Document:

EXHIBIT 10.2

                        SEPARATION AGREEMENT AND RELEASE

Icad, Inc. ("ICAD) and Gregory J. Stepic ("you"), hereby agree on this 30th day
of September 2002 for good and valuable consideration that:

1. You have resigned as the Vice President of Finance and as an employee of ICAD
effective October 30, 2002 (the "Resignation Date"). You agree that in addition
to resigning your employment with ICAD, (a) you resign, effective immediately,
from any other positions you hold as an officer of ICAD or its subsidiaries, and
(b). you resign, effective December 31, 2002, from any other positions you hold
as a director of ICAD or its subsidiaries.

2. In consideration for signing this Agreement, and in lieu of any severance to
which you might otherwise be entitled under your Employment Agreement dated June
4, 2002, between you and ICAD (the "Employment Agreement"), you will be paid a
sum of $148,000 (the "Severance Pay"), less all tax withholdings and other
deductions which ICAD is required by law to make. The Severance Pay will be paid
to you in equal monthly installments, without interest, over a twelve (12) month
period commencing on the Company's first pay period in the month of November,
2002. [in accordance with ICAD's regular payroll cycle]. Notwithstanding the
foregoing, if all of the capital stock or substantially all of the assets of
ICAD are sold during such thirty (30) month period, you will be entitled, at
your option upon written notice to ICAD, to either (i) accelerate any remaining
Severance Payments to the date of the consummation of such sale or (ii) request
that the acquiring company assume any remaining Severance Payment obligations
under this Agreement. In addition to the Severance Amount, ICAD will reimburse
you for all business expenses duly incurred by you in connection with your
employment by ICAD through the Resignation Date.

3. With respect to your outstanding stock options that currently entitle you to
purchase an aggregate of 100,000 shares of ICAD common stock at $3.49 per share
and an aggregate of 75,000 shares of ICAD common stock at $.80 per share
(collectively, the "Options"), the Options shall continue to be exercisable
pursuant to the terms of the written agreements evidencing the Options.

4. For a period of twelve (12) months from the Resignation Date, ICAD will, to
the extent allowable under ICAD's medical plan, maintain your health insurance
coverage at your current coverage levels (subject to whatever changes or
revisions are made to ICAD's medical plan) or, to the extent that ICAD cannot
legally continue your health insurance coverage under its medical plan, to make
payments to you so as to allow you to continue your health insurance coverage in
accordance with COBRA.

5. You may take your current desktop computer, monitor and keyboard from ICAD's
offices, subsequent to duplication of all files for iCAD and deletion of such
files from the computer to be removed.

6. You understand that ICAD makes no representation as to the income tax
treatment of any payments hereunder and that any and all payments (and all
compensation, benefits and/or other payments previously made to you by ICAD)
will be subject to such tax treatment and to such deductions, if any, as may be
required under applicable tax laws.

o     You agree that you will take no action which is intended to, or would
      reasonably be expected to harm or disparage ICAD or its subsidiaries, to
      impair ICADs or its subsidiaries reputation, or to lead to unwanted or
      unfavorable publicity to ICAD or any of its subsidiaries. You further
      agree that notwithstanding the termination of your employment with ICAD,
      you shall continue to be bound

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      by the confidentiality, non-competition and other provisions of Section 5
      of the Employment Agreement for the periods specified therein.

o     ICAD agrees that it will take no action which is intended to, or would
      reasonably be expected to harm or disparage you, to impair your
      reputation, or to lead to unwanted or unfavorable publicity to you, or to
      any other business in which you may be involved.

o     You agree to cooperate fully with ICAD, specifically including any
      attorney retained by ICAD, in connection with any pending or future
      litigation, business, or investigatory matter. The parties acknowledge and
      agree that such cooperation may include, but shall in no way be limited
      to, your making yourself available for interview by ICAD, or any attorney
      retained by ICAD, and providing to ICAD any documents in your possession
      or under your control relating to the litigation, business or
      investigatory matter. ICAD agrees to provide you with reasonable notice of
      the need for assistance when feasible. ICAD additionally agrees to
      schedule such assistance in such a manner as not to interfere with any
      alternative employment obtained by you when possible. ICAD will pay for
      your reasonable expenses in connection with such cooperation (including,
      without limitation, reasonable travel expenses and reasonable fees and
      expenses of counsel employed by you but only in the event that such
      counsel is necessitated as a result of a conflict of interest as
      determined by you and ICAD).

o     It is expressly understood and agreed that this Agreement and the
      effectuation of its terms do not constitute an admission or statement by
      any party that ICAD has acted unlawfully or is otherwise liable in any
      respect. It is also expressly understood and agreed that your employment
      with ICAD is not being terminated for "Cause" (as such term is defined in
      the Employment Agreement) or as a result of any illegal act committed by
      you. It is further agreed that evidence of this Agreement, its terms or
      the circumstances surrounding the parties entering into this Agreement,
      shall be inadmissible in any action or lawsuit of any kind, except for an
      action for alleged breach of this Agreement.

o     You knowingly and voluntarily release and forever discharge ICAD, and its
      current and former subsidiaries, affiliated and related corporations and
      entities, their successors and assigns, and the current and former
      directors, officers and/or employees of such corporations and entities,
      and their affiliates, successors, assigns, heirs, executors and
      administrators (referred to collectively throughout this Agreement as
      "ICAD") from and against any and all claims, actions, demands, contracts
      and causes of action, known and unknown, which you or your heirs,
      executors, administrators, successors and assigns (referred to
      collectively throughout this Agreement as "you") now or may have arising
      out of or relating to the Employment Agreement, including, but not limited
      to, any alleged violation of:

            The National Labor Relations Act, as amended;

            Title VII of the Civil Rights Act of 1964, as amended;

            Sections 1981 through 1988 of Title 42 of the United States Code, as
            amended;

            The Civil Rights Act of 1991;

            The Age Discrimination in Employment Act of 1967, as amended;

            The Employee Retirement Income Security Act of 1974, as amended;

            The Immigration Reform Control Act, as amended;

            The Americans with Disabilities Act of 1990, as amended;

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            The Fair Labor Standards Act, as amended;

            The Occupational Safety and Health Act, as amended;

            The Family and Medical Leave Act of 1993; or

            any allegation for costs, fees, or other expenses including
            attorneys' fees incurred in these matters.

Notwithstanding the foregoing, the provisions of this Section 13 shall not
constitute a release of any claims you may have against ICAD with respect to
ICAD's obligations under this Agreement.

7. ICAD knowingly and voluntarily releases and forever discharges you from and
against any and all claims, actions, demands, contracts and causes of action,
known and unknown, which ICAD now or may have arising out of or relating to the
Employment Agreement. Notwithstanding the foregoing, the provisions of this
Section 14 shall not constitute a release of any claims ICAD may have against
you with respect to your obligations under (i) this Agreement or (ii) Section 5
of your Employment Agreement.

8. ICAD agrees, to the maximum extent permitted by Delaware law, to defend and
indemnify you against and hold you harmless from any and all claims, suits,
losses, liabilities, damages and expenses (including reasonable attorney's fees)
asserted against you by anyone other than ICAD for actions taken by you in your
capacity as an officer, director or employee of ICAD; provided that such actions
were taken in the exercise of good faith business judgment in furtherance of the
performance your duties in such capacity. In the event that ICAD does not assume
the defense of any such claim as a result of a conflict of interest, you may
select your own counsel (which counsel shall be reasonably acceptable to ICAD)
in connection with such defense and ICAD will reimburse you for your reasonable
fees and expenses of such counsel in connection with such defense.

9. You hereby agree to indemnify ICAD and its officers, directors, employees and
agents with respect to any claims, suits, losses, liabilities, damages and
expenses (including reasonable attorney's fees) arising from any willful act,
act in violation of law or gross negligence committed by you prior to the
Resignation Date in your capacity as an officer, director, employee or agent of
ICAD or any of its predecessor companies.

10. You understand that if this Agreement were not signed, you would have the
right to voluntarily assist other individuals or entities in bringing claims
against ICAD and you hereby waive that right and you will not provide any such
assistance other than assistance in an investigation or proceeding conducted by
a government agency or as required by law; provided, however, that nothing in
this Section 18 shall prohibit you from being a passive participant in a
securities class action lawsuit against ICAD.

11. You agree to return to ICAD on the Resignation Date, your keys,
identification and any other equipment, data file (excluding personal files),
documents or materials belonging to ICAD that you have in your possession.

12. In the event that you breach this Agreement, ICAD will be entitled to
recover or withhold any payment and/or other benefits paid or payable under this
Agreement and to obtain all other relief provided by law or equity.

13. This Agreement shall be binding on both parties and their respective heirs,
successors and assigns. In the event that you die prior to the full payment of
ICAD's obligations under Sections 2, 3 and 4 hereof, such payments shall be made
to your estate or your designees.

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14. This Agreement sets forth the entire agreement between the parties and their
affiliates with respect to the subject matter herein and therein and fully
supersedes any and all prior agreements or understandings between them pursuant
to such subject matter, including the Employment Agreement, which, except for
the provisions of Section 5 thereof (under which you will continue to be bound),
is hereby terminated and of no force and effect. You acknowledge that all
amounts given under this Agreement shall be in full satisfaction of any and all
obligations of ICAD under the Employment Agreement.

15. Anything contained herein to the contrary notwithstanding, you hereby agree
and acknowledge that (i) the Stockholders' Agreement dated February 15, 2002,
among ICAD and certain stockholders of ICAD (including you), shall not be
amended by this Agreement and shall remain in full force and effect and (ii) the
representations and warranties set forth in Section 3 of that certain Agreement
and Plan of Merger dated February 15, 2002, by and among Howtek, Inc.,
Intelligent Systems Software, Inc. and the principal stockholders named therein,
shall remain in full force and effect in accordance with the terms thereof.

16. This Agreement may not be modified, altered or changed except upon express
written consent of both parties wherein specific reference is made to this
Agreement.

17. If any provision of this Agreement should be held invalid or unenforceable
by operation of law or by any tribunal of competent jurisdiction, or if
compliance with or enforcement of any provision is restrained by such tribunal,
the application of any and all provisions other than those which have been held
invalid or unenforceable shall not be affected.

18. This Agreement shall be governed and construed in accordance with the laws
of the State of Florida (without reference to its rules as to conflicts of
laws). Any dispute arising hereunder shall be brought before a court of
competent jurisdiction in the County of Palm Beach, State of Florida. With
respect to any action to enforce the terms of this Agreement, the prevailing
party shall be entitled to recover any relief or recovery therefrom, including
reasonable costs and attorney fees.

19. You may revoke this Agreement for a period of seven (7) days following the
day you execute this Agreement. Any revocation within this period must be
submitted, in writing, to W. Scott Parr, President, and state, "I hereby revoke
my acceptance of our Separation Agreement and Release." The revocation must be
personally delivered to Mr. Parr or his designee, or mailed to Mr. Parr at Icad,
Inc., 21 Park Avenue, Hudson, NH 03051 (with a copy to Blank Rome Tenzer
Greenblatt LLP, 405 Lexington Avenue, New York, NY 10174, Attn: Robert J.
Mittman, Esq.) and postmarked within seven (7) days of execution of this
Agreement. This Agreement shall not become effective or enforceable until the
revocation period has expired (the "Employee Irrevocability Date"). If the last
day of the revocation period is a Saturday, Sunday or legal holiday in Florida,
then the revocation period shall not expire until the next following day which
is not a Saturday, Sunday or legal holiday.

20. YOU ACKNOWLEDGE THAT YOU HAVE HAD AN OPPORTUNITY TO FULLY DISCUSS AND REVIEW
THE TERMS OF THIS AGREEMENT WITH YOUR ATTORNEY; THAT YOU UNDERSTAND THE CONTENTS
HEREOF; AND THAT YOU FREELY AND VOLUNTARILY ASSENT TO ALL THE TERMS AND
CONDITIONS HEREOF AND SIGN THE SAME AS YOUR OWN FREE ACT AND WITH THE INTENTION
OF RELEASING ICAD FROM EACH AND EVERY KNOWN AND UNKNOWN CLAIM RELATING IN ANY
WAY TO YOUR EMPLOYMENT WITH ICAD IN ACCORDANCE WITH THE TERMS OF THIS AGREEMENT.

<PAGE>

IN WITNESS WHEREOF, the parties hereto knowingly and voluntarily execute this
Separation Agreement and Release as of the date set forth below:

                                             /s/  Gregory J. Stepic
                                             ----------------------------------
                                             Gregory J. Stepic

                                             September 30, 2002
                                             ----------------------------------
                                             Date

                                             icad, inc.

                                             By: /s/ W. Scott Parr
                                                 ------------------------------
                                                 W. Scott Parr
                                                 President & CEO

                                             September 30, 2002
                                             ----------------------------------
                                             DateExhibit 10.1

                              FORBEARANCE AGREEMENT

      FORBEARANCE AGREEMENT, dated as of November 11, 2002 (this "Forbearance
Agreement"), among TRENWICK AMERICA CORPORATION ("Trenwick America"), TRENWICK
HOLDINGS LIMITED (the "Account Party"), the lending institutions party to the
Credit Agreement referred to below (each a "Bank," and collectively, the
"Banks"), and JPMORGAN CHASE BANK, as Administrative Agent (in such capacity,
the "Administrative Agent"), the Guarantors and Pledgors. All capitalized terms
used herein and not otherwise defined herein shall have the meaning provided
such terms in the Credit Agreement referred to below.

                                   BACKGROUND

      WHEREAS, Trenwick America, the Account Party, the Banks and the
Administrative Agent are parties to the Credit Agreement, dated as of November
24, 1999 and Amended and Restated as of September 27, 2000 (as amended, modified
and supplemented to, but not including, the date hereof, the "Credit
Agreement");

      WHEREAS, Trenwick Group Ltd. ("Holdings") and the Administrative Agent are
parties to the Holdings Guaranty, dated as of September 27, 2000 (as amended,
modified and supplemented to, but not including, the date hereof, the "Holdings
Guaranty");

      WHEREAS, in accordance with the Credit Agreement, Letters of Credit were
issued at the request of the Account Party for the benefit of Lloyd's in an
aggregate Stated Amount of $230,000,000, $225,874,000 of which are currently
outstanding;

      WHEREAS, Holdings has informed the Banks that (i) it is not in compliance
with Section 4.14 for the Holdings Guaranty as of the Forbearance Agreement
Effective Date and (ii) it will continue to be out of compliance with such
Section through at least the Forbearance Termination Date;

      WHEREAS, Holdings has informed the Banks that (i) it is not in compliance
with Section 4.16 for the Holdings Guaranty as of the Forbearance Agreement
Effective Date and (ii) it will continue to be out of compliance with such
Section through at least the Forbearance Termination Date;

      WHEREAS, Holdings has informed the Banks of the occurrence of an event
specified in Section 9.11 of the Credit Agreement;

      WHEREAS, the events described in the immediately preceding three
paragraphs above are collectively referred to as the "Events" and each is
individually referred to as an "Event." Each Event constitutes an Event of
Default under the Credit Agreement;

<PAGE>

      WHEREAS, Holdings has informed the Banks that it may not be in compliance
with Section 4.15 of the Holdings Guaranty during the period from the
Forbearance Agreement Effective Date to the Forbearance Termination Date;

            WHEREAS, to the extent a Default or Event of Default occurs due the
occurrence of the event in the immediately preceding paragraph, such Default or
Event of Default shall constitute an "Event" under this Forbearance Agreement;
and

            WHEREAS, in order to provide Holdings, the Account Party and the
other Guarantors with a period of time within which to develop a plan to address
the Events and restructure the Obligations, Holdings, the Account Party and the
other Guarantors have requested that the Banks forbear from exercising their
rights and remedies under the Credit Documents as a result of the occurrence of
the Events. Subject to the terms and conditions of this Forbearance Agreement,
the Banks have agreed to this request.

                                    AGREEMENT

            NOW THEREFORE, incorporating the section in this Forbearance
Agreement captioned "Background" above, and for other good and valuable
consideration, the receipt and legal sufficiency of which are hereby
acknowledged, and intending to be legally bound hereby, subject to the
satisfaction of Article III hereof, the Administrative Agent, the Collateral
Agent, the Banks and the Credit Parties agree as of the date hereof (the
"Forbearance Agreement Effective Date") as follows:

                                   ARTICLE I

                         ACKNOWLEDGMENTS AND AGREEMENTS

            1.1 Acknowledgment of Existing Events; Existing Credit Documents.
The Credit Parties acknowledge and agree that: (a) the Events are material in
nature and constitutes Events of Default and (b) the Credit Documents are legal,
valid and binding obligations of the Credit Parties enforceable against the
Credit Parties in accordance with their terms, except to the extent that
enforceability thereof may be limited by applicable bankruptcy, insolvency,
moratorium or similar laws affecting creditors' rights generally and general
principles of equity regardless of whether enforcement is sought in a proceeding
in equity or at law. The Credit Parties further acknowledge and agree that, as a
result of the Events, the Banks are entitled to, among other things, exercise
all rights and remedies under the Credit Documents, applicable law or otherwise,
including to (i) declare the Total Unutilized L/C Commitment terminated and (ii)
direct the Account Party to pay to the Administrative Agent, cash, cash
equivalents and/or marketable securities to be held as security for the Account
Party's reimbursement obligations in respect of all the Letters of Credit then
outstanding, equal to the Stated Amount of all Letters of Credit at such time.

            1.2 Acknowledgment of Current Outstanding Obligations . As of the
Forbearance Agreement Effective Date, the Credit Parties acknowledge and agree
that the aggregate Stated Amount of all the Letters of Credit at this time is
$225,874,000 and that they are indebted to the

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<PAGE>

Administrative Agent and the Banks for all of the reimbursement and indemnity
obligations in connection therewith, plus accrued but unpaid fees, plus the
costs and expenses associated with the Obligations (which includes, without
limitation, the fees, costs and expenses in connection with, and required under,
the Retention Agreements (as defined below) pursuant to Section 13.01 of the
Credit Agreement) and/or in connection with the occurrence of the Events,
incurred by the Administrative Agent and/or the Banks, to the extent
reimbursement of which is provided for in the Credit Documents but has not yet
been made (the foregoing amounts are hereafter collectively referred to as the
"Current Outstanding Obligations") all without offset, counterclaims or defenses
of any kind. Nothing contained herein shall alter, amend, modify or extinguish
the obligation of the Account Party or the Guarantors to repay the Current
Outstanding Obligations or any other Obligations pursuant to the terms of the
Credit Documents, and neither this Forbearance Agreement nor any of the other
documents related hereto constitutes a novation or modification of any of the
Credit Documents.

            1.3 Acknowledgment of Liens and Priority. Pursuant to the Credit
Documents and except as specifically set forth therein, the Collateral Agent,
for the benefit of the Secured Creditors, holds first priority, perfected
security interests in and liens upon all of the Collateral, wherever located,
including all Collateral now owned or hereafter acquired, and as more
specifically described in the Credit Documents. Holdings and LaSalle Re Holdings
will, and each will cause its Subsidiaries to, as promptly as possible, take all
actions and execute all documents requested by the Collateral Agent in regard to
such security interests and liens as required by the Credit Documents. Such
security interests and liens secure all of the Obligations (as defined in the
Pledge Agreement), including, without limitation, the Current Outstanding
Obligations.

            1.4 Reaffirmation of Security Interests. The Credit Parties
acknowledge and agree that Collateral pledged, assigned, conveyed, hypothecated
or transferred to the Collateral Agent for the benefit of the Secured Creditors
pursuant to the Credit Documents constitute (and shall continue to constitute)
collateral security for all of the Obligations (as defined in the Pledge
Agreement), including, without limitation, the Current Outstanding Obligations
to the extent set forth in the Pledge Agreement. Each Pledgor hereby
respectively reaffirms its prior conveyance to the Collateral Agent for the
benefit of the Administrative Agent and/or the Secured Creditors of a continuing
security interest in and lien on the Collateral described in each instrument
conveying such security interest.

            1.5 Reaffirmation of the Guaranties. The Guarantors reaffirm their
obligations under the Guaranties and acknowledge and agree that the Guaranties
remain in full force and effect.

                                   ARTICLE II

                                   FORBEARANCE

            2.1 Forbearance Period Subject to the terms and conditions of this
Forbearance Agreement, and without waiving the Events or other Defaults or
Events of Default that may now exist, the Banks agree to forbear from enforcing
their rights or remedies pursuant to the Credit Documents, applicable law or
otherwise solely because of the Events until the earliest to occur of

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<PAGE>

the following (the "Forbearance Termination Date"): (i) November 22, 2002, (ii)
the occurrence of any Default or Event of Default under the Credit Documents
(other than the Events), (iii) the occurrence of any Forbearance Event of
Default (as defined below), (iv) the exercise of any rights or taking of any
action by other party other than the Banks against Holdings or its Subsidiaries
by any party to any loan or credit agreement or other document evidencing a debt
in excess of $5,000,000 individually or in the aggregate for Holdings and its
Subsidiaries or other material obligation, in each case, to which Holdings or
its Subsidiaries is party or (v) the taking of any action by Holdings or any
Subsidiary thereof which the Required Banks reasonably consider to be materially
adverse to the interests of the Banks.

            2.2 Proceeds. (a) Until the date which is five Business Days after
the Forbearance Termination Date, Holdings shall not, and shall not permit any
of its Subsidiaries to, pay, distribute by way of dividend or otherwise, loan,
advance, disburse, pledge or hypothecate any cash, cash equivalents or
securities (the "LaSalle Collateral") of LaSalle Re Holdings Limited ("LaSalle
Holdings") or LaSalle Re Limited ("LaSalle Re" and, together with LaSalle
Holdings, the "LaSalle Entities") (including, but is not limited to, any
proceeds (the "Endurance Proceeds") received, or to be received, by, or on
behalf of, the LaSalle Entities in connection with the sale (the "LaSalle Sale")
pursuant to the Quota Share Retrocession Agreement, dated May 16, 2002, by and
between LaSalle Re and Endurance Specialty Insurance Ltd. (the "LaSalle Sale
Agreement")), other than (i) payments for past claims required under the LaSalle
Sale Agreement, (ii) the payment of ordinary and usual operating expenses of the
LaSalle Entities in the ordinary course of business and (iii) the payment of a
dividend of $60,000,000 from LaSalle Re to LaSalle Holdings; provided that to
the extent such dividend or any portion thereof is paid, such payment or
payments shall be deposited in a cash collateral account in a manner
satisfactory to the Administrative Agent in order to protect the security
interests of the Secured Creditors and shall be maintained with, and in the sole
dominion and control of, the Collateral Agent for the benefit of the Secured
Creditors (collectively, the "Specified Payments"). On the Forbearance Effective
Date, the LaSalle Entities maintain cash, cash equivalents and securities of
approximately $282,000,000, of which approximately $142,000,000 is the LaSalle
Collateral. For the purposes of this Article II.2.2(a), Endurance Proceeds shall
include, but not be limited to, any surplus increase or increase in capital at
LaSalle Holdings and LaSalle Re in connection with the LaSalle Sale.

            (b) Until the date which is five Business Days after the Forbearance
Termination Date, Holdings shall not, and shall not permit any of its
Subsidiaries to, pay, distribute by way of dividend or otherwise, loan, advance,
disburse or pledge or hypothecate the proceeds (the "Cat E Put Proceeds")
received from the issuance of the Cat E Put Securities, which amount shall not
be less than approximately $40,000,000 as of the Forbearance Agreement Effective
Date.

            (c) Holdings hereby represents and agrees that on the date hereof,
(i) Holdings holds all right, title and interest in the Cat E Put Proceeds,
which are maintained by Holdings in accounts at certain financial institutions
(the "Specified Holdings Accounts"), (ii) the Cat E Put Proceeds are not subject
to restrictions or set off other than in accordance with the terms of the
account agreements entered into with respect to the Specified Holdings Accounts
which agreements are listed on Annex I hereto and have been delivered to the
Administrative Agent,

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and (iii) that until the date which is five Business Days after the Forbearance
Termination Date, the Cat E Put Proceeds shall remain in the Specified Holdings
Accounts.

            (d) LaSalle Holdings hereby represents and agrees on behalf of
LaSalle Re that on the date hereof, (i) LaSalle Re holds all right, title, and
interest in the LaSalle Collateral which is maintained by LaSalle Re in accounts
at certain financial institutions (the "Specified LaSalle Accounts"), (ii) the
LaSalle Collateral is not subject to restrictions or set off other than in
accordance with the terms of the account agreements entered into with respect to
the Specified LaSalle Accounts which agreements are listed on Annex I hereto and
have been delivered to the Administrative Agent and (iii) that until the date
which is five days after the Forbearance Termination Date, the LaSalle
Collateral shall remain in the Specified LaSalle Accounts other than for
Specified Payments.

            (e) Holdings hereby acknowledges that it desires to use the LaSalle
Collateral and the Cat E Put Proceeds to deposit funds at Lloyd's solely to
satisfy the Account Party's solvency deficit at Lloyd's for the 2000 and earlier
years of account (the "Lloyd's Solvency Deficit"). Holdings hereby agrees that,
until the date which is five Business Days after the Forbearance Termination
Date, it shall not, and shall not permit its Subsidiaries to, use the LaSalle
Collateral or the Cat E Put Proceeds for any purpose whatsoever other than, with
the consent of the Required Banks, to deposit funds at Lloyd's for the Lloyd's
Solvency Deficit.

            2.3 Advances, Payments, etc. Until the Forbearance Termination Date,
Holdings shall not, and shall not permit any of its Subsidiaries to, (i) make
any payments of interest or principal, advances or distributions in respect of
any loan, credit agreement, note, mortgage or loan document, (ii) incur any
indebtedness, including, without limitation, executing any guarantees, or have
any letters of credit issued on its behalf (other than the Chubb security
deposit on substantially the same terms contained in the Summary of Indicative
Terms and Conditions, Underwriting and Reinsurance Agreement, dated October 25,
2002), or (iii) take any action that will result in, or require the creation or
imposition of, any lien or encumbrance on any of the respective properties,
other than in the case of clauses (i), (ii) and (iii) above, such payments,
indebtedness and liens that are permitted by the Credit Agreement and will not
be adverse to the interests of the Banks in any material respect.

            2.4 Discussions with Lloyd's. Holdings hereby agrees that the
Administrative Agent, and/or one or more Banks at the invitation of the
Administrative Agent, the Administrative Agent's advisors, may meet with, or
have access to, Lloyd's together with Holdings and/or subsidiary thereof to
discuss matters relating to the restructuring of the Obligations and any other
matters deemed reasonably necessary by the Administrative Agent. The initial
meeting with Lloyd's shall take place or occur within 14 days of the Forbearance
Agreement Effective Date.

            2.5 Financial Statements. The Guarantors shall provide to the Banks
within 5 days of the Forbearance Agreement Effective Date a consolidating
balance sheet as of September 30, 2002 in a form reasonably satisfactory to the
Administrative Agent showing in reasonable detail the assets, liabilities, and
contingent liabilities of the Credit Parties and LaSalle Re Limited.

                                       5
<PAGE>

            2.6 Continuing Obligations. Holdings will, and will cause its
Subsidiaries to, continue to cooperate and work in good faith with the
Administrative Agent, the Banks and their counsel and financial advisors, and to
continue to allow the Banks, their counsel and financial advisors access to the
financial and other information and any documentation reasonably requested
relating to the restructuring of the Obligations as promptly as practicable;
provided that such information and documentation in connection therewith remains
subject to the confidentiality obligations set forth in Section 5.11 of the
Holdings Guaranty.

            2.7 Termination of the Total Unutilized L/C Commitment. The Required
Banks hereby confirm, and the Credit Parties hereby acknowledge, that the Total
Unutilized L/C Commitment will be terminated in its entirety as of the
Forbearance Agreement Effective Date.

            2.8 Confidential Communications. Holdings hereby confirms that it
will, and will cause its Subsidiaries to, waive the confidentiality of any
information between and among Holdings and its Subsidiaries on the one hand and
the Banks on the other hand to permit the Banks to communicate such information
between and among the Banks to the extent the Banks deem necessary; provided
that such information and any documentation in connection therewith remains
subject to the confidentiality obligations set forth in Section 5.11 of the
Holdings Guaranty.

                                  ARTICLE III

                           CONDITIONS TO EFFECTIVENESS

            The obligations of the Administrative Agent, the Collateral Agent
and the Banks under this Forbearance Agreement and the occurrence of the
Forbearance Agreement Effective Date are subject to the receipt by the
Administrative Agent of the following:

            (a) this Forbearance Agreement duly executed by each Credit Party
and the Required Banks;

            (b) the Agreement between White & Case LLP ("White & Case") and
Holdings, dated as of October 29, 2002 with respect to the retention of
Elliston, LLC and Elliston (UK) Ltd., (collectively "Elliston") duly executed by
White & Case and Holdings and Holdings having delivered to Elliston the retainer
agreed to by Holdings in the amount of $150,000 (such agreement, the "Elliston
Retention Agreement"); and

            (c) the Agreement between White & Case and Holdings, dated as of
October 29, 2002, for the retention of White & Case duly executed by White &
Case and Holdings and Holdings having delivered to White & Case the retainer
agreed to by Holdings in the amount of $150,000 (such agreement, the "W&C
Retention Agreement," and together with the Elliston Retention Agreement, the
"Retention Agreements") .

                                       6
<PAGE>

                                   ARTICLE IV

                         REPRESENTATIONS AND WARRANTIES

            To induce the Administrative Agent, and the Banks to enter into this
Forbearance Agreement and as consideration for the terms and conditions
contained herein, each Credit Party, jointly and severally, makes the following
representations and warranties to the Administrative Agent and the Banks, each
and all of which shall survive the execution and delivery of this Forbearance
Agreement and all of the other documents executed in connection herewith:

            4.1 Organization. (a) Each Credit Party is a corporation duly
organized and validly existing and in good standing (where applicable) under the
laws of the jurisdiction of its organization, and is duly authorized to do
business and is duly qualified as a foreign corporation in all jurisdictions
wherein the nature of its businesses or properties make such qualification
necessary except where the failure to be so qualified is not reasonably likely
to have a Material Adverse Effect, and has the corporate power and authority to
own its respective properties and to carry on its respective businesses as now
conducted; and

            (b) Each Credit Party has the requisite corporate power and
authority to deliver and perform this Forbearance Agreement and Holdings has the
requisite corporate power and authority to deliver and perform the Retention
Agreements.

            4.2 Authorization; Valid and Binding Agreement. All corporate action
required to be taken by the Credit Parties and their respective officers,
directors and stockholders of the Credit Parties for the authorization,
execution, delivery and performance of this Forbearance Agreement and the
Retention Agreements have been taken. Each person executing this Forbearance
Agreement on behalf of the Credit Parties is an authorized officer of such
Credit Party. This Forbearance Agreement is, and the Retention Letters are,
legal, valid and binding obligations of the Credit Parties which are parties
thereto, enforceable against each such party in accordance with their respective
terms except to the extent that enforceability thereof may be limited by
applicable bankruptcy, insolvency, moratorium or similar laws affecting
creditors' rights generally and general principles of equity regardless of
whether enforcement is sought in a proceeding in equity or at law.

            4.3 Third Party Consents. The execution, delivery and performance,
by the Credit Parties of this Forbearance Agreement, and by Holdings of the
Retention Agreements will not:

            (a) require any consent or approval of any Person which has not been
obtained prior to, and which is not in full force and effect as of, the date of
this Forbearance Agreement;

            (b) result in the breach of, default under, or cause the
acceleration of any obligation owed under any loan, credit agreement, note,
security agreement, lease indenture, mortgage, loan document or other agreement
by which any of them are bound or affected; or

                                       7
<PAGE>

            (c) result in, or require the creation or imposition of, any lien or
encumbrance on any of their respective properties other than those liens or
security interests in favor of the Banks;

except where the failure to obtain such consents or approvals, breaches,
defaults, accelerations, liens or encumbrances is not reasonably likely to have
a Material Adverse Effect.

            4.4 No Defaults or Events of Default. No Default or Event of Default
under the Credit Agreement exists on the Forbearance Agreement Effective Date
(other than the Events).

                                   ARTICLE V

                              DEFAULTS AND REMEDIES

            It shall constitute an immediate event of default under this
Forbearance Agreement (a "Forbearance Event of Default"), if any Credit Party
fails to perform or observe any covenant, term, agreement or condition in this
Forbearance Agreement or the Retention Agreements or any representation or
warranty made in this Forbearance Agreement or the Retention Agreements proves
to be incorrect in any material respect. The Credit Parties specifically agree
that, upon and at any time after the Forbearance Termination Date, the Banks,
upon written notice to Holdings (although no notice shall be required in the
case of an Event of Default under Section 9.05 of the Credit Agreement), may, in
their sole discretion, exercise or enforce any or all of their rights and
remedies under this Forbearance Agreement, the Retention Agreements, the Credit
Documents, and/or applicable law, against the Account Party, the Guarantors or
any other Person.

                                   ARTICLE VI

                                  MISCELLANEOUS

            6.1 Submission to Jurisdiction; Selection of Forum; Judicial
Proceeding. Each of the parties hereto agrees that the provisions of Section
13.08 of the Credit Agreement shall be incorporated herein by reference and
shall apply to any action with respect to this Forbearance Agreement as if fully
set forth herein.

            6.2 Cooperation; Other Documents. At all times following the
execution of this Forbearance Agreement, the Credit Parties shall execute and
deliver to the Banks and the Administrative Agent, or shall cause to be executed
and delivered to the Banks and the Administrative Agent, and shall do or cause
to be done all such other acts and things as the Banks and the Administrative
Agent may reasonably deem to be necessary or desirable to assure the
Administrative Agent and the Banks of the benefit of this Forbearance Agreement
and the documents comprising or relating to this Forbearance Agreement. This
Forbearance Agreement is a Credit Document.

            6.3 Remedies Cumulative; No Waiver. The respective rights, powers
and remedies of the Administrative Agent and the Banks in this Forbearance
Agreement and in the other Credit Documents are cumulative and not exclusive of
any right, power or remedy provided in the Credit Documents, by law or equity
and no failure or delay on the part of the

                                       8
<PAGE>

Administrative Agent or the Banks in the exercise of any right, power or remedy
shall operate as a waiver thereof, nor shall any single or partial exercise of
any right, power or remedy preclude any other or further exercise thereof, or
the exercise of any other right, power or remedy. Other than as set forth in
Section 2.1 of this Forbearance Agreement, nothing contained in this Forbearance
Agreement or in any prior communications between or among the Credit Parties,
the Administrative Agent and the Banks shall constitute a waiver or modification
of any rights or remedies that the Administrative Agents or the Banks may have
under the Credit Documents and applicable law. The Administrative Agent and the
Banks expressly reserve and preserve all of their rights and remedies available
to them under the Credit Documents, applicable law or otherwise.

            6.4 Notices. Each of the parties hereto agree that the provisions of
Section 13.03 of the Credit Agreement shall be incorporated herein by reference
and shall apply to any action with respect to this Forbearance Agreement as if
fully set forth herein.

            6.5 Restructuring Negotiations The parties hereto have informed the
each other of their desire to restructure the Obligations owing to the Banks. In
connection with any such restructuring, the parties hereto hereby acknowledge
that (i) discussions among the Credit Parties, the Administrative Agent and the
Banks do not evidence an agreement on the part of the parties hereto to modify
or restructure the Obligations, (ii) any discussions, questions or comments
posed or made by any of the parties hereto or their staff, consultants or
advisors during any discussions or meetings should not be considered by the
parties hereto to be a binding commitment by any of the parties hereto to accede
to any requests or proposals made by any of the parties hereto during any such
discussions or meetings, (iii) even if any understanding in principle is reached
on the terms of a proposed restructuring of the Obligations at any time, none of
the parties hereto shall be legally bound until the appropriate approval
authority of such parties has approved such proposed restructuring, and until
all requisite parties have signed definitive documents evidencing such
restructuring, and (iv) any discussions concerning the terms of a proposed
restructuring shall in no way invalidate, nullify or waive any party's rights
and remedies under the Credit Documents or signify the Administrative Agent's or
the Banks' agreement to postpone the exercise of any of their respective
remedies under the Credit Documents. The parties contemplate that these
discussions may be lengthy and complex and that while the parties may reach
agreement on one or more preliminary matters that are part of the disputes and
issues that they are trying to resolve, the parties agree that none of them
shall be bound by any agreement until said agreement has been reduced to a
written agreement and signed by each of the requisite parties. Thus, no party
can rely upon (i) any understanding or agreement which is not reduced to a
written agreement and signed or (ii) the existence of the negotiations.

            6.6 Survival of Representations and Warranties. All representations
and warranties of the Credit Parties contained in this Forbearance Agreement and
in the Retention Agreements shall survive the execution of this Forbearance
Agreement and the Retention Agreements, as the case may be, and are material and
have been or will be relied upon by the Administrative Agent and the Banks,
notwithstanding any investigation made by any person, entity or organization on
the Administrative Agent's or the Banks' behalf. No implied representations or
warranties are created or arise as a result of this Forbearance Agreement or
Retention Agreements.

                                       9
<PAGE>

            6.7 Governing Law. This Forbearance Agreement shall be construed in
accordance with and governed by the internal laws of the State of New York
without reference to conflict of laws principles.

            6.8 Amendment and Waiver. No amendment of this Forbearance
Agreement, and no waiver, discharge or termination of any one or more of the
provisions thereof, shall be effective unless set forth in writing and signed by
the Credit Parties and the Required Banks.

            6.9 Successors and Assigns This Forbearance Agreement and the other
Credit Documents (i) shall be binding upon the Administrative Agent, the Banks
and the Credit Parties, and their respective heirs, nominees, successors and
assigns, and (ii) shall inure to the benefit of the Administrative Agent, the
Banks and the Credit Parties, and their respective heirs, nominees, successors
and assigns; provided, however, that no Credit Party may assign any rights
hereunder or any interest herein without obtaining the prior written consent of
the Required Banks, and any such assignment or attempted assignment without such
prior written consent of the Required Banks shall be void and of no effect with
respect to the Administrative Agent and the Banks.

            6.10 Severability of Provisions. Any provision of this Forbearance
Agreement that is held to be inoperative, unenforceable, void or invalid in any
jurisdiction shall, as to that jurisdiction, be ineffective, unenforceable, void
or invalid without affecting the remaining provisions in that jurisdiction or
the operation, enforceability or validity of that provision in any other
jurisdiction, and to this end the provisions of this Forbearance Agreement are
declared to be severable.

            6.11 Counterparts. This Forbearance Agreement may be executed in any
number of counterparts and by the different parties on separate counterparts,
and each such counterpart shall be deemed to be an original (including if
delivered by facsimile transmission), but all such counterparts shall together
constitute one and the same Forbearance Agreement.

                                      * * *

                                       10
<PAGE>

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

                               TRENWICK GROUP LTD.,
                               in its capacity as a Guarantor and Pledgor

                               By  /s/ W. Marston Becker
                                 ------------------------------------------
                                   Name:    W. Marston Becker
                                   Title:   Acting Chairman &
                                            Acting Chief Executive Officer

                               TRENWICK AMERICA CORPORATION,
                               in its capacity as the Borrower and Guarantor

                               By  /s/ David Finkelstein
                                 ------------------------------------------
                                   Name:    David Finkelstein
                                   Title:   Vice President & Treasurer

                               TRENWICK HOLDINGS LIMITED,
                               in its capacity as the Account Party

                               By  /s/ Alan L. Hunte
                                 ------------------------------------------
                                   Name:    Alan L. Hunte
                                   Title:   Director

                               LASALLE RE HOLDINGS LIMITED,
                               in its capacity as a Guarantor and Pledgor

                               By  /s/ John V. Del Col
                                 ------------------------------------------
                                   Name:    John V. Del Col
                                   Title:   Director
<PAGE>

                               NAME OF BANK:

                               By  /s/
                                 -------------------------------------------
                                   Name:
                                   Title:

<PAGE>

                                                                         ANNEX I

                               ACCOUNT AGREEMENTS

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