount of such participation (or direct interest).

              (d) Nothing contained herein shall require any Bank to exercise
any such right or shall affect the right of any Bank to exercise, and retain the
benefits of exercising, any such right with respect to any other indebtedness or
obligation of any Borrower. If, under any applicable bankruptcy, insolvency or
other similar law, any Bank receives a secured claim in lieu of a set-off to
which this Section 4.07 applies, such Bank shall, to the extent practicable,
exercise its rights in respect of such secured claim in a manner consistent with
the rights of the Banks entitled under this Section 4.07 to share in the
benefits of any recovery on such secured claim.

                      AMENDED AND RESTATED CREDIT AGREEMENT
<PAGE>
                                      -26-

              Section 5. YIELD PROTECTION, ETC.

              5.01 ADDITIONAL COSTS.

              (a) Each Borrower shall pay (but without duplication, including by
reason of Section 5.05(a) hereof) directly to each Bank from time to time such
amounts as such Bank may reasonably determine to be necessary to compensate such
Bank for any costs incurred by such Bank that such Bank reasonably determines
are attributable to its making or maintaining of any Eurocurrency Loans to such
Borrower or its obligation to make any Eurocurrency Loans to such Borrower
hereunder, or any reduction in any amount receivable by such Bank hereunder in
respect of any of such Loans or such obligation resulting from any Regulatory
Change that:

              (i) shall subject such Bank (or its Applicable Lending Office for
       any of such Loans) to any tax, duty or other charge in respect of such
       Loans or changes the basis of taxation of any amounts payable to such
       Bank under this Agreement in respect of any of such Loans (excluding
       changes in the rate of tax on the net income of such Bank or of such
       Applicable Lending Office by any jurisdiction in which such Bank is
       organized or has its principal office or in which such Applicable Lending
       Office is located or carrying on business);

              (ii) imposes or increases any reserve, special deposit or similar
       requirements (other than the reserve requirement utilized in the
       determination of the Eurocurrency Rate for such Loan) relating to any
       extensions of credit or other assets of, or any deposits with or other
       liabilities of, such Bank (including, without limitation, any of such
       Loans or any deposits referred to in the definition of "Eurocurrency Base
       Rate" in Section 1.01 hereof), or any commitment of such Bank (including,
       without limitation, the Commitment of such Bank hereunder); or

              (iii) imposes any other material condition affecting this
       Agreement (or any of such extensions of credit or liabilities) or its
       Commitment

(such increases in costs and reductions in amounts receivable being herein
called "ADDITIONAL COSTS").

If any Bank requests compensation from any Borrower under this Section 5.01(a),
such Borrower may, by notice to such Bank (with a copy to the Administrative
Agent), suspend the obligation of such Bank thereafter to make Eurocurrency
Loans to such Borrower until the Regulatory Change giving rise to such request
ceases to be in effect (in which case the provisions of Section 5.03 hereof
shall be applicable), PROVIDED that such suspension shall not affect the right
of such Bank to receive the compensation so requested.

                      AMENDED AND RESTATED CREDIT AGREEMENT
<PAGE>
                                      -27-

              (b) Without limiting the effect of the provisions of paragraph (a)
of this Section 5.01, in the event that, by reason of any Regulatory Change, any
Bank either (i) incurs Additional Costs based on or measured by the excess above
a specified level of the amount of a category of deposits or other liabilities
of such Bank that includes deposits by reference to which the interest rate on
Eurocurrency Loans denominated in any Currency as determined as provided in this
Agreement or a category of extensions of credit or other assets of such Bank
that includes Eurocurrency Loans denominated in such Currency or (ii) becomes
subject to restrictions on the amount of such a category of liabilities or
assets that it may hold, then, if such Bank so elects by notice to XL Capital
(with a copy to the Administrative Agent), the obligation of such Bank to make
Eurocurrency Loans in such Currency hereunder shall be suspended until such
Regulatory Change ceases to be in effect (in which case the provisions of
Section 5.03 hereof shall be applicable).

              (c) Without limiting the effect of the foregoing provisions of
this Section 5.01 (but without duplication), each Borrower shall pay directly to
each Bank from time to time on request such amounts as such Bank may reasonably
determine to be necessary to compensate such Bank (or, without duplication, the
bank holding company of which such Bank is a subsidiary) for any costs that it
reasonably determines are attributable to the maintenance by such Bank (or any
Applicable Lending Office or such bank holding company) of capital in respect of
its Commitment or Loans pursuant to any law or regulation or any interpretation,
directive or request (whether or not having the force of law and whether or not
failure to comply therewith would be unlawful) of any court or governmental or
monetary authority (i) following any Regulatory Change or (ii) implementing any
risk-based capital guideline or other requirement (whether or not having the
force of law and whether or not the failure to comply therewith would be
unlawful) hereafter issued by any government or governmental or supervisory
authority implementing at the national level the Basle Accord (such compensation
to include, without limitation, an amount equal to any reduction of the rate of
return on assets or equity of such Bank (or any Applicable Lending Office or
such bank holding company) to a level below that which such Bank (or any
Applicable Lending Office or such bank holding company) could have achieved but
for such law, regulation, interpretation, directive or request).

              (d) Each Bank shall notify XL Capital of any event occurring after
the date hereof entitling such Bank to compensation under paragraph (a) or (c)
of this Section 5.01 as promptly as practicable, but in any event within 90
days, after such Bank obtains actual knowledge thereof; PROVIDED that (i) if any
Bank fails to give such notice within 90 days after it obtains actual knowledge
of such an event, such Bank shall, with respect to compensation payable pursuant
to this Section 5.01 in respect of any costs resulting from such event, only be
entitled to payment under this Section 5.01 for costs incurred from and after
the date 90 days prior to the date that such Bank does give such notice and (ii)
each Bank will designate a different Applicable Lending

                      AMENDED AND RESTATED CREDIT AGREEMENT

<PAGE>
                                      -28-

Office for the Loans of such Bank affected by such event if such designation
will avoid the need for, or reduce the amount of, such compensation and will
not, in the sole opinion of such Bank, be disadvantageous to such Bank, except
that such Bank shall have no obligation to designate an Applicable Lending
Office located in the United States of America. Each Bank will furnish to XL
Capital a certificate setting forth in reasonable detail the basis and amount of
each request by such Bank for compensation under paragraph (a) or (c) of this
Section 5.01. Determinations and allocations by any Bank for purposes of this
Section 5.01 of the effect of any Regulatory Change pursuant to paragraph (a) or
(b) of this Section 5.01, or of the effect of capital maintained pursuant to
paragraph (c) of this Section 5.01, on its costs or rate of return of
maintaining Loans or its obligation to make Loans, or on amounts receivable by
it in respect of Loans, and of the amounts required to compensate such Bank
under this Section 5.01, shall be conclusive absent manifest error, so long as
such determinations and allocations are made on a reasonable basis.

              5.02 LIMITATION ON TYPES AND CURRENCIES OF LOANS. Anything herein
to the contrary notwithstanding, if, on or prior to the determination of any
Eurocurrency Base Rate for any Interest Period pursuant to clause (b) of the
definition of "Eurocurrency Base Rate" in Section 1.01 hereof:

              (a) the Administrative Agent determines, which determination shall
       be conclusive, that quotations of interest rates for the relevant
       deposits referred to in clause (b) of the definition of "Eurocurrency
       Base Rate" in Section 1.01 hereof are not being provided by the Reference
       Bank in the relevant amounts or Currencies or for the relevant maturities
       for purposes of determining rates of interest for Eurocurrency Loans
       referred to in said clause (b) as provided herein; or

              (b) the Majority Banks determine, which determination shall be
       conclusive, and notify (or notifies, as the case may be) the
       Administrative Agent that the relevant rates of interest referred to in
       clause (b) of the definition of "Eurocurrency Base Rate" in Section 1.01
       hereof upon the basis of which the rate of interest for Eurocurrency
       Loans denominated in any Currency for such Interest Period is to be
       determined are not likely adequately to cover the cost to such Banks (or
       to such quoting Bank) of making or maintaining Eurocurrency Loans
       denominated in such Currency for such Interest Period;

then the Administrative Agent shall give XL Capital and each Bank prompt notice
thereof and, so long as such condition remains in effect, the Banks shall be
under no obligation to make additional Eurocurrency Loans denominated in such
Currency.

              5.03 TREATMENT OF AFFECTED LOANS. If the obligation of any Bank to
make Eurocurrency Loans denominated in Dollars shall be suspended pursuant to
Section 5.01 hereof, then, unless and until such Bank gives notice as provided
below that the circumstances specified

<PAGE>
                                      -29-

in Section 5.01 hereof that gave rise to such suspension no longer exist, all
Loans that would otherwise be made by such Bank as Eurocurrency Loans
denominated in Dollars shall be made instead as Base Rate Loans. If the
obligation of any Bank to make Eurocurrency Loans denominated in any Agreed
Foreign Currency to any Borrower shall be suspended pursuant to Section 5.01
hereof, then, unless and until such Bank gives notice as provided below that the
circumstances specified in Section 5.01 hereof that gave rise to such suspension
no longer exist, all Loans that would otherwise be made by such Bank to such
Borrower as Eurocurrency Loans denominated in such Agreed Foreign Currency
shall, except as provided in the immediately preceding sentence, be made instead
as Eurocurrency Loans denominated in Dollars.

              5.04 COMPENSATION. Each Borrower shall pay to the Administrative
Agent for account of each Bank, upon the request of such Bank through the
Administrative Agent, such amount or amounts as shall be sufficient (in the
reasonable opinion of such Bank) to compensate it for any loss, cost or expense
that such Bank reasonably determines is attributable to:

              (a) any payment or mandatory or optional prepayment, of a
       Eurocurrency Loan to such Bank for any reason (including, without
       limitation, the acceleration of the Loans pursuant to Section 9 hereof)
       on a date other than the last day of the Interest Period for such Loan;
       or

              (b) any failure by such Borrower for any reason (including,
       without limitation, the failure of any of the conditions precedent
       specified in Section 7 hereof to be satisfied) to borrow a Eurocurrency
       Loan from such Bank on the date for such borrowing specified in the
       relevant notice of borrowing given pursuant to Section 2.02 hereof.

Without limiting the effect of the preceding sentence, such compensation shall
include an amount equal to the excess, if any, of (i) the amount of interest
that otherwise would have accrued on the principal amount so paid, prepaid or
not borrowed for the period ("RELEVANT PERIOD") from the date of such payment,
prepayment or failure to borrow to the last day of the then current Interest
Period for such Loan (or, in the case of a failure to borrow, the Interest
Period for such Loan that would have commenced on the date specified for such
borrowing) at the applicable rate of interest for such Loan provided for herein
over (ii) the amount of interest that otherwise would have accrued on such
principal amount at a rate equal to the arithmetic mean, as reasonably
determined by such Bank, of the respective rates per annum (rounded upward, if
necessary, to the nearest 1/16 of 1%) of the bid rates for deposits in the
Currency in which such Loan is denominated for the period approximately equal to
the Relevant Period appearing on the Screen or other publicly available source
(as described in the definition of the term "Eurocurrency Base Rate" in Section
1.01 hereof); PROVIDED that if the Screen is not publicly available, then the
provisions of paragraph (b) of the definition of the term "Eurocurrency Base
Rate" in Section 1.01 hereof shall apply herein MUTATIS MUTANDIS.

                      AMENDED AND RESTATED CREDIT AGREEMENT
<PAGE>
                                      -30-

              5.05 TAXES.

              (a) Each Borrower agrees to pay to each Bank such additional
amounts as are necessary in order that the net payment of any amount due to such
Bank hereunder, after deduction for or withholding in respect of any Taxes
imposed with respect to such payment (or in lieu thereof, payment of such Taxes
by such Bank), will not be less than the amount stated herein to be then due and
payable, PROVIDED that the foregoing obligation to pay such additional amounts
shall not apply:

              (i) to any payment to any Bank hereunder unless such Bank is, on
       the date hereof (or on the date it becomes a Bank hereunder as provided
       in Section 12.05(b) hereof) and on the date of any change in the
       Applicable Lending Office of such Bank, entitled to a complete (or, in
       the case of an assignee or participant pursuant to paragraph (b) or (e)
       of Section 12.05 hereof, at least to the extent of the assignor or
       applicable Bank at the time of such assignment or participation)
       exemption from withholding or deduction by such Borrower of Taxes on all
       amounts to be received by such Bank hereunder in respect of the Loans
       made by such Bank to such Borrower, or

              (ii) to any Taxes required to be deducted or withheld solely by
       reason of the failure by such Bank, after being requested by such
       Borrower, to comply with applicable certification, information,
       documentation or other reporting requirements specifically identified by
       such Borrower in such request concerning the nationality, residence,
       identity or connections with the relevant Borrower Jurisdiction if such
       compliance is required by treaty, statute or regulation as a precondition
       to relief or exemption from such Taxes.

For the purposes of this Section 5.05(a), "TAXES" shall mean with respect to a
Borrower any and all present or future taxes, levies, imposts, duties,
deductions, charges, or withholdings imposed by any Governmental Authority of
any Borrower Jurisdiction on or in respect of payments of principal, interest,
fees or other amounts payable under this Agreement, or any promissory notes
evidencing the Loans made hereunder, including (without limitation) payments
under this Section 5.05(a); PROVIDED, HOWEVER, that Taxes shall not include (x)
income or franchise taxes imposed on or measured by the net income or capital of
a Bank (or its Applicable Lending Office) by any Borrower Jurisdiction as a
result of (i) such Bank being organized under the laws of such Borrower
Jurisdiction, (ii) such Bank having its chief executive office in such Borrower
Jurisdiction or (iii) its Applicable Lending Office being located or carrying on
business in such Borrower Jurisdiction, (y) interest, penalties or additions to
tax not attributable to any act, failure to act or misrepresentation of a
Borrower (other than any act or failure to act permitted or contemplated
hereunder) and (z) any tax other than a withholding tax unless the Bank's
interest

                      AMENDED AND RESTATED CREDIT AGREEMENT

<PAGE>
                                      -31-

in the Loan became subject thereto solely by reason of such Bank's participation
in the transactions contemplated hereby.

              (b) Within 30 days after paying any amount to the Administrative
Agent or any Bank from which it is required by law to make any deduction or
withholding, and within 30 days after it is required by law to remit such
deduction or withholding to any relevant taxing or other authority, XL Capital
shall deliver to the Administrative Agent for delivery to such Bank evidence
satisfactory to such Bank of such deduction, withholding or payment (as the case
may be).

              5.06 REPLACEMENT OF BANKS. If any Bank requests compensation
pursuant to Section 5.01 or 5.05 hereof, or any Bank's obligation to make Loans
of any Type or denominated in any Currency shall be suspended pursuant to
Section 5.01 hereof (any such Bank requesting such compensation, or whose
obligations are so suspended, being herein called a "REQUESTING BANK"), any
Borrower, upon three Business Days' notice to the Administrative Agent, may
require that such Requesting Bank transfer all of its right, title and interest
under this Agreement to any bank or other financial institution identified by
such Borrower that is satisfactory to the Administrative Agent in its reasonable
determination (a) if such bank or other financial institution (a "PROPOSED
BANK") agrees to assume all of the obligations of such Requesting Bank
hereunder, and to purchase all of such Requesting Bank's Loans hereunder for
consideration equal to the aggregate outstanding principal amount of such
Requesting Bank's Loans, together with interest thereon to the date of such
purchase and (b) if such Requesting Bank has requested compensation pursuant to
Section 5.01 or 5.05 hereof, such Proposed Bank's aggregate requested
compensation, if any, pursuant to said Section 5.01 or 5.05 with respect to such
Requesting Bank's Loans is lower than that of the Requesting Bank. Subject to
the provisions of Section 12.05(b) hereof, such Proposed Bank shall be a "Bank"
for all purposes hereunder. Without prejudice to the survival of any other
agreement of the Borrowers hereunder the agreements of the Borrowers contained
in Sections 5.01, 5.05 and 12.03 (without duplication of any payments made to
such Requesting Bank by the Borrowers or the Proposed Bank) shall survive for
the benefit of such Requesting Bank under this Section 5.06 with respect to the
time prior to such replacement.

              Section 6. GUARANTEE.

              6.01 THE GUARANTEE. Each Guarantor hereby jointly and severally
guarantees to each Bank and the Administrative Agent and their respective
successors and assigns the prompt payment in full when due (whether at stated
maturity, by acceleration or otherwise) of the principal of and interest on the
Loans made by the Banks to each of the Borrowers (other than such Guarantor in
its capacity as a Borrower hereunder) and all other amounts from time to time
owing to the Banks or the Administrative Agent by such Borrowers under this
Agreement, in

                      AMENDED AND RESTATED CREDIT AGREEMENT

<PAGE>
                                      -32-

each case strictly in accordance with the terms thereof (such obligations being
herein collectively called the "GUARANTEED OBLIGATIONS"). Each Guarantor hereby
further jointly and severally agrees that if any Borrower (other than such
Guarantor in its capacity as a Borrower hereunder) shall fail to pay in full
when due (whether at stated maturity, by acceleration or otherwise) any of the
Guaranteed Obligations, such Guarantor will promptly pay the same, without any
demand or notice whatsoever, and that in the case of any extension of time of
payment or renewal of any of the Guaranteed Obligations, the same will be
promptly paid in full when due (whether at extended maturity, by acceleration or
otherwise) in accordance with the terms of such extension or renewal.

              6.02 OBLIGATIONS UNCONDITIONAL. The obligations of the Guarantors
under Section 6.01 are absolute and unconditional, joint and several,
irrespective of the value, genuineness, validity, regularity or enforceability
of the obligations of the Borrowers under this Agreement or any other agreement
or instrument referred to herein or therein, or any substitution, release or
exchange of any other guarantee of or security for any of the Guaranteed
Obligations, and, to the fullest extent permitted by applicable law,
irrespective of any other circumstance whatsoever that might otherwise
constitute a legal or equitable discharge or defense of a surety or guarantor,
it being the intent of this Section 6 that the obligations of the Guarantors
hereunder shall be absolute and unconditional, joint and several, under any and
all circumstances. Without limiting the generality of the foregoing, it is
agreed that the occurrence of any one or more of the following shall not alter
or impair the liability of the Guarantors hereunder, which shall remain absolute
and unconditional as described above:

              (i) at any time or from time to time, without notice to the
       Guarantors, the time for any performance of or compliance with any of the
       Guaranteed Obligations shall be extended, or such performance or
       compliance shall be waived;

              (ii) any of the acts mentioned in any of the provisions of this
       Agreement or any other agreement or instrument referred to herein shall
       be done or omitted; or

              (iii) the maturity of any of the Guaranteed Obligations shall be
       accelerated, or any of the Guaranteed Obligations shall be modified,
       supplemented or amended in any respect, or any right under this Agreement
       or any other agreement or instrument referred to herein shall be waived
       or any other guarantee of any of the Guaranteed Obligations or any
       security therefor shall be released or exchanged in whole or in part or
       otherwise dealt with.

The Guarantors hereby expressly waive diligence, presentment, demand of payment,
protest and all notices whatsoever, and any requirement that the Administrative
Agent or any Bank exhaust any right, power or remedy or proceed against any
Borrower under this Agreement or any other

                      AMENDED AND RESTATED CREDIT AGREEMENT

<PAGE>
                                      -33-

 agreement or instrument referred to
herein, or against any other Person under any other guarantee of, or security
for, any of the Guaranteed Obligations.

              6.03 REINSTATEMENT. The obligations of the Guarantors under this
Section 6 shall be automatically reinstated if and to the extent that for any
reason any payment by or on behalf of any Borrower in respect of the Guaranteed
Obligations is rescinded or must be otherwise restored by any holder of any of
the Guaranteed Obligations, whether as a result of any proceedings in bankruptcy
or reorganization or otherwise, and the Guarantors jointly and severally agree
that they will indemnify the Administrative Agent and each Bank on demand for
all reasonable costs and expenses (including reasonable fees of counsel)
incurred by the Administrative Agent or such Bank in connection with such
rescission or restoration, including any such costs and expenses incurred in
defending against any claim alleging that such payment constituted a preference,
fraudulent transfer or similar payment under any bankruptcy, insolvency or
similar law.

              6.04 SUBROGATION. The Guarantors hereby jointly and severally
agree that until the payment and satisfaction in full of all Guaranteed
Obligations and the expiration and termination of the Commitments they shall not
exercise any right or remedy arising by reason of any performance by them of
their guarantee in Section 6.01, whether by subrogation or otherwise, against
any Borrower or any other guarantor of any of the Guaranteed Obligations or any
security for any of the Guaranteed Obligations.

              6.05 REMEDIES. The Guarantors jointly and severally agree that, as
between the Guarantors and the Banks, the obligations of the Borrowers under
this Agreement may be declared to be forthwith due and payable as provided in
Section 10 (and shall be deemed to have become automatically due and payable in
the circumstances provided in Section 10) for purposes of Section 6.01
notwithstanding any stay, injunction or other prohibition preventing such
declaration (or such obligations from becoming automatically due and payable) as
against any Borrower and that, in the event of such declaration (or such
obligations being deemed to have become automatically due and payable), such
obligations (whether or not due and payable by any Borrower) shall forthwith
become due and payable by the Guarantors for purposes of Section 6.01.

              6.06 CONTINUING GUARANTEE. The guarantee in this Section 6 is a
continuing guarantee, and shall apply to all Guaranteed Obligations whenever
arising.

              6.07 RIGHTS OF CONTRIBUTION. The Guarantors (other than XL
Capital) hereby agree, as between themselves, that if any such Guarantor shall
become an Excess Funding Guarantor (as defined below) by reason of the payment
by such Guarantor of any Guaranteed Obligations, each other Guarantor (other
than XL Capital) shall, on demand of such Excess

                      AMENDED AND RESTATED CREDIT AGREEMENT

<PAGE>
                                      -34-

Funding Guarantor (but subject to the next sentence), pay to such Excess Funding
Guarantor an amount equal to such Guarantor's Pro Rata Share (as defined below
and determined, for this purpose, without reference to the properties, debts and
liabilities of such Excess Funding Guarantor) of the Excess Payment (as defined
below) in respect of such Guaranteed Obligations. The payment obligation of a
Guarantor to any Excess Funding Guarantor under this Section shall be
subordinate and subject in right of payment to the prior payment in full of the
obligations of such Guarantor under the other provisions of this Section 6 and
such Excess Funding Guarantor shall not exercise any right or remedy with
respect to such excess until payment and satisfaction in full of all of such
obligations.

              For purposes of this Section, (i) "EXCESS FUNDING GUARANTOR"
means, in respect of any Guaranteed Obligations, a Guarantor that has paid an
amount in excess of its Pro Rata Share of such Guaranteed Obligations, (ii)
"EXCESS PAYMENT" means, in respect of any Guaranteed Obligations, the amount
paid by an Excess Funding Guarantor in excess of its Pro Rata Share of such
Guaranteed Obligations and (iii) "PRO RATA SHARE" means, for any Guarantor, the
ratio (expressed as a percentage) of (x) the amount by which the aggregate
present fair saleable value of all properties of such Guarantor (excluding any
shares of stock of any other Guarantor) exceeds the amount of all the debts and
liabilities of such Guarantor (including contingent, subordinated, unmatured and
unliquidated liabilities, but excluding the obligations of such Guarantor
hereunder and any obligations of any other Guarantor that have been Guaranteed
by such Guarantor) to (y) the amount by which the aggregate fair saleable value
of all properties of all of the Guarantors (other than XL Capital) exceeds the
amount of all the debts and liabilities (including contingent, subordinated,
unmatured and unliquidated liabilities, but excluding the obligations of the
Guarantors under this Section 6) of all of the Guarantors (other than XL
Capital), determined (A) with respect to any Guarantor that is a party hereto on
the date hereof, as of the date hereof, and (B) with respect to any other
Guarantor, as of the date such Guarantor becomes a Guarantor hereunder.

              6.08 GENERAL LIMITATION ON GUARANTEE OBLIGATIONS. In any action or
proceeding involving any state corporate law, or any state or Federal
bankruptcy, insolvency, reorganization or other law affecting the rights of
creditors generally, if the obligations of any Guarantor under Section 6.01
would otherwise, taking into account the provisions of Section 6.07, be held or
determined to be void, invalid or unenforceable, or subordinated to the claims
of any other creditors, on account of the amount of its liability under Section
6.01, then, notwithstanding any other provision hereof to the contrary, the
amount of such liability shall, without any further action by such Guarantor,
any Bank, the Administrative Agent or any other Person, be automatically limited
and reduced to the highest amount that is valid and enforceable and not
subordinated to the claims of other creditors as determined in such action or
proceeding.

                      AMENDED AND RESTATED CREDIT AGREEMENT
<PAGE>
                                      -35-

              Section 7. CONDITIONS PRECEDENT.

              7.01 EFFECTIVE DATE. The effectiveness of this Agreement is
       subject to the receipt by the Administrative Agent of each of the
       following documents, each of which shall be satisfactory to the
       Administrative Agent (and to the extent specified below, to each Bank) in
       form and substance (or such condition shall have been waived in
       accordance with Section 12.04):

              (a) EXECUTED COUNTERPARTS. From each Obligor and the Majority
       Banks (i) a counterpart of this Agreement signed on behalf of such party
       or (ii) written evidence satisfactory to the Administrative Agent (which
       may include telecopy transmission of a signed signature page to this
       Agreement) that such party has signed a counterpart of this Agreement.

              (b) OPINIONS OF COUNSEL TO THE OBLIGORS. Opinions, each dated the
       Effective Date, of (i) Paul S. Giordano, Esq., counsel to XL Capital,
       substantially in the form of Exhibit A-1, (ii) Cahill Gordon & Reindel,
       special U.S. counsel for the Obligors, substantially in the form of
       Exhibit A-2, (iii) Conyers, Dill & Pearman, special Bermuda counsel to XL
       Insurance and XL Re, substantially in the form of Exhibit A-3 and (iv)
       Hunter & Hunter, special Cayman Islands counsel to XL Capital and Mid
       Ocean, substantially in the form of Exhibit A-4.

              (c) OPINION OF SPECIAL NEW YORK COUNSEL TO CHASE. An opinion,
       dated the Effective Date, of Milbank, Tweed, Hadley & McCloy LLP, special
       New York counsel to Chase, substantially in the form of Exhibit B (and
       Chase hereby instructs such counsel to deliver such opinion to the
       Banks).

              (d) CORPORATE DOCUMENTS. Such documents and certificates as the
       Administrative Agent or its counsel may reasonably request relating to
       the organization, existence and good standing of the Obligors, the
       authorization of the Transactions and any other legal matters relating to
       the Obligors, this Agreement or the Transactions, all in form and
       substance reasonably satisfactory to the Administrative Agent and its
       counsel.

              (e) OFFICER'S CERTIFICATE. A certificate, dated the Effective Date
       and signed by the President, a Vice President or a Financial Officer of
       XL Capital, confirming compliance with the conditions set forth in the
       lettered clauses of the first sentence of Section 7.02.

              (f) OTHER DOCUMENTS. Such other documents as the Administrative
       Agent or any Bank or special New York counsel to Chase may reasonably
       request.

              (g) PAYMENT OF FEES, EXPENSES AND OTHER AMOUNTS. Evidence of
       payment or delivery by the XL Capital of such fees as XL Capital shall
       have agreed to pay or deliver

                      AMENDED AND RESTATED CREDIT AGREEMENT

<PAGE>
                                      -36-

       to any Bank or an affiliate thereof or the Administrative Agent in
       connection herewith, including, without limitation, the reasonable fees
       and expenses of Milbank, Tweed, Hadley & McCloy LLP, special New York
       counsel to Chase, in connection with the negotiation, preparation,
       execution and delivery of this Agreement and each other document to be
       delivered by the Borrowers and the extensions of credit hereunder (to the
       extent that statements for such fees and expenses have been delivered to
       XL Capital).

              7.02 INITIAL AND SUBSEQUENT LOANS. The obligation of any Bank to
make any Loan hereunder (including such Bank's initial Loan) is subject to the
further conditions precedent that, both immediately prior to the making of such
Loan and also after giving effect thereto and to the intended use thereof:

              (a) if such borrowing will increase the Dollar Equivalent of the
       aggregate outstanding principal amount of the Loans of the Banks
       hereunder, no Default shall have occurred and be continuing; and

              (b) if such borrowing will increase the Dollar Equivalent of the
       aggregate outstanding principal amount of the Loans of the Banks
       hereunder, the representations and warranties made by the Borrowers in
       Section 8 hereof (other than Section 8.04(b) hereof) shall be true and
       complete in all material respects on and as of the date of the making of
       such Loan with the same force and effect as if made on and as of such
       date (or, if any such representation or warranty is expressly stated to
       have been made as of a specific date, as of such specific date).

Each notice of borrowing by XL Capital hereunder shall constitute a
certification by the Borrowers to the effect set forth in the preceding sentence
(both as of the date of such notice and as of the date of such borrowing).

              Section 8. REPRESENTATIONS AND WARRANTIES. Each Borrower
represents and warrants to the Banks that:

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

              8.02 AUTHORIZATION; ENFORCEABILITY. The Transactions are within
such Borrower's corporate powers and have been duly authorized by all necessary
corporate and, if required, by all

                      AMENDED AND RESTATED CREDIT AGREEMENT

<PAGE>
                                      -37-

necessary shareholder action. This Agreement has been duly executed and
delivered by such Borrower and constitutes a legal, valid and binding obligation
of such Borrower, enforceable against such Borrower in accordance with its
terms, except as such enforceability may be limited by (a) bankruptcy,
insolvency, reorganization, moratorium, examination or similar laws of general
applicability affecting the enforcement of creditors' rights and (b) the
application of general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).

              8.03 GOVERNMENTAL APPROVALS; NO CONFLICTS. The Transactions (a) do
not require any consent or approval of (including any exchange control
approval), registration or filing with, or any other action by, any Governmental
Authority, except such as have been obtained or made and are in full force and
effect, (b) will not violate any applicable law or regulation or the charter,
by-laws or other organizational documents of such Borrower or any of its
Subsidiaries or any order of any Governmental Authority, (c) will not violate or
result in a default under any material indenture, agreement or other instrument
binding upon such Borrower or any of its Subsidiaries or assets, or give rise to
a right thereunder to require any payment to be made by any such Person, and (d)
will not result in the creation or imposition of any Lien on any asset of such
Borrower or any of its Subsidiaries.

              8.04 FINANCIAL CONDITION; NO MATERIAL ADVERSE CHANGE.

              (a) FINANCIAL CONDITION. Such Borrower has heretofore furnished to
the Banks the consolidated balance sheet and statements of income, stockholders'
equity and cash flows of such Borrower and its consolidated Subsidiaries (A) as
of and for the fiscal years ended December 31, 1999 and December 31, 2000,
reported on by PricewaterhouseCoopers LLP, independent public accountants (as
provided in XL Capital's Report on Form 10-K filed with the SEC for the fiscal
year ended December 31, 2000), and (B) as of and for the fiscal quarter ended
June 30, 2001, as provided in XL Capital's Report on Form 10-Q filed with the
SEC for the fiscal quarter ended June 30, 2001. Such financial statements
present fairly, in all material respects, the financial position and results of
operations and cash flows of such Borrower and its respective consolidated
Subsidiaries as of such dates and for such periods in accordance with GAAP or
(in the case of XL Insurance, Mid Ocean or XL Re) SAP, subject to year-end audit
adjustments and the absence of footnotes in the case of the statements referred
to in clause (B) of the first sentence of this paragraph.

              (b) NO MATERIAL ADVERSE CHANGE. Since December 31, 2000, there has
been no material adverse change in the assets, business, financial condition or
operations of such Borrower and its Subsidiaries, taken as a whole.

                      AMENDED AND RESTATED CREDIT AGREEMENT
<PAGE>
                                      -38-

              8.05 PROPERTIES.

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

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

              8.06 LITIGATION AND ENVIRONMENTAL MATTERS.

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

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

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

                      AMENDED AND RESTATED CREDIT AGREEMENT
<PAGE>
                                      -39-

              8.08 INVESTMENT AND HOLDING COMPANY STATUS. Such Borrower is not
(a) an "investment company" as defined in, or subject to regulation under, the
Investment Company Act of 1940 or (b) a "holding company" as defined in, or
subject to regulation under, the Public Utility Holding Company Act of 1935.

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

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

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

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

              8.12 USE OF CREDIT. Neither such Borrower nor any of its
Subsidiaries is engaged principally, or as one of its important activities, in
the business of extending credit for the purpose, whether immediate, incidental
or ultimate, of buying or carrying Margin Stock. No part

                      AMENDED AND RESTATED CREDIT AGREEMENT

<PAGE>
                                      -40-

of the proceeds of any Loan hereunder will be used to buy or carry any Margin
Stock (except for repurchases of the capital stock of XL Capital and purchases
of Margin Stock in accordance with XL Capital's Statement of Investment Policy
Objectives and Guidelines as in effect on the date hereof or as it may be
changed from time to time by a resolution duly adopted by the board of directors
of XL Capital (or any committee thereof)). The purchase of any Margin Stock with
the proceeds of any Loan will not be in violation of Regulation U or X of the
FRB and, after applying the proceeds of such Loan, not more than 25% of the
value of the assets of XL Capital and its Subsidiaries taken as a whole consists
or will consist of Margin Stock.

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

              8.14 WITHHOLDING TAXES. Based upon information with respect to
each Bank provided by each Bank or the Administrative Agent, as of the date
hereof, the payment of principal of and interest on the Loans, the fees under
Section 2.04 and all other amounts payable hereunder will not be subject, by
withholding or deduction, to any Taxes imposed by any Borrower Jurisdiction.

              8.15 STAMP TAXES. To ensure the legality, validity, enforceability
or admissibility in evidence of this Agreement or any promissory notes
evidencing Loans made (or to be made), it is not necessary that this Agreement
or such promissory notes or any other document be filed or recorded with any
Governmental Authority or that any stamp or similar tax be paid on or in respect
of this Agreement or such promissory notes, or any other document other than
such filings and recordations that have already been made and such stamp or
similar taxes that have already been paid.

              8.16 LEGAL FORM. Each of this Agreement and any promissory notes
evidencing Loans made (or to be made) is in proper legal form under the laws of
any Borrower Jurisdiction for the admissibility thereof in the courts of such
Borrower Jurisdiction.

                      AMENDED AND RESTATED CREDIT AGREEMENT
<PAGE>
                                      -41-

              Section 9. COVENANTS OF THE BORROWERS. Until the Commitments have
expired or been terminated and the principal of and interest on each Loan and
all fees payable hereunder shall have been paid in full, the Borrowers covenant
and agree with the Banks that:

              9.01 FINANCIAL STATEMENTS AND OTHER INFORMATION. Each Borrower
will furnish to the Administrative Agent and each Bank:

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

              (b) within 60 days after the end of each of the first three fiscal
       quarters of each fiscal year of such Borrower, the consolidated balance
       sheet and related statements of operations, stockholders' equity and cash
       flows of such Borrower and its consolidated Subsidiaries as of the end of
       and for such fiscal quarter and the then elapsed portion of the fiscal
       year, setting forth in each case in comparative form the figures for (or,
       in the case of the balance sheet, as of the end of) the corresponding
       period or periods of the previous fiscal year (if such figures were
       already produced for such corresponding period or periods), all certified
       by a Financial Officer of such Borrower as presenting fairly in all
       material respects the financial condition and results of operations of
       such Borrower and its consolidated Subsidiaries on a consolidated basis
       in accordance with GAAP or (in the case of XL Insurance, Mid Ocean and XL
       Re) SAP, as the case may be, consistently applied, subject to normal
       year-end audit adjustments and the absence of footnotes (it being
       understood that delivery to the Banks of XL Capital's Report on Form 10-Q
       filed with the SEC shall satisfy the financial statement delivery
       requirements of this paragraph

                      AMENDED AND RESTATED CREDIT AGREEMENT

<PAGE>
                                      -42-

       (b) to deliver the quarterly financial statements of XL Capital so long
       as the financial information required to be contained in such Report is
       substantially the same as the financial information required under this
       paragraph (b));

              (c) concurrently with any delivery of financial statements under
       clause (a) or (b) of this Section, a certificate signed on behalf of each
       Borrower by a Financial Officer (i) certifying as to whether a Default
       has occurred and, if a Default has occurred, specifying the details
       thereof and any action taken or proposed to be taken with respect
       thereto, (ii) setting forth reasonably detailed calculations
       demonstrating compliance with Sections 9.14, 9.16, 9.17 and 9.18 and
       (iii) stating whether any change in GAAP or (in the case of XL Insurance,
       Mid Ocean and XL Re) SAP or in the application thereof has occurred since
       the date of the audited financial statements referred to in Section 8.04
       and, if any such change has occurred, specifying the effect of such
       change on the financial statements accompanying such certificate;

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

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

              (f) concurrently with any delivery of financial statements under
       clause (a) or (b) of this Section, a certificate of a Financial Officer
       of XL Capital, setting forth on a consolidated basis for XL Capital and
       its consolidated Subsidiaries as of the end of the fiscal year or quarter
       to which such certificate relates (i) the aggregate book value of assets
       which are subject to Liens permitted under Section 9.14(g) and the
       aggregate book value of liabilities which are subject to Liens permitted
       under Section 9.14(g) (it being understood that the reports required by
       paragraphs (a) and (b) of this Section shall satisfy the requirement of
       this clause (i) of this paragraph (f) if such reports set forth
       separately, in accordance with GAAP, line items corresponding to such
       aggregate book values) and (ii) a calculation showing the portion of each
       of such aggregate amounts which portion is attributable to transactions
       among wholly-owned Subsidiaries of XL Capital; and

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

                      AMENDED AND RESTATED CREDIT AGREEMENT

<PAGE>
                                      -43-

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

              9.02 NOTICES OF MATERIAL EVENTS. Each Borrower will furnish to the
Administrative Agent and each Bank prompt written notice of the following:

              (a) the occurrence of any Default; and

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

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

              9.03 PRESERVATION OF EXISTENCE AND FRANCHISES. Each Borrower will,
and will cause each of its Subsidiaries to, maintain its corporate existence and
its material rights and franchises in full force and effect in its jurisdiction
of incorporation; PROVIDED that the foregoing shall not prohibit any merger or
consolidation permitted under Section 9.12. Each Borrower will, and will cause
each of its Subsidiaries to, qualify and remain qualified as a foreign
corporation in each jurisdiction in which failure to receive or retain such
qualification would have a Material Adverse Effect.

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

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

              9.06 PAYMENT OF TAXES AND OTHER POTENTIAL CHARGES AND PRIORITY
CLAIMS PAYMENT

                      AMENDED AND RESTATED CREDIT AGREEMENT

<PAGE>
                                      -44-

OF OTHER CURRENT LIABILITIES. Each Borrower will, and will cause each of its
Subsidiaries to, pay or discharge:

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

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

              (c) on or prior to the date when due, all other lawful claims
       which, if unpaid, might result in the creation of a Lien upon any such
       property (other than Liens not forbidden by Section 9.14) or which, if
       unpaid, might give rise to a claim entitled to priority over general
       creditors of such Borrower in any proceeding under the Bermuda Companies
       Law or Bermuda Insurance Law, or any insolvency proceeding, liquidation,
       receivership, rehabilitation, dissolution or winding-up involving such
       Borrower or such Subsidiary;

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

              9.07 FINANCIAL ACCOUNTING PRACTICES. Such Borrower will, and will
cause each of its consolidated Subsidiaries to, make and keep books, records and
accounts which, in reasonable detail, accurately and fairly reflect its
transactions and dispositions of its assets and maintain a system of internal
accounting controls sufficient to provide reasonable assurances that
transactions are recorded as necessary to permit preparation of financial
statements required under Section 9.01 in conformity with GAAP and SAP, as
applicable, and to maintain accountability for assets.

              9.08 COMPLIANCE WITH APPLICABLE LAWS. Each Borrower will, and will
cause each of its Subsidiaries to, comply with all applicable Laws (including
but not limited to the Bermuda Companies Law and Bermuda Insurance Laws) in all
respects; PROVIDED that such Borrower or any Subsidiary of such Borrower will
not be deemed to be in violation of this Section as a result of any failure to
comply with any such Law which would not (i) result in fines, penalties,
injunctive relief or other civil or criminal liabilities which, in the
aggregate, would

                      AMENDED AND RESTATED CREDIT AGREEMENT

<PAGE>
                                      -45-

have a Material Adverse Effect or (ii) otherwise impair the ability of such
Borrower to perform its obligations under this Agreement.

              9.09 USE OF PROCEEDS. Each Borrower will use the proceeds of all
Loans for its general corporate purposes (which may include funding
acquisitions, paying dividends and repurchasing securities).

              9.10 CONTINUATION OF AND CHANGE IN BUSINESSES. Each Borrower and
its Subsidiaries will continue to engage in substantially the same business or
businesses it engaged in (or proposes to engage in) on the date of this
Agreement and businesses related or incidental thereto.

              9.11 VISITATION. Each Borrower will permit such Persons as any
Bank may reasonably designate to visit and inspect any of the properties of such
Borrower, to discuss its affairs with its financial management, and provide such
other information relating to the business and financial condition of such
Borrower at such times as such Bank may reasonably request. Each Borrower hereby
authorizes its financial management to discuss with any Bank the affairs of such
Borrower.

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

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

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

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

                      AMENDED AND RESTATED CREDIT AGREEMENT
<PAGE>
                                      -46-

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

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

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

              (b) Liens arising from taxes, assessments, charges, levies or
       claims described in Section 9.06 that are not yet due or that remain
       payable without penalty or to the extent permitted to remain unpaid under
       the provision of Section 9.06;

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

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

              (e) Liens securing Indebtedness permitted by Section 9.18(c)
       covering assets whose market value is not materially greater than the
       amount of the Indebtedness secured thereby plus a commercially reasonable
       margin;

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

                      AMENDED AND RESTATED CREDIT AGREEMENT
<PAGE>
                                      -47-

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

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

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

                      AMENDED AND RESTATED CREDIT AGREEMENT
<PAGE>
                                      -48-

              9.15 TRANSACTIONS WITH AFFILIATES. No Borrower will, nor will it
permit any of its Subsidiaries to, enter into or carry out any transaction with
(including, without limitation, purchase or lease property or services to, loan
or advance to or enter into, suffer to remain in existence or amend any
contract, agreement or arrangement with) any Affiliate of such Borrower, or
directly or indirectly agree to do any of the foregoing, except (i) transactions
involving guarantees or co-obligors with respect to any Indebtedness described
in Part A of Schedule II, (ii) transactions among the Borrowers and their
wholly-owned Subsidiaries and (iii) transactions with Affiliates in good faith
in the ordinary course of such Borrower's business consistent with past practice
and on terms no less favorable to such Borrower or any Subsidiary than those
that could have been obtained in a comparable transaction on an arm's length
basis from an unrelated Person.

              9.16 RATIO OF TOTAL FUNDED DEBT TO TOTAL CAPITALIZATION. XL
Capital will not permit its ratio of (a) Total Funded Debt to (b) the sum of
Total Funded Debt PLUS Consolidated Net Worth to be greater than 0.35:1.00 at
any time.

              9.17 CONSOLIDATED NET WORTH. XL Capital will not permit its
Consolidated Net Worth to be less than the sum of (a) $4,600,000,000 PLUS (b)
25% of net income (if positive) for each fiscal quarter of XL Capital commencing
with the fiscal quarter ending June 30, 2001.

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

              (a) Indebtedness created hereunder;

              (b) Indebtedness incurred pursuant to the Letter of Credit
       Agreement and the Revolving Credit Agreement;

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

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

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

                      AMENDED AND RESTATED CREDIT AGREEMENT
<PAGE>
                                      -49-

              (f) Indebtedness incurred in transactions described in Section
       9.14(f); and

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

              9.19 CLAIMS PAYING RATINGS. XL Capital will maintain at all times
a claims-paying rating of at least "A" from A.M. Best & Co. (or its successor)
and XL Insurance and XL Re will maintain at all times a rating of at least "A"
from Standard & Poor's.

              9.20 PRIVATE ACT. No Borrower will become subject to a Private Act
other than the X.L. Insurance Company, Ltd. Act, 1989.

              Section 10. EVENTS OF DEFAULT. If any of the following events
(herein called "EVENTS OF DEFAULT") shall occur and be continuing:

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

              (b) any Borrower shall fail to pay any interest on any Loan or any
       fee or any other amount (other than an amount referred to in clause (a)
       of this Section) payable under this Agreement, when and as the same shall
       become due and payable, and such failure shall continue unremedied for a
       period of 3 or more days;

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

              (d) any Borrower shall fail to observe or perform any covenant,
       condition or agreement contained in Section 9;

              (e) any Obligor shall fail to observe or perform any covenant,
       condition or agreement contained in this Agreement (other than those
       specified in clause (a), (b) or (d) of this Section) and such failure
       shall continue unremedied for a period of 20 or more days after notice
       thereof from the Administrative Agent (given at the request of any Bank)
       to such Obligor;

                      AMENDED AND RESTATED CREDIT AGREEMENT
<PAGE>
                                      -50-

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

              (g) a decree or order by a court having jurisdiction in the
       premises shall have been entered adjudging any Borrower a bankrupt or
       insolvent, or approving as properly filed a petition seeking
       reorganization of such Borrower under the Bermuda Companies Law or the
       Cayman Islands Companies Law (2000 Revision), or any other similar
       applicable Law, and such decree or order shall have continued
       undischarged or unstayed for a period of 60 days; or a decree or order of
       a court having jurisdiction in the premises for the appointment of an
       examiner, receiver, or liquidator or trustee or assignee in bankruptcy or
       insolvency of such Borrower or a substantial part of its property, or for
       the winding up or liquidation of its affairs, shall have been entered,
       and such decree or order shall have continued undischarged and unstayed
       for a period of 60 days;

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

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

                      AMENDED AND RESTATED CREDIT AGREEMENT
<PAGE>
                                      -51-

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

              (k) a Change in Control shall occur;

              (l) XL Capital shall cease to own, beneficially and of record,
       directly or indirectly all of the outstanding voting shares of capital
       stock of XL Insurance, XL Re or Mid Ocean (except, in the case of any
       company organized under the laws of Bermuda, for a nominal number of
       shares owned by nominee shareholders required by the Bermuda Companies
       Law); or

              (m) the guarantee contained in Section 6 shall terminate or cease,
       in whole or material part, to be a legally valid and binding obligation
       of each Guarantor or any Guarantor or any Person acting for or on behalf
       of any of such parties shall contest such validity or binding nature of
       such guarantee itself or the Transactions, or any other Person shall
       assert any of the foregoing;

then, and in every such event (other than an event with respect to any Borrower
described in clause (g) or (h) of this Section), and at any time thereafter
during the continuance of such event, the Administrative Agent may, and at the
request of the Majority Banks shall, by notice to the Borrowers, take either or
both of the following actions, at the same or different times: (i) terminate the
Commitments, and thereupon the Commitments shall terminate immediately, and (ii)
declare the Loans then outstanding to be due and payable in whole (or in part,
in which case any principal not so declared to be due and payable may thereafter
be declared to be due and payable), and thereupon the principal of the Loans so
declared to be due and payable, together with accrued interest thereon and all
fees and other obligations of the Borrowers accrued hereunder, shall become due
and payable immediately, without presentment, demand, protest or other notice of
any kind, all of which are hereby waived by the Borrowers; and in case of any
event with respect to any Borrower described in clause (g) or (h) of this
Section, the Commitments shall automatically terminate and the principal of the
Loans then outstanding, together with accrued interest thereon and all fees and
other obligations of the Borrowers accrued hereunder, shall automatically become
due and payable, without presentment, demand, protest or other notice of any
kind, all of which are hereby waived by the Borrowers.

              Section 11. THE ADMINISTRATIVE AGENT.

              11.01 APPOINTMENT, POWERS AND IMMUNITIES. Each Bank hereby
appoints and authorizes the Administrative Agent to act as its agent hereunder
with such powers as are

                      AMENDED AND RESTATED CREDIT AGREEMENT

<PAGE>
                                      -52-

specifically delegated to the Administrative Agent by the terms of this
Agreement, together with such other powers as are reasonably incidental thereto.
The Administrative Agent (which term as used in this sentence and in Section
11.05 and the first sentence of Section 11.06 hereof shall include reference to
its affiliates and its own and its affiliates' officers, directors, employees
and agents):

              (a) shall have no duties or responsibilities except those
       expressly set forth in this Agreement, and shall not by reason of this
       Agreement be a trustee for any Bank;

              (b) shall not be responsible to the Banks for any recitals,
       statements, representations or warranties contained in this Agreement, or
       in any certificate or other document referred to or provided for in, or
       received by any of them under, this Agreement, or for the value,
       validity, effectiveness, genuineness, enforceability or sufficiency of
       this Agreement or any other document referred to or provided for herein
       or for any failure by any Obligor to perform any of its obligations
       hereunder or thereunder;

              (c) shall not be required to initiate or conduct any litigation or
       collection proceedings hereunder; and

              (d) shall not be responsible for any action taken or omitted to be
       taken by it hereunder or under any other document or instrument referred
       to or provided for herein or in connection herewith, except for its own
       gross negligence or willful misconduct.

The Administrative Agent may employ agents and attorneys-in-fact and shall not
be responsible for the negligence or misconduct of any such agents or
attorneys-in-fact selected by it in good faith. The Administrative Agent may
deem and treat the payee of any promissory note evidencing any Loans hereunder
as the holder thereof for all purposes hereof unless and until an Assignment and
Acceptance relating to such Loans shall have been filed with the Administrative
Agent, together with the consent of each of the Borrowers thereto (to the extent
provided in Section 12.05(b) hereof).

              11.02 RELIANCE BY ADMINISTRATIVE AGENT. The Administrative Agent
shall be entitled to rely upon any certification, notice or other communication
(including, without limitation, any thereof by telephone, telecopy, telegram or
cable) believed by it to be genuine and correct and to have been signed or sent
by or on behalf of the proper Person or Persons, and upon advice and statements
of legal counsel, independent accountants and other experts selected by the
Administrative Agent. As to any matters not expressly provided for by this
Agreement, the Administrative Agent shall in all cases be fully protected in
acting, or in refraining from acting, hereunder in accordance with instructions
given by the Majority Banks (or, if so provided in Section 12.04 hereof, all of
the Banks), and such instructions of the Majority Banks (or all of the

                      AMENDED AND RESTATED CREDIT AGREEMENT

<PAGE>
                                      -53-

Banks, as the case may be) and any action taken or failure to act pursuant
thereto shall be binding on all of the Banks.

              11.03 DEFAULTS. The Administrative Agent shall not be deemed to
have knowledge or notice of the occurrence of a Default unless the
Administrative Agent has received notice from a Bank or a Borrower specifying
such Default and stating that such notice is a "Notice of Default". In the event
that the Administrative Agent receives such a notice of the occurrence of a
Default, the Administrative Agent shall give prompt notice thereof to the Banks.
The Administrative Agent shall (subject to Sections 11.01 and 11.07 hereof) take
such action with respect to such Default as shall be directed by the Majority
Banks, PROVIDED that, unless and until the Administrative Agent shall have
received such directions, the Administrative Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with respect
to such Default as it shall deem advisable in the best interest of the Banks
except to the extent that this Agreement expressly requires that such action be
taken, or not be taken, only with the consent or upon the authorization of the
Majority Banks or all of the Banks.

              11.04 RIGHTS AS A BANK. With respect to its Commitment and the
Loans made by it, Chase (and any successor acting as Administrative Agent) in
its capacity as a Bank hereunder shall have the same rights and powers hereunder
as any other Bank and may exercise the same as though it were not acting as the
Administrative Agent, and the term "Bank" or "Banks" shall, unless the context
otherwise indicates, include the Administrative Agent in its individual
capacity. Chase (and any successor acting as Administrative Agent) and its
Affiliates may (without having to account therefor to any Bank) accept deposits
from, lend money to, make investments in and generally engage in any kind of
banking, trust or other business with any Borrower (and any of its Subsidiaries
or Affiliates) as if it were not acting as the Administrative Agent, and Chase
(and any other successor acting as Administrative Agent) and its Affiliates may
accept fees and other consideration from any Borrower for services in connection
with this Agreement or otherwise without having to account for the same to the
Banks.

              11.05 INDEMNIFICATION. The Banks agree to indemnify the
Administrative Agent (to the extent not reimbursed under Section 12.03 hereof,
but without limiting the obligations of the Borrowers under said Section 12.03)
ratably in accordance with their respective Commitments, for any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind and nature whatsoever that may be
imposed on, incurred by or asserted against the Administrative Agent (including
by any Bank) arising out of or by reason of any investigation in or in any way
relating to or arising out of this Agreement or any other documents contemplated
by or referred to herein or the transactions contemplated hereby (including,
without limitation, the costs and expenses that the Borrowers are obligated to
pay under Section 12.03 hereof but excluding (i) normal administrative costs and
expenses incident to the performance of its agency duties hereunder and (ii) the
costs and

                      AMENDED AND RESTATED CREDIT AGREEMENT
<PAGE>
                                      -54-

expenses of the Administrative Agent in connection with the negotiation and
preparation of this Agreement) or the enforcement of any of the terms hereof or
of any such other documents, PROVIDED that no Bank shall be liable for any of
the foregoing to the extent they arise from the gross negligence or willful
misconduct of the party to be indemnified.

              11.06 NON-RELIANCE ON ADMINISTRATIVE AGENT AND OTHER BANKS. Each
Bank agrees that it has, independently and without reliance on the
Administrative Agent, or any other Bank, and based on such documents and
information as it has deemed appropriate, made its own credit analysis of the
Borrowers and their Subsidiaries and decision to enter into this Agreement and
that it will, independently and without reliance upon the Administrative Agent,
or any other Bank, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own analysis and decisions in
taking or not taking action under this Agreement. The Administrative Agent shall
not be required to keep itself informed as to the performance or observance by
the Borrowers of this Agreement or any other document referred to or provided
for herein or to inspect the Properties or books of the Borrowers or any of
their Subsidiaries. Except for notices, reports and other documents and
information expressly required to be furnished to the Banks by the
Administrative Agent hereunder, the Administrative Agent shall not have any duty
or responsibility to provide any Bank with any credit or other information
concerning the affairs, financial condition, operations, business, Properties,
liabilities or prospects of the Borrowers or any of their Subsidiaries (or any
of their Affiliates) that may come into the possession of the Administrative
Agent or any of its Affiliates.

              11.07 FAILURE TO ACT. Except for action expressly required of the
Administrative Agent hereunder, the Administrative Agent shall in all cases be
fully justified in failing or refusing to act hereunder unless it shall receive
further assurances to its satisfaction from the Banks of their indemnification
obligations under Section 11.05 hereof against any and all liability and expense
that may be incurred by it by reason of taking or continuing to take any such
action.

              11.08 RESIGNATION OF ADMINISTRATIVE AGENT. Subject to the
appointment and acceptance of a successor Administrative Agent as provided
below, the Administrative Agent may resign at any time by giving notice thereof
to the Banks and XL Capital. Upon any such resignation, the Majority Banks shall
have the right (with, so long as no Default shall have occurred and be
continuing, the consent of XL Capital, which consent shall not be unreasonably
withheld or delayed) to appoint a successor Administrative Agent. If no
successor Administrative Agent shall have been so appointed by the Majority
Banks and shall have accepted such appointment within 30 days after the retiring
Administrative Agent's giving of notice of resignation of the retiring
Administrative Agent, then the retiring Administrative Agent may, on behalf of
the Banks, (with, so long as no Default shall have occurred and be continuing,
the consent of XL Capital, which consent shall not be unreasonably withheld or
delayed) appoint a successor Administrative Agent, that shall be a Bank that has
an office in New York, New

                      AMENDED AND RESTATED CREDIT AGREEMENT

<PAGE>
                                      -55-

York with a combined capital and surplus of at least $500,000,000. Upon the
acceptance of any appointment as Administrative Agent hereunder by a successor
Administrative Agent, such successor Administrative Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring Administrative Agent, and the retiring Administrative Agent
shall be discharged from its duties and obligations hereunder. After any
retiring Administrative Agent's resignation or removal hereunder as
Administrative Agent, the provisions of this Section 10 shall continue in effect
for its benefit in respect of any actions taken or omitted to be taken by it
while it was acting as the Administrative Agent.

              Section 12. MISCELLANEOUS.

              12.01 WAIVER. No failure on the part of the Administrative Agent
or any Bank to exercise and no delay in exercising, and no course of dealing
with respect to, any right, power or privilege under this Agreement shall
operate as a waiver thereof, nor shall any single or partial exercise of any
right, power or privilege under this Agreement preclude any other or further
exercise thereof or the exercise of any other right, power or privilege. The
remedies provided herein are cumulative and not exclusive of any remedies
provided by law.

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

              (a) if to any Borrower, to XL Capital at XL House, One Bermudiana
       Road, Hamilton HM11 Bermuda, Attention of William Robbie (Telecopy No.
       (441) 296-6399); WITH A COPY to Paul Giordano, Esq. at the same address
       and telecopy number (441) 295-4867;

              (b) if to the Administrative Agent, to The Chase Manhattan Bank, 1
       Chase Manhattan Plaza, 8th Floor, New York, New York 10081, Attention of
       Loan and Agency Services Group, Attention of Laura Rebecca (Telecopy No.
       (212) 552-7490; Telephone No. (212) 552-7253), WITH A COPY to The Chase
       Manhattan Bank, 270 Park Avenue, New York, 15th Floor, New York 10017,
       Attention of Helen Newcomb (Telecopy No. (212) 270-1511; Telephone No.
       (212) 270-6260); and

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

Any party hereto may change its address or telecopy number for notices and other
communications hereunder by notice to the other parties hereto (or, in the case
of any such change by a Bank, by notice to XL Capital and the Administrative
Agent). All notices and other

                      AMENDED AND RESTATED CREDIT AGREEMENT

<PAGE>
                                      -56-

communications given to any party hereto in accordance with the provisions of
this Agreement shall be deemed to have been given on the date of receipt.

              12.03 EXPENSES, ETC. The Borrowers agree to pay or reimburse each
of the Banks and the Administrative Agent for: (a) all reasonable out-of-pocket
costs and expenses of the Administrative Agent (including, without limitation,
the reasonable fees and expenses of Milbank, Tweed, Hadley & McCloy LLP, special
New York counsel to Chase) in connection with the negotiation or preparation of
any modification, supplement or waiver of any of the terms of this Agreement
(whether or not consummated); (b) all reasonable out-of-pocket costs and
expenses of the Banks and the Administrative Agent (including, without
limitation, the reasonable fees and expenses of legal counsel) in connection
with (i) any Default and any enforcement or collection proceedings resulting
therefrom, including, without limitation, all manner of participation in or
other involvement with (x) bankruptcy, insolvency, receivership, foreclosure,
winding up or liquidation proceedings, (y) judicial or regulatory proceedings
and (z) workout, restructuring or other negotiations or proceedings (whether or
not the workout, restructuring or transaction contemplated thereby is
consummated) and (ii) the enforcement of this Section 12.03; and (c) all
transfer, stamp, documentary, recording or other similar taxes, assessments or
charges levied by any governmental or revenue authority in respect of this
Agreement or any other document referred to herein.

              The Borrowers hereby agree to indemnify the Administrative Agent
and each Bank and their respective directors, officers, employees, attorneys and
agents from, and hold each of them harmless against, any and all losses,
liabilities, claims, damages or expenses (without duplication of anything
covered by Section 5 hereof) incurred by any of them (including, without
limitation, any and all losses, liabilities, claims, damages or expenses
incurred by the Administrative Agent to any Bank, whether or not the
Administrative Agent or any Bank is a party thereto) arising out of or by reason
of any investigation or litigation or other proceedings (including any
threatened investigation or litigation or other proceedings) relating to the
Loans hereunder or any actual or proposed use by any Borrower or any of their
Subsidiaries of the proceeds of any of the Loans hereunder, including, without
limitation, the reasonable fees and disbursements of counsel incurred in
connection with any such investigation or litigation or other proceedings (but
excluding any such losses, liabilities, claims, damages or expenses incurred by
reason of the gross negligence or willful misconduct of the Person to be
indemnified).

              12.04 AMENDMENTS, ETC. Except as otherwise expressly provided in
this Agreement, any provision of this Agreement may be modified or supplemented
only by an instrument in writing signed by the Obligors and the Majority Banks,
or by each Obligor and the Administrative Agent acting with the

                      AMENDED AND RESTATED CREDIT AGREEMENT

<PAGE>
                                      -57-

consent of the Majority Banks, and any provision of this Agreement may be waived
by the Majority Banks or by the Administrative Agent acting with the consent of
the Majority Banks; PROVIDED that (a) no such modification, supplement or waiver
shall: (i) increase, or extend the term of the Commitment of any Bank, or extend
the time or waive any requirement for the reduction or termination of such
Commitment, without the written consent of such Bank; (ii) extend the date fixed
for the payment of principal of or interest on any Loan or any fee hereunder,
without the written consent of each Bank affected thereby; (iii) reduce the
amount of any such payment of principal, without the written consent of each
Bank affected thereby; (iv) reduce the rate at which interest is payable thereon
or any fee is payable hereunder, without the written consent of each Bank
affected thereby; (v) alter the rights or obligations of any Borrower to prepay
Loans, without the written consent of each Bank affected thereby; (vi) alter the
terms of Sections 4.02 or 4.07(b) hereof or this Section 12.04, without the
written consent of each Bank; or (vii) modify the definition of the terms
"Agreed Foreign Currency" or "Majority Banks" or modify in any other manner the
number or percentage of the Banks required to make any determinations or waive
any rights hereunder or to modify any provision hereof, without the written
consent of each Bank; and (b) any modification of any of the rights or
obligations of the Administrative Agent hereunder shall require the consent of
the Administrative Agent.

              12.05 SUCCESSORS AND ASSIGNS.

              (a) ASSIGNMENTS GENERALLY. The provisions of this Agreement shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns permitted hereby, except that no Borrower
shall assign or otherwise transfer any of its rights or obligations hereunder
without the prior written consent of each Bank (and any attempted assignment or
transfer by a Borrower without such consent shall be null and void). Nothing in
this Agreement, expressed or implied, shall be construed to confer upon any
Person (other than the parties hereto, their respective successors and assigns
permitted hereby and, to the extent expressly contemplated hereby, the Related
Parties of each of the Administrative Agent and the Banks) any legal or
equitable right, remedy or claim under or by reason of this Agreement.

              (b) ASSIGNMENTS BY BANKS. Any Bank may assign to one or more
assignees all or a portion of its rights and obligations under this Agreement
(including all or a portion of its Commitment and the Loans at the time owing to
it); PROVIDED that

              (i) except in the case of an assignment to a Bank or a Bank
       Affiliate, each of the Borrowers and the Administrative Agent must give
       their prior written consent to such assignment (which consent shall not
       be unreasonably withheld),

              (ii) except in the case of an assignment to a Bank or a Bank
       Affiliate or an assignment of the entire remaining amount of the
       assigning Bank's Commitment, the amount of the Commitment of the
       assigning Bank subject to each such assignment (determined as of the date
       the Assignment and Acceptance with respect to such

                      AMENDED AND RESTATED CREDIT AGREEMENT

<PAGE>
                                      -58-

       assignment is delivered to the Administrative Agent) shall not be less
       than $5,000,000 unless each of the Borrowers and the Administrative Agent
       otherwise consent,

              (iii) each partial assignment shall be made as an assignment of a
       proportionate part of all the assigning Bank's rights and obligations
       under this Agreement,

              (iv) the parties to each assignment shall execute and deliver to
       the Administrative Agent an Assignment and Acceptance, together with a
       processing and recordation fee of $3,500, and

              (v) the assignee, if it shall not be a Bank, shall deliver an
       Administrative Questionnaire to the Administrative Agent (with a copy to
       XL Capital);

PROVIDED FURTHER that any consent of the Borrowers otherwise required under this
paragraph shall not be required if an Event of Default under clause (a), (b),
(g) or (h) of Section 10 has occurred and is continuing. Upon acceptance and
recording pursuant to paragraph (d) of this Section, from and after the
effective date specified in each Assignment and Acceptance, the assignee
thereunder shall be a party hereto and, to the extent of the interest assigned
by such Assignment and Acceptance, have the rights and obligations of a Bank
under this Agreement, and the assigning Bank thereunder shall, to the extent of
the interest assigned by such Assignment and Acceptance, be released from its
obligations under this Agreement (and, in the case of an Assignment and
Acceptance covering all of the assigning Bank's rights and obligations under
this Agreement, such Bank shall cease to be a party hereto but shall continue to
be entitled to the benefits of Sections 5.01, 5.04, 5.05 and 12.03). Any
assignment or transfer by a Bank of rights or obligations under this Agreement
that does not comply with this paragraph shall be treated for purposes of this
Agreement as a sale by such Bank of a participation in such rights and
obligations in accordance with paragraph (e) of this Section.

              Notwithstanding anything to the contrary contained herein, any
Bank (a "GRANTING BANK") may grant to a special purpose vehicle (an "SPV") of
such Granting Bank, identified as such in writing from time to time by the
Granting Bank to the Administrative Agent and the Borrowers, the option to
provide to the Borrowers all or any part of any Loan that such Granting Bank
would otherwise be obligated to make to the Borrowers pursuant to Section 2.01,
PROVIDED that (i) nothing herein shall constitute a commitment by any SPV to
make any Loan, (ii) if an SPV elects not to exercise such option or otherwise
fails to provide all or any part of such Loan, the Granting Bank shall be
obligated to make such Loan pursuant to the terms hereof and (iii) the Borrowers
may bring any proceeding against either or both the Granting Bank or the SPV in
order to enforce any rights of the Borrowers hereunder. The making of a Loan by
an SPV hereunder shall utilize the Commitment of the Granting Bank to the same
extent, and as if, such Loan were made by the Granting Bank. Each party hereto
hereby agrees that no SPV shall be liable for any payment under this Agreement
for which a Bank would otherwise be liable, for so

                      AMENDED AND RESTATED CREDIT AGREEMENT

<PAGE>
                                      -59-

long as, and to the extent, the related Granting Bank makes such payment. In
furtherance of the foregoing, each party hereto hereby agrees (which agreement
shall survive the termination of this Agreement) that, prior to the date that is
one year and one day after the payment in full of all outstanding commercial
paper or other senior indebtedness of any SPV, it will not institute against, or
join any other person in instituting against, such SPV any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings or similar
proceedings under the laws of the United States or any State thereof arising out
of any claim against such SPV under this Agreement. In addition, notwithstanding
anything to the contrary contained in this Section, any SPV may with notice to,
but without the prior written consent of, the Borrowers or the Administrative
Agent and without paying any processing fee therefor, assign all or a portion of
its interests in any Loans to its Granting Bank or to any financial institutions
(consented to by the Borrowers and the Administrative Agent) providing liquidity
and/or credit support (if any) with respect to commercial paper issued by such
SPV to fund such Loans and such SPV may disclose, on a confidential basis,
confidential information with respect to any Borrower and its Subsidiaries to
any rating agency, commercial paper dealer or provider of a surety, guarantee or
credit liquidity enhancement to such SPV. This paragraph may not be amended
without the consent of any SPV at the time holding Loans under this Agreement.

              (c) MAINTENANCE OF REGISTER BY THE ADMINISTRATIVE AGENT. The
Administrative Agent, acting for this purpose as an agent of the Borrowers,
shall maintain at one of its offices in New York City a copy of each Assignment
and Acceptance delivered to it and a register for the recordation of the names
and addresses of the Banks, and the Commitment of, and principal amount of the
Loans owing to, each Bank pursuant to the terms hereof from time to time (the
"REGISTER"). The entries in the Register shall be conclusive, and the Borrowers,
the Administrative Agent and the Banks may treat each Person whose name is
recorded in the Register pursuant to the terms hereof as a Bank hereunder for
all purposes of this Agreement, notwithstanding notice to the contrary. The
Register shall be available for inspection by any Borrower and any Bank, at any
reasonable time and from time to time upon reasonable prior notice.

              (d) EFFECTIVENESS OF ASSIGNMENTS. Upon its receipt of a duly
completed Assignment and Acceptance executed by an assigning Bank and an
assignee, the assignee's completed Administrative Questionnaire (unless the
assignee shall already be a Bank hereunder), the processing and recordation fee
referred to in paragraph (b) of this Section and any written consent to such
assignment required by paragraph (b) of this Section, the Administrative Agent
shall accept such Assignment and Acceptance and record the information contained
therein in the Register. No assignment shall be effective for purposes of this
Agreement unless it has been recorded in the Register as provided in this
paragraph.

              (e) PARTICIPATIONS. Any Bank may, without the consent of the
Borrowers or the Administrative Agent, sell participations to one or more banks
or other entities (a "PARTICIPANT")

                      AMENDED AND RESTATED CREDIT AGREEMENT

<PAGE>
                                      -60-

in all or a portion of such Bank's rights and obligations under this Agreement
(including all or a portion of its Commitment and the Loans owing to it);
PROVIDED that (i) any such participation sold to a Participant which is not a
Bank, a Bank Affiliate or a Federal Reserve Bank shall be made only with the
consent (which in each case shall not be unreasonably withheld) of XL Capital
and the Administrative Agent, unless a Default has occurred and is continuing,
in which case the consent of XL Capital shall not be required, (ii) such Bank's
obligations under this Agreement shall remain unchanged, (iii) such Bank shall
remain solely responsible to the other parties hereto for the performance of
such obligations and (iv) the Borrowers, the Administrative Agent and the other
Banks shall continue to deal solely and directly with such Bank in connection
with such Bank's rights and obligations under this Agreement. Any agreement or
instrument pursuant to which a Bank sells such a participation shall provide
that such Bank shall retain the sole right to enforce this Agreement and to
approve any amendment, modification or waiver of any provision of this
Agreement; PROVIDED that such agreement or instrument may provide that such Bank
will not, without the consent of the Participant, agree to any amendment,
modification or waiver described in the proviso to Section 12.04 that affects
such Participant. Subject to paragraph (f) of this Section, the Borrowers agree
that each Participant shall be entitled to the benefits of Sections 5.01, 5.04
and 5.05 to the same extent as if it were a Bank and had acquired its interest
by assignment pursuant to paragraph (b) of this Section.

              (f) LIMITATIONS ON RIGHTS OF ASSIGNEES AND PARTICIPANTS. A
Participant or Assignee shall not be entitled to receive any greater payment
under Section 5.01 or 5.05 than the applicable Bank would have been entitled to
receive with respect to the participation sold to such Participant or the Bank
interest assigned, unless the sale of the participation to such Participant or
the assignment is made with the Borrowers' prior written consent.

              (g) CERTAIN PLEDGES. Any Bank may at any time pledge or assign a
security interest in all or any portion of its rights under this Agreement to
secure obligations of such Bank, including any such pledge or assignment to a
Federal Reserve Bank, and this Section shall not apply to any such pledge or
assignment of a security interest; PROVIDED that no such pledge or assignment of
a security interest shall release a Bank from any of its obligations hereunder
or substitute any such assignee for such Bank as a party hereto.

              (h) NO ASSIGNMENTS TO ANY BORROWER OR AFFILIATES. Anything in this
Section to the contrary notwithstanding, no Bank may assign or participate any
interest in any Loan held by it hereunder to any Borrower or any of its
Affiliates or Subsidiaries without the prior consent of each Bank.

              12.06 SURVIVAL. The obligations of the Borrowers to any Bank under
Sections 5.01, 5.04, 5.05, and 12.03 hereof, and the obligations of any Bank
under Sections 11.05 and 12.11 hereof, shall survive the repayment of the Loans
made by such Bank and the termination of the Commitment of such Bank and, in the
case of any Bank that may assign any

                      AMENDED AND RESTATED CREDIT AGREEMENT

<PAGE>
                                      -61-

interest in its Commitment or Loans hereunder, shall survive the making of such
assignment, notwithstanding that such assigning Bank may cease to be a "Bank"
hereunder. In addition, each representation and warranty made, or deemed to be
made by a notice of any Loan, herein or pursuant hereto shall survive the making
of such representation and warranty, and no Bank shall be deemed to have waived,
by reason of making any Loan, any Default that (i) may arise by reason of such
representation or warranty proving to have been false or misleading or (ii)
exists at the time such Loan was made, notwithstanding that such Bank or the
Administrative Agent may have had notice or knowledge or reason to believe that
such representation or warranty was false or misleading, or that such Default
was existing, at the time such Loan was made.

              12.07 CAPTIONS. The table of contents and captions and section
headings appearing herein are included solely for convenience of reference and
are not intended to affect the interpretation of any provision of this
Agreement.

              12.08 COUNTERPARTS. This Agreement may be executed in any number
of counterparts, all of which taken together shall constitute one and the same
instrument and any of the parties hereto may execute this Agreement by signing
any such counterpart.

              12.09 GOVERNING LAW; SUBMISSION TO JURISDICTION. This Agreement
shall be governed by, and construed in accordance with, the law of the State of
New York. Each Obligor hereby submits to the nonexclusive jurisdiction of the
United States District Court for the Southern District of New York and of any
New York state court sitting in New York County (and any appellate court from
any thereof) for the purposes of all legal proceedings arising out of or
relating to this Agreement or the transactions contemplated hereby. Each Obligor
irrevocably waives, to the fullest extent permitted by applicable law, any
objection that it may now or hereafter have to the laying of the venue of any
such proceeding brought in such a court and any claim that any such proceeding
brought in such a court has been brought in an inconvenient forum. Each Obligor
hereby irrevocably agrees and consents that service of process in any such legal
proceeding in any such court may be made on such Obligor by the mailing thereof
by registered mail postage prepaid, or by transmitting the same by telecopier,
to such Obligor in the manner specified in Section 12.02 hereof, and any such
service shall be deemed good and effective when transmitted by telecopier or, in
the case of mail, upon receipt; provided that nothing herein will affect the
right of any Bank or the Administrative Agent to serve process in any other
manner permitted by law.

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

                      AMENDED AND RESTATED CREDIT AGREEMENT
<PAGE>
                                      -62-

              12.10 WAIVER OF JURY TRIAL. EACH OF THE OBLIGORS, THE
ADMINISTRATIVE AGENT AND THE BANKS HEREBY IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY
LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.

              12.11 Treatment of Certain Information; Confidentiality.

              (a) TREATMENT OF CERTAIN INFORMATION. Each of the Borrowers
acknowledge that from time to time financial advisory, investment banking and
other services may be offered or provided to any Borrower or one or more of
their Subsidiaries (in connection with this Agreement or otherwise) by any Bank
or by one or more subsidiaries or affiliates of such Bank and each of the
Borrowers hereby authorizes each Bank to share any information delivered to such
Bank by such Borrower and its Subsidiaries pursuant to this Agreement, or in
connection with the decision of such Bank to enter into this Agreement, to any
such subsidiary or affiliate, it being understood that (i) any such information
shall be used only for the purpose of advising the Borrowers or preparing
presentation materials for the benefit of the Borrowers and (ii) any such
subsidiary or affiliate receiving such information shall be bound by the
provisions of paragraph (b) of this Section as if it were a Bank hereunder. Such
authorization shall survive the repayment of the Loans, the expiration or
termination of the Commitments or the termination of this Agreement or any
provision hereof.

              (b) CONFIDENTIALITY. Each of the Administrative Agent and the
Banks agrees to maintain the confidentiality of the Information (as defined
below), except that Information may be disclosed (i) to its and its Affiliates'
directors, officers, employees and agents, including accountants, legal counsel
and other advisors (it being understood that the Persons to whom such disclosure
is made will be informed of the confidential nature of such Information and
instructed to keep such Information confidential), (ii) to the extent requested
by any regulatory authority having jurisdiction over the Administrative Agent or
any Bank, (iii) to the extent required by applicable laws or regulations or by
any subpoena or similar legal process, (iv) to any other party to this
Agreement, (v) in connection with the exercise of any remedies hereunder or any
suit, action or proceeding relating to this Agreement or the enforcement of
rights hereunder, (vi) subject to an agreement in writing containing provisions
substantially the same as those of this paragraph and for the benefit of the
Borrowers, to (a) any assignee of or Participant in, or any prospective assignee
of or Participant in, any of its rights or obligations under this Agreement or
(b) any actual or prospective counterparty (or its advisors) to any swap or
derivative transaction relating to any Borrower and its obligations, (vii) with
the consent of the Borrowers or (viii) to the extent such Information (A)
becomes publicly available other than as a result of a breach of

                      AMENDED AND RESTATED CREDIT AGREEMENT

<PAGE>
                                      -63-

this paragraph or (B) becomes available to the Administrative Agent or any Bank
on a nonconfidential basis from a source other than a Borrower. For the purposes
of this paragraph, "INFORMATION" means all information received from a Borrower
relating to a Borrower or its business, other than any such information that is
available to the Administrative Agent or any Bank on a nonconfidential basis
prior to disclosure by such Borrower; PROVIDED that, in the case of information
received from a Borrower after the date hereof, such information is clearly
identified at the time of delivery as confidential. Any Person required to
maintain the confidentiality of Information as provided in this Section shall be
considered to have complied with its obligation to do so if such Person has
exercised the same degree of care to maintain the confidentiality of such
Information as such Person would accord to its own confidential information.
Notwithstanding the foregoing, each of the Administrative Agent and the Banks
agree that they will not trade the securities of any of the Borrowers based upon
non-public Information that is received by them.

              12.12 JUDGMENT CURRENCY. This is an international loan transaction
in which the specification of Dollars or any Foreign Currency, as the case may
be (the "SPECIFIED CURRENCY"), and any payment in New York County or the country
of the Specified Currency, as the case may be (the "SPECIFIED PLACE"), is of the
essence, and the Specified Currency shall be the currency of account in all
events relating to Loans denominated in the Specified Currency. The payment
obligations of the Borrowers under this Agreement shall not be discharged by an
amount paid in another currency or in another place, whether pursuant to a
judgment or otherwise, to the extent that the amount so paid on conversion to
the Specified Currency and transfer to the Specified Place under normal banking
procedures does not yield the amount of the Specified Currency at the Specified
Place due hereunder. If for the purpose of obtaining judgment in any court it is
necessary to convert a sum due hereunder in the Specified Currency into another
currency (the "SECOND CURRENCY"), the rate of exchange which shall be applied
shall be that at which in accordance with normal banking procedures the
Administrative Agent could purchase the Specified Currency with the Second
Currency on the Business Day next preceding that on which such judgment is
rendered. The obligation of each Borrower in respect of any such sum due from it
to the Administrative Agent or any Bank hereunder shall, notwithstanding the
rate of exchange actually applied in rendering such judgment, be discharged only
to the extent that on the Business Day following receipt by the Administrative
Agent or such Bank, as the case may be, of any sum adjudged to be due hereunder
in the Second Currency to the Administrative Agent or such Bank, as the case may
be, the Administrative Agent or such Bank, as the case may be, may in accordance
with normal banking procedures purchase and transfer to the Specified Place the
Specified Currency with the amount of the Second Currency so adjudged to be due;
and the Borrowers hereby, as a separate obligation and notwithstanding any such
judgment, agree to indemnify the Administrative Agent or such Bank, as the case
may be, against, and to pay the Administrative Agent or such Bank, as the

                      AMENDED AND RESTATED CREDIT AGREEMENT

<PAGE>
                                      -64-

case may be, on demand in the Specified Currency, any difference between the sum
originally due to the Administrative Agent or such Bank, as the case may be, in
the Specified Currency and the amount of the Specified Currency so purchased and
transferred.

              12.13 EUROPEAN MONETARY UNION. (a) If, as a result of the
implementation of European monetary union, (i) any European Currency ceases to
be lawful currency of the nation issuing the same and is replaced by a European
common currency (the "EURO"), or (ii) any European Currency and the Euro are at
the same time recognized by any Governmental Authority of the nation issuing
such European Currency as lawful currency of such nation and the Administrative
Agent or the Majority Banks shall so request in a notice delivered to XL
Capital, then any amount payable hereunder by any party hereto in such European
Currency shall instead be payable in the Euro and the amount so payable shall be
determined by translating the amount payable in such European Currency to the
Euro at the exchange rate recognized by the European Central Bank for the
purpose of implementing European monetary union. Prior to the occurrence of the
event or events described in clause (i) or (ii) of the preceding sentence, each
amount payable hereunder in any European Currency will, except as otherwise
provided herein, continue to be payable only in that Currency.

              (b) The Borrowers agree, at the request of any Bank, to compensate
such Bank for any loss, cost, expense or reduction in return that such Bank
shall reasonable determine shall be incurred or sustained by such Bank as a
result of the implementation of European monetary union and that would not have
been incurred or sustained but for the transactions provided for herein. A
certificate of a Bank setting forth such Bank's determination of the amount or
amounts necessary to compensate such Bank shall be delivered to XL Capital and
shall be conclusive absent manifest error so long as such determination is made
on a reasonable basis. XL Capital shall pay such Bank the amount shown as due on
any such certificate within 10 days after receipt thereof.

              (c) The parties hereto agree, at the time of or at any time
following the implementation of European monetary union, to use reasonable
efforts to enter into an agreement amending this Agreement in order to reflect
the implementation of such monetary union, to permit (if feasible) the Euro to
qualify as an Agreed Foreign Currency under the terms and conditions of the
definition of such term and to place the parties hereto in the position with
respect to the settlement of payments of the Euro as they would have been with
respect to the settlement of the Currencies it replaced.

                      AMENDED AND RESTATED CREDIT AGREEMENT
<PAGE>
                                      -65-

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

                                    XL INSURANCE LTD,
                                    as a Borrower and a Guarantor

                                    By /s PAUL S. GIORDANO
                                       --------------------
                                        Name:  Paul S. Giordano
                                        Title: Executive Vice President, General
                                               Counsel & Secretary

                                    MID OCEAN LIMITED,
                                    as a Borrower and a Guarantor

                                    By /s PAUL S. GIORDANO
                                       --------------------
                                      Name:  Paul S. Giordano
                                      Title: Secretary & Director

                                    XL RE LTD, (formerly known as MID
                                    OCEAN REINSURANCE LTD),
                                    as a Borrower and a Guarantor

                                    By /s PAUL S. GIORDANO
                                       --------------------
                                        Name:  Paul S. Giordano
                                        Title: Executive Vice President, General
                                               Counsel & Secretary

                      AMENDED AND RESTATED CREDIT AGREEMENT
<PAGE>
                                      -66-

              IN WITNESS WHEREOF, XL Capital has caused this Agreement to be
duly executed as a Deed by an authorized officer as of the day and year first
above written.

                                    EXECUTED AS A DEED by XL CAPITAL LTD,
                                    as a Borrower and a Guarantor

                                    /s/ BRIAN O'HARA
                                     ----------------
                                    witness:  Brian O'Hara

                                    By /s PAUL S. GIORDANO
                                       --------------------
                                        Name:  Paul S. Giordano
                                        Title: Executive Vice President, General
                                               Counsel & Secretary

                      AMENDED AND RESTATED CREDIT AGREEMENT
<PAGE>
                                      -67-

                                    BANKS

                                    THE CHASE MANHATTAN BANK, Individually
                                    and as Administrative Agent

                                    By /s/ HELEN NEWCOMB
                                       ---------------------------
                                       Title:  Vice President

                      AMENDED AND RESTATED CREDIT AGREEMENT
<PAGE>
                                      -68-

                                    CITIBANK N.A.

                                    By /s/ MICHAEL A. TAYLOR
                                       ---------------------------
                                    Title:   Vice President

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

                      AMENDED AND RESTATED CREDIT AGREEMENT
<PAGE>
                                      -69-

                                    DEUTSCHE BANK AG, NEW YORK AND/OR
                                    CAYMAN ISLANDS BRANCHES

                                    By /s/ RUTH LEUNG
                                       ------------------------------
                                       Title:   Director

                                    By /s/ JOHN S. MCGILL
                                       ------------------------------
                                       Title:   Director

                      AMENDED AND RESTATED CREDIT AGREEMENT
<PAGE>
                                      -70-

                                    MELLON BANK, N.A.

                                    By /s/ KARLA MALOOF
                                       ---------------------------
                                       Title:  Vice President

                      AMENDED AND RESTATED CREDIT AGREEMENT
<PAGE>
                                      -71-

                                    ROYAL BANK OF CANADA

                                    By /s/ ALEXANDER BIRR
                                       -------------------
                                      Title:   Senior Manager

                      AMENDED AND RESTATED CREDIT AGREEMENT
<PAGE>
                                      -72-

                                    THE BANK OF BERMUDA LIMITED

                                    By /s/ A. KERRY DAVIDSON
                                       ---------------------------
                                       Title:  VP - Credit Manager

                      AMENDED AND RESTATED CREDIT AGREEMENT
<PAGE>
                                      -73-

                                    CREDIT LYONNAIS NEW YORK BRANCH

                                    By /s/ PETER RASMUSSEN
                                       ---------------------------
                                       Title:  First Vice President

                      AMENDED AND RESTATED CREDIT AGREEMENT
<PAGE>
                                      -74-

                                    STATE STREET BANK AND TRUST COMPANY

                                    By /s/ EDWARD ANDERSEN
                                       ---------------------------
                                       Title:  Vice President

                      AMENDED AND RESTATED CREDIT AGREEMENT
<PAGE>
                                      -75-

                                    BANQUE NATIONALE DE PARIS

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

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

                      AMENDED AND RESTATED CREDIT AGREEMENT
<PAGE>
                                      -76-

                                    THE BANK OF NOVA SCOTIA NY AGENCY

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

                      AMENDED AND RESTATED CREDIT AGREEMENTCONFORMED COPY

                                20 NOVEMBER 2001

                                 XL CAPITAL LTD
                                AS ACCOUNT PARTY

                                 THE GUARANTORS
                               (AS DEFINED HEREIN)

                            THE LENDERS PARTY HERETO
                               (AS DEFINED HEREIN)

                           CITIBANK INTERNATIONAL PLC
                          AS AGENT AND SECURITY TRUSTEE

                     SALOMON BROTHERS INTERNATIONAL LIMITED
                                   AS ARRANGER

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

              LETTER OF CREDIT FACILITY AND REIMBURSEMENT AGREEMENT

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

                      [LOGO] FRESHFIELDS BRUCKHAUS DERINGER

<PAGE>

                                    CONTENTS

CLAUSE                                                                      PAGE

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

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

3.  UTILISATION OF THE FACILITY...............................................15

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

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

6.  THE ACCOUNT PARTY'S LIABILITIES IN RELATION TO LETTERS OF CREDIT..........21

7.  DEFAULT INTEREST..........................................................22

8.  TERMINATION AND REDUCTION OF THE COMMITMENTS..............................22

9.  FEES......................................................................23

10. TAXES.....................................................................24

11. TAX RECEIPTS..............................................................25

12. INCREASED COSTS...........................................................26

13. ILLEGALITY................................................................27

14. MITIGATION OBLIGATIONS; REPLACEMENT OF LENDERS............................28

15. PAYMENTS GENERALLY; PRO RATA TREATMENT; SHARING OF SET-OFFS...............29

16. GUARANTEE AND INDEMNITY...................................................31

17. REPRESENTATIONS AND WARRANTIES............................................34

18. AFFIRMATIVE COVENANTS.....................................................38

19. NEGATIVE COVENANTS........................................................42

20. EVENTS OF DEFAULT.........................................................46

21. THE AGENT, THE ARRANGER AND THE LENDERS...................................48

22. NOTICES...................................................................55

23. WAIVERS AND AMENDMENTS....................................................56

<PAGE>

24. COSTS AND EXPENSES........................................................57

25. INDEMNITIES...............................................................58

26. ALTERATION TO THE PARTIES.................................................59

27. SET OFF...................................................................64

28. MISCELLANEOUS PROVISIONS..................................................64

29. GOVERNING LAW AND JURISDICTION............................................65

30. TREATMENT OF CERTAIN INFORMATION; CONFIDENTIALITY.........................66

31. THIRD PARTY RIGHTS........................................................67

SCHEDULE 1..........................................

      Commitments...................................

SCHEDULE 2..........................................

      Indebtedness and Liens........................
      Part A - Indebtedness.........................
      Part B - Liens................................

SCHEDULE 3..........................................

      Subsidiaries..................................
      XL CAPITAL - CAYMAN...........................

SCHEDULE 4..........................................

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

SCHEDULE 5..........................................

      Conditions Precedent..........................

SCHEDULE 6..........................................

      Utilisation Request...........................

SCHEDULE 7..........................................

      Form of Letter of Credit......................
      APPENDIX 1....................................
      APPENDIX 2....................................
      APPENDIX 3....................................

SCHEDULE 8..........................................

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

SCHEDULE 9..........................................

      Form of Charge Agreement......................
      APPENDIX 1....................................

                                                                         Page II

<PAGE>

                                                                  CONFORMED COPY

LETTER OF CREDIT FACILITY AND REIMBURSEMENT AGREEMENT dated 20 November 2001

BETWEEN:

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

The GUARANTORS as defined below;

The LENDERS as defined below;

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

SALOMON BROTHERS INTERNATIONAL LIMITED (the ARRANGER).

DEFINITIONS

DEFINED TERMS

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

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

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

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

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

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

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

<PAGE>

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

                                                                          Page 2
<PAGE>

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

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

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

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

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

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

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

COMMITMENT  LETTER  means the letter so titled from the  Arranger to the Account
Party dated 9 October 2001;

COMMITMENT  TERMINATION  DATE means the  earlier of (a) the later of 23 November
2001 and the date which Lloyd's may specify as the Funds Date for 2001;  and (b)
1 January 2002;

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

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

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

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

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

                                                                          Page 3
<PAGE>

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

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

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

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

EFFECTIVE  DATE means,  in respect of a Letter of Credit,  the date upon which a
Letter of Credit shall become  valid and  enforceable,  being any date from (and
including) the Closing Date to (but excluding) 1 January 2002;

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

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

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

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

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

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

                                                                          Page 4
<PAGE>

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

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

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

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

FEE LETTER  means the letter  from the  Arranger  to the  Account  Party dated 9
October 2001, relating to the payment of certain fees;

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

FINAL  MATURITY DATE means 31 December  2006,  as extended  pursuant to Clause 4
(EXTENSION OF LETTERS OF CREDIT);

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

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

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

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

FUNDS DATE means the date notified by Lloyd's each year as being the latest date
in that year by which Funds at Lloyd's  can be placed  with  Lloyd's in order to
satisfy Funds at Lloyd's  Requirements in respect of the immediately  succeeding
calendar year being,  in respect of the 2001 calendar  year, 29 November 2001 or
such other date as may be advised by Lloyd's;

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

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

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

                                                                          Page 5
<PAGE>

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

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

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

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

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

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

                                                                          Page 6
<PAGE>

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

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

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

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

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

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

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

LETTER OF CREDIT FEES means the fees  payable by the Account  Party  pursuant to
Clause 9.2 (LETTER OF CREDIT FEES) (as adjusted  from time to time in accordance
with the provisions of Clause 9.3) (ADJUSTMENT OF LETTER OF CREDIT FEE);

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

LIBOR means, in relation to any unpaid sum:

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

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

       for the purposes of this definition:

                                                                          Page 7
<PAGE>

       TELERATE  PAGE 3750  means  the  display  designated  as Page  3750,  and
       TELERATE  PAGE 3740 means the display  designated  as Page 3740,  in each
       case on the  Telerate  Service (or such other  pages as may replace  Page
       3750  or Page  3740 on that  service  or  such  other  service  as may be
       nominated  by the British  Bankers'  Association  (including  the Reuters
       Screen) as the information  vendor for the purposes of displaying British
       Bankers'  Association  Interest  Settlement  Rates  for  deposits  in the
       currency concerned);

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

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

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

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

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

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

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

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

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

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

OBLIGORS means each of the Account Party and the Guarantors;

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

ORIGINAL AGREEMENT means the letter of credit and reimbursement  agreement dated
3 November  2000  between,  inter alios,  the Account  Party,  the Agent and the
lenders thereto;

ORIGINAL LETTERS OF CREDIT means the letters of credit issued under the Original
Agreement;

                                                                          Page 8
<PAGE>

ORIGINAL PARTIES means the parties to the Original Agreement;

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

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

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

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

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

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

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

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

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

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

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

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

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

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

                                                                          Page 9
<PAGE>

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

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

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

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

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

TOTAL COMMITMENTS means, at any time, the aggregate of the Lenders'  Commitments
(being on the date hereof (pound)324,000,000);

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

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

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

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

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

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

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

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

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

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

                                                                         Page 10
<PAGE>

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

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

XL RE means  XL Re Ltd  (formerly  XL Mid  Ocean  Reinsurance  Ltd),  a  company
organised under the laws of Bermuda.

INTERPRETATION

1.2    Any reference in this Agreement to:

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

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

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

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

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

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

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

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

                                                                         Page 11
<PAGE>

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

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

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

(l)    unless the contrary intention appears:

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

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

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

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

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

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

                                                                         Page 12
<PAGE>

ACCOUNTING TERMS; GAAP AND SAP

1.3    Except as otherwise expressly provided herein, all terms of an accounting
or financial  nature shall be construed in  accordance  with GAAP or SAP, as the
context  requires,  each as in effect from time to time;  provided  that, if the
Account Party  notifies the Agent that the Obligors  request an amendment to any
provision  hereof to eliminate the effect of any change occurring after the date
hereof in GAAP or SAP, as the case may be, or in the application  thereof on the
operation of such  provision  (or if the Agent  notifies  the Obligors  that the
Majority Lenders request an amendment to any provision hereof for such purpose),
regardless  of whether any such  notice is given  before or after such change in
GAAP or SAP,  as the case  may be,  or in the  application  thereof,  then  such
provision  shall be interpreted on the basis of GAAP or SAP, as the case may be,
as in effect and  applied  immediately  before  such  change  shall have  become
effective until such notice shall have been withdrawn or such provision  amended
in accordance herewith.

AGREEMENTS AND STATUTES

1.4    Any reference in this Agreement to:

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

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

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

HEADINGS

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

TIME

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

THE FACILITY

GRANT OF THE FACILITY

2.1    The Lenders, upon the terms and subject to other conditions hereof, grant
to the  Account  Party a letter of credit  facility  in an  aggregate  amount of
(pound)324,000,000.

PURPOSE AND APPLICATION

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

                                                                         Page 13
<PAGE>

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

CONDITIONS PRECEDENT

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

SEVERAL OBLIGATIONS

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

SEVERAL RIGHTS

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

CHANGE OF CURRENCY

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

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

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

                                                                         Page 14
<PAGE>

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

CANCELLATION OF ORIGINAL AGREEMENT

2.7(a) From the date of this  Agreement  the Account Party shall not deliver any
       Utilisation  Request (as  defined in the  Original  Agreement)  under the
       Original Agreement.

(b)    The Original  Parties hereby agree that the Original  Agreement  shall be
       automatically  terminated and the Total Commitments  thereunder cancelled
       upon  cancellation  of all the Original  Letters of Credit in  accordance
       with the terms of the Original Agreement.

UTILISATION OF THE FACILITY

UTILISATION CONDITIONS FOR THE FACILITY

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

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

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

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

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

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

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

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

REQUEST FOR LETTERS OF CREDIT

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

COMPLETION OF LETTERS OF CREDIT

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

                                                                         Page 15
<PAGE>

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

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

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

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

EXPIRY DATE

3.4    Each Letter of Credit  shall  expire at or prior to the close of business
on 31 December 2006 (prior to giving effect to the automatic  extension pursuant
to  Clause  4.1)  (or,  in the case of any  renewal  or  extension  thereof  (or
subsequent  renewals or  extensions)  in accordance  with Clause 4 (EXTENSION OF
LETTER OF  CREDIT),  one year after such  renewal or  extension  (or  subsequent
renewal or extension)).

EACH LENDER'S PARTICIPATION IN LETTERS OF CREDIT

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

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

NOTIFICATION TO LENDERS

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

CANCELLATION OF AVAILABLE COMMITMENTS

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

EXTENSION OF LETTERS OF CREDIT

AUTOMATIC EXTENSION

4.1(a) Each Lender acknowledges that, subject to the terms of this Agreement, on
       31 December of each year,  each issued Letter of Credit shall be extended
       automatically to 31 December of the year immediately  succeeding the year
       in which its then  current  Expiry Date falls,  unless  Lloyd's  receives
       notice to the  contrary,  so that each Letter of Credit shall on any date
       be valid for a minimum of four years from

                                                                         Page 16
<PAGE>

       such date. No Finance Party is entitled to give notice of  non-renewal to
       Lloyd's  pursuant to Clause 3 of Schedule 7 except as  permitted  by this
       Clause 4.

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

LENDERS' RIGHTS TO DECLINE EXTENSIONS OF A LETTER OF CREDIT

4.2    In any year (other than the year 2001),  each Lender may in its  absolute
discretion  elect not to participate  in the automatic  extension of a Letter of
Credit which  (pursuant to Clause 4.1) is expressed to take place on 31 December
of that year.  Each Lender  undertakes to notify the Agent in writing as soon as
reasonably  practicable  after it has determined that it will not participate in
the  extension,  and in any  event  by no later  than  close  of  business  on 1
September of that year. The Agent shall give notice thereof to the Account Party
within two Business  Days of  notification  from such Lender.  Unless  notice is
given to the Agent as aforesaid each Lender will be deemed automatically to have
agreed to the extension taking place on 31 December of such year.

EXTENSION OF A LETTER OF CREDIT

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

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

SUBSTITUTE LENDER

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

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

                                                                         Page 17
<PAGE>

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

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

REPLACEMENT LETTERS OF CREDIT (FOLLOWING EXTENSION)

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

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

EXTENSION CONDITIONS PRECEDENT

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

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

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

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

                                                                         Page 18
<PAGE>

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

CANCELLATION OF BILATERAL LETTERS OF CREDIT

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

REVISED LETTERS OF CREDIT

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

INCREASE TO FACILITY

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

PAYMENT OF DEMANDS

DISBURSEMENT PROCEDURES

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

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

                                                                         Page 19
<PAGE>

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

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

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

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

RIGHT TO MAKE PAYMENTS UNDER LETTERS OF CREDIT

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

LIABILITY OF LENDERS

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

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

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

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

                                                                         Page 20
<PAGE>

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

THE ACCOUNT PARTY'S INDEMNITY TO LENDERS

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

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

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

PRESERVATION OF RIGHTS

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

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

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

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

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

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

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

SETTLEMENT CONDITIONAL

6.3    Any settlement or discharge  between the Account Party and a Lender shall
be  conditional  upon no security or payment to such Lender by the Account Party
or any other person on behalf of the Account Party,  being avoided or reduced by
virtue of any Laws relating to  Bankruptcy,  insolvency,  liquidation or similar
Laws of general  application  and, if any such security or payment is so avoided
or reduced, such Lender shall be entitled to

                                                                         Page 21
<PAGE>

recover the value or amount of such  security or payment from the Account  Party
subsequently as if such settlement or discharge had not occurred.

DEFAULT INTEREST

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

TERMINATION AND REDUCTION OF THE COMMITMENTS

SCHEDULED TERMINATION

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

VOLUNTARY CANCELLATION OR REDUCTION

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

NOTICE OF VOLUNTARY CANCELLATION OR REDUCTION

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

NO OTHER REPAYMENTS OR CANCELLATION

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

EFFECT OF CANCELLATION OR REDUCTION

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

                                                                         Page 22
<PAGE>

FEES

PARTICIPATION FEE

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

LETTER OF CREDIT FEE

9.2(a) The  Account  Party shall pay to the Agent for account of each Lender pro
       rata  according to their  respective  LC Exposures  hereunder a letter of
       credit fee computed at the rate of 0.60 per cent. per annum (as such rate
       may be adjusted  from time to time in accordance  with the  provisions of
       Clause  9.3) on the  principal  amount  of each  issued  Letter of Credit
       payable from the Utilisation  Date until the Expiry Date (as extended) of
       that  Letter  of  Credit  or  any  earlier  cancellation,   repayment  or
       prepayment  of  the  Letter  of  Credit  in  accordance   with  Clause  8
       (TERMINATION AND REDUCTION OF THE COMMITMENTS) of this Agreement;

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

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

ADJUSTMENT OF LETTER OF CREDIT FEE

9.3    Notwithstanding  Clause 9.2(a) above,  when the credit rating (as defined
below)  corresponds  to a rating set out in Column 1 below of the fee chart (the
FEE CHART), the Letter of Credit Fee payable in accordance with Clause 9.2 shall
be the  amount  set out in the  corresponding  row in Column 2 of the Fee Chart;
provided however, that when the credit rating is less than A, then the Letter of
Credit Fee shall be 0.80 per cent. per annum until the provisions of Clause 19.8
(a) or (b)  (RATINGS  DOWNGRADE)  have been  complied  with (in which case,  the
Letter of Credit Fee shall be 0.30 per cent.  per annum as set forth in Column 2
of the Fee  Chart).  Once  the  conditions  of  Clause  19.8  (i) and  (ii)  are
satisfied,  then the  Letter  of Credit  Fee  shall  once  again be  payable  in
accordance with the Fee Chart.

Any change to the Letter of Credit Fee described  above shall take effect on the
day on which the credit  rating change is publicly  announced by the  applicable
rating  agency;  or, in the event either of the  conditions  set forth in Clause
19.8 (i) or (ii) are not  satisfied  the day on which the  provisions  of Clause
19.8 (a) or (b) (RATINGS DOWNGRADE) have been complied with.

                                                                         Page 23
<PAGE>

FEE CHART

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

       CREDIT RATING - COLUMN 1             LETTER OF CREDIT FEE - COLUMN 2
-------------------------------------- -----------------------------------------

     Greater than or equal to AA+               0.55 per cent. per annum
-------------------------------------- -----------------------------------------

                  AA                            0.60 per cent. per annum
-------------------------------------- -----------------------------------------

                 AA-                            0.65 per cent. per annum
-------------------------------------- -----------------------------------------

                  A+                           0.725 per cent. per annum
-------------------------------------- -----------------------------------------

                  A                             0.80 per cent. per annum
-------------------------------------- -----------------------------------------

             Less than A                        0.30 per cent. per annum
-------------------------------------- -----------------------------------------

In this Clause 9.3, CREDIT RATING means the lower of:

(a)    the financial  strength  rating of the Account Party from A.M. Best & Co.
       (or its successor); and

(b)    the  financial  strength  rating of XL Insurance  from  Standard & Poor's
       Rating Services (or its successor).

AGENT FEES

9.4    The Account  Party agrees to pay to the Agent,  for its own account,  the
agency fees payable in the amounts and at the times specified in the Fee Letter.

PAYMENT OF FEES

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

BASIS OF CALCULATION

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

TAXES

TAX GROSS-UP

10.1   All  payments  to be made by an Obligor to any Finance  Party  hereunder,
whether in respect of principal, interest, fees or any other item, shall be made
free and clear of and  without  deduction  for or on account of tax unless  such
Obligor  is  required  to  make  such a  payment  subject  to the  deduction  or
withholding of tax, in which case the sum payable by such Obligor (in respect of
which such  deduction or  withholding is required to be made) shall be increased
to the extent  necessary to ensure that such Finance Party receives a sum net of

                                                                         Page 24
<PAGE>

any deduction or  withholding  equal to the sum which it would have received had
no such deduction or withholding been made or required to be made.

TAX INDEMNITY

10.2   Without prejudice to Clause 10.1 (TAX GROSS-UP),  if any Finance Party is
required  to make any  payment of or on account of tax on or in  relation to any
sum received or receivable  hereunder  (including any sum deemed for purposes of
tax to be received or  receivable  by such Finance Party whether or not actually
received or  receivable)  or if any  liability in respect of any such payment is
asserted,  imposed,  levied or assessed  against any Finance Party,  the Account
Party shall,  upon demand of the Agent,  promptly  indemnify  the Finance  Party
which suffers a loss or liability as a result against such payment or liability,
together with any interest, penalties, costs and expenses payable or incurred in
connection therewith, PROVIDED THAT this Clause 10.2 shall not apply to:

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

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

CLAIMS BY LENDERS

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

TAX RECEIPTS

NOTIFICATION OF REQUIREMENT TO DEDUCT TAX

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

EVIDENCE OF PAYMENT OF TAX

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

TAX CREDIT PAYMENT

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

                                                                         Page 25
<PAGE>

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

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

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

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

TAX CREDIT CLAWBACK

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

TAX AND OTHER AFFAIRS

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

INCREASED COSTS

INCREASED COSTS

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

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

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

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

                                                                         Page 26
<PAGE>

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

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

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

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

then and in each such case:

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

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

EXCEPTIONS

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

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

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

ILLEGALITY

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

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

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<PAGE>

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

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

MITIGATION OBLIGATIONS; REPLACEMENT OF LENDERS.

DESIGNATION OF A DIFFERENT LENDING OFFICE

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

REPLACEMENT OF LENDERS

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

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

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

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<PAGE>

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

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

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

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

PAYMENTS BY THE ACCOUNT PARTY

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

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

CURRENCY

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

APPLICATION OF INSUFFICIENT PAYMENTS

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

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

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

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

                                                                         Page 29
<PAGE>

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

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

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

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

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

PRO RATA TREATMENT

15.4    Except to the extent otherwise provided herein:

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

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

SHARING OF PAYMENTS BY LENDERS

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

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

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

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

                                                                         Page 30
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Party in the amount of such participation and the Obligors authorise the Lenders
to exchange Transfer  Certificates and any other documentation to give effect to
those purchases of participations.

PRESUMPTIONS OF PAYMENT

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

CERTAIN DEDUCTIONS BY THE AGENT

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

GUARANTEE AND INDEMNITY

GUARANTEE AND INDEMNITY

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

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

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

ADDITIONAL SECURITY

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

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<PAGE>

CONTINUING OBLIGATIONS

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

OBLIGATIONS NOT DISCHARGED

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

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

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

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

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

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

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

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

SETTLEMENT CONDITIONAL

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

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<PAGE>

EXERCISE OF RIGHTS

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

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

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

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

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

DEFERRAL OF GUARANTOR'S RIGHTS

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

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

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

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

RIGHTS OF CONTRIBUTION

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

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

                                                                         Page 33
<PAGE>

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

GENERAL LIMITATION ON GUARANTEE OBLIGATIONS

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

REPRESENTATIONS AND WARRANTIES

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

ORGANISATION; POWERS

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

AUTHORISATION: ENFORCEABILITY

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

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<PAGE>

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

GOVERNMENTAL APPROVALS; NO CONFLICTS

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

FINANCIAL CONDITION; NO MATERIAL ADVERSE CHANGE

17.5(a) FINANCIAL  CONDITION.  The Account Party has heretofore furnished to the
Lenders  (i)  its   consolidated   balance  sheet  and   statements  of  income,
shareholders'  equity  and  cash  flows  as of and for the  fiscal  years  ended
December 31, 1999 and December 31, 2000,  reported on by  PricewaterhouseCoopers
LLP,  independent  public accountants (as provided in the Account Party's Report
on Form 10-K filed with the SEC for the fiscal year ended  December  31,  2000);
(ii) its  consolidated  balance sheet and  statements  of income,  shareholders'
equity and cash flows as of and for the fiscal quarter ended September 30, 2001,
as provided in the  Account  Party's  Report on Form 10-Q filed with the SEC for
the fiscal quarter ended September 30, 2001; and (iii) the management  financial
statements  of XL America,  XL Insurance,  XL Europe,  and XL Re for the quarter
ended June 30, 2001. Such financial  statements (and any further such statements
delivered  pursuant to Clause 18.1(a) and (b)) present  fairly,  in all material
respects,  the financial  position and results of  operations  and cash flows of
such Obligor and its respective  consolidated  Subsidiaries as of such dates and
for such periods (or the dates or periods to which any such  further  statements
relate) in accordance with GAAP or (in the case of XL Europe, XL Insurance or XL
Re) SAP,  subject to year-end audit  adjustments and the absence of footnotes in
the case of the management financial statements referred to in (iii) hereto.

(b)     NO MATERIAL  ADVERSE CHANGE.  Since December 31, 2000, there has been no
        material adverse change in the assets, business,  financial condition or
        operations  of such  Obligor  and its  Subsidiaries,  taken  as a whole,
        except  for  losses  caused  by or  relating  to or  arising  out of the
        terrorist events of September 11, 2001 provided however that the Account
        Party remains in compliance with Clause 19.6 hereof.

PROPERTIES

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

(b)     INTELLECTUAL  PROPERTY.  Such Obligor and each of its Subsidiaries owns,
        or is licensed to use, all trademarks,  tradenames,  copyrights, patents
        and other  intellectual  property material to its business,  and the use
        thereof by such Obligor and its Subsidiaries does

                                                                         Page 35
<PAGE>

        not infringe  upon the rights of any other  Person,  except for any such
        infringements  that,  individually  or  in  the  aggregate,   could  not
        reasonably be expected to result in a Material Adverse Effect.

LITIGATION AND ENVIRONMENTAL MATTERS

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

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

COMPLIANCE WITH LAWS AND AGREEMENTS

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

INVESTMENT AND HOLDING COMPANY STATUS

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

TAXES

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

ERISA

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

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<PAGE>

recent  financial  statements  reflecting  such amounts,  exceed the fair market
value of the assets of such Plan by an amount that could  reasonably be expected
to result in a Material Adverse Effect.

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

DISCLOSURE

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

USE OF CREDIT

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

SUBSIDIARIES

17.14   Set forth in  Schedule 3 is a complete  and  correct  list of all of the
Subsidiaries  of the Account Party as of 30 September  2001,  together with, for
each such  Subsidiary,  (i) the jurisdiction of organisation of such Subsidiary,
(ii) each Person holding  ownership  interests in such  Subsidiary and (iii) the
percentage  of  ownership  of such  Subsidiary  represented  by  such  ownership
interests.  Except as disclosed in Schedule 3, (x) each of the Account Party and
its Subsidiaries  owns, free and clear of Liens, and has the unencumbered  right
to vote, all outstanding  ownership interests in each Person shown to be held by
it in Schedule 5, (y) all of the issued and  outstanding  capital  stock of each
such  Person  organised  as a  corporation  is  validly  issued,  fully paid and
nonassessable  and (z) except as disclosed in filings of the Account  Party with
the SEC prior to the date hereof,  there are no  outstanding  Equity Rights with
respect to any Obligor.

WITHHOLDING TAXES

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

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<PAGE>

STAMP TAXES

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

LEGAL FORM

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

CLAIMS PARI PASSU

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

AFFIRMATIVE COVENANTS

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

FINANCIAL STATEMENTS AND OTHER INFORMATION

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

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

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<PAGE>

(b)     within 60 days after the end of each of the first three fiscal  quarters
        of each fiscal year of such Obligor,  the consolidated balance sheet and
        related statements of operations, shareholders' equity and cash flows of
        such Obligor and its consolidated  Subsidiaries as of the end of and for
        such fiscal  quarter and the then  elapsed  portion of the fiscal  year,
        setting forth in each case in  comparative  form the figures for (or, in
        the  case of the  balance  sheet,  as of the  end of) the  corresponding
        period or periods of the  previous  fiscal  year (if such  figures  were
        already  produced  for  such  corresponding  period  or  periods),   all
        certified by a Financial Officer of such Obligor as presenting fairly in
        all material respects the financial  condition and results of operations
        of such  Obligor and its  consolidated  Subsidiaries  on a  consolidated
        basis in accordance with GAAP or (in the case of XL Europe, XL Insurance
        and XL Re) SAP,  as the case may be,  consistently  applied,  subject to
        normal year-end audit adjustments and the absence of footnotes (it being
        understood that delivery to the Lenders of the Account Party's Report on
        Form 10-Q  filed  with the SEC shall  satisfy  the  financial  statement
        delivery  requirements  of this  paragraph  (b) to deliver the quarterly
        financial  statements  of the  Account  Party  so long as the  financial
        information required to be contained in such Report is substantially the
        same as the financial information required under this paragraph (b));

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

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

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

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

                                                                         Page 39
<PAGE>

        book values) and (ii) a calculation  showing the portion of each of such
        aggregate  amounts which portion is attributable  to transactions  among
        wholly-owned Subsidiaries of the Account Party; and

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

NOTICES OF MATERIAL EVENTS

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

(a)     the occurrence of any Default; and

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

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

PRESERVATION OF EXISTENCE AND FRANCHISES

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

INSURANCE

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

MAINTENANCE OF PROPERTIES

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

                                                                         Page 40
<PAGE>

in addition to such Obligor's obligations under the applicable document creating
such Obligor's or such Subsidiary's lease or tenancy.

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

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

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

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

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

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

FINANCIAL ACCOUNTING PRACTICES

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

COMPLIANCE WITH APPLICABLE LAWS

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

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<PAGE>

USE OF LETTERS OF CREDIT

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

CONTINUATION OF AND CHANGE IN BUSINESSES

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

VISITATION

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

NEGATIVE COVENANTS

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

MERGERS

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

DISPOSITIONS

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

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

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

                                                                         Page 42
<PAGE>

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

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

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

LIENS

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

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

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

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

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

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

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

(g)     Liens on (i) assets received, and on actual or imputed investment income
        on such assets received,  relating and identified to specific  insurance
        payment  liabilities or to liabilities arising in the ordinary course of
        any Obligor's or any of their  Subsidiary's  business as an insurance or
        reinsurance  company  (including  guaranteed  investment  contracts)  or
        corporate  member of Lloyd's or as a provider of financial or investment

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<PAGE>

        services or contracts,  or the proceeds thereof,  in each case held in a
        segregated  trust or other account and securing such liabilities or (ii)
        any other assets subject to any trust or other account arising out of or
        as a  result  of  contractual,  regulatory  or any  other  requirements;
        provided that in no case shall any such Lien secure Indebtedness and any
        Lien which secures Indebtedness shall not be permitted under this Clause
        19.3(g);

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

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

TRANSACTIONS WITH AFFILIATES

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

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

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

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

RATIO OF TOTAL FUNDED DEBT TO TOTAL CAPITALISATION

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

CONSOLIDATED NET WORTH

19.6    The Account Party will not permit its  Consolidated Net Worth to be less
than the sum of (a) $4,250,000,000  plus (b) 25% of net income (if positive) for
each fiscal  quarter of the Account  Party  commencing  with the fiscal  quarter
ending September 30, 2002.

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<PAGE>

INDEBTEDNESS

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

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

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

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

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

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

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

RATINGS DOWNGRADE

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

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

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

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

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

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

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

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<PAGE>

Assets to the Account  Party and the Letter of Credit Fee shall be determined by
reference to Clause 9.3.

PRIVATE ACT

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

EVENTS OF DEFAULT

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

(a)     FAILURE TO PAY:

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

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

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

(c)     BREACH OF OBLIGATIONS:

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

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

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

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<PAGE>

        Indebtedness  that  becomes  due as a result  of the  voluntary  sale or
        transfer of the property or assets securing such Indebtedness;

(e)     WINDING-UP:  a decree  or order by a court  having  jurisdiction  in the
        premises  shall have been  entered  adjudging  any Obligor a bankrupt or
        insolvent,   or   approving  as  properly   filed  a  petition   seeking
        reorganisation  of such Obligor  under the Bermuda  Companies Law or the
        Cayman  Islands  Companies  Law (2000  Revision)  or any  other  similar
        applicable   Law,  and  such  decree  or  order  shall  have   continued
        undischarged  or unstayed for a period of 60 days;  or a decree or order
        of a court having  jurisdiction in the premises for the appointment of a
        receiver  or   liquidator  or  trustee  or  assignee  in  bankruptcy  or
        insolvency of such Obligor or a substantial part of its property, or for
        the winding up or liquidation  of its affairs,  shall have been entered,
        and such decree or order shall have continued  undischarged and unstayed
        for a period of 60 days;

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

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

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

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

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

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

(l)     DEFAULT UNDER GUARANTEE: the guarantee contained in Clause 16 (GUARANTEE
        AND INDEMNITY)  shall  terminate or cease, in whole or material part, to
        be a legally valid

                                                                         Page 47
<PAGE>

        and binding  obligation of each Guarantor or any Guarantor or any Person
        acting  for or on  behalf  of any of such  parties  shall  contest  such
        validity or binding nature of such guarantee itself or the Transactions,
        or any other Person shall assert any of the foregoing;

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

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

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

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

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

                (x)     the Commitments shall automatically terminate; and

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

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

THE AGENT, THE ARRANGER AND THE LENDERS

APPOINTMENT OF THE AGENT

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

AGENT'S DISCRETIONS

21.2    The Agent may:

(a)     assume,  unless  it has,  in its  capacity  as  agent  for the  Lenders,
        received  notice to the contrary from any other party  hereto,  that (a)
        any representation made or deemed to be made by an Obligor in connection
        with the Finance Documents is true, (b) no Event of Default or Potential
        Event of Default has occurred, (c) no Obligor is in breach of or default
        under its obligations under the Finance Documents and (d) any

                                                                         Page 48
<PAGE>

        right,  power,  authority or discretion vested therein upon the Majority
        Lenders,  the  Lenders or any other  person or group of persons  has not
        been exercised;

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

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

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

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

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

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

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

AGENT'S OBLIGATIONS

21.3    The Agent shall:

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

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

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

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

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<PAGE>

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

EXCLUDED OBLIGATIONS

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

(a)     be bound to enquire as to (i) whether or not any representation  made or
        deemed to be made by an Obligor in connection with the Finance Documents
        is true, (ii) the occurrence of any Default, (iii) the performance by an
        Obligor  of its  obligations  under the  Finance  Documents  or (iv) any
        breach of or default by an Obligor of or under its obligations under the
        Finance Documents;

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

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

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

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

INDEMNIFICATION

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

EXCLUSION OF LIABILITIES

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

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

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

(c)     for  the  exercise  of,  or the  failure  to  exercise,  any  judgement,
        discretion  or power given to any of them by or in  connection  with the
        Finance Documents or any other

                                                                         Page 50
<PAGE>

        agreement,  arrangement  or document  entered into,  made or executed in
        anticipation   of,  pursuant  to  or  in  connection  with  the  Finance
        Documents.

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

NO ACTIONS

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

BUSINESS WITH THE GROUP

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

RESIGNATION

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

SUCCESSOR AGENT

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

RIGHTS AND OBLIGATIONS

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

OWN RESPONSIBILITY

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

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

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

(c)     whether  such  Lender  has  recourse,  and the nature and extent of that
        recourse,  against an  Obligor or any other  person or any of its assets
        under or in connection with the Finance  Documents,  the Transactions or
        any other  agreement,  arrangement  or document  entered  into,  made or
        executed  in  anticipation  of,  pursuant to or in  connection  with the
        Finance Documents; and

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

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

AGENCY DIVISION SEPARATE

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

DECLARATION OF AGENT AS SECURITY TRUSTEE

21.14   The Agent hereby declares that it shall hold:

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

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

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

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

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

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

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POWERS AND DISCRETIONS

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

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

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

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

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

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

LIABILITY

21.16   The Agent shall not be liable for any failure:

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

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

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

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

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

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

TITLE TO SECURITY ETC.

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

NEW SECURITY TRUSTEE

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

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

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

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

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

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

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PERPETUITY PERIOD

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

LENDER REPRESENTATIONS

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

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

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

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

LETTERS OF CREDIT

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

NOTICES

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

(a)     if to any Obligor, to:

        XL Capital Ltd
        XL House
        One Bermudiana Road
        Hamilton HM 11
        Bermuda,

        Attention:        Roddy Gray
        (Telecopy No.     (441) 2966399);

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

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(b)     if to the Agent:

        P O Box 242
        336 The Strand
        London WC2R 1HB

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

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

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

WAIVERS AND AMENDMENTS

NO DEEMED WAIVERS

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

REMEDIES CUMULATIVE

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

AMENDMENTS

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

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

                (ii)    reduce the amount of any reimbursement obligation of the
                        Account  Party  in  respect  of any LC  Disbursement  or
                        reduce the rate of interest thereon, or

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<PAGE>

                        reduce any fees payable  hereunder,  without the written
                        consent of each Lender affected thereby,

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

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

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

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

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

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

COSTS AND EXPENSES

24.1    The Account Party shall pay:

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

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

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STAMP DUTY

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

INDEMNITIES

CURRENCY INDEMNITY

25.1(a) If:

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

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

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

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

OTHER INDEMNITIES

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

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

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

(c)     any actual or prospective claim, litigation, investigation or proceeding
        relating to any of the foregoing, whether based on contract, tort or any
        other  theory  and  regardless  of  whether  any  Indemnitee  is a party
        thereto; provided that such indemnity shall not, as

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        to any Indemnitee,  be available to the extent that such losses, claims,
        damages, liabilities or related expenses result from or arise out of the
        gross negligence or wilful misconduct of such Indemnitee.

REIMBURSEMENT BY LENDERS

25.3    To the extent that the  Obligors  fail to pay any amount  required to be
paid by them  to the  Agent  under  Clauses  25  (COSTS  AND  EXPENSES)  or 25.1
(CURRENCY INDEMNITY) and 25.2 (OTHER INDEMNITIES),  each Lender severally agrees
to pay to the Agent such Lender's  Applicable  Percentage  (determined as of the
time that the applicable unreimbursed expense or indemnity payment is sought) of
such unpaid amount;  PROVIDED that the unreimbursed expense or indemnified loss,
claim, damage, liability or related expense, as the case may be, was incurred by
or asserted against the Agent in its capacity as such.

ALTERATION TO THE PARTIES

SUCCESSORS

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

ASSIGNMENTS AND TRANSFERS BY THE ACCOUNT PARTY

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

TRANSFERS BY LENDERS.

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

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

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

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

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

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        PROVIDED  FURTHER  that  any  consent  of the  Account  Party  otherwise
        required  under  this  paragraph  shall not be  required  if an Event of
        Default under Clause 20.1(a), (e) or (f) has occurred and is continuing.
        Upon transfer  pursuant to Clause 26.4, from and after the last to occur
        of (i) the effective  date specified in each Transfer  Certificate;  and
        (ii) the  cancellation  of a Letter  of  Credit  and the  issue of a new
        Letter of Credit with the  Transferee  identified as an Issuing  Lender,
        the Transferee  thereunder shall be a party hereto and, to the extent of
        the lesser of the interest assigned by such Transfer Certificate and the
        Transferee's participation as an Issuing lender of a re-issued Letter of
        Credit (the TRANSFERRED INTEREST),  have the rights and obligations of a
        Lender under this Agreement, and the Transferor thereunder shall, to the
        extent of the  Transferred  Interest,  be released from its  obligations
        under this Agreement (and, in the case of Transfer  Certificate covering
        all of the  Transferor's  rights and  obligations  under this Agreement,
        such Lender  shall cease to be a party  hereto but shall  continue to be
        entitled to the benefits of Clauses 12 (INCREASED  COSTS), 10 (TAXES) 24
        (COSTS AND EXPENSES) and 25  (INDEMNITIES)).  Any assignment or transfer
        by a Lender of rights or obligations  under this Agreement that does not
        comply  with  this  paragraph  shall be  treated  for  purposes  of this
        Agreement as a sale by such Lender of a participation in such rights and
        obligations in accordance with Clause 26.7 (PARTICIPATIONS).

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

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        Subsidiaries to any rating agency,  commercial  paper dealer or provider
        of a surety, guarantee or credit liquidity enhancement to such SPV. This
        paragraph may not be amended  without the consent of any SPV at the time
        holding LC Disbursements under this Agreement.

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

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

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

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

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

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

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

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

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

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

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

26.4    TRANSFER PROCEDURE:

(a)     A novation is effected if:

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

        (ii)    the Agent executes it.

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

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

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

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

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

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

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

RIGHT TO SUBSTITUTE SINGLE LENDER

26.5    If:

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

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

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

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

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

REFERENCE BANKS

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

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PARTICIPATIONS

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

        (i)     any  such  participation  sold to a  Participant  which is not a
                Lender or a Lender Affiliate shall be made only with the consent
                (which in each case shall not be  unreasonably  withheld) of the
                Account  Party and the Agent,  unless an Event of Default  under
                Clause  20.1(a),  (e) or (f) has occurred and is continuing,  in
                which  case  the  consent  of the  Account  Party  shall  not be
                required;

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

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

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

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

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

NO INCREASED COSTS

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

CERTAIN PLEDGES

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

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NO TRANSFERS TO ANY ACCOUNT PARTY OR AFFILIATES

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

MAINTENANCE OF REGISTER BY THE AGENT

26.11   The Agent,  acting for this  purpose as an agent of the  Account  Party,
shall  maintain  at one of its  offices  in  London  a  copy  of  each  Transfer
Certificate  delivered  to it and a register of the names and  addresses  of the
Lenders,  and the  Commitment of, and principal  amount of the LC  Disbursements
owing  to,  each  Lender  pursuant  to the terms  hereof  from time to time (the
REGISTER).  The entries in the  Register  shall be  conclusive,  and the Account
Party,  the Agent,  the  Security  Trustee and the Lenders may treat each Person
whose name is recorded in the Register  pursuant to the terms hereof as a Lender
hereunder  for all  purposes of this  Agreement,  notwithstanding  notice to the
contrary.  The Register  shall be available for  inspection by any Account Party
and any Lender,  at any  reasonable  time and from time to time upon  reasonable
prior notice.

SET OFF

RIGHT OF SET-OFF

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

MISCELLANEOUS PROVISIONS

CERTIFICATES

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

SURVIVAL

28.2    All covenants,  agreements,  representations  and warranties made by the
Account Party herein and in the certificates or other  instruments  delivered in
connection  with or pursuant to this Agreement  shall be considered to have been
relied upon by the other  parties  hereto and shall  survive the  execution  and
delivery of this Agreement and the issuance of any Letters of Credit, regardless
of any  investigation  made  by any  such  other  party  or on  its  behalf  and
notwithstanding that the Agent or any Lender may have had notice or knowledge of
any Default or  incorrect  representation  or warranty at the time any credit is
extended  hereunder,  and shall continue in full force and effect as long as any
fee or any other amount payable under this  Agreement is outstanding  and unpaid
or any Letter of Credit is outstanding and so

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<PAGE>

long as the  Commitments  have not  expired or  terminated.  The  provisions  of
Clauses  12  (INCREASED  COSTS),  10  (TAXES),  24  (COSTS  AND  EXPENSES),   25
(INDEMNITIES)  and 21 (AGENT)  shall survive and remain in full force and effect
regardless of the  consummation of the  transactions  contemplated  hereby,  the
expiration or  termination  of the Letters of Credit and the  Commitments or the
termination of this Agreement or any provision hereof.

COUNTERPARTS

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

ENTIRE AGREEMENT

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

SEVERABILITY

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

GOVERNING LAW AND JURISDICTION

GOVERNING LAW

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

JURISDICTION

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

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

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

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<PAGE>

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

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

AGENT FOR SERVICE OF PROCESS

29.3    Each Obligor shall at all times maintain an agent for service of process
and any other  documents in proceedings  in England or any other  proceedings in
connection  with this  Agreement.  Such agent shall be XL  Brockbank  Limited of
Fitzwilliam  House, 10 St. Mary Axe,  London EC3A 8NL and any writ,  judgment or
other  notice of legal  process  shall be  sufficiently  served on the  relevant
Obligor if  delivered  to such agent  marked for the  attention  of the  Finance
Director  at its  address for the time being.  Each  Obligor  undertakes  not to
revoke the authority of the above agent without promptly  appointing a successor
and notifying the Agent thereof.

WAIVER OF IMMUNITIES

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

TREATMENT OF CERTAIN INFORMATION; CONFIDENTIALITY

TREATMENT OF CERTAIN INFORMATION

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

CONFIDENTIALITY

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

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

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<PAGE>

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

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

(d)     to any other party to this Agreement;

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

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

(g)     with the consent of the Obligor; or

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

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

THIRD PARTY RIGHTS

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

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

                                                                         Page 67
<PAGE>

                                                                         Page 68
<PAGE>

IN WITNESS WHEREOF, XL CAPITAL LTD has caused this Agreement to be duly executed
as a Deed by an authorised officer on the day and year first above written.

ACCOUNT PARTY

EXECUTED as a DEED
for and on behalf of XL CAPITAL LTD

By:               MICHAEL SIESE

In the presence of:        KIRSTIN ROMANN

GUARANTORS

EXECUTED as a DEED
for and on behalf of XL CAPITAL LTD

By:               MICHAEL SIESE

In the presence of:        KIRSTIN ROMANN

SIGNED for and on behalf of X.L. AMERICA, INC.

By:               RICHARD H MILLER

Title:            SENIOR VICE PRESIDENT, CFO & TREASURER

SIGNED for and on behalf of XL INSURANCE (BERMUDA) LTD

By:               CHRISTOPHER COELHO

Title:            SENIOR VICE PRESIDENT & CHIEF FINANCIAL OFFICER

SIGNED for and on behalf of XL EUROPE LTD

By:               FIONA MULDOON     20/11/01

Title:            CHIEF FINANCIAL OFFICER & COMPANY SECRETARY

SIGNED for and on behalf of XL RE LTD

By:               HENRY KEELING

Title:            PRESIDENT & CHIEF EXECUTIVE OFFICER

                                                                         Page 69
<PAGE>

AGENT

SIGNED for and on behalf of CITIBANK INTERNATIONAL PLC

By:               PAUL GIBBS

Address:          Citigroup Centre
                  33 Canada Square
                  Canary Wharf
                  London E14 5LB

Fax:              020 7986 8275
Tel:              020 7986 7160
Attention:        Paul Gibbs

ARRANGER

SIGNED for and on behalf of SALOMON BROTHERS INTERNATIONAL LIMITED

By:               PAREEJAT SINGHAL

Address:          Citigroup Centre
                  33 Canada Square
                  Canary Wharf
                  London E14 5LB

Fax:              020 7986 8275
Tel:              020 7986 7569
Attention:        Pareejat Singhal

SECURITY TRUSTEE

SIGNED for and on behalf of CITIBANK INTERNATIONAL PLC

By:               PAUL GIBBS

Address:          Citigroup Centre
                  33 Canada Square
                  Canary Wharf
                  London E14 5LB

Fax:              020 7986 8275
Tel:              020 7986 7166
Attention:        Paul Gibbs

                                                                         Page 70
<PAGE>

LENDERS

SIGNED for and on behalf of CITIBANK, N.A.

By:               PAREEJAT SINGHAL

Address:          Citigroup Centre
                  33 Canada Square
                  Canary Wharf
                  London E14 5LB

Fax:              020 7986 8275
Tel:              020 7986 7569
Attention:        Pareejat Singhal

SIGNED for and on behalf of BARCLAYS BANK PLC

By:               PAUL JOHNSON (RELATIONSHIP DIRECTOR)

Address:          1st Floor
                  54 Lombard Street
                  London EC3V 9EX

Fax:              020 7699 2407
Tel:              020 7699 3121
Attention:        Paul Johnson

SIGNED for and on behalf of ING BANK, N.V, LONDON BRANCH

By:               NICK MARCHANT (DIRECTOR)
                  MIKE SHARMAN (MANAGING DIRECTOR)

Address:          60 London Wall
                  London
                  EC2M 5TQ

Fax:              020 7767 7507
Tel:              020 7767 5902/5904
Attention:        Nick Marchant/Mike Sharman

SIGNED for and on behalf of CREDIT LYONNAIS NEW YORK BRANCH

By:               PETER RASMUSSEN (FIRST VICE PRESIDENT)

Address:          1301 Avenue of the Americas
                  NY 10019
                  USA

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<PAGE>

Fax:              001 212 261 3438
Tel:              001 212 261 7718/7794
Attention:        Peter Rasmussen/Roy Rodriguez

SIGNED for and on behalf of NATIONAL WESTMINSTER BANK PLC

By:               JOHN MALLETT (SENIOR CORPORATE MANAGER)

Address:          Corporate Commercial Banking
                  PO Box 12264
                  3rd Floor
                  1 Princes Street
                  London EC2R 8PB

Fax:              020 7551 1094
Tel:              020 7714 5893
Attention:        John Mallet

Copy to:          The Manager, Commercial Loans
                  National Westminster Bank plc
                  2nd Floor Regents House
                  42 Islington High Street
                  N1 8XL

Fax:              020 7615 5070
Tel:              020 7615 5023

SIGNED for and on behalf of LLOYDS TSB BANK PLC

By:               J H SMITH (MANAGER)

Address:          St George's House
                  6-8 Eastcheap
                  Monument
                  EC3M 1AE

Fax:              020 7661 4981
Tel:              020 7661 4953
Attention:        Harvey Smith

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