Document:

EX-10.1

 

Exhibit 10.1

EMPLOYMENT AGREEMENT

     THIS EMPLOYMENT AGREEMENT (this “Agreement”) is entered into by and between Paychex, Inc., a
Delaware corporation (the “Company”), and Jonathan J. Judge (the “Executive”) as of the 30th day of
November, 2007.

     WHEREAS, the Company desires to employ Executive as Company’s President and Chief Executive
Officer on the terms and conditions set forth herein, and Executive desires to be so employed by
Company;

     NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:

     1. Employment Period. Company hereby agrees to employ Executive, and Executive hereby
agrees to be employed by Company, subject to the terms and conditions of this Agreement, for a term
commencing on November 30, 2007 (the “Effective Date”), and, unless sooner terminated as provided
herein, continuing for a period of three (3) years (the “Employment Period”).

     2. Position and Duties. During the Employment Period, Executive shall serve as
President and Chief Executive Officer of Company, reporting directly to Company’s Board of
Directors (the “Board”), with such authority, duties and responsibilities as are commensurate with
such position. Executive shall serve as a member of the Board subject to annual shareholder
approval.

     3. Compensation.

          (a) Base Salary. During the Employment Period, Executive shall receive an annual base
salary of $915,000, paid bi-weekly on Fridays (the “Annual Base Salary”). The amount of the Annual
Base Salary shall be reviewed annually and increased by such amount, if any, as may be determined
by the Governance and Compensation Committee of the Board. In no event will the Annual Base Salary
be reduced below $915,000.

          (b) Annual Bonus. During the Employment Period, Executive shall be eligible to receive
an annual cash incentive bonus (the “Annual Bonus”). For Company’s fiscal year 2008, Executive
will be entitled to an Annual Bonus pursuant to the 2007-2008 Officer Performance Incentive Award
Agreement, which is incorporated herein by reference. In addition, Executive will be eligible for a
qualitative bonus of up to 20% of Annual Base Salary as determined by the Governance and
Compensation Committee of the Board in its sole discretion. For subsequent periods during the
Employment Period, Annual Bonus plans and objectives will be subject to prior review and input by
Executive, but shall be determined at the sole discretion of the Governance and Compensation
Committee of the Board. It is anticipated that Annual Bonus plans and objectives for such
subsequent periods will generally follow the plans and objectives as applicable for Company’s
fiscal year 2008.

 

 

          (c) Equity Compensation Grants. In conjunction with the annual review process for
Company’s executive officers, the Governance and Compensation Committee will review Executive’s
compensation plan and may, in its sole discretion, grant equity awards based upon (i) Executive’s
performance, and/or (ii) share or option pool availability.

          (d) Expenses. During the Employment Period, Executive shall be entitled to
reimbursement for all reasonable expenses incurred by Executive associated with the conduct of
Company’s business in accordance with Company’s policies.

          (e) Other Benefits. During the Employment Period, Executive shall be entitled to
participate in:

     (i) Company’s medical and dental insurance, life / AD&D insurance, long term disability
insurance and 401k plan;

     (ii) Company’s deferred compensation plan for senior executives;

     (iii) Healthcare benefits for Executive and members of his family which are integral to
Company’s standard benefit schemes;

     (iv) D&O insurance and indemnification consistent with the coverage provided to other
directors and officers; and

     (v) All other standard benefits available to Company’s senior executive employees,
including vacation entitlements, sick leave, paid holidays and floating holidays, according
to Company’s standard benefit schemes.

     4. Termination of Employment.

          (a) Cause. Company may terminate Executive’s employment during the Employment Period
with or without Cause. For purposes of this Agreement, “Cause” shall mean (i) dereliction of duty
(after notice and a reasonable opportunity to cure, to the extent curable), (ii) conviction for a
felony, (iii) willful misconduct; or (iv) failure to follow a lawful directive from the Board of
Directors (after notice and a reasonable opportunity to cure, to the extent curable).

          (b) Good Reason. Executive’s employment may be terminated by Executive for Good
Reason. For purposes of this Agreement, “Good Reason” shall mean (i) failure of Company to make any
payments or equity grants to Executive or any other material breach by Company of its obligations
to Executive within 30 days after the same shall be due, and (ii) any material reduction in
Executive’s duties, authority or responsibilities.

-2-

 

     5. Obligations of the Company upon Termination.

          (a) Good Reason; Other Than for Cause. If, during the Employment Period, Company shall
terminate Executive’s employment other than for Cause or Executive shall terminate employment for
Good Reason:

               (i) Earned and unpaid compensation and expenses will be paid within 30 days of the Date of
Termination. Company shall pay to Executive, upon the expiration of six months after the Date of
Termination, or as soon thereafter as is administratively feasible, but no longer than ninety days
after such due date, the aggregate of one (1) year’s Annual Base Salary, plus an Annual Bonus
determined at the same percentage of Plan as was the case for the bonus determination for the
immediately preceding fiscal year (and without pro-ration).

               (ii) Any options, restricted stock or other equity granted prior to July 1, 2007 that have not
previously vested shall vest and become exercisable immediately. Provided, however, that if such
termination occurs within one (1) year after a Change of Control, any options, restricted stock or
other equity shall vest and become exercisable immediately, regardless of when granted. For
purposes of this provision, Change of Control is defined as: the acquisition by any person or
entity of at least 50% of the voting shares of Paychex; a consolidation or merger involving Paychex
in which Paychex is not the surviving entity; the sale, lease or exchange of all or substantially
all of the company’s assets; or shareholder approval of a plan of liquidation or dissolution of
Paychex. 

               (iii) The Company will pay the full cost of COBRA premiums for medical insurance benefits
pursuant to the benefit plans in effect at the time of the termination for twelve months following
the Date of Termination.

          (b) Cause; Other than for Good Reason. If Executive’s employment is terminated during
the Employment Period (i) by Company for Cause, or (ii) by Executive without Good Reason, this
Agreement shall terminate without further obligations of Company to Executive or his legal
representatives under this Agreement, other than Company’s obligations for accrued salary, vacation
and any earned and unpaid bonus.

     6. Confidential Information.

          (a) Executive shall hold in a fiduciary capacity for the benefit of Company all secret or
confidential information, knowledge or data relating to Company or any of its affiliated companies,
and their respective businesses, which shall have been obtained by Executive during Executive’s
employment by Company. After termination of Executive’s employment with Company, Executive shall
not, without the prior written consent of Company or as may otherwise be required by law or legal
process, communicate or divulge any such information, knowledge or data to anyone other than
Company and those designated by it.

-3-

 

          (b) In the event of a breach or threatened breach of this Section 6, Executive agrees that
Company shall be entitled to injunctive relief to remedy any such breach or threatened breach.
Executive acknowledges that damages would be inadequate and insufficient. This Section 6 shall
survive any termination of Executive’s employment or of this Agreement.

     7. Miscellaneous.

          (a) This Agreement shall be governed by and construed in accordance with the laws of the State
of New York. The exclusive jurisdiction and venue of any action arising out this Agreement shall
be New York State Supreme Court, County of Monroe.

          (b) The Company shall be entitled to withhold from any amounts payable hereunder such amount
or amounts, if any, as are required by law and to the extent permissible under Section 409A of the
Internal Revenue Code, including withholdings from cash payments at the time payment is made or
share withholding, as necessary, to satisfy tax obligations upon vesting of equity awards. It is
intended that the payments and benefits provided for by this Agreement (including all amendments
thereto) either comply with or are exempt from the requirements of Section 409A of the Code, and
this Agreement shall be administered and interpreted to the extent possible in a manner consistent
with that intention.

          (c) This Agreement may not be amended or modified otherwise than by a written agreement
executed by the parties hereto or their respective successors and legal representatives.

          (d) All notices and other communications hereunder shall be in writing and shall be given by
hand delivery to the other party or by registered or certified mail, return receipt requested,
postage prepaid, addressed as follows:

	 	 	 
	If to Executive:

	 	If to Company:
	 
	 	 
	Jonathan J. Judge

	 	Paychex, Inc.
	**

	 	911 Panorama Trail South
	**

	 	Rochester, New York 14625
	 

	 	Attention: Chief Financial Officer

or to such other address as either party shall have furnished to the other in writing in accordance
herewith. Notice and communications shall be effective when actually received by the addressee.

          (e) The invalidity or unenforceability of any provision of this Agreement shall not affect the
validity or enforceability of any other provision of this Agreement. The Company represents and
warrants that the execution, delivery and performance of this Agreement have been duly authorized
and that it is legal, valid and binding upon the Company.

          (f) This Agreement constitutes the entire agreement between Company and Executive and
supersedes any other agreements or understandings, whether written or oral, which relate to the
subject matter hereof.

-4-

 

     IN WITNESS WHEREOF, Executive has hereunto set his hand and, pursuant to the authorization
from its Governance and Compensation Committee as authorized by the Board of Directors, Company has
caused this Agreement to be executed in its name on its behalf, all as of the day and year first
above written.

	 	 	 	 	 
	 	 	Paychex, Inc.
	 
	 	 	 	 
	 

	 	By:
	 	/s/ John M. Morphy
	 

	 	 	 	 
	 	 	John Morphy

Senior Vice President, Chief Financial

Officer, Secretary, and Treasurer
	 
	 	 	 	 
	 	 	/s/ Jonathan J. Judge
	 	 	 
	 	 	Jonathan J. Judge

-5-ex10_1.htm

     

     

     

    Exhibit
      10.1

     

    
      	 	 
	 	
              EXECUTION
                VERSION

            
	 	 
	
               

               

              DATED
                28 NOVEMBER 2007

               

            
	 
	
              TALBOT
                HOLDINGS LTD.

              AS
                BORROWER

               

              VALIDUS
                HOLDINGS, LTD.

              AS
                GUARANTOR

               

              LLOYDS
                TSB BANK PLC

              AND

              ING
                BANK N.V., LONDON BRANCH

              AS
                MANDATED LEAD ARRANGERS

               

              ING
                BANK N.V., LONDON BRANCH

              AS
                STRUCTURING AGENT

               

              LLOYDS
                TSB BANK PLC

              AS
                AGENT

               

              AND

               

              LLOYDS
                TSB BANK PLC

              AS
                SECURITY TRUSTEE

               

            
	 	
               

              $100,000,000
                STANDBY LETTER OF CREDIT

              FACILITY
                AGREEMENT

            	 

    

     

     

     

    
 

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
 

    
      	
              CONTENTS

            
	
              Clause

            	
              Page 

            
	
              1.

            	
              Definitions
                And Interpretation

            	
              1

            
	 	 	 
	
              2.

            	
              The
                Facility

            	
              26

            
	 	 	 
	
              3.

            	
              Utilisation
                Of The Facility

            	
              28

            
	 	 	 
	
              4.

            	
              Letter
                Of Credit Commission

            	
              31

            
	 	 	 
	
              5.

            	
              Market
                Disruption And Alternative Interest Rates

            	
              32

            
	 	 	 
	
              6.

            	
              Notification

            	
              33

            
	 	 	 
	
              7.

            	
              Borrower's
                Indemnity To The Lenders

            	
              33

            
	 	 	 
	
              8.

            	
              Prepayment
                And Cancellation

            	
              36

            
	 	 	 
	
              9.

            	
              Collateralisation
                And Redesignation Of Letters Of Credit

            	
              37

            
	 	 	 
	
              10.

            	
              Tax
                Gross Up And Indemnities

            	
              41

            
	 	 	 
	
              11.

            	
              Increased
                Costs

            	
              44

            
	 	 	 
	
              12.

            	
              Illegality

            	
              46

            
	 	 	 
	
              13.

            	
              Other
                Indemnities

            	
              46

            
	 	 	 
	
              14.

            	
              Mitigation

            	
              48

            
	 	 	 
	
              15.

            	
              Commitment
                Commission And Fees

            	
              49

            
	 	 	 
	
              16.

            	
              Costs
                And Expenses

            	
              50

            
	 	 	 
	
              17.

            	
              Default
                Interest And Break Costs

            	
              52

            
	 	 	 
	
              18.

            	
              Guarantee
                And Indemnity

            	
              54

            
	 	 	 
	
              19.

            	
              Representations

            	
              57

            
	 	 	 
	
              20.

            	
              Information
                Undertakings

            	
              65

            
	 	 	 
	
              21.

            	
              Financial
                Condition

            	
              70

            
	 	 	 
	
              22.

            	
              General
                Undertakings

            	
              73

            
	 	 	 
	
              23.

            	
              Events
                Of Default

            	
              87

            
	 	 	 
	
              24.

            	
              Changes
                To The Lenders

            	
              93

            
	 	 	 
	
              25.

            	
              Changes
                To The Obligors

            	
              96

            
	 	 	 
	
              26.

            	
              Role
                Of The Agent And The Arranger

            	
              98

            
	 	 	 
	
              27.

            	
              Role
                Of Security Trustee

            	
              104

            
	 	 	 
	
              28.

            	
              Conduct
                Of Business By The Finance Parties

            	
              112

            
	 	 	 
	
              29.

            	
              Sharing
                Among The Finance Parties

            	
              112

            
	 	 	 
	
              30.

            	
              Payment
                Mechanics

            	
              115

            
	 	 	 
	
              31.

            	
              Set-Off

            	
              118

            
	 	 	 
	
              32.

            	
              Application
                Of Proceeds

            	
              118

            
	 	 	 

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

     

    
      	
              33.

            	
              Notices

            	
              120

            
	 	 	 
	
              34.

            	
              Calculations
                And Certificates

            	
              122

            
	 	 	 
	
              35.

            	
              Partial
                Invalidity

            	
              123

            
	 	 	 
	
              36.

            	
              Remedies
                And Waivers

            	
              123

            
	 	 	 
	
              37.

            	
              Counterparts

            	
              123

            
	 	 	 
	
              38.

            	
              Amendments
                And Waivers

            	
              123

            
	 	 	 
	
              39.

            	
              Counterparts

            	
              125

            
	 	 	 
	
              40.

            	
              Governing
                Law

            	
              126

            
	 	 	 
	
              41.

            	
              Enforcement

            	
              126

            
	 	 	 
	
              42.

            	
              Confidentiality

            	
              126

            
	 	 	 
	
              Schedule
                1 The Original
                Lenders

            	
              129

            
	 	 
	
              Schedule
                2 Conditions
                Precedent

            	
              130

            
	 	 
	
              Schedule
                3 Form Of Utilisation
                Request

            	
              133

            
	 	 
	
              Schedule
                4 Form Of Transfer
                Certificate

            	
              134

            
	 	 
	
              Schedule
                5 Form Of Credit
                Institution Confirmation

            	
              137

            
	 	 
	
              Schedule
                6 Form Of Letter Of
                Credit

            	
              138

            
	 	 
	
              Schedule
                7 Mandatory Costs
                Rate

            	
              143

            
	 	 
	
              Schedule
                8 Letter Of
                Comfort

            	
              146

            
	 	 
	
              Schedule
                9 Eligible Collateral
                Table

            	
              147

            
	 	 
	
              Schedule
                10 Form Of Borrowing
                Base
                Certificate

            	
              150

            
	 	 
	
              Schedule
                11 Existing
                Liens

            	
              152

            
	 	 
	
              Schedule
                12 Existing Intercompany
                Arrangements And Agreements

            	
              153

            
	 	 
	
              Schedule
                13 Permitted Subsidiary
                Indebtedness

            	
              154

            
	 	 
	
              Schedule
                14
                Subsidiaries

            	
              155

            
	 	 
	
              Schedule
                15 Existing Affiliate
                Transactions

            	
              156

            
	 	 
	
              Schedule
                16 Existing
                Investments

            	
              158

            
	 	 
	
              Schedule
                17 Permitted
                Investors

            	
              159

            
	 	 
	
              Signatures

            	
              161

            

    

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    THIS
      AGREEMENT is made on 28 November 2007

     

    BETWEEN

     

    
      	
              (1)  

            	
              TALBOT
                HOLDINGS LTD. (the
                "Borrower");

            

    

     

    
      	
              (2)  

            	
              VALIDUS
                HOLDINGS, LTD. (the
                "Guarantor");

            

    

     

    
      	
              (3)  

            	
              ING
                BANK N.V., LONDON BRANCH and LLOYDS TSB BANK PLC
                as mandated lead arranger(s) (whether acting individually
                or
                together, the
                "Arranger");

            

    

     

    
      	
              (4)  

            	
              ING
                BANK N.V. as structuring agent (the "Structuring
                Agent");

            

    

     

    
      	
              (5)  

            	
              LLOYDS
                TSB BANK PLC as agent of the other Finance Parties other than the
                Security Trustee (the
                "Agent");

            

    

     

    
      	
              (6)  

            	
              LLOYDS
                TSB BANK PLC as Security Trustee for the Secured Parties (the
                "Security Trustee");
                and

            

    

     

    
      	
              (7)  

            	
              THE
                FINANCIAL INSTITUTIONS listed in Schedule 1 (The Original
                Lenders) as lenders (the "Original
                Lenders").

            

    

     

    WHEREAS:

     

    In
      support of the obligations of the Borrower under the Borrower’s 2008 and 2009
      underwriting years' letter of credit facility procurement agreements and capital
      stack arrangements with Talbot 2002 Underwriting Capital Ltd., Validus Holdings,
      Ltd., as Guarantor, and Talbot Holdings Ltd., as Borrower, enter into this
      Agreement.

     

    ACCORDINGLY,
      IT IS AGREED as follows.

     

    SECTION
      1

    INTERPRETATION

     

     

    
      	
              1.  

            	
              DEFINITIONS
                AND INTERPRETATION

            

    

     

    
      	
              1.1  

            	
              Definitions

            

    

    In
      this
      Agreement:

     

    "Account
      Party" means Talbot 2002 Underwriting Capital Ltd.

     

    "Advance
      Rate" means, for any category of Cash or obligation or investment
      specified in Schedule 9 (Eligible Collateral Table) in the column
      entitled "Cash and Eligible Securities" in the Eligible Collateral Table (other
      than Cash, the "Eligible Securities"), the percentage set forth
      opposite such category of Cash or Eligible Securities in the column entitled
      "Advance Rate" of the Eligible Collateral Table and, in each case, subject
      to
      the original term to maturity criteria set forth therein.

     

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

     

    
      
        
        

      

      
        -1-

        
          

        

      

      
        
        

      

    

    

     

    "Agent's
      Spot Rate of Exchange" means the Agent's spot rate of exchange for the
      purchase of the relevant currency with the Base Currency in the London foreign
      exchange market at or about 11:00 a.m. on a particular day.

     

    "A.M.
      Best" means A.M. Best Company and its successors.

     

    "Applicable
      Insurance Regulatory Authority" means, when used with
      respect
      to any Regulated Insurance Company:

     

    
      	
              (a)  

            	
              the
                insurance department or similar administrative authority or agency
                located
                in each state or jurisdiction (foreign or domestic) in which such
                Regulated Insurance Company is domiciled;
                or

            

    

     

    
      	
              (b)  

            	
              to
                the extent asserting regulatory jurisdiction over such Regulated
                Insurance
                Company, the insurance department, authority or agency in each state
                or
                jurisdiction (foreign or domestic) in which such Regulated Insurance
                Company is licensed,

            

    

     

    and
      shall
      include any federal or national insurance regulatory department, authority
      or
      agency that may be created and that asserts insurance regulatory jurisdiction
      over such Regulated Insurance Company.

     

    "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 the Council
      of Lloyd's for the purpose of providing guarantees and issuing or confirming
      letters of credit comprised (or to be comprised) in a member's Funds at
      Lloyd's.

     

    "Authorisation"
      means an authorisation, consent, approval, resolution, license, exemption,
      filing or registration.

     

    "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.

     

    "Availability
      Period" means the period commencing on the date of this Agreement and
      ending on 31 December 2008.

     

    "Available
      Commitment" means, in relation to a Lender at any time and save as
      otherwise provided herein its Commitment less the Base Currency Amount of its
      share of the Outstandings at such time provided that such
      amount shall not be less than zero.

     

    "Available
      Facility" means, at any time, the aggregate of the Available
      Commitments adjusted, in the case of a proposed utilisation, so as to take
      into
      account:

     

    
      	
              (a)  

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

            

    

     

    
      
        
        

      

      
        -2-

        
          

        

      

      
        
        

      

    

    

     

    
      	
              (b)  

            	
              the
                Base Currency Amount of any Letter of Credit which pursuant to any
                other
                utilisation, is to be issued; and

            

    

     

    
      	
              (c)  

            	
              the
                Base Currency Amount of any Letter of Credit which is due to expire
                or
                returned as cancelled,

            

    

     

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

     

    "Base
      Currency" means dollars.

     

    "Base
      Currency Amount" means, in relation to a Letter of Credit, the amount
      specified in the Utilisation Request for that Letter of Credit (or, if the
      amount requested is not denominated in the Base Currency, that amount converted
      into the Base Currency at the Agent's Spot Rate of Exchange on the date which
      is
      three Business Days before the Utilisation Date or, if later, on the date the
      Agent receives the Utilisation Request).

     

    "Borrowing
      Base" means, at any time, the aggregate amount of Cash
      and Eligible Securities held in the Collateral Accounts under the Security
      Agreement at such time multiplied in each case by the respective Advance Rates
      for Cash and such Eligible Securities (the value of Eligible Securities at
      any
      time being determined on the basis of the Borrowing Base Report (as defined
      in
      the Security Agreement) then most recently prepared by the Special Report Agent)
      provided that all Cash and Eligible Securities in respect of
      any Borrowing Base shall only be included in such Borrowing Base to the extent
      the same are subject to a first priority perfected security interest in favour
      of the Security Trustee pursuant to the Security Documents.

     

    "Borrowing
      Base Certificate" means a Borrowing Base Certificate substantially in
      the form set out in Schedule 10 (Form of Borrowing Base Certificate) or
      in such other form reasonably acceptable to the Agent.

     

    "Business
      Day" means a day (other than a Saturday or Sunday) on which banks
      generally are open for business in both London and New York.

     

    "Business
      Plan" means the 2008 business plan of the Guarantor, a copy of which
      has been provided to the Agent pursuant to paragraph 4(i) of Schedule 2
      (Conditions precedent).

     

    "Capital
      Lease Obligations" has the meaning given to such term in Clause 21.2 (Financial Definitions).

     

    "Capital
      Markets Product" means, as to any person, any security, commodity,
      derivative transaction or other financial or similar product purchased, sold
      or
      entered into by such person for the purpose of a third-party undertaking or
      assuming one or more risks otherwise assumed by such person or entered into
      by
      such person for the purpose of managing one or more risks otherwise assumed
      by
      such person or other agreements or arrangements entered into by such person
      designed to transfer credit risk from one party to another,
      including:

     

    
      
        
        

      

      
        -3-

        
          

        

      

      
        
        

      

    

    

     

    
      	
              (a)  

            	
              any
                structured insurance product, catastrophe bond, rate swap transaction,
                swap option, basis swap, forward rate transaction, commodity swap,
                commodity option, commodity hedge, equity or equity index swap, equity
                or
                equity index option, bond option, interest rate option or hedge,
                foreign
                exchange transaction, cap transaction, floor transaction, collar
                transaction, currency swap transaction, cross-currency rate swap
                transaction, currency option or swap transaction, credit protection
                transaction, credit swap, credit default swap (including single default,
                single-name, basket and first-to-default swaps), credit default option,
                equity default swap, total return swap, credit-linked notes, credit
                spread
                transaction, repurchase transaction, reverse repurchase transaction,
                buy/sellback transaction, securities lending transaction, weather
                index
                transaction, emissions allowance transaction, or forward purchase
                or sale
                of a security, commodity or other financial instrument or interest
                (including any option with respect to any of these
                transactions);

            

    

     

    
      	
              (b)  

            	
              any
                transaction which is a type of transaction that is similar to any
                transaction referred to in paragraph (a) above that is currently,
                or in
                the future becomes, recurrently entered into in the financial
                markets;

            

    

     

    
      	
              (c)  

            	
              any
                combination of the transactions referred to in paragraphs (a) and
                (b)
                above; and

            

    

     

    
      	
              (d)  

            	
              any
                master agreement relating to any of the transactions referred to
                in
                paragraphs (a), (b) or (c) above.

            

    

     

    "Cash"
      means the category of "Cash" described in the definition of Advance
      Rate.

     

    "Cash
      Equivalents" means, as to any person:

     

    
      	
              (a)  

            	
              securities
                issued or directly and fully guaranteed or insured by the US or any
                agency
                or instrumentality thereof (provided that the full faith and credit
                of the
                US is pledged in support thereof) having maturities of not more than
                one
                year from the date of acquisition;

            

    

     

    
      	
              (b)  

            	
              time
                deposits and certificates of deposit of any commercial bank having,
                or
                which is the principal banking subsidiary of a bank holding company
                organised under the laws of the US, any state thereof, the District
                of
                Columbia or any foreign jurisdiction having, capital, surplus and
                undivided profits aggregating in excess of $200,000,000, with maturities
                of not more than one year from the date of acquisition by such
                person;

            

    

     

    
      	
              (c)  

            	
              repurchase
                obligations with a term of not more than 90 days for underlying securities
                of the types described in paragraph (a) above entered into with any
                bank
                meeting the qualifications specified in paragraph (b)
                above;

            

    

     

    
      
        
        

      

      
        -4-

        
          

        

      

      
        
        

      

    

    

     

    
      	
              (d)  

            	
              commercial
                paper rated at least A-1 or the equivalent thereof by S&P or P-1 or
                the equivalent thereof by Moody's and in each case maturing not more
                than
                one year after the date of acquisition by such
                person;

            

    

     

    
      	
              (e)  

            	
              obligations
                of obligors organised outside the US (including sovereign nations),
                which
                obligations are correlative in type, maturity and rating as those
                set
                forth in paragraphs (a) through (d) above;
                and

            

    

     

    
      	
              (f)  

            	
              investments
                in "money market funds" within the meaning of Rule 2a-7 of the Investment
                Company Act of 1940 of the US, as amended, substantially all of whose
                assets are comprised of securities of the types described in paragraphs
                (a) through (e) above.

            

    

     

    "Change
      of Control" means:

     

    
      	
              (a)  

            	
              the
                Borrower or Validus Reinsurance, Ltd. ceasing to be a Wholly-Owned
                Subsidiary of the Guarantor;

            

    

     

    
      	
              (b)  

            	
              the
                acquisition of ownership, directly or indirectly, beneficially or
                of
                record, by any person or group (within the meaning of the Securities
                Exchange Act of 1934 of the US, as amended, and the rules of the
                SEC
                thereunder as in effect on the date hereof) other than Permitted
                Investors, of Equity Interests in the Guarantor representing more
                than 25
                per cent. of either the aggregate ordinary voting rights or the aggregate
                equity value represented by the issued and outstanding Equity Interests
                in
                the Guarantor;

            

    

     

    
      	
              (c)  

            	
              the
                occupation of a majority of the seats (other than vacant seats) on
                the
                board of directors of the Guarantor by persons who were neither (i)
                nominated by the board of directors of the Guarantor or Permitted
                Investors nor (ii) appointed by directors so nominated;
                or

            

    

     

    
      	
              (d)  

            	
              the
                occurrence of a "Change of Control" (or similar event, however
                denominated), as defined in any indenture, agreement in respect of
                any
                Indebtedness or other material agreement of any member of the Group
                or any
                certificate of designations (or other provision of the constitutional
                documents of such member of the Group) relating to, or any other
                agreement
                governing the rights of the holders of, any Equity Interests in such
                member of the Group, in each case which would give rise to liabilities
                or
                obligations of such member of the Group in an amount equal to or
                greater
                than $50,000,000.

            

    

     

    "Charged
      Property" means all the assets of any member of the Group which from
      time to time are, or are expressed to be, the subject of the Transaction
      Security.

     

    "Closing
      Date" means 28 November 2007.

     

    "Code"
      means the Internal Revenue Code of 1986.

     

    
      
        
        

      

      
        -5-

        
          

        

      

      
        
        

      

    

    

     

    "Collateral"
      means, in relation to any Lender's Proportion of a Letter of Credit, a deposit
      in the Collateral Accounts and the term "Collateralised" shall
      be construed accordingly.

     

    "Collateral
      Accounts" has the meaning set forth in the Control
      Agreement.

     

    "Commitment"
      means:

     

    
      	
              (a)  

            	
              in
                relation to an Original Lender, the amount in the Base Currency set
                opposite its name under the heading "Commitment" in
                Schedule 1 (The Original Lenders);
                and

            

    

     

    
      	
              (b)  

            	
              in
                relation to any other Lender, the amount in the Base Currency of
                any
                Commitment transferred to it under this
                Agreement,

            

    

     

    to
      the
      extent not cancelled, reduced or transferred by it under this
      Agreement.

     

    "Confidentiality
      Undertaking" means a confidentiality undertaking substantially in a
      recommended form of the Loan Market Association from time to time, or such
      other
      form as may be agreed between the Borrower and the Agent.

     

    "Consolidated
      Indebtedness" has the meaning given to such term in Clause 21.2 (Financial Definitions).

     

    "Consolidated
      Net Worth" has the meaning given to such term in Clause 21.2 (Financial Definitions).

     

    "Consolidated
      Total Capital" has the meaning given to such term in Clause 21.2 (Financial Definitions).

     

    "Control"
      means, with respect to any person, the possession, directly or indirectly,
      of
      the power:

     

    
      	
              (a)  

            	
              to
                vote 10% or more of the voting power of the securities having ordinary
                voting power for the election of directors of such person;
                or

            

    

     

    
      	
              (b)  

            	
              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,

            

    

     

    and
      "Controlling" and "Controlled" have meanings
      correlative thereto.

     

    "Control
      Agreement" has the meaning set forth in the Security
      Agreement.

     

    "Corporate
      Member" means the Account Party, being a corporate member of
      Lloyd's.

     

    "Credit
      Institution Confirmation" means the confirmation in form and substance
      satisfactory to Lloyd's and substantially in the form set out in Schedule 5
      (Form of Credit Institution Confirmation).

     

    
      
        
        

      

      
        -6-

        
          

        

      

      
        
        

      

    

    

     

    "Custodian"
      means custodian under the Control Agreement and the Security
      Agreement.

     

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

     

    "Delegate"
      means any delegate, agent, attorney or co-Security Trustee appointed by the
      Security Trustee.

     

    "Disruption
      Event" means either or both of:

     

    
      	
              (a)  

            	
              a
                material disruption to those payment or communications systems or
                to those
                financial markets which are, in each case, required to operate in
                order
                for payments to be made in connection with the Facility (or otherwise
                in
                order for the transactions contemplated by the Finance Documents
                to be
                carried out) which disruption is not caused by, and is beyond the
                control
                of, any of the Parties; or

            

    

     

    
      	
              (b)  

            	
              the
                occurrence of any other event which results in a disruption (of a
                technical or systems-related nature) to the treasury or payments
                operations of a Party preventing that, or any other
                Party:

            

    

     

    
      	
              (i)  

            	
              from
                performing its payment obligations under the Finance Documents;
                or

            

    

     

    
      	
              (ii)  

            	
              from
                communicating with other Parties in accordance with the terms of
                the
                Finance Documents,

            

    

     

    (and
      which (in either such case)) is not caused by, and is beyond the control of,
      the
      Party whose operations are disrupted.

     

    "DTC"
      means the Depository Trust Company.

     

    "Eligible
      Collateral Table" means the table set out in Schedule 9 (Eligible
      Collateral Table).

     

    "Eligible
      Securities" has the meaning provided in the definition of the term
      "Advance Rate".

     

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

     

    "Environmental
      Liability" means any liability, contingent or otherwise (including any
      liability for damages, costs of environmental remediation, fines, penalties
      or

     

    
      
        
        

      

      
        -7-

        
          

        

      

      
        
        

      

    

    indemnities),
      of the Guarantor or any subsidiary directly or indirectly resulting from or
      based upon:

     

    
      	
              (a)  

            	
              its
                violation of any Environmental Law;

            

    

     

    
      	
              (b)  

            	
              its
                generation, use, handling, transportation, storage, treatment or
                disposal
                of any Hazardous Materials;

            

    

     

    
      	
              (c)  

            	
              its
                exposure to any Hazardous
                Materials;

            

    

     

    
      	
              (d)  

            	
              its
                release or threatened release of any Hazardous Materials into the
                environment; or

            

    

     

    
      	
              (e)  

            	
              any
                contract, agreement or other consensual arrangement pursuant to which
                liability is assumed or imposed with respect to any of the
                foregoing,

            

    

     

    but
      in
      each of (a) through (e) excluding liabilities arising out of Capital Markets
      Products and insurance and reinsurance contracts, agreements and arrangements
      in
      each case entered into in the ordinary course of business and not for
      speculative purposes.

     

    "Equity
      Interests" means, with respect to any person, shares of capital stock
      of (or other ownership or profit interests in) such person, warrants, options
      or
      other rights for the purchase or other acquisition from such person of shares
      of
      capital stock of (or other ownership or profit interests in) such person,
      securities convertible into or exchangeable for shares of capital stock of
      (or
      other ownership or profit interests in) such person or warrants, rights or
      options for the purchase or other acquisition from such person of such shares
      (or such other interests), and other ownership or profit interests in such
      person (including partnership, member or trust interests therein), whether
      voting or nonvoting, and whether or not such shares, warrants, options, rights
      or other interests are authorised or otherwise existing on any date of
      determination.

     

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

     

    "ERISAAffiliate"
      means any corporation or trade or business which is a member of the same
      controlled group of corporations (within the meaning of Section 414(b) of the
      Code) as the Guarantor or any of its subsidiaries or is under common control
      (within the meaning of Section 414(c) of the Code) with the Guarantor or any
      of
      its subsidiaries.

     

    "Event
      of Default" means any circumstance described as such in Clause 23 (Events of Default) other than Clause 23.14
      (Acceleration and
      Cancellation).

     

    "Existing
      Affiliate Transactions" means the
      transactions set forth on Schedule 15 (Existing Affiliate
      Transactions).

     

    
      
        
        

      

      
        -8-

        
          

        

      

      
        
        

      

    

    

     

    "Existing
      Facility" means the $30,000,000 standby letter of credit facility dated
      25 November 2003 (as amended and restated by amendment and restatement
      agreements dated 23 November 2004, 25 November 2005, 2 March 2006 and 29
      November 2006 and an amendment letter dated 28 June 2007) and entered into
      between the Borrower as parent, the Account Party and Talbot Underwriting
      Holdings Ltd as guarantors and Lloyds TSB Bank plc as bank.

     

    "Existing
      Investments" means the investments set forth on Schedule 16
      (Existing Investments).

     

    "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.

     

    "Facility"
      means the letter of credit facility granted to the Borrower in this
      Agreement.

     

    "Facility
      Office" means, in relation to the Agent, the office identified with its
      signature below or such other office as it may select by notice and, in relation
      to any Lender, the office notified by it to the Agent 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) or such other office as it
      may
      from time to time select by notice to the Agent.

     

    "Fee
      Letter" means any letter or letters dated on or about the date of this
      Agreement between the Borrower and the Arrangers (or the Agent and the Borrower,
      the Security Trustee and the Borrower or the Structuring Agent and the
      Borrower), setting out any of the fees referred to in Clause 15 (Commitment Commission and
      fees).

     

    "Finance
      Documents" means this Agreement, any Fee Letter, the Security Documents
      and any other document designated in writing as a "Finance Document" by the
      Agent and the Borrower.

     

    "Finance
      Parties" means the Agent, the Structuring Agent, the Security Trustee,
      the Arrangers and the Lenders.

     

    "Financial
      Officer" means the chief financial officer, principal accounting
      officer, treasurer or controller of the Borrower or the Guarantor.

     

    "Five-Year
      Secured Letter of Credit Facility" means the $500,000,000 five-year
      secured letter of credit facility dated 12 March 2007 between Validus Holdings,
      Ltd., Validus Reinsurance, Ltd., JPMorgan Chase Bank, National Association,
      as
      administrative agent and others, including the related instruments and
      agreements executed in connection therewith, and amendments, renewals,
      replacements, refinancings and restatements to any of the
      foregoing.

     

    "Foreign
      Pension Plan" means any plan, fund (including any superannuation fund)
      or other similar program established or maintained outside the US by the
      Guarantor or any one or more of its subsidiaries primarily for the benefit
      of
      employees of the Guarantor or such subsidiaries residing outside the US, which
      plan, fund or other similar program provides, or results in, retirement income,
      a deferral of income in contemplation of

     

    
      
        
        

      

      
        -9-

        
          

        

      

      
        
        

      

    

    retirement
      or payments to be made upon termination of employment, and which plan is not
      subject to ERISA or the Code.

     

    "Fronting
      Arrangement" has the meaning given to such term in Clause 21.2 (Financial Definitions).

     

    "FSA
      Handbook" means the UK Financial Services Authority Handbook of Rules
      and Guidance (as amended from time to time).

     

    "Funds
      at Lloyd's" has the meaning given to it in paragraphs 16 and 17 of the
      Membership Byelaw (No. 5 of 2005).

     

    "GAAP"
      means US GAAP, or, in relation to subsidiaries of the Guarantor which are
      incorporated in England and Wales, UK GAAP.

     

    "General
      Prudential Sourcebook" means the General Prudential Sourcebook for
      Banks, Building Societies, Insurers and Investment Firms (as amended and
      replaced from time to time), which forms part of the FSA Handbook.

     

    "Governmental
      Authority" means the government of the US, 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.

     

    "Group"
      means the Guarantor and its subsidiaries for the time being.

     

    "Guarantee"
      has the meaning given to such term in Clause 21.2
      (Financial Definitions).

     

    "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.

     

    "Hybrid
      Capital" has the meaning given to such term in Clause 21.2 (Financial Definitions).

     

    "Indebtedness"
      of any person means, without duplication:

     

    
      	
              (a)  

            	
              all
                obligations of such person for borrowed money or with respect to
                deposits
                or advances of any kind;

            

    

     

    
      	
              (b)  

            	
              all
                obligations of such person evidenced by bonds, debentures, notes
                or
                similar instruments;

            

    

     

    
      	
              (c)  

            	
              all
                obligations of such person upon which interest charges are customarily
                paid and treated as interest expense under
                GAAP;

            

    

     

    
      
        
        

      

      
        -10-

        
          

        

      

      
        
        

      

    

    

     

    
      	
              (d)  

            	
              all
                obligations of such person under conditional sale or other title
                retention
                agreements relating to property acquired by such
                person;

            

    

     

    
      	
              (e)  

            	
              all
                obligations of such person in respect of the deferred purchase price
                of
                property or services (excluding current ordinary course trade accounts
                payable);

            

    

     

    
      	
              (f)  

            	
              all
                Indebtedness of others secured by (or for which the holder of such
                Indebtedness has an existing right, contingent or otherwise, to be
                secured
                by) any Lien on property owned or acquired by such person, whether
                or not
                the Indebtedness secured thereby has been assumed, provided that
                the
                amount of Indebtedness of such person shall be the lesser of (i)
                the fair
                market value of such property at such date of determination (determined
                in
                good faith by the Guarantor) and (ii) the amount of such Indebtedness
                of
                such other person;

            

    

     

    
      	
              (g)  

            	
              all
                Guarantees by such person of Indebtedness of
                others;

            

    

     

    
      	
              (h)  

            	
              all
                Capital Lease Obligations of such
                person;

            

    

     

    
      	
              (i)  

            	
              all
                obligations (or to the extent netting is permitted under the applicable
                agreement governing such Capital Markets Products and such netting
                is
                limited with respect to the counterparty or counterparties of such
                agreement, all net termination obligations) of such person under
                transactions in Capital Markets Products;
                and

            

    

     

    
      	
              (j)  

            	
              all
                reimbursement obligations of such person in respect of letters of
                credit,
                letters of guaranty, bankers' acceptances and similar credit transactions;
                provided that, Indebtedness shall not include any preferred (including
                without limitation trust preferred) or preference securities or Hybrid
                Capital to the extent such preferred or preference securities or
                Hybrid
                Capital would be treated as equity under the applicable procedures
                and
                guidelines of S&P as of the date of this
                Agreement.

            

    

     

    The
      Indebtedness of any person shall include the Indebtedness of any other entity
      (including any partnership in which such person is a general partner) to the
      extent such person is liable therefor as a result of such person's ownership
      interest in or other relationship with such entity, except to the extent the
      terms of such Indebtedness provide that such person is not liable therefor.
      For
      the avoidance of doubt, Indebtedness shall not include (v) current trade
      payables (including current payables under insurance contracts and current
      reinsurance payables) and accrued expenses, in each case arising in the ordinary
      course of business, (w) obligations and Guarantees of Regulated Insurance
      Companies with respect to Policies, (x) obligations and Guarantees with respect
      to products underwritten by Regulated Insurance Companies in the ordinary course
      of business, including insurance and reinsurance policies, annuities,
      performance and surety bonds, assumptions of liabilities and any related
      contingent obligations, (y) Reinsurance Agreements and Fronting Arrangements
      and

     

    
      
        
        

      

      
        -11-

        
          

        

      

      
        
        

      

    

    Guarantees
      thereof entered into by any Regulated Insurance Company in the ordinary course
      of business and (z) indebtedness arising under any Syndicate
      Arrangement.

     

    "Insurance
      Business" means one or more aspects of the business of selling, issuing
      or underwriting insurance or reinsurance and other businesses reasonably related
      thereto.

     

    "Insurance
      Contract" has the meaning given to such term in Clause 21.2 (Financial Definitions).

     

    "Insurance
      License" has the meaning given to such term in Clause 19.15 (Insurance Licenses).

     

    "Integrated
      Prudential Sourcebook" means the Prudential Sourcebook for Insurers (as
      amended and replaced from time to time), which forms part of the FSA
      Handbook.

     

    "Interest
      Period" means, save as otherwise provided herein, in relation to an
      Unpaid Sum, any of those periods mentioned in Clause 17.1 (Default Interest Periods).

     

    "Junior
      Subordinated Deferrable Debentures" has the meaning given to such term
      in Clause 21.2 (Financial
      Definitions).

     

    "L/C
      Commission Rate" means a letter of credit commission rate calculated in
      accordance with Clauses 4.1 (Letter of Credit
      Commission) and 4.2 (Calculation of L/C
      Commission Rate).

     

    "Legal
      Requirements" means all applicable laws, rules and regulations and
      interpretations thereof made by any governmental body or regulatory authority
      (including any Applicable Insurance Regulatory Authority) having jurisdiction
      over any member of the Group.

     

    "Legal
      Reservations" means:

     

    
      	
              (a)  

            	
              the
                principle that equitable remedies may be granted or refused at the
                discretion of a court and the limitations imposed by laws relating
                to
                bankruptcy, insolvency, liquidation, reorganisation, court schemes,
                moratoria, administration and other laws generally affecting the
                rights of
                creditors or (as the case may be) secured
                creditors;

            

    

     

    
      	
              (b)  

            	
              the
                time barring of claims, the possibility that an undertaking to assume
                liability for or to indemnify a person against non-payment of UK
                stamp
                duty may be void and defences of set-off or
                counterclaim;

            

    

     

    
      	
              (c)  

            	
              similar
                principles, rights and defences under the laws of any other jurisdiction;
                and

            

    

     

    
      	
              (d)  

            	
              any
                other matters which are set out as qualifications or reservations
                as to
                matters of law of general application in the legal opinions delivered
                to
                any of the Finance Parties in connection with the Finance
                Documents.

            

    

     

    
      
        
        

      

      
        -12-

        
          

        

      

      
        
        

      

    

    

     

    "Lender"
      means any financial institution:

     

    
      	
              (a)  

            	
              named
                in Schedule 1 (The Original
                Lenders); or

            

    

     

    
      	
              (b)  

            	
              which
                has become a party hereto in accordance with Clause 24 (Changes to the
                Lenders),

            

    

     

    and
      which
      has not ceased to be a party hereto in accordance with the terms
      hereof.

     

    "Lender's
      Proportion" means, in relation to a Letter of Credit, the proportion
      which that Lender's participation in that Letter of Credit bears to the
      participation of all the Lenders, determined in accordance with Clause 3.4 (Each Lender's Participation in Letters of
      Credit).

     

    "Letter
      of Comfort" means a comfort letter from Lloyd's substantially in the
      form set out in Schedule 8 (Letter of Comfort) or with such amendments
      as may be requested by the Borrower and/or Lloyd's and reasonably approved
      by
      the Agent.

     

    "Letter
      of Credit" means a letter of credit issued or to be issued pursuant to
      Clause 3 (Utilisation of the Facility)
      substantially in the form set out in Schedule 6 (Form of Letter of
      Credit) or in such other form requested by the Borrower which is approved
      by the Lenders (such approval not to be unreasonably withheld).

     

    "Leverage
      Ratio" has the meaning given to such term in Clause 21.2 (Financial Definitions).

     

    "LIBOR"
      means, in relation to any Unpaid Sum on which interest for a given period is
      to
      accrue:

     

    
      	
              (a)  

            	
              the
                percentage rate per annum equal to the offered quotation which appears
                on
                the appropriate page of the Reuters screen which displays the British
                Bankers Association Interest Settlement Rate for the relevant currency
                for
                such period; or

            

    

     

    
      	
              (b)  

            	
              if
                such page or such service shall cease to be available, the arithmetic
                mean
                of the rates (rounded upwards to four decimal places) as supplied
                to the
                Agent at its request quoted by the Reference Banks to leading banks
                in the
                London Interbank market

            

    

     

    at
      11.00
      a.m. on the Quotation Date for such period.

     

    "Lien"
      means, with respect to any asset:

     

    
      	
              (a)  

            	
              any
                mortgage, deed of trust, lien, pledge, hypothecation, encumbrance,
                charge
                or security interest in, on or of such
                asset;

            

    

     

    
      	
              (b)  

            	
              the
                interest of a vendor or a lessor under any conditional sale agreement,
                capital lease or title retention agreement (or any financing lease
                having
                substantially the same economic effect as any of the foregoing) relating
                to such asset; and

            

    

     

    
      
        
        

      

      
        -13-

        
          

        

      

      
        
        

      

    

    

     

    
      	
              (c)  

            	
              in
                the case of securities, any purchase option, call or similar right
                of a
                third party with respect to such
                securities.

            

    

     

    "Lloyd's"
      means the society incorporated by Lloyd's Act 1871 by the name of
      Lloyd's.

     

    "Lloyd's
      Trust Deed" means a trust deed in the form prescribed by Lloyd's for
      execution by a member, or any other member of the Group which provides Own
      FAL
      on behalf of a member, in respect of that member's insurance
      business.

     

    "Lloyd's
      Trust Fund" means a fund held on the terms of a Lloyd's Trust
      Deed.

     

    "Majority
      Lenders" means, save as otherwise provided herein a Lender or Lenders
      whose Commitments amount (or, if each Lender's Commitment has been reduced
      to
      zero, did immediately before such reduction to zero, amount) in aggregate to
      more than 50 per cent. of the Total Commitments.

     

    "Managed
      Syndicate" means Syndicate 1183 at Lloyd's, which is currently under
      the management of the Managing Agent.

     

    "Managing
      Agent" means Talbot Underwriting Ltd.

     

    "Mandatory
      Costs Rate" means the percentage rate per annum calculated by the Agent
      in accordance with Schedule 7 (Mandatory Costs Rate).

     

    "Material
      Adverse Effect" means a material adverse effect
      on:

     

    
      	
              (a)  

            	
              the
                business, operations, assets, liabilities or financial condition
                of the
                Group taken as a whole;

            

    

     

    
      	
              (b)  

            	
              the
                ability of the Obligors or any other member of the Group that is
                party to
                any Finance Document to perform their material or payment obligations
                under the Finance Documents; or

            

    

     

    
      	
              (c)  

            	
              the
                validity or enforceability of the Finance Documents or the rights
                or
                remedies of any Finance Party under the Finance
                Documents.

            

    

     

    "Minimum
      Consolidated Net Worth Amount" has the meaning given to such term in
      Clause  21.2 (Financial
      Definitions).

     

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

     

    "Multiemployer
      Plan" means any multiemployer plan as defined in Section 4001(a)(3) of
      ERISA, which is maintained or contributed to by (or to which there is an
      obligation to contribute of) the Guarantor, or any ERISA Affiliate, and each
      such plan for the five year period immediately following the latest date on
      which the Guarantor or such ERISA Affiliate contributed to or had an obligation
      to contribute to such plan.

     

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

     

    
      
        
        

      

      
        -14-

        
          

        

      

      
        
        

      

    

    

     

    "Net
      Income" has the meaning given to such term in Clause 21.2 (Financial Definitions).

     

    "Net
      Worth" means, as to any person, the sum of its capital stock (including
      its preferred stock), capital in excess of par or stated value of shares of
      its
      capital stock (including its preferred stock), retained earnings and any other
      account which, in accordance with US GAAP, constitutes stockholders equity,
      but
      excluding:

     

    
      	
              (a)  

            	
              any
                treasury stock; and

            

    

     

    
      	
              (b)  

            	
              the
                amount of the effects of Financial Accounting Statement No. 115
                (which amount is shown on the Guarantor's 31 December 2006 balance
                sheet
                under the caption "Accumulated other comprehensive income" and which,
                after adoption of Financial Accounting Statements Nos. 157 and 159
                will be
                measured as the difference between investments carried at estimated
                fair
                value and investments carried at amortised
                cost).

            

    

     

    "Notice
      of Non-Extension" means a notice of the kind referred to in Clause 3.7 (Notice of Non-Extension in respect
      of Letters
      of Credit).

     

    "Obligors"
      means the Borrower and the Guarantor.

     

    "Optional
      Currency" means sterling.

     

    "Original
      Financial Statements" means:

     

    
      	
              (a)  

            	
              in
                relation to the Borrower, its audited consolidated financial statements
                for its financial year ended 31 December 2006;
                and

            

    

     

    
      	
              (b)  

            	
              in
                relation to the Guarantor, its audited consolidated financial statements
                for its financial year ended 31 December
                2006.

            

    

     

    "Outstandings"
      means, at any time, the Base Currency Amount of the aggregate of the maximum
      actual and contingent liabilities of the Lenders in respect of each outstanding
      Letter of Credit.

     

    "Own
      FAL" means, in relation to the Account Party, such part of its Funds
      at
      Lloyd's as is provided by the Account Party or any other member of the Group
      by
      way of Cash and/or investments and/or covenant and charge or otherwise as
      permitted by Lloyd's from time to time (which shall be valued by Lloyd's in
      accordance with Lloyd's usual practice).

     

    "Party"
      means a party to this Agreement.

     

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

     

    "Permitted
      Investment Portfolio Securities" means assets and securities in one or
      more managed investment portfolios (each, a "Portfolio")
      provided that each Portfolio meets at least the following credit criteria and
      characteristics:

     

    
      
        
        

      

      
        -15-

        
          

        

      

      
        
        

      

    

    

     

    
      	
              (a)  

            	
              securities
                therein must be rated A3 or A- (or, in the case of money market
                securities, A-1 or P-1), or the equivalent, or better by at least
                one
                nationally recognised credit rating agency (split-rated credits shall
                be
                assumed to have the lower credit
                grade);

            

    

     

    
      	
              (b)  

            	
              such
                Portfolio’s average credit quality shall be AA- (or the equivalent) or
                better;

            

    

     

    
      	
              (c)  

            	
              mortgage
                and commercial mortgage-backed issues in such Portfolio shall have
                an
                aggregate weighted average credit quality of not less than triple-A
                (or
                the equivalent);

            

    

     

    
      	
              (d)  

            	
              money
                market instruments in such Portfolio shall be rated A-1 or P-1 (or
                the
                equivalent) or better at the time of
                purchase;

            

    

     

    
      	
              (e)  

            	
              notwithstanding
                the foregoing, such Portfolio may hold unrated securities if deemed
                by
                Borrower, the Guarantor, Validus Reinsurance, Ltd. or the applicable
                investment advisor to meet the rating criteria via a "pari passu"
                rating
                and would be expected to receive a NAIC 1 (minimum A3)
                rating;

            

    

     

    
      	
              (f)  

            	
              no
                more than 3% of such Portfolio’s assets may be invested in securities of a
                single issuer (excluding for such calculation US Treasury or agency
                debentures, UK government securities or agency debt, and other domestic
                or
                foreign sovereign debt otherwise permitted pursuant to the credit
                criterion, for which there need not be any holding percentage limits);
                and

            

    

     

    
      	
              (g)  

            	
              compliance
                with the above criterion shall be based on a "date of purchase"
                test.

            

    

     

    For
      the
      avoidance of doubt, such Portfolio may without limitation allow any one or
      more
      of the following:

     

    
      	
              (i)  

            	
              investments
                of temporary cash balances in money market instruments (A-1/P-1 (or
                the
                equivalent) or better, less than 390
                days);

            

    

     

    
      	
              (ii)  

            	
              the
                purchase of securities on a when-issued basis or for forward
                delivery;

            

    

     

    
      	
              (iii)  

            	
              entering
                into repurchase agreements collateralised 102% with government securities
                or mortgage securities or other investments permitted by this Facility.
                The maximum term of these agreements shall be not more than 90 days,
                and
                the collateral must be marked to market on a periodic
                basis;

            

    

     

    
      	
              (iv)  

            	
              entering
                into reverse repurchase agreements;

            

    

     

    
      	
              (v)  

            	
              entering
                into covered dollar rolls on mortgage securities.  Covered
                agreements will be defined as a sale and simultaneous purchase (for
                forward settlement) whereby the trade date cash balance must remain
                positive for the life of the roll (until the forward purchase settles);
                and

            

    

     

    
      
        
        

      

      
        -16-

        
          

        

      

      
        
        

      

    

    

     

    
      	
              (vi)  

            	
              entering
                into cross trades at prevailing market
                levels.

            

    

     

    "Permitted
      Investors" means each of the persons listed in Schedule 17
      (Permitted Investors) and their respective
      Affiliates.

     

    "Permitted
      Subsidiary Indebtedness" means:

     

    
      	
              (a)  

            	
              Indebtedness
                of any subsidiary of the Guarantor under the Finance Documents or
                existing
                on the date hereof and listed on Schedule 13 (Permitted Subsidiary
                Indebtedness) and extensions, renewals and replacements of any such
                Indebtedness, provided that such extending, renewal or replacement
                Indebtedness:

            

    

     

    
      	
              (i)  

            	
              shall
                not be Indebtedness of an obligor that was not an obligor with respect
                to
                the Indebtedness being extended, renewed or
                replaced;

            

    

     

    
      	
              (ii)  

            	
              shall
                not be in a principal amount that exceeds the principal amount of
                the
                Indebtedness being extended, renewed or replaced (plus any accrued
                but
                unpaid interest and redemption premium payable by the terms of such
                Indebtedness thereon and reasonable refinancing or renewal
                expenses);

            

    

     

    
      	
              (iii)  

            	
              shall
                not have an earlier maturity date or shorter weighted average life
                than
                the Indebtedness being extended, renewed or replaced;
                and

            

    

     

    
      	
              (iv)  

            	
              shall
                be subordinated to the obligations of the Guarantor in respect of
                this
                Agreement on the same terms (if any) as the Indebtedness being extended,
                renewed or replaced;

            

    

     

    
      	
              (b)  

            	
              Indebtedness
                of any subsidiary of the Guarantor incurred in the ordinary course
                of
                business in connection with any Capital Markets Product that are
                not
                entered into for speculative
                purposes;

            

    

     

    
      	
              (c)  

            	
              Indebtedness
                owed by subsidiaries of the Guarantor to the Guarantor or any of
                its
                subsidiaries;

            

    

     

    
      	
              (d)  

            	
              Indebtedness
                of any subsidiary of the Guarantor incurred to finance the acquisition,
                construction or improvement of any fixed or capital assets, including
                Capital Lease Obligations and any Indebtedness assumed by any subsidiary
                of the Guarantor in connection with the acquisition of any such assets
                or
                secured by a Lien on any such assets prior to the acquisition thereof,
                provided that:

            

    

     

    
      	
              (i)  

            	
              such
                Indebtedness is incurred prior to or within 90 days after such
                acquisition or the completion of such construction or improvement;
                and

            

    

     

    
      	
              (ii)  

            	
              the
                aggregate principal amount of Indebtedness permitted by this
                paragraph (d) shall not exceed $10,000,000 at any time
                outstanding;

            

    

     

    
      
        
        

      

      
        -17-

        
          

        

      

      
        
        

      

    

    

     

    
      	
              (e)  

            	
              Indebtedness
                of any subsidiary of the Guarantor in respect of letters of credit
                issued
                to reinsurance cedents, or to lessors of real property in lieu of
                security
                deposits in connection with leases of any subsidiary of the Guarantor,
                in
                each case in the ordinary course of
                business;

            

    

     

    
      	
              (f)  

            	
              Indebtedness
                of any subsidiary of the Guarantor incurred in the ordinary course
                of
                business in connection with workers' compensation claims, self-insurance
                obligations, unemployment insurance or other forms of governmental
                insurance or benefits and pursuant to letters of credit or other
                security
                arrangements entered into in connection with such insurance or
                benefit;

            

    

     

    
      	
              (g)  

            	
              Indebtedness
                under the Five-Year Secured Letter of Credit Facility and Indebtedness
                under the Three-Year Unsecured Letter of Credit
                Facility;

            

    

     

    
      	
              (h)  

            	
              Indebtedness
                arising under any Syndicate
                Arrangement;

            

    

     

    
      	
              (i)  

            	
              without
                duplication, additional Indebtedness of subsidiaries of the Guarantor
                not
                otherwise permitted under paragraphs (a) through (h) of this
                definition which, when added to the aggregate amount of all Liens
                (other
                than with respect to Indebtedness incurred pursuant to this
                paragraph (i)) incurred by the Guarantor pursuant to sub-clause 22.14.26 of Clause 22.14 (Liens),
                shall not exceed at any
                time outstanding 5 per cent. of Consolidated Net Worth at the time
                of
                incurrence of any new Indebtedness under this paragraph (i);
                provided that immediately after giving effect (including
                pro forma effect) to the incurrence of any Indebtedness pursuant
                to this
                paragraph (i), no Event of Default shall have occurred and be
                continuing.

            

    

     

    "Plan"
      means any pension plan as defined in Section 3(2) of ERISA and subject to Title
      IV of ERISA, which is maintained or contributed to by (or to which there is
      an
      obligation to contribute of) the Guarantor or any of its ERISA Affiliates,
      and
      each such plan for the five year period immediately following the latest date
      on
      which the Guarantor or any of its ERISA Affiliates maintained, contributed
      to or
      had an obligation to contribute to such plan.

     

    "Policies"
      means all insurance policies, annuity contracts, guaranteed interest contracts
      and funding agreements (including riders to any such policies or contracts,
      certificates issued with respect to group life insurance or annuity contracts
      and any contracts issued in connection with retirement plans or arrangements)
      and assumption certificates issued or to be issued (or filed pending current
      review by applicable Governmental Authorities) by any Regulated Insurance
      Company and any coinsurance agreements entered into or to be entered into by
      any
      Regulated Insurance Company.

     

    "Preferred
      Securities" means any preferred Equity Interests (or capital stock) of
      any person that has preferential rights with respect to dividends or redemptions
      or upon liquidation or dissolution of such person over shares of common Equity
      Interests (or capital stock) of any other class of such person.

     

    
      
        
        

      

      
        -18-

        
          

        

      

      
        
        

      

    

    

     

    "Private
      Act" means separate legislation enacted in Bermuda with the intention
      that such legislation apply specifically to any Obligor, in whole or in
      part.

     

    "Proportion"
      means, in relation to a Lender:

     

    
      	
              (a)  

            	
              the
                proportion borne by its Commitment to the Total Commitments (or,
                if the
                Total Commitments are then zero, by its Commitment to the Total
                Commitments immediately prior to their reduction to zero);
                and

            

    

     

    
      	
              (b)  

            	
              in
                respect of any Letter of Credit and save as otherwise provided herein,
                the
                proportion (expressed as a percentage) borne by such Lender's Available
                Commitment to the Available Facility immediately prior to the issue
                of
                such Letter of Credit.

            

    

     

    "Protected
      Cell Company" means any subsidiary of the Guarantor that has created
      segregated accounts pursuant to the provisions of the Segregated Account
      Companies Act 2000 of Bermuda.

     

    "Quotation
      Date" means, in relation to any period for which an interest rate is to
      be determined hereunder:

     

    
      	
              (a)  

            	
              (if
                the currency is domestic sterling) the first day of that period;
                or

            

    

     

    
      	
              (b)  

            	
              (for
                any other currency) two Business Days before the first day of that
                period,

            

    

     

    unless
      market practice differs in the Relevant Interbank Market for a currency, in
      which case the Quotation Date for that currency will be determined by the Agent
      in accordance with market practice in the Relevant Interbank Market (and if
      quotations would normally be given by leading banks in the Relevant Interbank
      Market on more than one day, the Quotation Date will be the last of those
      days).

     

    "Receiver"
      means a receiver or receiver and manager or administrative receiver of the
      whole
      or any part of the Charged Property.

     

    "Reference
      Banks" means the principal London offices of ING Bank N.V., London
      Branch and Lloyds TSB Bank plc or such banks as may be appointed as such by
      the
      Agent after consultation with the Borrower.

     

    "Regulated
      Insurance Company" means any subsidiary of the Guarantor, whether now
      owned or hereafter acquired, that is authorised or admitted to carry on or
      transact Insurance Business in any jurisdiction (foreign or domestic) and is
      regulated by any Applicable Insurance Regulatory Authority.

     

    "Reinsurance
      Agreement" has the meaning given to such term in Clause 21.2 (Financial Definitions).

     

    "Release
      Test Calculations" has the meaning given to such term in Clause 20.9 (Release Test
      Calculations).

     

    "Relevant
      Interbank Market" means the London interbank market.

     

    
      
        
        

      

      
        -19-

        
          

        

      

      
        
        

      

    

    

     

    "Repeated
      Representations" means each of the representations set out in Clause 19.1 (Corporate Status) to Clause 19.3
      (No Contravention of Agreements or
      Organisational Documents), Clause 19.9
      (Tax Returns and Payments), Clause 19.15
      (Insurance Licenses), Clause 19.17
      (Properties; Liens; and Insurance) to Clause 19.18 (Solvency) and Clause 19.19
      (No Default).

     

    "Representations"
      means each of the representations set out in Clause 19 (Representations).

     

    "Retrocession
      Agreement" has the meaning given to such term in Clause 21.2 (Financial Definitions).

     

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

     

    "SAP"
      means, with respect to any Regulated Insurance Company, the statutory accounting
      principles and accounting procedures and practices prescribed or permitted
      by
      the Applicable Insurance Regulatory Authority of the state or jurisdiction
      in
      which such Regulated Insurance Company is domiciled.

     

    "SEC"
      means the US Securities and Exchange Commission or any successor
      thereto.

     

    "Secured
      Letter of Credit" means, at any time, a Letter of Credit that has been
      designated as such in the relevant Utilisation Request or pursuant to Clause
9.1 (Redesignation of Letters of Credit) and
      any Letter of Credit in respect of which, and only for so long as, the
      liabilities of the Lenders have been Collateralised in full pursuant to Clause
      9 (Collateralisation and Redesignation of
      Letters of Credit) or sub-clause 23.14.1 of
      Clause 23.14 (Acceleration and
      Cancellation).

     

    "Secured
      Obligations" has the meaning set forth in the Security
      Agreement.

     

    "Secured
      Outstandings" means, at any time, the Base Currency Amount of the
      aggregate of the maximum actual and contingent liabilities of the Lenders in
      respect of each outstanding Secured Letter of Credit.

     

    "Secured
      Parties" means the Security Trustee, any Receiver or Delegate, the
      Agent, each Lender and the Arranger from time to time party to this
      Agreement.

     

    "Security
      Agreement" means the pledge and security agreement relating to the
      Collateral dated on or about the date hereof between the Custodian, the Special
      Report Agent, the Borrower, the Guarantor, the Grantors identified therein
      from
      time to time and the Security Trustee.

     

    "Security
      Documents" means the Security Agreement, the Control Agreement and any
      other document designated in writing as such by the Borrower and the Security
      Trustee.

     

    
      
        
        

      

      
        -20-

        
          

        

      

      
        
        

      

    

    

     

    "Solvent"
      means, with respect to any person on a particular date, that on such
      date:

     

    
      	
              (a)  

            	
              the
                fair value of its assets exceeds the amount of its liabilities (in
                each
                case, as would be reflected on a balance sheet prepared in accordance
                with
                GAAP); and

            

    

     

    
      	
              (b)  

            	
              such
                person does not intend to incur debts beyond their ability to pay
                such
                debts as they mature (taking into account the timing and amounts
                of cash
                to be received by such person, and of amounts to be payable on or
                in
                respect of debt of such person).

            

    

     

    "Special
      Report Agent" has the meaning set forth in the Security
      Agreement.

     

    "Super-Majority
      Lenders" means, save as otherwise provided herein a Lender or Lenders
      whose Commitments amount (or, if each Lender's Commitment has been reduced
      to
      zero, did immediately before such reduction to zero, amount) in aggregate to
      66
      2/3 per cent. or more of the Total Commitments.

     

    "Syndicate
      Arrangement" means an arrangement entered into by a managing agent at
      Lloyd's on behalf of the Account Party together with the other syndicate members
      with respect to financing or reinsurance for the purposes of or in connection
      with the underwriting business carried on by all such members of that
      syndicate.

     

    "Tax"
      means any tax, levy, impost, duty or other charge or withholding of a similar
      nature (including any penalty or interest payable in connection with any failure
      to pay or any delay in paying any of the same) imposed by any Governmental
      Authority.

     

    "Term"
      means, save as otherwise provided herein, in relation to any Letter of Credit,
      the period from its Utilisation Date until its Expiry Date.

     

    "Three-Year
      Unsecured Letter of Credit Facility" means the $200,000,000 three-year
      unsecured letter of credit facility dated 12 March 2007 between, Validus
      Holdings, Ltd., JPMorgan Chase Bank, National Association, as administrative
      agent and others, including the related instruments and agreements executed
      in
      connection therewith, and amendments, renewals, replacements, refinancings
      and
      restatements to any of the foregoing.

     

    "Total
      Commitments" means, at any time, the aggregate of the Lenders'
      Commitments, being $100,000,000 as at the date of this Agreement.

     

    "Transaction
      Security" means the Liens created or expressed to be created in favour
      of the Security Trustee pursuant to the Security Documents.

     

    "Transfer
      Certificate" means a certificate substantially in the form set out in
      Schedule 4 (Form of Transfer Certificate) or any other form agreed
      between the Agent and the Borrower.

     

    
      
        
        

      

      
        -21-

        
          

        

      

      
        
        

      

    

    

     

    "Transfer
      Date" means, in relation to a transfer, the later of:

     

    
      	
              (a)  

            	
              the
                proposed Transfer Date specified in the Transfer Certificate;
                and

            

    

     

    
      	
              (b)  

            	
              the
                date specified by the Agent to the Existing Lender and the New Lender
                upon
                execution by the Agent of the Transfer
                Certificate.

            

    

     

    "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.

     

    "UCC"
      means the Uniform Commercial Code, as amended, and as in effect from time to
      time in the State of New York, except that references to sections of the UCC
      refer to the section numbers of such sections as of the date of this
      Agreement.

     

    "UKGAAP"
      means generally accepted accounting principles in the United
      Kingdom.

     

    "Unpaid
      Sum" means the unpaid balance of any of the sums referred to in
      Clause 17.1 (Default Interest
      Periods).

     

    "Unsecured
      Letter of Credit" means, at any time, a Letter of Credit that has been
      designated as such in the relevant Utilisation Request or pursuant to Clause
9.1 (Redesignation of Letters of
      Credit).

     

    "Unsecured
      Outstandings" means, at any time, the Base Currency Amount of the
      aggregate of the maximum actual and contingent liabilities of the Lenders in
      respect of each outstanding Unsecured Letter of Credit.

     

    "US"
      means the United States of America.

     

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

     

    "Utilisation
      Date" means, in relation to a Letter of Credit, the date on which it is
      to be issued.

     

    "Utilisation
      Request" means a notice substantially in the form set out in Schedule 3
      (Form of Utilisation Request).

     

    "Validus
      Guarantee" means the guarantee and indemnity of the Guarantor set out
      in Clause 18 (Guarantee and
      Indemnity).

     

    "Wholly-Owned
      Subsidiary" of any person means any subsidiary of such person to the
      extent all of the capital stock or other ownership interests in such subsidiary,
      other than directors' or nominees' qualifying shares, is owned directly or
      indirectly by such person.

     

    
      	
              1.2  

            	
              Interpretation

            

    

    Any
      reference in this Agreement to:

     

    
      	
              1.2.1  

            	
              the
                "Agent",
                "StructuringAgent", the
                "Arranger", the "Security Trustee", any
                "Finance Party", any "Secured Party",
                any "Lender", any "Obligor"
                or

            

    

     

    
      
        
        

      

      
        -22-

        
          

        

      

      
        
        

      

    

    any
      "Party" shall be construed so as to include its successors in
      title, permitted assigns and permitted transferees and, in the case of the
      Security Trustee, any person for the time being appointed as Security Trustee
      or
      Security Trustees in accordance with this Agreement;

     

    
      	
              1.2.2  

            	
              a
                document in "agreed form" is a document which is
                initialled by or on behalf of the Borrower and the
                Agent;

            

    

     

    
      	
              1.2.3  

            	
              a
                default (other than an Event of Default) is "continuing"
                if it has not been remedied or waived and an Event of Default is
                "continuing" if it has not been remedied or
                waived;

            

    

     

    
      	
              1.2.4  

            	
              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 Agent's Spot Rate of Exchange on such
                date for
                the purchase of the first currency with the second
                currency;

            

    

     

    
      	
              1.2.5  

            	
              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;

            

    

     

    
      	
              1.2.6  

            	
              a
                "member" shall be construed (when the context so
                requires) as a reference to an underwriting member of
                Lloyd's;

            

    

     

    
      	
              1.2.7  

            	
              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);

            

    

     

    
      	
              1.2.8  

            	
              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;

            

    

     

    
      	
              1.2.9  

            	
              a
                "person" shall be construed as a reference to any person,
                firm, company, corporation, government, state or agency of a state
                or any
                association or partnership (whether or not having separate legal
                personality) of two or more of the
                foregoing;

            

    

     

    
      	
              1.2.10  

            	
              "subsidiary"
                means, with respect to any person (the "parent") at any
                date, any corporation, limited liability company, partnership, association
                or other entity

            

    

     

    
      
        
        

      

      
        -23-

        
          

        

      

      
        
        

      

    

    the
      accounts of which would be consolidated with those of the parent in the parent's
      consolidated financial statements if such financial statements were prepared
      in
      accordance with GAAP as of such date, as well as any other corporation, limited
      liability company, partnership, association or other entity of which securities
      or other ownership interests representing more than 50% of the equity or
      ordinary voting power or, in the case of a partnership, more than 50% of the
      general partnership interests are, as of such date, owned, controlled or held
      by
      the parent or one or more subsidiaries of the parent or by the parent and one
      or
      more subsidiaries of the parent provided that neither 1384
      Capital Limited nor the Talbot Employee Benefit Trust shall be a subsidiary
      of
      any parent for the purposes of this Agreement;

     

    
      	
              1.2.11  

            	
              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;

            

    

     

    
      	
              1.2.12  

            	
              "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

            

    

     

    
      	
              1.2.13  

            	
              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.

            

    

     

    
      	
              1.3  

            	
              Syndicate

            

    

    For
      the
      purpose of construing references in this Agreement to a Lloyd's syndicate,
      unless the context otherwise requires, the several groups of members to which
      in
      successive years a particular syndicate number is assigned by the Council of
      Lloyd's shall be treated as the same syndicate notwithstanding that they may
      not
      comprise the same members with the same premium income limits.

     

    
      	
              1.4  

            	
              Currency
                Symbols

            

    

    "£"
      and "sterling" denote lawful currency of the United Kingdom for
      the time being and "dollars" and "$" denote
      lawful currency of the US for the time being.

     

    
      	
              1.5  

            	
              Agreements
                and Statutes

            

    

    Any
      reference in this Agreement to:

     

    
      	
              1.5.1  

            	
              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; 

            

    

     

    
      
        
        

      

      
        -24-

        
          

        

      

      
        
        

      

    

    

     

    
      	
              1.5.2  

            	
              a
                statute or treaty shall be construed, unless the context otherwise
                requires, 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

            

    

     

    
      	
              1.5.3  

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

            

    

     

    
      	
              1.6  

            	
              Headings

            

    

    Clause
      and Schedule headings are for ease of reference only.

     

    
      	
              1.7  

            	
              Time

            

    

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

     

    
      	
              1.8  

            	
              Third
                Party Rights

            

    

    A
      person
      who is not a party to this Agreement has no right under the Contracts (Rights
      of
      Third Parties) Act 1999 to enforce any term of this Agreement.

     

    
      
        
        

      

      
        -25-

        
          

        

      

      
        
        

      

    

    SECTION
      2

    THE
      FACILITY

     

     

    
      	
              2.  

            	
              THE
                FACILITY

            

    

     

    
      	
              2.1  

            	
              Grant
                of the Facility

            

    

    The
      Lenders, upon the terms and subject to the conditions hereof, grant to the
      Borrower on behalf of the Account Party, a multicurrency letter of credit
      facility in an aggregate amount equal to the Total Commitments.

     

    
      	
              2.2  

            	
              Purpose
                and Application

            

    

    The
      Facility is intended to enable the Account Party to provide Funds at Lloyd's
      for
      the 2008, 2009 and prior underwriting years of account of the Managed Syndicate,
      it being acknowledged that for so long as the Letters of Credit issued hereunder
      are deposited at Lloyd's, they shall be deemed to support all of the Account
      Party's underwriting years of account that have yet to close, and accordingly,
      the Borrower shall apply all amounts raised by it hereunder in or towards
      satisfaction of such purposes and none of the Finance Parties shall be obliged
      to concern themselves with such application.

     

    
      	
              2.3  

            	
              Ranking
                of Funds at Lloyd's

            

    

    It
      is
      acknowledged by the parties hereto that, subject to the duties of Lloyd's as
      trustee of all Funds at Lloyd's and to any conditions and requirements
      prescribed under the Membership Byelaw (No. 5 of 2005) which are for the time
      being applicable, the Facility will provide Funds at Lloyd's for the Account
      Party which, to the extent that such parties are able to procure the same upon
      and subject to the terms of this Agreement, shall only be applied after all
      of
      the Own FAL of the Account Party from time to time has been
      exhausted.

     

    
      	
              2.4  

            	
              Application
                of Own FAL

            

    

    The
      Borrower shall use all reasonable endeavours to ensure that the Own FAL at
      Lloyd's of the Account Party are applied to the fullest extent possible before
      any payment is made under a Letter of Credit in respect the Account Party
      (including, without limitation, using all reasonable endeavours to obtain a
      Letter of Comfort with respect to the order of application of Funds at
      Lloyd's).

     

    
      	
              2.5  

            	
              Initial
                Conditions Precedent

            

    

    Save
      as
      the Lenders may otherwise agree, the Borrower may not deliver a Utilisation
      Request unless the Agent has confirmed to the Borrower on the Closing Date
      by
      means of executing this Agreement that it has received all of the documents
      and
      other evidence listed in Schedule 2 (Conditions Precedent) and that
      each is, in form and substance, satisfactory to the Agent.

     

    
      
        
        

      

      
        -26-

        
          

        

      

      
        
        

      

    

    

     

    
      	
              2.6  

            	
              Further
                conditions precedent

            

    

    The
      Lenders will only be obliged to comply with Clause 3.4 (Each Lender's participation in Letters of
      Credit), if on the date of the Utilisation Request and on the proposed
      Utilisation Date:

     

    
      	
              2.6.1  

            	
              no
                Default is
                continuing or would result from the issue of the proposed Letter
                of
                Credit; and

            

    

     

    
      	
              2.6.2  

            	
              the
                Repeated Representations are true in all material respects with the
                same
                effect as though such Repeated Representations had been made on the
                date
                of the Utilisation Request and on the Utilisation Date (it being
                understood and agreed that any Repeated Representation which by its
                terms
                is made as of a specified date shall be required to be true in all
                material respects only as of such specified
                date).

            

    

     

    
      	
              2.7  

            	
              Several
                Obligations

            

    

    The
      obligations of each Lender are several and the failure by a Lender to perform
      its obligations hereunder shall not affect the obligations of an Obligor towards
      any other party hereto nor shall any other party be liable for the failure
      by
      such Lender to perform its obligations hereunder.

     

    
      	
              2.8  

            	
              Several
                Rights

            

    

    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.  Except as otherwise stated in the Finance Documents 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).

     

    
      
        
        

      

      
        -27-

        
          

        

      

      
        
        

      

    

    SECTION
      3

    UTILISATION

     

     

    
      	
              3.  

            	
              UTILISATION
                OF THE FACILITY

            

    

     

    
      	
              3.1  

            	
              Utilisation
                Conditions for the
                Facility

            

    

    Save
      as
      otherwise provided herein, a Letter of Credit will be issued at the request
      of
      the Borrower if:

     

    
      	
              3.1.1  

            	
              no
                less than three Business Days before the proposed Utilisation Date,
                the
                Agent has received a completed Utilisation Request from such
                Borrower;

            

    

     

    
      	
              3.1.2  

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

            

    

     

    
      	
              3.1.3  

            	
              the
                first day of the Term of the Letter of Credit is a Business Day falling
                within the Availability Period;

            

    

     

    
      	
              3.1.4  

            	
              the
                Letter of Credit is designated either a Secured Letter of Credit
                or an
                Unsecured Letter of Credit;

            

    

     

    
      	
              3.1.5  

            	
              the
                proposed Expiry Date of the Letter of Credit shall be 31 December
                2012;

            

    

     

    
      	
              3.1.6  

            	
              the
                Letter of Credit is substantially in the form set out in Schedule
                6
                (Form of Letter of
                Credit);

            

    

     

    
      	
              3.1.7  

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

            

    

     

    
      	
              3.1.8  

            	
              the
                conditions set out in Clause 3.2 (Currency
                and amount) are satisfied,

            

    

     

    provided
      that no Letter of Credit shall be issued for the account of the Account
      Party at any time when the Secured Outstandings exceed (or would after the
      issuance of such Letter of Credit exceed) the Borrowing Base of the Account
      Party at such time.

     

    
      	
              3.2  

            	
              Currency
                and amount

            

    

    
      	
              3.2.1  

            	
              The
                currency specified in a Utilisation Request must be the Base Currency
                or
                an Optional Currency.

            

    

     

    
      	
              3.2.2  

            	
              The
                amount of the proposed Letter of Credit must
                be:

            

    

     

    
      	
              (a)  

            	
              if
                the currency selected is the Base Currency, a minimum of $1,000,000
                or if
                less, the  Available Facility;
                or

            

    

     

    
      	
              (b)  

            	
              if
                the currency selected is the Optional Currency, a minimum of £500,000 or
                if less, the Available Facility;
                and

            

    

     

    
      	
              (c)  

            	
              in
                any event such that its Base Currency Amount is less than or equal
                to the
                Available Facility.

            

    

     

    
      
        
        

      

      
        -28-

        
          

        

      

      
        
        

      

    

    

     

    
      	
              3.3  

            	
              Completion
                of Letters of Credit

            

    

    The
      Agent
      is authorised to issue each Letter of Credit pursuant to Clause 3.1 (Utilisation Conditions for the Facility)
      by:

     

    
      	
              3.3.1  

            	
              completing
                the issue date, the proposed Expiry Date and the other details required
                in
                respect of such Letter of Credit, in accordance with the Utilisation
                Request for such Letter of Credit;

            

    

     

    
      	
              3.3.2  

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

            

    

     

    
      	
              3.3.3  

            	
              executing
                such Letter of Credit on behalf of each Lender and following such
                execution delivering such Letter of Credit together with a Credit
                Institution Confirmation with respect to each Lender to Lloyd's on
                the
                Utilisation Date,

            

    

     

    and,
      promptly after each such Letter of Credit is delivered to Lloyd's, the Agent
      shall send a copy of it to the Borrower.

     

    
      	
              3.4  

            	
              Each
                Lender's Participation in Letters of
                Credit

            

    

    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.

     

    
      	
              3.5  

            	
              Lloyd's
                Approved Credit
                Institution

            

    

    
      	
              3.5.1  

            	
              Each
                Lender acknowledges that the Agent must provide a Credit Institution
                Confirmation to Lloyd's with each Letter of
                Credit.

            

    

     

    
      	
              3.5.2  

            	
              For
                the purposes of the Agent providing such Credit Institution Confirmation
                to Lloyd's, each Lender confirms, on the date of this Agreement and
                on the
                date of issue of any Letter of Credit, that, subject to compliance
                with
                the terms of this Agreement for the utilisation of a Letter of
                Credit:

            

    

     

    
      	
              (a)  

            	
              it
                hereby authorises the execution and delivery by the Agent of each
                Letter
                of Credit and each such Letter of Credit will be duly executed by
                the
                Agent on its behalf; and

            

    

     

    
      	
              (b)  

            	
              its
                obligations under any Letter of Credit constitute its legal, valid
                and
                binding obligations.

            

    

     

    
      	
              3.5.3  

            	
              In
                the event that any Lender participating in the Facility ceases to
                be an
                Approved Credit Institution, following notification by Lloyd's to
                the
                Borrower, the Borrower shall notify the Arrangers thereof and the
                Arrangers, in consultation with the Borrower, will, subject to agreement
                relating to fees and expenses, use their reasonable endeavours to
                replace
                the participation of such Lender in the Facility and in any Letter
                of
                Credit issued hereunder with one or more of the other Lenders or
                with
                another Approved Credit Institution. In the event that any such Lender
                ceases to be so accredited it shall, at the request of the Agent,
                transfer
                (in accordance with Clause 24 (Changes to
                the Lenders)) its Commitment and participation in outstanding Letters
                of Credit to such financial

            

    

     

    
      
        
        

      

      
        -29-

        
          

        

      

      
        
        

      

    

    institution
      which is accredited by Lloyd's and which has been agreed by the Arrangers and
      the Borrower.  The Borrower agrees to reimburse the Agent and the
      Arrangers for all fees, costs and expenses (including legal fees) together
      with
      any VAT thereon incurred in connection with such replacement of a Lender's
      participation.

     

    
      	
              3.6  

            	
              Expiry
                of Availability Period

            

    

    The
      Available Commitment of each Lender shall be reduced to zero at the end of
      the
      Availability Period.

     

    
      	
              3.7  

            	
              Notice
                of Non-Extension in respect of Letters of
                Credit

            

    

    
      	
              3.7.1  

            	
              The
                Agent shall, no earlier than 1 December 2008 and no later than 31
                December
                2008, give a Notice of Non-Extension to Lloyd's in respect of such
                Letter
                of Credit issued hereunder (and the Lenders hereby authorise the
                Agent to
                serve such notice) so that each such Letter of Credit expires at
                any time
                after 31 December 2012.

            

    

     

    
      	
              3.7.2  

            	
              In
                the event that any Letter of Credit is issued after a Notice of
                Non-Extension has been given under sub-clause 3.7.1 above the Agent shall give a Notice
                of
                Non-Extension in respect of such Letter of Credit at the time such
                Letter
                of Credit is issued.

            

    

     

    
      	
              3.7.3  

            	
              Upon
                the expiry of a Letter of Credit in accordance with a Notice of
                Non-Extension, the maximum actual and contingent liabilities of each
                Lender under the Letter of Credit referred to in such Notice of
                Non-Extension will be reduced to
                zero.

            

    

     

    
      	
              3.8  

            	
              Applied
                Letters of Credit

            

    

    If,
      notwithstanding the provisions of Clause 2.4
      (Application ofOwn FAL), any sum is paid under a Letter of
      Credit (an "Applied Letter of Credit") which is greater than
      any sum which would have been paid had Own FAL been applied to meet any demand
      prior to the Funds at Lloyd's provided pursuant to this Facility in accordance
      with Clause 2.4 (Application of Own FAL)
      (the difference between the sum paid under the Applied Letter of Credit and
      the
      sum which should have been paid being the "Overpayment"), the
      Borrower shall, to any extent necessary to facilitate the indemnification of
      the
      Lenders under Clause 7 (Borrower's Indemnity to
      the Lenders), use all reasonable endeavours to procure the release by
      Lloyd's of the Own FAL of the Account Party in an amount equal to the
      Overpayment and, upon the Lenders being indemnified in full thereunder (but
      subject to the Agent receiving confirmation in writing from the Borrower that
      no
      Default is continuing), either:

     

    
      	
              3.8.1  

            	
              a
                supplementary Letter of Credit will be issued in an amount equal
                to the
                Overpayment having an Expiry Date which is the same as that of the
                Applied
                Letter of Credit; or

            

    

     

    
      	
              3.8.2  

            	
              the
                Applied Letter of Credit will be amended by increasing the amount
                thereof
                by an amount equal to the
                Overpayment.

            

    

     

    
      
        
        

      

      
        -30-

        
          

        

      

      
        
        

      

    

    SECTION
      4

    COSTS
      OF UTILISATION

     

     

    
      	
              4.  

            	
              LETTER
                OF CREDIT COMMISSION

            

    

     

    
      	
              4.1  

            	
              Letter
                of Credit Commission

            

    

    The
      Borrower shall, in respect of each Letter of Credit requested by it, pay to
      the
      Agent for the account of each Lender (for distribution in proportion to each
      Lender's Proportion of such Letter of Credit) a letter of credit commission
      in
      the currency in which the relevant Letter of Credit is denominated, at the
      relevant L/C Commission Rate on the aggregate Commitments of the Lenders under
      such Letter of Credit.  Such letter of credit commission shall be
      calculated on a daily basis according to the Commitments on each such
      day, and shall be paid in arrear in respect of each successive period
      of three months (or such shorter period as shall end on the relevant Expiry
      Date) during the Term of the relevant Letter of Credit, the first such payment
      to be made on the date falling three Months after the Utilisation Date for
      such
      Letter of Credit and successive payments to be made thereafter on the last
      day
      of each successive such period (each an "Interest Payment
      Date").

     

    
      	
              4.2  

            	
              Calculation
                of L/C Commission Rate

            

    

    
      	
              4.2.1  

            	
              For
                each Secured Letter of Credit, the L/C Commission Rate is 0.25 per
                cent.
                per annum.

            

    

     

    
      	
              4.2.2  

            	
              For
                each Unsecured Letter of Credit, the L/C Commission Rate shall be
                adjusted
                as required from time to time in accordance with the table below
                based on
                the financial strength rating assigned to Validus Reinsurance, Ltd.
                by
                A.M. Best:

            

    

     

    
      	
              Financial
                Strength Rating

            	
              L/C
                Commission Rate

               

            
	
              A++

               

            	
              0.40
                per cent. per annum

            
	
              A+

               

            	
              0.50
                per cent. per annum

            
	
              A

               

            	
              0.55
                per cent. per annum

            
	
              A-

               

            	
              0.65
                per cent. per annum

            
	
              B++

               

            	
              0.80
                per cent. per annum

            
	
              B+
                or below

            	
              1.00
                per cent. per annum

            

    

    

    For
      the
      purposes of determining the L/C Commission Rate, the rating shall be that
      applicable on the relevant Interest Payment Date and shall be automatically
      adjusted, if required, in case of a rating change, on the Business Day after
      such change has been made public by A.M. Best.  The Borrower shall
      send, no later than one Business Day following the day of each relevant public
      financial strength rating announcement, notification thereof to the Agent to
      enable it to determine the L/C Commission Rate accordingly.

     

    
      
        
        

      

      
        -31-

        
          

        

      

      
        
        

      

    

    

     

    
      	
              4.2.3  

            	
              In
                the event that A.M. Best ceases to exist or ceases to be able to
                provide a
                rating in respect of Validus Reinsurance, Ltd., the Borrower and
                the Agent
                shall negotiate in good faith in order to agree an alternative mechanism
                for calculating the L/C Commission Rate applicable to Unsecured Letters
                of
                Credit.  In the absence of such agreement, or until such
                agreement is reached, the L/C Commission Rate applicable to Unsecured
                Letters of Credit shall be the last applicable rate prior to such
                event.

            

    

     

     

    
      	
              5.  

            	
              MARKET
                DISRUPTION AND ALTERNATIVE INTEREST
                RATES

            

    

     

    
      	
              5.1  

            	
              Absence
                of quotations

            

    

    Subject
      to Clause 5.2 (Market disruption), if
      LIBOR is to be determined by reference to the Reference Banks but a Reference
      Bank does not supply a quotation by 11.00 am on the Quotation Date, the
      applicable LIBOR shall be determined on the basis of the quotations of the
      remaining Reference Banks.

     

    
      	
              5.2  

            	
              Market
                Disruption

            

    

    If,
      in
      relation to any Unpaid Sum:

     

    
      	
              5.2.1  

            	
              LIBOR
                is to be determined by reference to Reference Banks and at or about
                11.00
                a.m. on the Quotation Date for the relevant Interest Period none
                or only
                one of the Reference Banks supplies a rate for the purpose of determining
                LIBOR for the relevant Interest Period;
                or

            

    

     

    
      	
              5.2.2  

            	
              before
                the close of business in London on the Quotation Date for such Unpaid
                Sum
                the Agent has been notified by a Lender or each of a group of Lenders
                to
                whom in aggregate fifty per cent. or more of such Unpaid Sum is owed
                that
                the LIBOR rate does not accurately reflect the cost of funding its
                participation in such Unpaid Sum,

            

    

     

    then,
      the
      Agent shall notify the Borrower and the Lenders of such event and,
      notwithstanding anything to the contrary in this Agreement, Clause 5.3 (Substitute Interest Period and Interest
      Rate) shall apply to such Unpaid Sum.

     

    
      	
              5.3  

            	
              Substitute
                Interest Period and Interest
                Rate

            

    

    If
      either
      sub-clause 5.2.1 or 5.2.2 of Clause 5.2
      (Market Disruption) applies to an Unpaid Sum, the rate of interest
      applicable to each Lender's portion of such Unpaid Sum during the relevant
      Interest Period shall (subject to any agreement reached pursuant to Clause
5.4 (Alternative basis of interest or
      funding)) be the rate per annum which is the sum of:

     

    
      	
              5.3.1  

            	
              the
                Mandatory Costs Rate, if any, applicable to that Lender's portion
                of such
                Unpaid Sum; and

            

    

     

    
      	
              5.3.2  

            	
              the
                rate per annum notified to the Agent by such Lender before the last
                day of
                such Interest Period to be that which expresses as a percentage rate
                per
                annum the cost to such Lender of funding from whatever sources it
                may
                reasonably select its portion of such Unpaid Sum during such Interest
                Period.

            

    

     

    
      
        
        

      

      
        -32-

        
          

        

      

      
        
        

      

    

    

     

    
      	
              5.4  

            	
              Alternative
                basis of interest or
                funding

            

    

    
      	
              5.4.1  

            	
              If
                either of those events mentioned in sub-clauses 5.2.1 and 5.2.2 of
                Clause 5.2 (Market Disruption)
                occurs in relation to an Unpaid Sum and the Agent or the Borrower
                so
                requires, the Agent and the Borrower shall enter into negotiations
                (for a
                period of not more than thirty days) with a view to agreeing on a
                substitute basis for determining the rate of
                interest.

            

    

     

    
      	
              5.4.2  

            	
              Any
                alternative basis agreed pursuant to sub-clause 5.4.1 above shall, with the prior consent
                of all
                the Lenders and the Borrower, be binding on all
                Parties.

            

    

     

    
      	
              5.5  

            	
              Interest
                Rate Determination

            

    

    The
      Agent
      shall promptly notify the Borrower and the Lenders of each determination of
      LIBOR and the Mandatory Costs Rate.

     

    
      	
              5.6  

            	
              Changes
                to Interest Rates

            

    

    The
      Agent
      shall promptly notify the Borrower and the Lenders of any change
      to:

     

    
      	
              5.6.1  

            	
              the
                proposed length of an Interest Period;
                or

            

    

     

    
      	
              5.6.2  

            	
              any
                interest rate occasioned by the operation of Clause 5 (Market Disruption and Alternative
                Interest Rates).

            

    

     

     

    
      	
              6.  

            	
              NOTIFICATION

            

    

     

    
      	
              6.1  

            	
              Letters
                of Credit

            

    

    Not
      less
      than one Business Day before the first day of a Term, the Agent shall notify
      each Lender, in respect of each Letter of Credit to be issued, of:

     

    
      	
              6.1.1  

            	
              the
                proposed length of the relevant
                Term;

            

    

     

    
      	
              6.1.2  

            	
              the
                proposed currency;

            

    

     

    
      	
              6.1.3  

            	
              the
                aggregate principal amount;

            

    

     

    
      	
              6.1.4  

            	
              the
                Utilisation Date; and

            

    

     

    
      	
              6.1.5  

            	
              whether
                it is to be a Secured Letter of Credit or an Unsecured Letter of
                Credit.

            

    

     

    
      	
              6.2  

            	
              Demands
                under Letters of Credit

            

    

    If
      a
      demand is made under a Letter of Credit the Agent shall promptly make demand
      upon the relevant Borrower in accordance with this Agreement and notify the
      Lenders.

     

     

    
      	
              7.  

            	
              BORROWER'S
                INDEMNITY TO THE LENDERS 

            

    

     

    
      	
              7.1  

            	
              Borrower's
                Indemnity to Lenders

            

    

    Without
      duplication of any expense reimbursement obligations or indemnities contained
      elsewhere in this Agreement or the other Finance Documents, the Borrower
      shall

     

    
      
        
        

      

      
        -33-

        
          

        

      

      
        
        

      

    

    irrevocably
      and unconditionally as a primary obligation indemnify (within 5 Business Days
      of
      demand by the Agent) each Finance Party against:

     

    
      	
              7.1.1  

            	
              any
                sum paid or due and payable by such Finance Party under such Letter
                of
                Credit; and

            

    

     

    
      	
              7.1.2  

            	
              all
                liabilities, 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 expenses which such Finance
                Party may at any time reasonably incur or sustain in connection with
                any
                Letter of Credit (in each case, invoiced in reasonable
                detail),

            

    

     

    provided
      that such indemnity shall not, as to any Finance Party, be available to
      the extent that such liabilities, costs, claims, losses, damages or related
      expenses have resulted from the gross negligence or wilful misconduct of any
      Finance Party.

     

    The
      Borrower waives any right it may have of first requiring any Finance Party
      (or
      any trustee or agent on its behalf) to enforce the Transaction Security before
      claiming from the Borrower under this Clause 7.  This waiver applies irrespective of any
      law or any provision of a Finance Document to the contrary.

     

    
      	
              7.2  

            	
              Preservation
                of Rights

            

    

    Neither
      the obligations of the Borrower set out in this Clause 7 nor the rights, powers and remedies conferred
      on any
      Lender by this Agreement or by law shall be discharged, impaired or otherwise
      affected by:

     

    
      	
              7.2.1  

            	
              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;

            

    

     

    
      	
              7.2.2  

            	
              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
                Borrower's obligations hereunder or otherwise in connection with
                a Letter
                of Credit being or becoming illegal, invalid, unenforceable or ineffective
                in any respect;

            

    

     

    
      	
              7.2.3  

            	
              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 a Letter of Credit or under any such other
                security;

            

    

     

    
      	
              7.2.4  

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

            

    

     

    
      	
              7.2.5  

            	
              any
                other act, event or omission which, but for this Clause 7, might operate to discharge, impair
                or
                otherwise affect any of the obligations of the relevant Borrower
                set out
                in this Clause 7 or any of the rights, powers
                or remedies conferred upon any Lender by this Agreement or by
                law.

            

    

     

    
      
        
        

      

      
        -34-

        
          

        

      

      
        
        

      

    

    

     

    The
      obligations of each Borrower set out in this Clause 7 shall be in addition to and independent of every
      other security which any Lender may at any time hold in respect of such
      Borrower's obligations hereunder.

     

    
      	
              7.3  

            	
              Settlement
                Conditional

            

    

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

     

    
      	
              7.4  

            	
              Right
                to make Payments under Letters of
                Credit

            

    

    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
      relevant Borrower or any other investigation or enquiry.  The Borrower
      irrevocably authorises each Lender to comply with any demand under a Letter
      of
      Credit which is valid on its face.

     

    
      
        
        

      

      
        -35-

        
          

        

      

      
        
        

      

    

    SECTION
      5

    PREPAYMENT,
      CANCELLATION AND COLLATERALISATION

     

     

    
      	
              8.  

            	
              PREPAYMENT
                AND CANCELLATION 

            

    

     

    
      	
              8.1  

            	
              Automatic
                Cancellation of the
                Facility

            

    

    At
      close
      of business in London on the last Business Day of the Availability Period the
      Available Commitment of each Lender shall be (if it has not already been)
      reduced to zero.

     

    
      	
              8.2  

            	
              Cancellation
                of the Facility

            

    

    The
      Borrower may, by giving to the Agent not less than five Business Days' prior
      notice to that effect, cancel the whole or any part of the Available Facility
      (being a minimum amount of $1,000,000 and integral multiples of $500,000
      thereafter). Any such cancellation shall reduce the Available Commitment and
      Commitment of each Lender rateably.

     

    
      	
              8.3  

            	
              Notice
                of Cancellation

            

    

    Any
      notice of cancellation given by the Borrower pursuant to this Clause 8 shall be irrevocable and shall specify the date
      upon
      which such cancellation is to be made and the amount of such cancellation
provided that any such notice may state that it is conditional
      upon the effectiveness of replacement financing, in which case such notice
      may
      be revoked by the Borrower by notice to the Agent, on or prior to the date
      specified in such notice as the anticipated effective date of replacement
      financing, if such condition is not satisfied.

     

    
      	
              8.4  

            	
              Notice
                of Removal of a Lender

            

    

    If:

     

    
      	
              8.4.1  

            	
              any
                sum payable to any Lender by an Obligor is required to be increased
                pursuant to Clause 10 (Tax Gross-up and
                Indemnities);

            

    

     

    
      	
              8.4.2  

            	
              any
                Lender claims indemnification from the Borrower under Clause 10.3 (Tax Indemnity) or Clause 11
                (Increased
                Costs),

            

    

     

    the
      Borrower may, whilst such circumstance continues, give the Agent at least ten
      Business Days' notice (which notice shall be irrevocable) of its intention
      to
      cancel the Commitment of such Lender.

     

    
      	
              8.5  

            	
              Removal
                of a Lender

            

    

    On
      the
      day the notice referred to in Clause 8.4
      (Notice of Removal of a Lender) expires each Borrower at whose request
      a Letter of Credit has been issued shall procure that such Lender's Proportion
      of each relevant Letter of Credit be reduced to zero (by reduction of the amount
      of such Letter of Credit in an amount equal to such Lender's
      Proportion).

     

    
      	
              8.6  

            	
              No
                Further Availability

            

    

    A
      Lender
      whose Commitment is to be cancelled under Clause 8.4 (Notice of Removal of a Lender) shall not
      be obliged to participate in any Letter of Credit on or after the
      date

     

    
      
        
        

      

      
        -36-

        
          

        

      

      
        
        

      

    

    upon
      which the Agent receives the Borrower's notice of its intention to cancel such
      Commitment, and such Lender's Available Commitment shall be reduced to
      zero.

     

    
      	
              8.7  

            	
              No
                Other Cancellation

            

    

    The
      Borrower shall not cancel all or any part of the Total Commitments except at
      the
      times and in the manner expressly provided for in this Agreement.

     

    
      	
              8.8  

            	
              No
                Reinstatement

            

    

    No
      amount
      of the Total Commitments cancelled under this Agreement shall be
      reinstated.

     

     

    
      	
              9.  

            	
              COLLATERALISATION
                AND REDESIGNATION OF LETTERS OF
                CREDIT

            

    

     

    
      	
              9.1  

            	
              Redesignation
                of Letters of Credit

            

    

    
      	
              9.1.1  

            	
              The
                Borrower may, by not less than three Business Days notice, identify
                to the
                Agent in writing, one or more Letters of Credit already in issue
                that it
                wishes to designate as a "Secured Letter of Credit" or an "Unsecured
                Letter of Credit" and on the first day of the next calendar month,
                such
                designation shall take effect.

            

    

     

    
      	
              9.1.2  

            	
              For
                the avoidance of doubt, with respect to Clauses 9.4 (Trust Funds) to 9.9
                (Material adverse effect) below, if
                the events described therein cease to be continuing, the Borrower
                may, in
                its discretion, redesignate any Letter of Credit as an Unsecured
                Letter of
                Credit in accordance with sub-clause 9.1.1
                above.

            

    

     

    
      	
              9.2  

            	
              Secured
                Letters of Credit

            

    

    
      	
              9.2.1  

            	
              Without
                prejudice to the remainder of this Clause 9,
                the Borrower shall ensure that at all times, the Borrowing Base is
                equal
                to or greater than the Secured
                Outstandings.

            

    

     

    
      	
              9.2.2  

            	
              If
                at any time the Secured Outstandings exceed the Borrowing Base, then
                the
                Obligors shall, within three Business Days of the earlier of any
                Obligor
                becoming aware of such shortfall or such shortfall being notified
                by the
                Agent to any Obligor, either:

            

    

     

    
      	
              (a)  

            	
              pay
                or deliver to the Custodian an amount of Cash or Eligible Securities
                (valued for this purpose based on the respective Advance Rate applicable
                thereto) as is necessary to satisfy the foregoing;
                or

            

    

     

    
      	
              (b)  

            	
              redesignate
                one or more Letters of Credit already in issue, and with a face value
                equal to or exceeding such excess, as an "Unsecured Letter of Credit",
                and
                such redesignation shall thereupon take
                effect.

            

    

     

    
      	
              9.2.3  

            	
              Failure
                by the Obligors to comply with their obligations under sub-clause
9.2.2 within ten (10) Business Days of the
                earlier of any Obligor becoming aware or receiving notice that the
                Secured
                Outstandings exceed the Borrowing Base shall constitute an immediate
                and
                automatic Event of Default under the terms and conditions of this
                Agreement.

            

    

     

    
      
        
        

      

      
        -37-

        
          

        

      

      
        
        

      

    

    

     

    
      	
              9.2.4  

            	
              Notwithstanding
                the frequency of the reporting obligations set forth in Clause 20.8 (Borrowing Base Certificate), this
                covenant shall apply at all times and shall be tested by reference
                to the
                Borrowing Base Certificate most recently supplied in accordance with
                that
                Clause.

            

    

     

    
      	
              9.3  

            	
              Notice
                of Termination

            

    

    If
      the
      Agent delivers a Notice of Non-Extension to the Beneficiary in respect of an
      Unsecured Letter of Credit in accordance with Clause 3.7 (Notice of Non-Extension in relation to Letters
      of Credit), then, by no later than the date falling five Business Days
      after 31 December 2009, the Borrower shall either:

     

    
      	
              9.3.1  

            	
              procure
                that the relevant Unsecured Letter of Credit is released by Lloyd's;
                or

            

    

     

    
      	
              9.3.2  

            	
              provide
                additional collateral to the Custodian, thereby causing the Borrowing
                Base
                to be no less than 100% of the Outstandings in respect of the relevant
                Unsecured Letter of Credit.

            

    

     

    
      	
              9.4  

            	
              Trust
                Funds

            

    

    
      	
              9.4.1  

            	
              If
                at any time, the value of the Lloyd's Trust Fund of the Account Party,
                as
                evidenced by the Release Test Calculations (including for these purposes,
                any letters of credit included in its Funds at Lloyd's but
                excluding any Unsecured Letters of Credit issued hereunder), is
                less than the aggregate of:

            

    

     

    
      	
              (a)  

            	
              the
                net unfunded solvency deficit of the Account Party on all open years
                of
                account (as reported in the solvency statements prepared by Lloyd's);
                and

            

    

     

    
      	
              (b)  

            	
              the
                value of the Account Party's Funds at Lloyd's requirements as determined
                by the Individual Capital Assessment agreed by Lloyd's from time
                to time
                (less an amount equal to the principal face amount of the Unsecured
                Letters of Credit issued
                hereunder),

            

    

     

    then
      the
      Obligors shall, within five Business Days of the earlier of any Obligor becoming
      aware of such occurrence or such occurrence being notified by the Agent or
      the
      Majority Lenders to any Obligor, pay or deliver to the Custodian an amount
      of
      Cash or Eligible Securities (valued for this purpose based on the respective
      Advance Rate applicable thereto) as is necessary to increase the Borrowing
      Base
      by an amount equal to or greater than the lesser of (x) such difference and
      (y)
      the then Unsecured Outstandings.

     

    
      	
              9.4.2  

            	
              Notwithstanding
                the frequency of the reporting obligations set forth in Clause 20.9 (Release Test Calculations), this
                covenant shall apply at all times and shall be tested by reference
                to the
                release test calculations most recently delivered in accordance with
                that
                Clause.

            

    

     

    
      	
              9.4.3  

            	
              For
                the purposes of this Clause 9.4 (Trust
                Funds):

            

    

     

    
      
        
        

      

      
        -38-

        
          

        

      

      
        
        

      

    

    

     

    "Individual
      Capital Assessment" means the assessment performed by Lloyd's under
      INSPRU 7.1 (and otherwise in accordance with the FSA Handbook) of the adequacy
      of the capital resources available to support the Corporate Member's insurance
      business, taking into account the relevant syndicate's ICA and the Corporate
      Member's Funds at Lloyd's; and

     

    "ICA"
      means the assessment performed by the Managing Agent under INSPRU 7.1 (and
      otherwise in accordance with the FSA Handbook) in respect of the
      syndicate.

     

    
      	
              9.5  

            	
              A.M.
                Best Financial Strength
                Rating

            

    

    If
      at any
      time the Financial Strength Rating of Validus Reinsurance, Ltd. provided by
      A.M.
      Best falls below "B++", the Obligors shall, within five Business Days of the
      earlier of any Obligor or Validus Reinsurance, Ltd. becoming aware of such
      occurrence or such occurrence being notified by the Agent or the Majority
      Lenders to any Obligor, pay or deliver to the Custodian an amount of Cash or
      Eligible Securities (valued for this purpose based on the respective Advance
      Rate applicable thereto) as is necessary to ensure that the Borrowing Base
      is
      equal to or greater than the Outstandings.

     

    
      	
              9.6  

            	
              Solvency
                Test

            

    

    If
      the
      Corporate Member fails as a Member to maintain the members' capital resources
      requirement calculated by Lloyd's and notified to it in accordance with the
      Integrated Prudential Sourcebook and the Lloyd's Sourcebook which form part
      of
      the FSA Handbook and the Corporate Member fails to implement the procedure
      requested by Lloyd's to remedy such failure, the Obligors shall, within five
      Business Days of the earlier of any Obligor becoming aware of such occurrence
      or
      such occurrence being notified by the Agent or the Majority Lenders to any
      Obligor, pay or deliver to the Custodian an amount of Cash or Eligible
      Securities (valued for this purpose based on the respective Advance Rate
      applicable thereto) as is necessary to ensure that the Borrowing Base is equal
      to or greater than the Outstandings.

     

    
      	
              9.7  

            	
              Insurers
                (Reorganisation and Winding Up)(Lloyd's) Regulations
                2005

            

    

    If
      a
      "Lloyd's Market Reorganisation Order" is made by the English courts in relation
      to the "association of underwriters known as Lloyd's" as each of those terms
      is
      defined in the Insurers (Reorganisation and Winding Up) (Lloyd's) Regulations
      2005, the Obligors shall, within five Business Days or such later date as the
      Borrower and the Agent (acting reasonably) may otherwise agree of the earlier
      of
      any Obligor becoming aware of such occurrence or such occurrence being notified
      by the Agent or the Majority Lenders to any Obligor, pay or deliver to the
      Custodian an amount of Cash or Eligible Securities (valued for this purpose
      based on the respective Advance Rate applicable thereto) as is necessary to
      ensure that the Borrowing Base is equal to or greater than the
      Outstandings.

     

    
      	
              9.8  

            	
              Financial
                Services and Markets Act
                2000

            

    

    If:

     

    
      
        
        

      

      
        -39-

        
          

        

      

      
        
        

      

    

    

     

    
      	
              9.8.1  

            	
              Lloyd's
                (or, where appropriate, the members of Lloyd's taken together) fails
                to
                satisfy the solvency requirements to which it is or they are subject
                by
                virtue of Part XIX of the Financial Services and Markets Act 2000,
                the
                General Prudential Sourcebook, the Integrated Prudential Sourcebook
                or any
                statutory provision enacted hereafter and a failure to comply with
                any
                binding requirement to rectify the position within the time period
                permitted for such rectification;
                or

            

    

     

    
      	
              9.8.2  

            	
              the
                authorisation or permission granted to Lloyd's to carry on a regulated
                activity pursuant to the Financial Markets and Services Act 2000
                is
                withdrawn, removed, revoked or cancelled by the Financial Services
                Authority,

            

    

     

    which,
      in
      either such case, in the reasonable opinion of the Lenders is reasonably likely
      materially and adversely to affect the ability of any Obligor or any other
      member of the Group that is party to a Finance Document to perform or comply
      with its obligations under the Finance Documents, the Obligors shall, within
      five Business Days or such later date as the Borrower and the Agent (acting
      reasonably) may otherwise agree of the earlier of any Obligor becoming aware
      of
      such occurrence or such occurrence being notified by the Agent to any Obligor,
      pay or deliver to the Custodian an amount of Cash or Eligible Securities (valued
      for this purpose based on the respective Advance Rate applicable thereto) as
      is
      necessary to ensure that the Borrowing Base is equal to or greater than the
      Outstandings.

     

    
      	
              9.9  

            	
              Material
                adverse effect

            

    

    Upon
      the
      occurrence and during the continuance of any event or circumstance which
      would have a material adverse effect on the ability of the Guarantor to perform
      its payment obligations under the Finance Documents, the Agent in its
      discretion shall have the right to deliver a notice to the Obligors (a
      "Collateralisation Request Notice") requiring that an amount of
      Cash or Eligible Securities be paid or delivered to the Custodian
      (valued for this purpose based on the respective Advance Rate applicable
      thereto) as is necessary to ensure that the Borrowing Base is equal to or
      greater than the Outstandings.  The Obligors shall comply with such
      Collateralisation Request Notice within five Business Days or such later date
      as
      the Borrower and the Agent (acting reasonably) may otherwise agree of the
      Obligors' receipt thereof.

     

    

     

    
      
        
        

      

      
        -40-

        
          

        

      

      
        
        

      

    

    SECTION
      6

    ADDITIONAL
      PAYMENT OBLIGATIONS

     

     

    
      	
              10.  

            	
              TAX
                GROSS UP AND INDEMNITIES

            

    

     

    
      	
              10.1  

            	
              Definitions

            

    

    
      	
              10.1.1  

            	
              In
                this Agreement:

            

    

     

    "Foreign
      Lender" means any Lender which is treated by the jurisdiction in which
      the Borrower is resident for tax purposes:

     

    
      	
              (a)  

            	
              as
                being resident for tax purposes; or

            

    

     

    
      	
              (b)  

            	
              as
                having a place of business, place of management or permanent
                establishment,

            

    

     

    in
      a
      jurisdiction other than that in which the Borrower is resident.

     

    "Protected
      Party" means a Finance Party which is or will be subject to any
      liability, or required to make any payment, for or on account of tax in relation
      to a sum received or receivable (or any sum deemed for the purposes of tax
      to be
      received or receivable) under a Finance Document.

     

    "Tax
      Credit" means a credit against, relief from or remission or repayment
      of, any Tax.

     

    "Tax
      Deduction" means a deduction or withholding for or on account of tax
      from a payment under a Finance Document.

     

    "Tax
      Payment" means either the increase in a payment made by an Obligor to a
      Finance Party under Clause 10.2 (Tax
      gross-up) or a payment under Clause 10.3
      (Tax indemnity).

     

    
      	
              10.1.2  

            	
              Unless
                a contrary indication appears, in this Clause 10 a reference to "determines" or "determined"
                means a determination made in the discretion (reasonably exercised)
                of the
                person making the determination.

            

    

     

    
      	
              10.2  

            	
              Tax
                gross-up

            

    

    
      	
              10.2.1  

            	
              Each
                Obligor shall make all payments to be made by it without any Tax
                Deduction, unless a Tax Deduction is required by
                law.

            

    

     

    
      	
              10.2.2  

            	
              The
                Borrower shall promptly upon becoming aware that an Obligor must
                make a
                Tax Deduction (or that there is any change in the rate or the basis
                of a
                Tax Deduction) notify the Agent accordingly.  Similarly, a
                Lender shall notify the Agent on becoming so aware in respect of
                a payment
                payable to that Lender.  If the Agent receives such notification
                from a Lender it shall notify the Borrower and the relevant
                Obligor.

            

    

     

    
      	
              10.2.3  

            	
              If
                a Tax Deduction is required by law to be made by an Obligor, the
                amount of
                the payment due from that Obligor shall be increased to an amount
                which
                (after

            

    

     

    
      
        
        

      

      
        -41-

        
          

        

      

      
        
        

      

    

    making
      any Tax Deduction) leaves an amount equal to the payment which would have been
      due if no Tax Deduction had been required.

     

    
      	
              10.2.4  

            	
              If
                an Obligor is required to make a Tax Deduction, that Obligor shall
                make
                that Tax Deduction and any payment required in connection with that
                Tax
                Deduction within the time allowed and in the minimum amount required
                by
                law.

            

    

     

    
      	
              10.2.5  

            	
              Within
                thirty days of making either a Tax Deduction or any payment required
                in
                connection with that Tax Deduction, the Obligor making that Tax Deduction
                shall deliver to the Agent for the Finance Party entitled to the
                payment
                evidence reasonably satisfactory to that Finance Party that the Tax
                Deduction has been made or (as applicable) any appropriate payment
                paid to
                the relevant taxing authority.

            

    

     

    
      	
              10.3  

            	
              Tax
                indemnity

            

    

    
      	
              10.3.1  

            	
              The
                Borrower shall (within three Business Days of demand by the Agent)
                pay to
                a Protected Party an amount equal to the loss, liability or cost
                which
                that Protected Party determines will be or has been (directly or
                indirectly) suffered for or on account of tax by that Protected Party
                in
                respect of payments received or receivable by the Protected Party
                under a
                Finance Document or the transactions occurring under such Finance
                Document.

            

    

     

    
      	
              10.3.2  

            	
              Sub-clause
                10.3.1 above shall not
                apply:

            

    

     

    
      	
              (a)  

            	
              with
                respect to any tax assessed on a Finance
                Party:

            

    

     

    
      	
              (i)  

            	
              under
                the law of the jurisdiction in which that Finance Party is incorporated
                or, if different, the jurisdiction (or jurisdictions) in which that
                Finance Party is treated as resident for tax purposes;
                or

            

    

     

    
      	
              (ii)  

            	
              under
                the law of the jurisdiction in which that Finance Party's Facility
                Office
                is located in respect of amounts received or receivable in that
                jurisdiction,

            

    

     

    if
      that
      tax is imposed on or calculated by reference to the net income or profits
      received or receivable (but not any sum deemed to be received or receivable)
      by
      that Finance Party or is a franchise or similar tax; or

     

    
      	
              (b)  

            	
              with
                respect to any tax assessed on a Finance Party which is imposed as
                a
                result of a present or former connection between that Finance Party
                and
                the jurisdiction imposing that tax (or any political subdivision
                thereof)
                (other than any such connection arising as a result of that Finance
                Party
                having executed, delivered, become a party to, enforced or performed
                its
                obligations or received payments under, this agreement or any other
                Finance Document); or

            

    

     

    
      
        
        

      

      
        -42-

        
          

        

      

      
        
        

      

    

    

     

    
      	
              (c)  

            	
              to
                the extent a loss, liability or cost is compensated for by an increased
                payment under Clause 10.2 (Tax
                gross-up); or

            

    

     

    
      	
              (d)  

            	
              to
                the extent that the loss, liability or cost is a result of failure
                by the
                Protected Party to comply with Clause 10.4
                (Status of Foreign
                Lender).

            

    

     

    
      	
              10.3.3  

            	
              A
                Protected Party making, or intending to make a claim under sub-clause
10.3.1 above shall promptly notify the Agent
                of
                the event which will give, or has given, rise to the claim, following
                which the Agent shall notify the
                Borrower.

            

    

     

    
      	
              10.3.4  

            	
              A
                Protected Party shall, on receiving a payment from an Obligor under
                this
                Clause 10.3, notify the
                Agent.

            

    

     

    
      	
              10.4  

            	
              Status
                of Foreign Lender

            

    

    Any
      Foreign Lender that is entitled to an exemption from or reduction in the rate
      of
      any Tax Deduction from any payment under any of the Finance Documents under
      the
      law of the jurisdiction which requires or would require the Tax Deduction,
      or
      under any treaty to which that jurisdiction is a party, shall deliver to the
      Borrower (with a copy to the Agent), at the time or times reasonably specified
      by the Borrower or the Agent, such properly completed and executed documentation
      as will permit such payments to be made without withholding or at a reduced
      rate
      of withholding. In addition, any Finance Party, if requested by the Borrower
      or
      the Agent, shall deliver such other documentation reasonably specified by the
      Borrower or the Agent as will enable the Borrower or the Agent to determine
      whether or not such Finance Party is subject to backup withholding or
      information reporting requirements.

     

    
      	
              10.5  

            	
              Tax
                Credit

            

    

    If
      an
      Obligor makes a Tax Payment and the relevant Finance Party determines
      that:

     

    
      	
              10.5.1  

            	
              a
                Tax Credit is attributable either to an increased payment of which
                that
                Tax Payment forms part, or to that Tax Payment;
                and

            

    

     

    
      	
              10.5.2  

            	
              that
                Finance Party has obtained, utilised and retained that Tax
                Credit,

            

    

     

    the
      Finance Party shall pay an amount to the Obligor which that Finance Party
      reasonably determines will leave it (after that payment) in the same after-Tax
      position as it would have been in had the Tax Payment not been required to
      be
      made by the Obligor.

     

    
      	
              10.6  

            	
              Value
                added tax

            

    

    
      	
              10.6.1  

            	
              All
                amounts set out, or expressed to be payable under a Finance Document
                by
                any Party to a Finance Party which (in whole or in part) constitute
                the
                consideration for VAT purposes shall be deemed to be exclusive of
                any VAT
                which is chargeable on such supply, and accordingly, subject to sub-clause
                10.6.3 below, if VAT is chargeable on any
                supply made by any Finance Party to any Party under a Finance Document,
                that Party shall pay to the Finance Party (in addition to and at
                the same
                time as paying the consideration) an
                amount

            

    

     

    
      
        
        

      

      
        -43-

        
          

        

      

      
        
        

      

    

    equal
      to
      the amount of the VAT (and such Finance Party shall promptly provide an
      appropriate VAT invoice to such Party).

     

    
      	
              10.6.2  

            	
              If
                VAT is chargeable on any supply made by any Finance Party (the
                "Supplier") to any other Finance Party (the
                "Recipient") under a Finance Document, and any Party (the
                "Relevant Party") is required by the terms of any Finance
                Document to pay an amount equal to the consideration for such supply
                to
                the Supplier (rather than being required to reimburse the Recipient
                in
                respect of that consideration), such Party shall also pay to the
                Supplier
                (in addition to and at the same time as paying such amount) an amount
                equal to the amount of such VAT.  The Recipient will promptly
                pay to the Relevant Party an amount equal to any credit or repayment
                from
                the relevant tax authority which it reasonably determines relates
                to the
                VAT chargeable on that supply.

            

    

     

    
      	
              10.6.3  

            	
              Where
                a Finance Document requires any Party to reimburse a Finance Party
                for any
                costs or expenses, that Party shall also at the same time pay and
                indemnify the Finance Party against all VAT incurred by the Finance
                Party
                in respect of the costs or expenses to the extent that the Finance
                Party
                reasonably determines that neither it nor any other member of any
                group of
                which it is a member for VAT purposes is entitled to credit or repayment
                from the relevant tax authority in respect of the
                VAT.

            

    

     

     

    
      	
              11.  

            	
              INCREASED
                COSTS

            

    

     

    
      	
              11.1  

            	
              Increased
                costs

            

    

    
      	
              11.1.1  

            	
              Subject
                to Clause 11.3 (Exceptions) the
                Borrower shall, within three Business Days of a demand by the Agent,
                pay
                for the account of a Finance Party the amount of any Increased Costs
                incurred by that Finance Party or any of its Affiliates as a result
                of:

            

    

     

    
      	
              (a)  

            	
              the
                introduction of or any change in (or in the interpretation, administration
                or application of) any law or regulation;
                or

            

    

     

    
      	
              (b)  

            	
              compliance
                with any law or regulation made after the date of this
                Agreement,

            

    

     

    together,
      a "Change in Law".

     

    
      	
              11.1.2  

            	
              In
                this Agreement "Increased Costs"
                means:

            

    

     

    
      	
              (a)  

            	
              a
                reduction in the rate of return from the Facility or on a Finance
                Party's
                (or its Affiliate's) overall capital to a level below that which
                such
                Finance Party (or Affiliate) would have achieved but for such Change
                in
                Law (taking into consideration such Finance Party's (or Affiliates')
                policies with respect to capital adequacy as generally
                applied);

            

    

     

    
      	
              (b)  

            	
              an
                additional or increased cost; or

            

    

     

    
      
        
        

      

      
        -44-

        
          

        

      

      
        
        

      

    

    

     

    
      	
              (c)  

            	
              a
                reduction of any amount due and payable under any Finance
                Document,

            

    

     

    which
      in
      the good faith determination of such Finance Party is incurred or suffered
      by a
      Finance Party or any of its Affiliates to the extent that it is attributable
      to
      that Finance Party having entered into a commitment or funding or performing
      its
      obligations under any Finance Document.

     

    
      	
              11.2  

            	
              Increased
                cost claims

            

    

    
      	
              11.2.1  

            	
              A
                Finance Party intending to make a claim pursuant to Clause 11.1 (Increased costs) shall notify the
                Agent within sixty (60) days of the event giving rise to the claim,
                following which the Agent shall promptly notify the
                Borrower.

            

    

     

    
      	
              11.2.2  

            	
              Each
                Finance Party shall, as soon as practicable after a demand by the
                Agent,
                provide a certificate confirming the amount of its Increased Costs
                and
                setting out:

            

    

     

    
      	
              (a)  

            	
              the
                basis, in reasonable detail, for the determination of such additional
                amount or amounts necessary to compensate such Lender as aforesaid;
                and

            

    

     

    
      	
              (b)  

            	
              the
                basis, in reasonable detail, for the computation of such amount or
                amounts, which shall be consistently applied. Notwithstanding the
                foregoing, the Borrower shall not be required to compensate any Finance
                Party pursuant to Clause 11.1 (Increased
                costs) for any increased costs or reductions incurred more than 180
                days prior to the date that such Finance Party notifies the Borrower
                of
                the applicable Change in Law.

            

    

     

    
      	
              11.3  

            	
              Exceptions

            

    

    
      	
              11.3.1  

            	
              Clause
                11.1 (Increased costs) does not apply
                to the extent any Increased Cost
                is:

            

    

     

    
      	
              (a)  

            	
              attributable
                to a Tax Deduction required by law to be made by an
                Obligor;

            

    

     

    
      	
              (b)  

            	
              compensated
                for by Clause 10.3 (Tax
                indemnity) (or would have been compensated for under
                Clause 10.3 (Tax indemnity) but was
                not so compensated solely because any of the exclusions in sub-clause
10.3.2 of Clause 10.3
                (Tax indemnity) applied) or because of failure of such Finance
                Party to comply with Clause 10.3) (Tax
                indemnity);

            

    

     

    
      	
              (c)  

            	
              compensated
                for by the payment of the Mandatory Costs
                Rate;

            

    

     

    
      	
              (d)  

            	
              attributable
                to the wilful breach by the relevant Finance Party or its Affiliates
                of
                any law or regulation;

            

    

     

    
      	
              (e)  

            	
              attributable
                to an increase in the rate of corporation tax;
                or

            

    

     

    
      
        
        

      

      
        -45-

        
          

        

      

      
        
        

      

    

    

     

    
      	
              (f)  

            	
              attributable
                to the implementation or application of or compliance with the
                "International Convergence of Capital Measurement and Capital Standards,
                a
                Revised Framework" published by the Basel Committee on Banking Supervision
                in June 2004 in the form existing on the date of this Agreement
                ("Basel II") or any other law or regulation which
                implements Basel II (whether such implementation, application or
                compliance is by a government, regulator, Finance Party or any of
                its
                Affiliates).

            

    

     

    
      	
              11.3.2  

            	
              Additionally
                Clause 11.1 (Increased costs) shall
                not apply to Increased Costs with respect to taxes imposed on or
                measured
                by the net income or net profits of a Lender pursuant to the laws
                of the
                jurisdiction in or under the laws of which it is organised or the
                jurisdiction in which the principal office or applicable lending
                office of
                such Lender is located or in which it conducts a trade or business
                or has
                a permanent establishment, or has a present or former connection
                with such
                jurisdiction, or any subdivision thereof or
                therein.

            

    

     

    
      	
              11.3.3  

            	
              In
                this Clause 11.3, a reference to a
                "Tax Deduction" has the same meaning given to the term in
                Clause 10.1
                (Definitions).

            

    

     

     

    
      	
              12.  

            	
              ILLEGALITY

            

    

     

    
      	
              12.1  

            	
              If,
                at any time, any Lender determines in good faith that it is or will
                become
                unlawful or prohibited pursuant to any request from or requirement
                of any
                central bank or other financial, monetary or other authority (being
                a
                request or requirement with which banks are accustomed to comply
                and the
                Lender so complies with respect to its clients generally) for such
                Lender
                to make, fund, issue, participate in or allow to remain outstanding
                all or
                part of its share of the Letters of Credit, then that Lender shall,
                promptly after becoming aware of the same, deliver to the Borrower
                through
                the Agent a notice to that effect.

            

    

     

    
      	
              12.2  

            	
              Such
                Lender shall not thereafter be obliged to participate in any Letter
                of
                Credit or issue any Letter of Credit (whichever shall be so affected)
                and
                the amount of its Available Commitment shall be immediately reduced
                to
                zero and if the Agent on behalf of such Lender so requires, the Borrower
                shall on such date as the Agent shall have
                specified:

            

    

     

    
      	
              12.2.1  

            	
              repay
                all amounts owing to such Lender hereunder;
                and

            

    

     

    
      	
              12.2.2  

            	
              ensure
                that the liabilities of such Lender under or in respect of each affected
                Letter of Credit is reduced to
                zero.

            

    

     

     

    
      	
              13.  

            	
              OTHER
                INDEMNITIES

            

    

     

    
      	
              13.1  

            	
              Currency
                Indemnity

            

    

    If
      any
      sum (a "Sum") due from an Obligor under the Finance Documents
      or any order, judgment given or made in relation thereto has to be converted
      from the currency (the "First Currency") in which such Sum is
      payable into another currency (the "Second Currency") for the
      purpose of:

     

    
      	
              13.1.1  

            	
              making
                or filing a claim or proof against such
                Obligor;

            

    

     

    
      
        
        

      

      
        -46-

        
          

        

      

      
        
        

      

    

    

     

    
      	
              13.1.2  

            	
              obtaining
                an order, judgment in any court or other tribunal;
                or

            

    

     

    
      	
              13.1.3  

            	
              enforcing
                any order, judgment given or made in relation
                thereto,

            

    

     

    the
      Borrower shall indemnify each person to whom such Sum is due from and against
      any loss suffered or incurred as a result of any discrepancy between (a) the
      rate of exchange used for such purpose to convert such Sum from the First
      Currency into the Second Currency and (b) the rate or rates of exchange
      available to such person at the time of receipt of such Sum.

     

    
      	
              13.2  

            	
              Other
                indemnities

            

    

    Without
      duplication of any expense reimbursement obligations or indemnities contained
      elsewhere in this Agreement or the other Finance Documents, each Obligor shall,
      within five Business Days of demand, indemnify each Secured Party and the
      Arranger against any cost, loss or liability incurred by that Secured Party
      or
      Arranger (and invoiced in reasonable detail) as a result of:

     

    
      	
              13.2.1  

            	
              the
                occurrence of any Event of Default;

            

    

     

    
      	
              13.2.2  

            	
              a
                failure by an Obligor to pay any amount due under a Finance Document
                on
                its due date, including without limitation, any cost, loss or liability
                arising as a result of Clause 29 (Sharing
                among the Finance Parties); or

            

    

     

    
      	
              13.2.3  

            	
              issuing
                or making arrangements to issue a Letter of Credit requested by the
                Borrower in a Utilisation Request but not issued by reason of the
                operation of any one or more of the provisions of this Agreement
                (other
                than by reason of default or negligence by that Finance Party
                alone).

            

    

     

    
      	
              13.3  

            	
              Indemnity
                to the Agent

            

    

    Without
      duplication of any expense reimbursement obligations or indemnities contained
      elsewhere in this Agreement or the other Finance Documents, the Borrower shall,
      within five Business Days of demand, indemnify the Agent against any cost,
      loss
      or liability incurred by the Agent (acting reasonably and invoiced in reasonable
      detail) as a result of:

     

    
      	
              13.3.1  

            	
              investigating
                any event which it reasonably believes is a Default;
                or

            

    

     

    
      	
              13.3.2  

            	
              acting
                or relying on any notice, request or instruction which it reasonably
                believes to be genuine, correct and appropriately
                authorised.

            

    

     

    
      	
              13.4  

            	
              Indemnity
                to the Security Trustee

            

    

    
      	
              13.4.1  

            	
              Without
                duplication of any expense reimbursement obligations contained elsewhere
                in this Agreement or the other Finance Documents, each Obligor shall,
                within five Business Days of demand, indemnify the Security Trustee
                and
                every Receiver and Delegate against any cost, loss or liability incurred
                by any of them (and invoiced in reasonable detail) as a result
                of:

            

    

     

    
      	
              (a)  

            	
              the
                taking, holding, protection or enforcement of the Transaction
                Security;

            

    

     

    
      
        
        

      

      
        -47-

        
          

        

      

      
        
        

      

    

    

     

    
      	
              (b)  

            	
              the
                exercise of any of the rights, powers, discretions and remedies vested
                in
                the Security Trustee and each Receiver and Delegate by the Finance
                Documents or by law; and

            

    

     

    
      	
              (c)  

            	
              any
                default by any Obligor or any other member of the Group that is party
                to a
                Finance Document in the performance of any of the obligations expressed
                to
                be assumed by it in the Finance
                Documents.

            

    

     

    
      	
              13.4.2  

            	
              The
                Security Trustee may, in priority to any payment to the Secured Parties,
                indemnify itself out of the Charged Property in respect of, and pay
                and
                retain, all sums necessary to give effect to the indemnity in this
                Clause
                13.4 and shall have a lien on the Transaction
                Security and the proceeds of the enforcement of the Transaction Security
                for all moneys payable to it.

            

    

     

    
      	
              13.5  

            	
              Exceptions

            

    

    The
      indemnities referred to in Clauses 13.3
      (Indemnity to the Agent) and 13.4
      (Indemnity to the Security Trustee) shall not apply to the extent that
      the cost, loss or liability concerned have resulted from the gross negligence
      or
      wilful misconduct of the Agent or Security Trustee (as the case may
      be).

     

     

    
      	
              14.  

            	
              MITIGATION

            

    

     

    
      	
              14.1  

            	
              If,
                in respect of any Lender, circumstances arise which would or would
                upon
                the giving of notice result in:

            

    

     

    
      	
              14.1.1  

            	
              an
                increase in any sum payable to it or for its account pursuant to
                Clause 10.2 (Tax
                Gross-up);

            

    

     

    
      	
              14.1.2  

            	
              a
                claim for indemnification pursuant to Clause 10.3 (Tax Indemnity) or Clause 11
                (Increased
                Costs); or

            

    

     

    
      	
              14.1.3  

            	
              the
                reduction of its Available Commitment to zero or any repayment to
                be made
                pursuant to Clause 12
                (Illegality),

            

    

     

    then,
      without in any way limiting, reducing or otherwise qualifying the rights of
      such
      Lender or the obligations of the Obligors under any of the Clauses referred
      to
      in sub-clauses 14.1.1, 14.1.2 and 14.1.3,
      such
      Lender shall promptly upon becoming aware of such circumstances notify the
      Agent
      thereof (who shall promptly notify the Borrower) and, in consultation with
      the
      Agent and the Borrower and to the extent that it can do so lawfully and without
      prejudice to its own position, take reasonable steps (including a change of
      location of its Facility Office or the transfer of its rights, benefits and
      obligations hereunder to another financial institution which is an Approved
      Credit Institution and which is acceptable to the Borrower and willing to
      participate in the Facility) to mitigate the effects of such circumstances
      provided that such Lender shall be under no obligation to take
      any such action if, in the good faith judgment of such Lender, to do so might
      be
      reasonably expected to have any adverse effect upon its business, operations
      or
      financial condition (in each case, taken as a whole).

     

    
      
        
        

      

      
        -48-

        
          

        

      

      
        
        

      

    

    

     

    
      	
              14.2  

            	
              In
                connection with the occurrence of any of the events set forth in
                sub-clauses 14.1.1 through 14.1.3, the
                Borrower, at its sole expense and
                effort, shall have the right, if no Default or Event of Default then
                exists, to replace such Lender (the "Replaced Lender"),
                with one or more person or persons (collectively, the "Replacement
                Lender") reasonably acceptable to the Agent at which time the
                Replaced Lender shall assign or transfer, without recourse (in accordance
                with and subject to the restrictions contained in Clause 24 (Changes to the Lenders)), all its
                interests, rights and obligations under this Agreement to the Replacement
                Lender provided
                that:

            

    

     

    
      	
              14.2.1  

            	
              the
                Replacement Lender shall pay to the Replaced Lender in respect thereof
                an
                amount equal to the sum of:

            

    

     

    
      	
              (a)  

            	
              an
                amount equal to all Unpaid Sums that have been funded by (and not
                reimbursed to) such Replaced Lender, together with all then unpaid
                interest with respect thereto at such time;
                and

            

    

     

    
      	
              (b)  

            	
              an
                amount equal to all accrued, but theretofore unpaid, fees owing to
                the
                Replaced Lender pursuant to Clause 15
                (Commitment Commission and
                fees);

            

    

     

    
      	
              14.2.2  

            	
              all
                obligations of the Borrower under the Finance Documents owing to
                the
                Replaced Lender (other than those specifically described in sub-clause
14.2.1 above in respect of which the assignment
                purchase price has been, or is concurrently being, paid), shall be
                paid in
                full to such Replaced Lender concurrently with such
                replacement;

            

    

     

    
      	
              14.2.3  

            	
              such
                assignment or transfer is likely to result in a reduction in such
                compensation or payments; and

            

    

     

    
      	
              14.2.4  

            	
              no
                Lender shall be required to become a Replaced Lender if, prior thereto,
                as
                a result of a waiver by such Lender or otherwise, the circumstances
                entitling the Borrower to require such assignment or transfer cease
                to
                apply.

            

    

     

    For
      the
      avoidance of doubt, no Replaced Lender shall be required to execute, sign or
      deliver any document or assignment in order to be replaced in accordance with
      this Clause 14.2.

     

     

    
      	
              15.  

            	
              COMMITMENT
                COMMISSION AND FEES

            

    

     

    
      	
              15.1  

            	
              Commitment
                Commission on the Facility

            

    

    The
      Borrower shall pay to the Agent for account of each Lender a commitment
      commission on the amount of such Lender's Available Commitment from day to
      day
      during the Availability Period, such commitment commission to be calculated
      at a
      rate of 0.10 per cent. per annum on such amount and payable in arrear on the
      last day of each successive period of three months which ends during such period
      and on the last day of the Availability Period.

     

    
      
        
        

      

      
        -49-

        
          

        

      

      
        
        

      

    

    

     

    
      	
              15.2  

            	
              Arrangement
                Fee

            

    

    The
      Borrower shall pay to the Arranger, the arrangement fees specified in a Fee
      Letter between the Arranger and the Borrower at the times, and in the amounts,
      specified in such letter.

     

    
      	
              15.3  

            	
              Structuring
                Fee

            

    

    The
      Borrower shall pay to the Structuring Agent, the structuring fees specified
      in a
      Fee Letter between the Structuring Agent and the Borrower at the times, and
      in
      the amounts, specified in such letter.

     

    
      	
              15.4  

            	
              Agency
                Fees

            

    

    The
      Borrower shall pay to the Agent for its own account the agency fees specified
      in
      a Fee Letter between the Agent and the Borrower at the times, and in the
      amounts, specified in such letter.

     

     

    
      	
              16.  

            	
              COSTS
                AND EXPENSES

            

    

     

    
      	
              16.1  

            	
              Transaction
                expenses

            

    

    Without
      duplication of any expense reimbursement obligations or indemnities contained
      elsewhere in this Agreement or the other Finance Documents, the Borrower shall
      within five Business Days of demand, pay the Agent, the Arranger and the
      Security Trustee the amount of all costs and expenses (including, but not
      limited to, legal fees of one legal counsel in each relevant jurisdiction)
      reasonably incurred by any of them (and invoiced in reasonable detail) and,
      in
      the case of the Security Trustee, by any Receiver or Delegate, in connection
      with the negotiation, preparation, execution and perfection of:

     

    
      	
              16.1.1  

            	
              this
                Agreement and any other documents referred to in this Agreement and
                the
                Transaction Security; and

            

    

     

    
      	
              16.1.2  

            	
              any
                other Finance Documents executed after the date of this
                Agreement.

            

    

     

    
      	
              16.2  

            	
              Amendment
                costs

            

    

    Without
      duplication of any expense reimbursement obligations or indemnities contained
      elsewhere in this Agreement or the other Finance Documents, if (a) an Obligor
      or
      any other member of the Group that is party to a Finance Document requests
      an
      amendment, waiver or consent or (b) an amendment is required pursuant to Clause
      30.9 (Change of currency), the Borrower
      shall, within five Business Days of demand, reimburse each of the Agent and
      the
      Security Trustee for the amount of all costs and expenses (including, but not
      limited to, legal fees of one legal counsel in each relevant jurisdiction)
      reasonably incurred by the Agent and the Security Trustee (and invoiced in
      reasonable detail) and in the case of the Security Trustee, by any Receiver
      or
      Delegate, in responding to, evaluating, negotiating or complying with that
      request or requirement.

     

    
      	
              16.3  

            	
              Security
                Trustee's ongoing costs

            

    

    
      	
              16.3.1  

            	
              Without
                duplication of any expense reimbursement obligations or indemnities
                contained elsewhere in this Agreement or the other Finance Documents,
                in
                the

            

    

     

    
      
        
        

      

      
        -50-

        
          

        

      

      
        
        

      

    

    event
      of
      (i) the occurrence of a Default or (ii) the Security Trustee considering it
      necessary or expedient or (iii) the Security Trustee being requested by an
      Obligor or any other member of the Group that is party to a Finance Document
      or
      the Majority Lenders to undertake duties which the Security Trustee and the
      Borrower agree to be of an exceptional nature and/or outside the scope of the
      normal duties of the Security Trustee under the Finance Documents, the Borrower
      shall pay to the Security Trustee any additional remuneration that may be agreed
      between them.

     

    
      	
              16.3.2  

            	
              Without
                duplication of any expense reimbursement obligations or indemnities
                contained elsewhere in this Agreement or the other Finance Documents,
                if
                the Security Trustee and the Borrower fail to agree upon the nature
                of the
                duties or upon any additional remuneration, that dispute shall be
                determined by an investment bank (acting as an expert and not as
                an
                arbitrator) selected by the Security Trustee and approved by the
                Borrower
                or, failing approval, nominated (on the application of the Security
                Trustee) by the President for the time being of the Law Society of
                England
                and Wales (the costs of the nomination and of the investment bank
                being
                payable by the Borrower) and the determination of any
                investment  bank shall be final and binding upon the parties to
                this Agreement.

            

    

     

    
      	
              16.4  

            	
              Enforcement
                and preservation costs

            

    

    Without
      duplication of any expense reimbursement obligations or indemnities contained
      elsewhere in this Agreement or the other Finance Documents, the Borrower shall,
      within five Business Days of demand, pay to Agent the amount of all costs and
      expenses (including, but not limited to, legal fees of one legal counsel in
      each
      relevant jurisdiction but excluding costs and expenses to the extent that they
      result from the gross negligence or wilful misconduct of the Agent or any of
      the
      other Finance Parties) incurred by the Agent (and invoiced in reasonable detail)
      in connection with the enforcement of, or the preservation of any rights under,
      any Finance Document and the Transaction Security and any proceedings instituted
      by or against the Security Trustee as a consequence of taking or holding the
      Transaction Security or enforcing these rights.

     

    
      	
              16.5  

            	
              Stamp
                taxes

            

    

    Without
      duplication of any expense reimbursement obligations or indemnities contained
      elsewhere in this Agreement or the other Finance Documents, the Borrower shall
      pay and, within five Business Days of demand, indemnify each Secured Party
      and
      the Arrangers against any stamp duty, registration and other similar Taxes
      which
      are incurred by that Secured Party or the Arrangers arising from any payment
      made under any Finance Document or from the execution, delivery, performance,
      enforcement or registration of any Finance Document.

     

    
      
        
        

      

      
        -51-

        
          

        

      

      
        
        

      

    

    

     

     

    
      	
              17.  

            	
              DEFAULT
                INTEREST AND BREAK COSTS

            

    

     

    
      	
              17.1  

            	
              Default
                Interest Periods

            

    

    If
      an
      Obligor fails to pay:

     

    
      	
              17.1.1  

            	
              any
                amount payable by it pursuant to sub-clause 7.1.1 of Clause 7.1
                (Borrower's Indemnity to Lenders), the period beginning on the
                date on which the relevant Finance Party paid any sum due and payable
                under the relevant Letter of Credit and ending on the date upon which
                the
                obligation of such Obligor to pay such sum is discharged shall be
                divided
                into successive periods:

            

    

     

    
      	
              (a)  

            	
              the
                first three periods being periods of a duration of one day each,
                which
                (other than the first) shall start on the last day of the preceding
                such
                period; and

            

    

     

    
      	
              (b)  

            	
              thereafter,
                each such period shall start on the last day of the preceding period
                and
                the duration of each of which shall (except as otherwise provided
                in this
                Clause 17) be selected by the
                Agent;

            

    

     

    
      	
              17.1.2  

            	
              any
                other amount payable by it under a Finance Document on its due date,
                or if
                any sum due and payable by an Obligor under any judgment of any court
                in
                connection herewith is not paid on the date of such judgment, the
                period
                beginning on such due date or, as the case may be, the date of such
                judgment and ending on the date upon which the obligation of such
                Obligor
                to pay such sum is discharged shall be divided into successive periods,
                each of which (other than the first) shall start on the last day
                of the
                preceding such period and the duration of each of which shall (except
                as
                otherwise provided in this Clause 17) be
                selected by the Agent.

            

    

     

    
      	
              17.2  

            	
              Default
                Interest

            

    

    An
      Unpaid
      Sum:

     

    
      	
              17.2.1  

            	
              which
                is a sum referred to in sub-clause 17.1.1 of
                Clause 17.1 (Default Interest
                Periods) above shall bear
                interest:

            

    

     

    
      	
              (a)  

            	
              during
                the first three Interest Periods in respect thereof at LIBOR at the
                overnight rate on the Quotation Date therefor;
                and

            

    

     

    
      	
              (b)  

            	
              during
                each Interest Period thereafter, at the rate per annum which is three
                per
                cent. per annum above LIBOR on the Quotation Date
                therefor;

            

    

     

    
      	
              17.2.2  

            	
              which
                is a sum referred to in sub-clause 17.1.2 of
                Clause 17.1 (Default Interest
                Periods) above shall bear interest during each Interest Period in
                respect thereof at the rate per annum which is three per cent. per
                annum
                above LIBOR, on the Quotation Date
                therefor.

            

    

     

    
      
        
        

      

      
        -52-

        
          

        

      

      
        
        

      

    

    

     

    

    
      	
              17.3  

            	
              Payment
                of Default Interest

            

    

    Any
      interest which shall have accrued under Clause 17.2 (Default Interest) in respect of an
      Unpaid Sum shall be due and payable and shall be paid by the Obligor owing
      such
      Unpaid Sum on the last day of each Interest Period in respect thereof or on
      such
      other dates as the Agent may specify by notice to such Obligor.

     

    
      	
              17.4  

            	
              Break
                Costs

            

    

    If
      any
      Lender or the Agent on its behalf receives or recovers all or any part of an
      Unpaid Sum otherwise than on the last day of an Interest Period relating
      thereto, the Borrower shall pay to the Agent on demand for account of such
      Lender an amount equal to the amount (if any) by which (a) the additional
      interest which would have been payable on the amount so received or recovered
      had it been received or recovered on the last day of that Interest Period
      exceeds (b) the amount of interest which in the opinion of the Agent (acting
      reasonably) would have been payable to the Agent on the last day of that
      Interest Period in respect of a deposit in the currency of the amount so
      received or recovered equal to the amount so received or recovered placed by
      it
      with a prime bank in London for a period starting on the first Business Day
      following the date of such receipt or recovery and ending on the last day of
      that Interest Period.

     

    

     

    
      
        
        

      

      
        -53-

        
          

        

      

      
        
        

      

    

    SECTION
      7

    GUARANTEE

     

     

    
      	
              18.  

            	
              GUARANTEE
                AND INDEMNITY

            

    

     

    
      	
              18.1  

            	
              Guarantee
                and indemnity

            

    

    The
      Guarantor irrevocably and unconditionally:

     

    
      	
              18.1.1  

            	
              guarantees
                to each Finance Party punctual performance by the Borrower of all
                the
                Borrower's obligations under the Finance
                Documents;

            

    

     

    
      	
              18.1.2  

            	
              undertakes
                with each Finance Party that whenever the Borrower does not pay any
                amount
                when due under or in connection with any Finance Document, the Guarantor
                shall immediately on demand pay that amount as if it was the principal
                obligor; and

            

    

     

    
      	
              18.1.3  

            	
              indemnifies
                each Finance Party immediately on demand against any cost, loss or
                liability suffered by that Finance Party if any obligation guaranteed
                by
                it is or becomes unenforceable, invalid or illegal.  The amount
                of the cost, loss or liability shall be equal to the amount which
                that
                Finance Party would otherwise have been entitled to
                recover.

            

    

     

    
      	
              18.2  

            	
              Continuing
                guarantee

            

    

    This
      guarantee is a continuing guarantee and will extend to the ultimate balance
      of
      sums payable by the Borrower under the Finance Documents, regardless of any
      intermediate payment or discharge in whole or in part.

     

    
      	
              18.3  

            	
              Reinstatement

            

    

    If
      any
      payment by the Borrower or any discharge given by a Finance Party (whether
      in
      respect of the obligations of the Borrower or any security for those obligations
      or otherwise) is avoided or reduced as a result of insolvency or any similar
      event:

     

    
      	
              18.3.1  

            	
              the
                liability of the Borrower shall continue as if the payment, discharge,
                avoidance or reduction had not occurred;
                and

            

    

     

    
      	
              18.3.2  

            	
              each
                Finance Party shall be entitled to recover the value or amount of
                that
                security or payment from the Borrower as if the payment, discharge,
                avoidance or reduction had not
                occurred.

            

    

     

    
      	
              18.4  

            	
              Waiver
                of defences

            

    

    The
      obligations of the Guarantor under this Clause 18
      will not be affected by any act, omission, matter or thing which, but for this
      Clause, would reduce, release or prejudice any of its obligations under this
      Clause 18 (without limitation and whether or not
      known to it or any Finance Party) including:

     

    
      	
              18.4.1  

            	
              any
                time, waiver or consent granted to, or composition with, the Borrower
                or
                other person;

            

    

     

    
      
        
        

      

      
        -54-

        
          

        

      

      
        
        

      

    

    

     

    
      	
              18.4.2  

            	
              the
                release of the Borrower or any other person under the terms of any
                composition or arrangement with any creditor of an
                Obligor;

            

    

     

    
      	
              18.4.3  

            	
              the
                taking, variation, compromise, exchange, renewal or release of, or
                refusal
                or neglect to perfect, take up or enforce, any rights against, or
                security
                over assets of, the Borrower or other person or any non-presentation
                or
                non-observance of any formality or other requirement in respect of
                any
                instrument or any failure to realise the full value of any
                security;

            

    

     

    
      	
              18.4.4  

            	
              any
                incapacity or lack of power, authority or legal personality of or
                dissolution or change in the members or status of the Borrower or
                any
                other person;

            

    

     

    
      	
              18.4.5  

            	
              any
                amendment, novation, supplement, extension (whether of maturity or
                otherwise) or restatement (in each case however fundamental and of
                whatsoever nature, and whether or not more onerous) or replacement
                of a
                Finance Document or any other document or
                security;

            

    

     

    
      	
              18.4.6  

            	
              any
                unenforceability, illegality or invalidity of any obligation of any
                person
                under any Finance Document or any other document or security;
                or

            

    

     

    
      	
              18.4.7  

            	
              any
                insolvency or similar proceedings.

            

    

     

    
      	
              18.5  

            	
              Guarantor
                Intent

            

    

    Without
      prejudice to the generality of Clause 18.4
      (Waiver of Defences), the Guarantor expressly confirms that it intends
      that this guarantee shall extend from time to time to any (however fundamental
      and of whatsoever nature and whether or not more onerous) variation, increase,
      extension or addition of or to any of the Finance Documents and/or any facility
      or amount made available under any of the Finance Documents for the purposes
      of
      or in connection with any of the following:

     

    
      	
              18.5.1  

            	
              acquisitions
                of any nature;

            

    

     

    
      	
              18.5.2  

            	
              increasing
                working capital;

            

    

     

    
      	
              18.5.3  

            	
              enabling
                investor distributions to be made;

            

    

     

    
      	
              18.5.4  

            	
              carrying
                out restructurings;

            

    

     

    
      	
              18.5.5  

            	
              refinancing
                existing facilities;

            

    

     

    
      	
              18.5.6  

            	
              refinancing
                any other indebtedness;

            

    

     

    
      	
              18.5.7  

            	
              making
                facilities available to new
                borrowers;

            

    

     

    
      	
              18.5.8  

            	
              any
                other variation or extension of the purposes for which any such facility
                or amount might be made available from time to time;
                and

            

    

     

    
      	
              18.5.9  

            	
              any
                fees, costs and/or expenses associated with any of the
                foregoing.

            

    

     

    
      
        
        

      

      
        -55-

        
          

        

      

      
        
        

      

    

    

     

    
      	
              18.6  

            	
              Immediate
                recourse

            

    

    The
      Guarantor waives any right it may have of first requiring any Finance Party
      (or
      any trustee or agent on its behalf) to proceed against or enforce any other
      rights or security or claim payment from any person before claiming from the
      Guarantor under this Clause 18.  This
      waiver applies irrespective of any law or any provision of a Finance Document
      to
      the contrary.

     

    
      	
              18.7  

            	
              Appropriations

            

    

    Until
      all
      amounts which may be or become payable by the Borrower under or in connection
      with the Finance Documents have been irrevocably paid in full, each Finance
      Party (or any trustee or agent on its behalf) may:

     

    
      	
              18.7.1  

            	
              refrain
                from applying or enforcing any other moneys, security or rights held
                or
                received by that Finance Party (or any trustee or agent on its behalf)
                in
                respect of those amounts, or apply and enforce the same in such manner
                and
                order as it sees fit (whether against those amounts or otherwise)
                and the
                Guarantor shall not be entitled to the benefit of the same;
                and

            

    

     

    
      	
              18.7.2  

            	
              hold
                in an interest-bearing suspense account any moneys received from
                the
                Guarantor or on account of the Guarantor's liability under this Clause
18.

            

    

     

    
      	
              18.8  

            	
              Deferral
                of Guarantor's rights

            

    

    Until
      all
      amounts which may be or become payable by the Borrower under or in connection
      with the Finance Documents have been irrevocably paid in full and unless the
      Agent otherwise directs, the Guarantor will not exercise any rights which it
      may
      have by reason of performance by it of its obligations under the Finance
      Documents:

     

    
      	
              18.8.1  

            	
              to
                be indemnified by the Borrower;

            

    

     

    
      	
              18.8.2  

            	
              to
                claim any contribution from any other guarantor of the Borrower's
                obligations under the Finance Documents;
                and/or

            

    

     

    
      	
              18.8.3  

            	
              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 guarantee or security taken pursuant to,
                or in
                connection with, the Finance Documents by any Finance
                Party.

            

    

     

    If
      the
      Guarantor receives any benefit, payment or distribution in relation to such
      rights it shall hold that benefit, payment or distribution to the extent
      necessary to enable all amounts which may be or become payable to the Finance
      Parties by the Borrower under or in connection with the Finance Documents to
      be
      repaid in full on trust for the Finance Parties and shall promptly pay or
      transfer the same to the Agent or as the Agent may direct for application in
      accordance with Clause 30 (Payment
      mechanics) of this Agreement.

     

    
      	
              18.9  

            	
              Additional
                security

            

    

    This
      guarantee is in addition to and is not in any way prejudiced by any other
      guarantee or security now or subsequently held by any Finance
      Party.

     

    
      
        
        

      

      
        -56-

        
          

        

      

      
        
        

      

    

    SECTION
      8

    REPRESENTATIONS,
      UNDERTAKINGS AND EVENTS OF DEFAULT

     

     

    
      	
              19.  

            	
              REPRESENTATIONS

            

    

     

    On
      the
      date of this Agreement, each Obligor makes to the Finance Parties the
      representations and warranties set out in Clauses 19.1 (Corporate
      Status) to 19.7 (Projections and
      Assumptions), 19.15 (Insurance
      Licenses), and Clauses 19.19(No
      default) to 19.23 (No Winding-up) and
      the Guarantor makes to the Finance Parties the representations and warranties
      set out in Clauses 19.8 (Financial
      Condition) to 19.14 (Compliance with
      Statutes and Agreements), 19.16 (Security
      Documents) and Clauses 19.17 (Properties;
      Liens; and Insurance) and 19.18
      (Solvency) in each case in relation to itself and (where applicable)
      its subsidiaries.

     

    
      	
              19.1  

            	
              Corporate
                Status

            

    

    It
      and
      each of its subsidiaries:

     

    
      	
              19.1.1  

            	
              is
                a duly organised and validly existing corporation or business trust
                or
                other entity in good standing under the laws of the jurisdiction
                of its
                organisation and has the corporate or other organisational power
                and
                authority to own its property and assets and to transact the business
                in
                which it is engaged and presently proposes to engage;
                and

            

    

     

    
      	
              19.1.2  

            	
              has
                been duly qualified and is authorised to do business and is in good
                standing in all jurisdictions where it is required to be so
                qualified,

            

    

     

    except,
      in the case of sub-clauses 19.1.1 (other than in
      respect of the Obligors or any other member of the Group that is party to a
      Finance Document) and 19.1.2, where the failure to
      be so qualified, authorised or in good standing, either individually or in
      the
      aggregate, has not had, and would not reasonably be expected to have, a Material
      Adverse Effect.

     

    
      	
              19.2  

            	
              Corporate
                Power and Authority

            

    

    
      	
              19.2.1  

            	
              It
                and each of its subsidiaries that is party to any Finance Document
                has the
                corporate power and authority to execute, deliver and carry out the
                terms
                and provisions of the Finance Documents to which it is a party and
                has
                taken all necessary corporate action to authorise the execution,
                delivery
                and performance of such Finance
                Documents.

            

    

     

    
      	
              19.2.2  

            	
              It
                and each of its subsidiaries that is party to any Finance Document
                has
                duly executed and delivered each Finance Document to which it is
                a party
                and, subject to the Legal Reservations, each such Finance Document
                constitutes the legal, valid and binding obligation of such Obligor
                or
                such subsidiary enforceable against it in accordance with its 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.

            

    

     

    
      
        
        

      

      
        -57-

        
          

        

      

      
        
        

      

    

    

     

    
      	
              19.3  

            	
              No
                Contravention of Agreements or Organisational
                Documents

            

    

    Neither
      the execution, delivery and performance, by it or any of its subsidiaries that
      is party to any Finance Document, of this Agreement or the other Finance
      Documents to which it is a party nor compliance with the terms and provisions
      thereof, nor the consummation of the transactions contemplated
      therein:

     

    
      	
              19.3.1  

            	
              will
                contravene any applicable provision of any law, statute, rule, regulation,
                order, writ, injunction or decree of any court or governmental
                instrumentality;

            

    

     

    
      	
              19.3.2  

            	
              will
                conflict or be inconsistent with or result in any breach of any of
                the
                terms, covenants, conditions or provisions of, or constitute a default
                under, or result in the creation or imposition of (or the obligation
                to
                create or impose) any Lien (other than Liens in favour of the Security
                Trustee pursuant to the Security Documents) upon any of its property
                or
                assets or those of any of its subsidiaries pursuant to the terms
                of any
                indenture, mortgage, deed of trust, loan agreement, credit agreement
                or
                any other material instrument to which it or any of its subsidiaries
                is a
                party or by which it or any of its property or assets are bound or
                to
                which it may be subject; or

            

    

     

    
      	
              19.3.3  

            	
              will
                violate any provision of its certificate of incorporation, by-laws
                or
                other organisational documents, nor those of its
                subsidiaries.

            

    

     

    
      	
              19.4  

            	
              Litigation
                and Environmental Matters

            

    

    There
      are
      no actions, suits or proceedings pending or, to the best of its knowledge,
      threatened involving it or any of its subsidiaries (including with respect
      to
      this Agreement or any other Finance Document) that, either individually or
      in
      the aggregate, have had, or would reasonably be expected to have, a Material
      Adverse Effect.  Except for any matters that, either individually or
      in the aggregate, have not had, and would not reasonably be expected to have,
      a
      Material Adverse Effect, neither the Guarantor nor any of its
      subsidiaries:

     

    
      	
              19.4.1  

            	
              has
                failed to comply with any Environmental Law or to obtain, maintain
                or
                comply with any permit, license or other approval required under
                any
                Environmental Law;

            

    

     

    
      	
              19.4.2  

            	
              has
                become subject to any Environmental
                Liability;

            

    

     

    
      	
              19.4.3  

            	
              has
                received notice of any claim with respect to any Environmental Liability;
                or

            

    

     

    
      	
              19.4.4  

            	
              knows
                of any basis for any Environmental
                Liability.

            

    

     

    
      	
              19.5  

            	
              Approvals

            

    

    Any:

     

    
      	
              19.5.1  

            	
              order,
                consent, approval, license, authorisation, or validation of, or filing,
                recording or registration with, or exemption by, any foreign or domestic
                governmental or public body or authority, or any subdivision thereof,
                which is required by it or any of its subsidiaries;
                or

            

    

     

    
      
        
        

      

      
        -58-

        
          

        

      

      
        
        

      

    

    

     

    
      	
              19.5.2  

            	
              third
                party approval, permit or license required to be obtained by it or
                any of
                its subsidiaries,

            

    

     

    in
      each
      case in connection with (i) the transactions contemplated by the Finance
      Documents or (ii) the legality, validity, binding effect or enforceability
      of
      any Finance Document, has been obtained or effected and is in full force and
      effect, or will be obtained or effected within the period required by
      law.

     

    
      	
              19.6  

            	
              Investment
                Company Act

            

    

    It
      is not
      an "investment company" or a company "controlled" by an "investment company",
      within the meaning of the Investment Company Act of 1940 of the US, as
      amended.

     

    
      	
              19.7  

            	
              Projections
                and Assumptions

            

    

    The
      financial projections contained in the Business Plan have been prepared based
      on
      good faith estimates and assumptions believed by the Borrower to be reasonable
      and attainable at the time made, it being recognised by Finance Parties that
      such projections as to future events are not to be viewed as facts and are
      subject to significant uncertainties and contingencies many of which are beyond
      the control of the Obligors and that actual results during the period or periods
      covered by any such projections may differ from the projected
      results.

     

    
      	
              19.8  

            	
              Financial
                Condition

            

    

    
      	
              19.8.1  

            	
              The
                Guarantor has heretofore furnished to the Agent (on behalf of the
                Lenders)
                its consolidated balance sheet and consolidated statements of operations
                and comprehensive income, (loss), shareholders' equity and cash flows
                as
                of and for the fiscal year ended 31 December 2006 reported on by
                PricewaterhouseCoopers, independent public accountants. Such financial
                statements present fairly, in all material respects, the financial
                position and results of operations and cash flows of the Guarantor
                and its
                consolidated subsidiaries as of such dates and for such periods in
                accordance with US GAAP.

            

    

     

    
      	
              19.8.2  

            	
              As
                of the Closing Date, nothing has occurred since 31 December 2006
                either
                individually or in the aggregate, which has resulted in, or would
                reasonably be expected to result in, any material adverse condition
                or any
                material adverse change which, in either case, has a Material Adverse
                Effect, in or affecting:

            

    

     

    
      	
              (a)  

            	
              the
                business, operations, assets, liabilities or financial condition
                of the
                Guarantor and its subsidiaries, taken as a whole;
                or

            

    

     

    
      	
              (b)  

            	
              the
                rights and remedies of any Finance Party or the ability of the Obligors,
                taken as a whole, to perform their respective obligations owed to
                any
                Finance Party under this Agreement or any other Finance
                Document.

            

    

     

    
      
        
        

      

      
        -59-

        
          

        

      

      
        
        

      

    

    

     

    
      	
              19.9  

            	
              Tax
                Returns and Payments

            

    

    
      	
              19.9.1  

            	
              Except
                where the failure to do so would not reasonably be expected, individually
                or in aggregate, to have a Material Adverse Effect, the Guarantor
                and its
                subsidiaries:

            

    

     

    
      	
              (a)  

            	
              have
                timely filed or caused to be timely filed with the appropriate taxing
                authority (taking into account any applicable extension within which
                to
                file) all material income and other material tax returns (including
                any
                statements, forms and reports), domestic and foreign, required to
                be filed
                by the Guarantor and its subsidiaries;
                and

            

    

     

    
      	
              (b)  

            	
              have
                timely paid, collected or remitted or caused to have timely paid,
                collected or remitted all material Taxes payable by them which have
                become
                due and assessments which have become due, except for those contested
                in
                good faith and for which adequate reserves have been established
                in
                accordance with applicable GAAP.

            

    

     

    
      	
              19.9.2  

            	
              To
                the best knowledge of the Guarantor, there is no action, suit, proceeding,
                     investigation, audit or claim now pending or proposed or threatened
                by any
                authority regarding any Taxes relating to the Guarantor or any of
                its
                subsidiaries, which, either individually or in the aggregate, has
                had, or
                would reasonably be expected to have, a Material Adverse
                Effect.

            

    

     

    
      	
              19.9.3  

            	
              To
                the best knowledge of the Guarantor, no Tax Liens have been filed
                and no
                claims are pending or proposed or threatened with respect to any
                Taxes for
                any taxable period, except for Liens permitted under Clause 22.14 (Liens) and claims which, either
                individually or in the aggregate, have not had, and would not reasonably
                be expected to have, a Material Adverse
                Effect.

            

    

     

    
      	
              19.10  

            	
              Compliance
                with ERISA

            

    

    
      	
              19.10.1  

            	
              Except
                as, either individually or in the aggregate, has not had, and would
                not
                reasonably be expected to have, a Material Adverse Effect, the Guarantor
                and its ERISA Affiliates:

            

    

     

    
      	
              (a)  

            	
              have
                fulfilled their respective obligations under the minimum funding
                standards
                of ERISA and the Code with respect to each Plan and are in compliance
                with
                the applicable provisions of ERISA and the Code;
                and

            

    

     

    
      	
              (b)  

            	
              have
                not incurred any liability to the PBGC or any Plan or Multiemployer
                Plan
                (other than to make contributions in the ordinary course of
                business).

            

    

     

    
      	
              19.10.2  

            	
              Except
                as, either individually or in the aggregate, has not had, and would
                not
                reasonably be expected to have, a Material Adverse
                Effect:

            

    

     

    
      	
              (a)  

            	
              each
                Foreign Pension Plan has been maintained in compliance with its terms
                and
                with the requirements of any and all applicable laws,
                statutes,

            

    

     

    
      
        
        

      

      
        -60-

        
          

        

      

      
        
        

      

    

    rules,
      regulations and orders and has been maintained, where required, in good standing
      with applicable regulatory authorities;

     

    
      	
              (b)  

            	
              all
                contributions required to be made with respect to a Foreign Pension
                Plan
                have been timely made;

            

    

     

    
      	
              (c)  

            	
              neither
                the Guarantor nor any of its subsidiaries has incurred any obligation
                in
                connection with the termination of, or withdrawal from, any Foreign
                Pension Plan; and

            

    

     

    
      	
              (d)  

            	
              the
                present value of the accrued benefit liabilities (whether or not
                vested)
                under each Foreign Pension Plan that is required to be funded, determined
                as of the end of the Guarantor's most recently ended fiscal year
                on the
                basis of actuarial assumptions, each of which is reasonable, did
                not
                exceed the current value of the assets of such Foreign Pension Plan
                allocable to such benefit
                liabilities.

            

    

     

    
      	
              19.11  

            	
              Subsidiaries

            

    

    
      	
              19.11.1  

            	
              Listed
                in Schedule 14 (Subsidiaries) is a complete and correct list of
                all of the subsidiaries of the Guarantor as of the Closing Date,
                together
                with, for each such subsidiary:

            

    

     

    
      	
              (a)  

            	
              the
                jurisdiction of organisation of such
                subsidiary;

            

    

     

    
      	
              (b)  

            	
              each
                person holding direct ownership interests in such subsidiary;
                and

            

    

     

    
      	
              (c)  

            	
              the
                percentage ownership of such subsidiary represented by such ownership
                interests.

            

    

     

    
      	
              19.11.2  

            	
              Except
                as disclosed in Schedule 14 (Subsidiaries), each of the Guarantor
                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 14
                (Subsidiaries).

            

    

     

    
      	
              19.11.3  

            	
              As
                of the Closing Date, there are no restrictions on the Guarantor or
                any of
                its subsidiaries which prohibit or otherwise restrict the transfer
                of cash
                or other assets from any subsidiary of the Guarantor to the Guarantor,
                other than:

            

    

     

    
      	
              (a)  

            	
              prohibitions
                or restrictions existing under or by reason of this Agreement or
                the other
                Finance Documents;

            

    

     

    
      	
              (b)  

            	
              prohibitions
                or restrictions existing under or by reason of Legal
                Requirements;

            

    

     

    
      	
              (c)  

            	
              prohibitions
                and restrictions permitted by Schedule 12 (Existing Intercompany
                Arrangements and Agreements) or Clause 22.21 (Limitation on Certain Restrictions
                on
                subsidiaries); and

            

    

     

    
      
        
        

      

      
        -61-

        
          

        

      

      
        
        

      

    

    

     

    
      	
              (d)  

            	
              other
                prohibitions or restrictions which, either individually or in the
                aggregate, have not had, and would not reasonably be expected to
                have, a
                Material Adverse Effect.

            

    

     

    
      	
              19.12  

            	
              Capitalisation

            

    

    The
      authorised capital stock of:

     

    
      	
              19.12.1  

            	
              the
                Borrower consists of 500,000,000 shares, par value $0.0020 per
                share;

            

    

     

    
      	
              19.12.2  

            	
              the
                Guarantor consists of 571,428,571.4 shares, par value $0.175 per
                share.

            

    

     

    
      	
              19.13  

            	
              Indebtedness

            

    

    As
      of the
      Closing Date, the Guarantor and its consolidated subsidiaries have no
      outstanding Indebtedness for borrowed money required to be set forth on a
      quarterly balance sheet prepared in accordance with US GAAP other
      than:

     

    
      	
              19.13.1  

            	
              as
                set forth on the Guarantor's consolidated balance sheet as of 30
                September
                2007;

            

    

     

    
      	
              19.13.2  

            	
              borrowings
                since such date under the revolving credit facilities, letter of
                credit
                facilities and lines of credit of the Guarantor and/or its subsidiaries;
                and

            

    

     

    
      	
              19.13.3  

            	
              Permitted
                Subsidiary Indebtedness.

            

    

     

    
      	
              19.14  

            	
              Compliance
                with Statutes and
                Agreements

            

    

    
      	
              19.14.1  

            	
              The
                Guarantor and each of its subsidiaries is in compliance with all
                applicable statutes, regulations, rules and orders of, and all applicable
                restrictions imposed by, and has filed or otherwise provided all
                material
                reports, data, registrations, filings, applications and other information
                required to be filed with or otherwise provided (or will do so within
                the
                period required by law) to, all governmental bodies, domestic or
                foreign,
                in respect of the conduct of its business and the ownership of its
                property (including compliance with all applicable Environmental
                Laws),
                except where the failure to comply or file or otherwise provide,
                either
                individually or in the aggregate, has not had, and would not reasonably
                be
                expected to have, a Material Adverse
                Effect.

            

    

     

    
      	
              19.14.2  

            	
              All
                regulatory approvals required by the Guarantor and each of its
                subsidiaries are in full force and effect on the date hereof, except
                where
                the failure of such approvals to be in full force and effect, either
                individually or in the aggregate, has not had, and would not reasonably
                be
                expected to have, a Material Adverse
                Effect.

            

    

     

    
      	
              19.14.3  

            	
              The
                Guarantor and each of its subsidiaries is in compliance with all
                indentures, agreements and other instruments binding upon it or its
                property, except where the failure to do so, either individually
                or in the
                aggregate, has not had, and would not reasonably be expected to have,
                a
                Material Adverse Effect.

            

    

     

    
      
        
        

      

      
        -62-

        
          

        

      

      
        
        

      

    

    

     

    
      	
              19.15  

            	
              Insurance
                Licenses

            

    

    
      	
              19.15.1  

            	
              There
                is, in relation to itself and each of its
                subsidiaries:

            

    

     

    
      	
              (a)  

            	
              no
                Insurance License that is the subject of a proceeding for suspension,
                revocation or limitation or any similar
                proceedings;

            

    

     

    
      	
              (b)  

            	
              no
                sustainable basis for such a suspension, revocation or limitation;
                and

            

    

     

    
      	
              (c)  

            	
              no
                such suspension, revocation or limitation threatened by any Applicable
                Insurance Regulatory Authority,

            

    

     

    that,
      in
      each instance under paragraphs (a), (b) and (c) above and either individually
      or
      in the aggregate, has had, or would reasonably be expected to have, a Material
      Adverse Effect.

     

    
      	
              19.15.2  

            	
              As
                of the Closing Date, neither it nor any of its subsidiaries that
                is a
                Regulated Insurance Company transacts any Insurance Business, directly
                or
                indirectly, in any jurisdiction without all Insurance Licenses required
                by
                the Applicable Insurance Regulatory Authority in such jurisdiction,
                except
                where the failure to have such Insurance Licenses has not had, and
                would
                not reasonably be expected to have, a Material Adverse
                Effect.  For the purposes of this sub-clause 19.15.2, "Insurance
                Licenses" means material licences
                (including licences or certificates of authority from Applicable
                Insurance
                Regulatory Authorities), permits or authorisations to transact insurance
                and reinsurance
                business.

            

    

     

    
      	
              19.16  

            	
              Security
                Documents

            

    

    
      	
              19.16.1  

            	
              The
                Security Documents create, as security for Secured Obligations, valid
                and
                enforceable security interests in and Liens on all of the Collateral,
                which, subject to the Legal Reservations and to Liens having priority
                by
                operation of law, rank superior to and prior to the rights of all
                third
                persons and subject to no other
                Liens.

            

    

     

    
      	
              19.16.2  

            	
              No
                filings or recordings are required in order to ensure the enforceability,
                perfection or priority of the security interests created under the
                Security Documents, except for filings or recordings which shall
                have been
                previously made or which are otherwise made within the period prescribed
                by law for such filings or
                recordings.

            

    

     

    
      	
              19.17  

            	
              Properties;
                Liens; and Insurance

            

    

    
      	
              19.17.1  

            	
              The
                Guarantor and its subsidiaries have good title to, or valid leasehold
                interests in, all real and personal property material to the businesses
                of
                the Guarantor and its subsidiaries, taken as a whole except where
                not
                having such title, either individually or in the aggregate, has not
                had,
                and would not reasonably be expected to have, a Material Adverse
                Effect.

            

    

     

    
      	
              19.17.2  

            	
              There
                exists no Lien (including any Lien arising out of any attachment,
                judgment
                or execution) of any kind, on, in or with respect to any of the
                property

            

    

     

    
      
        
        

      

      
        -63-

        
          

        

      

      
        
        

      

    

    of
      the
      Guarantor or any of its Subsidiaries, in each case except as expressly permitted
      by Clause 22.14 (Liens).

     

    
      	
              19.17.3  

            	
              The
                Guarantor and its subsidiaries own, or are licensed to use, all
                trademarks, trade names, copyrights, patents and other intellectual
                property material to the businesses of the Guarantor and its subsidiaries,
                taken as a whole, and the use thereof by the Guarantor or such subsidiary
                does not infringe upon the rights of any other person, except for
                any such
                infringements that, either individually or in the aggregate, have
                not had,
                and would not reasonably be expected to have, a Material Adverse
                Effect.

            

    

     

    
      	
              19.17.4  

            	
              As
                of the Closing Date, all premiums due in respect of each material
                insurance policy maintained by the Guarantor and its subsidiaries
                have
                been paid.

            

    

     

    
      	
              19.18  

            	
              Solvency

            

    

    
      	
              19.18.1  

            	
              Each
                Obligor, taken individually; and

            

    

     

    
      	
              19.18.2  

            	
              the
                Guarantor and its subsidiaries, taken as a
                whole,

            

    

     

    are,
      in
      each case, Solvent.

     

    
      	
              19.19  

            	
              No
                default

            

    

    No
      Event
      of Default is continuing or might reasonably be expected to result from the
      issuance of any Letter of Credit.

     

    
      	
              19.20  

            	
              Deduction
                of Tax

            

    

    It
      is not
      required under the laws of England and Wales, New York or Bermuda, to make
      any
      deduction for or on account of Tax from any payment it may make under any
      Finance Document.

     

    
      	
              19.21  

            	
              No
                Filing or Stamp Taxes

            

    

    Under
      the
      laws of England and Wales, New York or Bermuda, it is not necessary that the
      Finance Documents be filed, recorded or enrolled with any court or other
      authority in that jurisdiction or that any stamp, registration or similar tax
      be
      paid on or in relation to the Finance Documents or the transactions contemplated
      by the Finance Documents save for:

     

    
      	
              19.21.1  

            	
              filings
                in respect of any registerable security created under the Finance
                Documents and the payment of registration fees in connection therewith;
                and

            

    

     

    
      	
              19.21.2  

            	
              any
                stock transfer taxes which may be payable upon the realisation or
                enforcement of all or any part of the Transaction
                Security.

            

    

     

    
      	
              19.22  

            	
              Claims
                Pari Passu

            

    

    Subject
      to the Legal Reservations, under the laws of Bermuda, the payment obligations
      under the Finance Documents of each member of the Group that is party to any
      Finance Document, rank at least pari passu with the claims of all its
      other unsecured and

     

    
      
        
        

      

      
        -64-

        
          

        

      

      
        
        

      

    

    unsubordinated
      creditors, except for obligations mandatorily preferred by law applying to
      companies generally.

     

    
      	
              19.23  

            	
              No
                Winding-up

            

    

    Neither
      it nor any of its subsidiaries has taken any corporate action nor have any
      other
      steps been taken or legal proceedings been started or (to the best of its
      knowledge and belief) threatened against any member of the Group for its
      winding-up, dissolution, administration or re-organisation (whether by voluntary
      arrangement, scheme of arrangement or otherwise) or for the appointment of
      a
      receiver, administrator, administrative receiver, conservator, custodian,
      Security Trustee or similar officer of it or of any or all of its assets or
      revenues.

     

    
      	
              19.24  

            	
              Repetition
                of Representations

            

    

    The
      Repeated Representations shall be deemed to be repeated by the relevant Obligor
      by reference to the facts and circumstances then existing on:

     

    
      	
              19.24.1  

            	
              each
                Utilisation Date; and

            

    

     

    
      	
              19.24.2  

            	
              every
                six months after such date until the Expiry Date of such Letter of
                Credit,

            

    

     

    and
      shall
      at such time be true in all material respects with the same effect as though
      such Repeated Representations had been made on such date (it being understood
      and agreed that any Repeated Representation which by its terms is made as of
      a
      specified date shall be required to be true in all material respects only as
      of
      such specified date and with respect to the representations and warranties
      set
      out in Clause 19.18 (Solvency), shall be
      tested by reference to the then most recent financial statements provided to
      the
      Agent pursuant to Clause 20.1 (Annual Financial
      Statements) and Clause 20.2 (Quarterly
      Financial Statements)) provided that when made by an
      Obligor on any date other than a Utilisation Date, the representations and
      warranties set out in Clause 19.3 (No
      Contravention of Agreements or Organisational Documents) shall not be
      deemed to be untrue in any material respect unless any contravention, conflict,
      inconsistency, breach, creation or imposition of Lien any Lien or violation
      (as
      the case may be) as set out therein, would reasonably be expected to have a
      Material Adverse Effect.

     

     

    
      	
              20.  

            	
              INFORMATION
                UNDERTAKINGS

            

    

     

    
      	
              20.1  

            	
              Annual
                Financial Statements

            

    

    The
      Guarantor shall supply to the Agent (for distribution to the
      Lenders):

     

    
      	
              20.1.1  

            	
              as
                soon as available and in any event within 90 days after the close
                of each
                fiscal year of the Guarantor, the consolidated balance sheet of the
                Guarantor and its subsidiaries as at the end of such fiscal year
                and the
                related consolidated statements of income, changes in shareholders'
                equity
                and cash flows of the Guarantor and its subsidiaries for such fiscal
                year,
                setting forth in comparative form the consolidated figures for the
                previous fiscal year, all in reasonable detail and accompanied by
                a report
                thereon of PricewaterhouseCoopers
                or

            

    

     

    
      
        
        

      

      
        -65-

        
          

        

      

      
        
        

      

    

    another
      independent registered public accounting firm of recognised national standing
      selected by the Guarantor (without a "going concern" or like qualification
      and
      without any qualification or exception as to the scope of such audit), which
      report shall state that such consolidated financial statements present fairly
      in
      all material respects the consolidated financial position of the Guarantor
      and
      its subsidiaries as at the dates indicated and their consolidated results of
      operations and cash flows for the periods indicated in conformity with US GAAP
      and that the audit by such accountants in connection with such consolidated
      financial statements has been made in accordance with generally accepted
      auditing standards. The Guarantor shall be deemed to have delivered the same
      to
      the Agent if the Guarantor files the same with the SEC via EDGAR and notifies
      the Agent of such filing; and

     

    
      	
              20.1.2  

            	
              as
                soon as the same becomes available and in any event within 120 days
                after
                the close of each of its financial year, the audited financial statements
                of the Managed Syndicate for that financial
                year.

            

    

     

    
      	
              20.2  

            	
              Quarterly
                Financial Statements

            

    

    The
      Guarantor shall supply to the Agent (for distribution to the Lenders), as soon
      as available and in any event within 60 days after the close of each of the
      first three quarterly accounting periods in each fiscal year of the Guarantor,
      consolidated balance sheets of the Guarantor and its subsidiaries as at the
      end
      of such period and the related consolidated statements of income, changes in
      shareholders' equity and cash flows of the Guarantor and its subsidiaries for
      such period and (in the case of the second and third quarterly periods) for
      the
      period from the beginning of the current fiscal year to the end of such
      quarterly period, setting forth in each case in comparative form the
      consolidated figures for the corresponding periods of the previous fiscal year,
      all in reasonable detail and certified by the chief financial officer of the
      Guarantor as presenting fairly in all material respects, in accordance with
      US
      GAAP, the information contained therein, subject to changes resulting from
      normal year-end audit adjustments and the absence of full footnote disclosure.
      The Guarantor shall be deemed to have delivered the same to the Agent if the
      Guarantor files the same with the SEC via EDGAR and notifies the Agent of such
      filing.

     

    
      	
              20.3  

            	
              Officer's
                Certificates

            

    

    The
      Guarantor shall supply to the Agent (for distribution to the Lenders), at the
      time of the delivery of the financial statements provided for in Clause 20.1 (Annual Financial Statements) and Clause
20.2 (Quarterly
      Financial Statements), a
      certificate of a Financial Officer of the Guarantor:

     

    
      	
              20.3.1  

            	
              certifying
                that no Default or Event of Default has occurred or, if any Default
                or
                Event of Default has occurred, specifying the nature and extent thereof
                and any action taken or proposed to be taken with respect
                thereto;

            

    

     

    
      	
              20.3.2  

            	
              setting
                forth reasonably detailed calculations demonstrating compliance with
                the
                provisions of Clause 21 (Financial Condition), as at the end of
                such fiscal year or quarter, as the case may
                be;

            

    

     

    
      
        
        

      

      
        -66-

        
          

        

      

      
        
        

      

    

    

     

    
      	
              20.3.3  

            	
              certifying
                that the Regulated Insurance Companies have, in the opinion of such
                Financial Officer maintained adequate
                reserves;

            

    

     

    
      	
              20.3.4  

            	
              stating
                whether any change in US GAAP or in the application thereof has occurred
                since 31 December 2006 and, if any such change has occurred, specifying
                the effect of such change on the financial statements accompanying
                such
                certificate; and

            

    

     

    
      	
              20.3.5  

            	
              it
                being agreed that a certificate in a form substantially similar to
                the
                Covenant Compliance Calculations delivered by the Guarantor under
                the
                Five-Year Secured Letter of Credit Facility with respect to the fiscal
                period ended 30 September 2007 (a copy of which has been provided
                to the
                Agent) is acceptable for purposes
                hereof.

            

    

     

    
      	
              20.4  

            	
              Quarterly
                Monitoring Return

            

    

    The
      Guarantor shall as soon as the same become available but in any event within
      90
      days after the end of the fourth quarter and 60 days after the end of the first,
      second and third quarters of each financial year of the Managed Syndicate
      deliver to the Agent in sufficient copies for the Lenders, the Quarterly
      Monitoring Return for the Managed Syndicate.

     

    
      	
              20.5  

            	
              Accounting
                Firm Certificate

            

    

    The
      Guarantor shall supply to the Agent (for distribution to the Lenders), at the
      time of the delivery of the financial statements provided for in Clause 20.1 (Annual Financial Statements) above, 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 under Clause 21.1 (Financial Condition) (which certificate
      may be limited to the extent required by general accounting rules or guidelines
      or the guidelines of the applicable accounting firm, to the extent generally
      applicable).

     

    
      	
              20.6  

            	
              Notice
                of Event of Default or
                Litigation

            

    

    The
      Guarantor shall supply to the Agent (for distribution to the
      Lenders):

     

    
      	
              20.6.1  

            	
              promptly
                after the Borrower or the Guarantor becomes aware of the occurrence
                of any
                Event of Default and/or any event or condition constituting, or which
                would reasonably be expected to have, a Material Adverse Effect,
                a
                certificate of an Authorised Officer of the Guarantor setting forth
                the
                details thereof and the actions which the Guarantor is taking or
                proposes
                to take with respect thereto; and

            

    

     

    
      	
              20.6.2  

            	
              promptly
                after the Borrower or the Guarantor knows of the commencement thereof,
                notice of any litigation, dispute or proceeding involving a claim
                against
                the Guarantor and/or any of its subsidiaries which claim has had,
                or would
                reasonably be expected to have, a Material Adverse
                Effect.

            

    

     

    
      
        
        

      

      
        -67-

        
          

        

      

      
        
        

      

    

    

     

    
      	
              20.7  

            	
              SEC
                Filings

            

    

    Promptly
      upon the filing thereof and if requested by the Agent, copies of (or, to the
      extent same is publicly available via the SEC's "EDGAR" filing system, written
      or electronic notification of the filing of) all publicly available registration
      statements (other than the exhibits thereto and any registration statements
      on
      Form S-8 or its equivalent) and annual or quarterly reports which the Guarantor
      shall have filed with the SEC or any national securities exchange.

     

    
      	
              20.8  

            	
              Borrowing
                Base Certificate

            

    

    The
      Guarantor shall supply to the Agent (for distribution to the Lenders), no later
      than the tenth Business Day of each calendar month, a Borrowing Base Certificate
      as of the last day of the immediately preceding month, executed by an Authorised
      Signatory of the Guarantor.

     

    
      	
              20.9  

            	
              Release
                Test Calculations

            

    

    The
      Borrower shall as soon as the same become available, but in any event within
      30
      days from the date of publication by Lloyd's of the release test calculations
      (each, a "Publication Date") in each calendar year, deliver to
      the Agent (for distribution to the Lenders) a copy of the release test
      calculations for the Corporate member published by Lloyd's on or around such
      Publication Date (the "Release Test
      Calculations").

     

    
      	
              20.10  

            	
              Ratings
                Information

            

    

    The
      Guarantor shall supply to the Agent (for distribution to the Lenders), promptly
      after A.M. Best Company, Inc. shall have announced a downgrade in the financial
      strength rating of Validus Reinsurance, Ltd., written notice of such rating
      change.

     

    
      	
              20.11  

            	
              Other
                Information

            

    

    The
      Guarantor shall supply to the Agent (for distribution to the Lenders), with
      reasonable promptness, such other information or existing documents (financial
      or otherwise) as the Agent or any Lender may reasonably request from time to
      time.

     

    
      	
              20.12  

            	
              Delivery
                of Information

            

    

    The
      Guarantor and each Lender hereby acknowledges and agrees that notwithstanding
      anything to the contrary contained in this Agreement, the Agent and/or the
      Borrower and/or the Guarantor may make available to the Lenders materials and/or
      information provided by or on behalf of any Obligor or any other member of
      the
      Group that is party to a Finance Document under this Agreement or any other
      Finance Document by posting such materials and/or information on IntraLinks
      or
      another similar electronic system reasonably acceptable to the Agent and the
      Borrower.

     

    
      	
              20.13  

            	
              Books,
                Records and Inspections

            

    

    The
      Guarantor shall:

     

    
      	
              20.13.1  

            	
              keep,
                and will cause each of its subsidiaries to keep, proper books of
                record
                and account in which full, true and correct entries in conformity
                with
                GAAP or SAP, as applicable, shall be made of all dealings and transactions
                in relation to its business and activities which GAAP or SAP, as
                applicable, requires to be entered therein;
                and

            

    

     

    
      
        
        

      

      
        -68-

        
          

        

      

      
        
        

      

    

    

     

    
      	
              20.13.2  

            	
              subject
                to binding contractual confidentiality obligations of the Obligors
                or
                their subsidiaries to third parties, to Clause 24.7 (Disclosure of
                Information) and to Clause 42
                (Confidentiality), permit, and will cause each of its
                subsidiaries to permit, representatives of the Agent or, following
                the
                occurrence of an Event of Default which is continuing, any Lender
                (at such
                Agent or Lender's expense prior to the occurrence of an Event of
                Default
                and at the Borrower's expense (to the extent invoiced and reasonable)
                after an Event of Default has occurred and is continuing) to visit
                and
                inspect any of their respective properties, to examine their respective
                books and records and to discuss their respective affairs, finances
                and
                accounts with their respective officers, employees and independent
                public
                accountants, in each case at such reasonable times (which shall be,
                unless
                an Event of Default has occurred and is continuing, during business
                hours,
                upon reasonable prior notice to the Agent, which notice shall be
                promptly
                conveyed to the Guarantor) and as often as may reasonably be desired
                providedthat unless a Default or Event
                of Default has occurred which is continuing, such visits and inspections
                shall not occur more than once in any calendar year. Each Obligor
                agrees
                to (and the Guarantor shall ensure that each other member of the
                Group
                that is party to a Finance Document shall) cooperate and assist in
                such
                visits and inspections. With respect to any such discussions with
                any
                independent public accountants of the Guarantor or its subsidiaries,
                the
                Guarantor shall be granted the opportunity to participate
                therein.

            

    

     

    
      	
              20.14  

            	
              "Know
                your customer" checks

            

    

    
      	
              20.14.1  

            	
              If:

            

    

     

    
      	
              (a)  

            	
              the
                introduction of or any change in (or in the interpretation, administration
                or application of) any law or regulation made after the date of this
                Agreement;

            

    

     

    
      	
              (b)  

            	
              any
                change in the status of an Obligor or any other member of the Group
                that
                is party to a Finance Document or the composition of the shareholders
                of
                an Obligor or any other member of the Group that is party to a Finance
                Document after the date of this Agreement;
                or

            

    

     

    
      	
              (c)  

            	
              a
                proposed assignment or transfer by a Lender of any of its rights
                and
                obligations under this Agreement to a party that is not a Lender
                prior to
                such assignment or transfer,

            

    

     

    obliges
      the Agent or any Lender (or, in the case of paragraph (c) above, any prospective
      new Lender) to comply with "know your customer" or similar identification
      procedures in circumstances where the necessary information is not already
      available to it, each Obligor shall (and, where relevant, shall procure that
      each other member of the Group that is party to a Finance Document will)
      promptly upon the request of the Agent or any Lender supply, or procure the
      supply of, such documentation and other evidence as is reasonably requested
      by
      the Agent (for itself or on behalf of any Lender) or any Lender (for itself
      or,
      in the case of the event described in paragraph (c) above, on behalf of any
      prospective new Lender) in order for the Agent, such Lender or, in the case
      of

     

    
      
        
        

      

      
        -69-

        
          

        

      

      
        
        

      

    

    the
      event
      described in paragraph (c) above, any prospective new Lender to carry out and
      be
      satisfied it has complied with all necessary "know your customer" or other
      similar checks under all applicable laws and regulations pursuant to the
      transactions contemplated in the Finance Documents.

     

    
      	
              20.14.2  

            	
              Each
                Lender shall promptly upon the request of the Agent supply, or procure
                the
                supply of, such documentation and other evidence as is reasonably
                requested by the Agent (for itself) in order for the Agent to carry
                out
                and be satisfied it has complied with all necessary "know your customer"
                or other similar checks under all applicable laws and regulations
                pursuant
                to the transactions contemplated in the Finance
                Documents.

            

    

     

     

    
      	
              21.  

            	
              FINANCIAL
                CONDITION

            

    

     

    
      	
              21.1  

            	
              Financial
                Condition

            

    

    The
      Guarantor shall not at any time permit:

     

    
      	
              21.1.1  

            	
              the
                Leverage Ratio to be greater than 0.35:1.00;
                and

            

    

     

    
      	
              21.1.2  

            	
              the
                Consolidated Net Worth to be less than the Minimum Consolidated Net
                Worth
                Amount in effect at such time.

            

    

     

    
      	
              21.2  

            	
              Financial
                Definitions

            

    

    In
      this
      Agreement, the following terms have the following meanings:

     

    "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 US GAAP, and the amount of such obligations
      shall be the capitalised amount thereof determined in accordance with US
      GAAP.

     

    "Consolidated
      Indebtedness" means, as of any date of determination, all Indebtedness
      (other than (a) Indebtedness described in paragraph (i) of the definition
      thereof that does not constitute bonds, debentures, notes or similar instruments
      that are generally recourse with respect to the Guarantor and its subsidiaries,
      (b) obligations in respect of undrawn letters of credit and (c) Indebtedness
      that is non-recourse with respect to the Guarantor and its subsidiaries) of
      the
      Guarantor and its subsidiaries. For the avoidance of doubt, "Consolidated
      Indebtedness" shall not include contingent obligations of the Guarantor or
      any
      subsidiary as an account party or applicant in respect of any letter of credit
      or Guarantee unless such letter of credit or Guarantee supports an obligation
      that constitutes Indebtedness.

     

    "Consolidated
      Net Worth" means, as of any date of determination, the Net Worth of the
      Guarantor and its subsidiaries determined on a consolidated basis in accordance
      with US

     

    
      
        
        

      

      
        -70-

        
          

        

      

      
        
        

      

    

    GAAP
      after appropriate deduction for any minority interests in subsidiaries including
      for the avoidance of doubt the aggregate principal amount of all outstanding
      preferred (including without limitation trust preferred) or preference
      securities or Hybrid Capital of the Guarantor and its subsidiaries
provided that the aggregate outstanding amount of such
      preferred or preference securities or Hybrid Capital of the Guarantor and its
      subsidiaries shall only be included in Consolidated Net Worth to the extent
      such
      amount would be included in a determination of the consolidated net worth of
      the
      Guarantor and its subsidiaries under the applicable procedures and guidelines
      of
      S&P as of the date of this Agreement.

     

    "Consolidated
      Total Capital" means, as of any date of determination, the sum of (a)
      Consolidated Indebtedness and (b) Consolidated Net Worth at such
      time.

     

    "Fronting
      Arrangement" means an agreement or other arrangement by a Regulated
      Insurance Company pursuant to which an insurer or insurers agree to issue
      insurance policies at the request or on behalf of such Regulated Insurance
      Company and such Regulated Insurance Company assumes the obligations in respect
      thereof pursuant a Reinsurance Agreement or otherwise.

     

    "Guarantee"
      of or by any person (the "guarantor") means any obligation
      guaranteeing or intended to guarantee any Indebtedness, leases, dividends or
      other obligations ("primary obligations") of any other person
      (the "primary obligor") in any manner, whether directly or
      indirectly, including any obligation of such person, whether or not
      contingent:

     

    
      	
              (a)  

            	
              to
                purchase any such primary obligation or any property constituting
                direct
                or indirect security therefor;

            

    

     

    
      	
              (b)  

            	
              to
                advance or supply funds:

            

    

     

    
      	
              (i)  

            	
              for
                the purchase or payment of any such primary obligation;
                or

            

    

     

    
      	
              (ii)  

            	
              to
                maintain working capital or equity capital of the primary obligor
                or
                otherwise to maintain the net worth or solvency of the primary
                obligor;

            

    

     

    
      	
              (c)  

            	
              to
                purchase or lease property, securities or services primarily for
                the
                purpose of assuring the owner of any such primary obligation of the
                ability of the primary obligor to make payment of such primary obligation;
                or

            

    

     

    
      	
              (d)  

            	
              otherwise
                to assure or hold harmless the owner of such primary obligation against
                loss in respect thereof,

            

    

     

    provided
      that the term "Guarantee" shall not include (i) endorsements of
      instruments for deposit or collection in the ordinary course of business and
      (ii) obligations of any Regulated Insurance Company under Insurance Contracts,
      Reinsurance Agreements, Fronting Arrangements or Retrocession Agreements
      (including any Liens with respect thereto). The amount of any Guarantee shall
      be
      deemed to be an amount equal to the stated or determinable amount of the primary
      obligation in respect of which such

     

    
      
        
        

      

      
        -71-

        
          

        

      

      
        
        

      

    

    Guarantee
      is made or, if not stated or determinable, the maximum reasonably anticipated
      liability in respect thereof (assuming such person is required to perform
      thereunder) as determined by such person in good faith.

     

    "Hybrid
      Capital" means any security that affords equity benefit to the issuer
      thereof (under the procedures and guidelines of the S&P) by having ongoing
      payment requirements that are more flexible than interest payments associated
      with conventional indebtedness for borrowed money and by being contractually
      subordinated to such indebtedness. For the avoidance of doubt, the Guarantor's
      Junior Subordinated Deferrable Debentures constitute Hybrid
      Capital.

     

    "Insurance
      Contract" means any insurance contract or policy issued by a Regulated
      Insurance Company but shall not include any Reinsurance Agreement, Fronting
      Arrangement or Retrocession Agreement.

     

    "Junior
      Subordinated Deferrable Debentures" mean the Guarantor's Junior
      Subordinated Deferrable Interest Debentures due 2036 issued under the Junior
      Subordinated Indenture dated as of 15 June 2006 between the Guarantor and
      JPMorgan Chase Bank, National Association as trustee, as the same has been
      and
      may be amended from time to time, and any substantially similarly structured
      security issued by the Guarantor or any of its subsidiaries, including for
      the
      avoidance of doubt the Guarantor's Junior Subordinated Deferrable Interest
      Debentures due 2037 issued under the Junior Subordinated Indenture dated 21
      June
      2007 between the Guarantor and Wilmington Trust Company, as Trustee, as the
      same
      may be amended from time to time.

     

    "Leverage
      Ratio" means the ratio of (i) Consolidated Indebtedness to (ii)
      Consolidated Total Capital.

     

    "Minimum
      Consolidated Net Worth Amount" shall mean, at any time, an amount which
      initially shall be equal to $1,164,265,000, and which amount shall be increased
      on the last day of each financial quarter (commencing with the financial quarter
      ending on 31 December 2007) by (i) an amount (if positive) equal to 50% of
      the
      Net Income for such financial quarter plus (ii) 50% of the net
      proceeds received from any issuance of shares of common stock of the Guarantor
      during such financial quarter.

     

    "Net
      Income" shall mean, for any period, an amount equal to the net income
      of the Guarantor and its subsidiaries (determined on a consolidated basis in
      accordance with US GAAP) for such period.

     

    "Reinsurance
      Agreement" means any agreement, contract, treaty, certificate or other
      arrangement whereby any Regulated Insurance Company agrees to transfer, cede
      or
      retrocede to another insurer or reinsurer all or part of the liability assumed
      or assets held by such Regulated Insurance Company under a policy or policies
      of
      insurance issued by such Regulated Insurance Company or under a reinsurance
      agreement assumed by such Regulated Insurance Company.

     

    
      
        
        

      

      
        -72-

        
          

        

      

      
        
        

      

    

    

     

    "Retrocession
      Agreement" means any agreement, contract, treaty or other arrangement
      whereby one or more insurers or reinsurers, as retrocessionaires, assume
      liabilities of reinsurers under a Reinsurance Agreement or other
      retrocessionaires
      under another Retrocession Agreement.

     

    
      	
              21.3  

            	
              Financial
                Testing

            

    

    The
      financial covenants set out in this Clause 21 shall
      be tested by reference to each of the annual audited or quarterly financial
      statements and/or each officer's certificate delivered pursuant to Clause 20.3 (Officer's Certificates).

     

    
      	
              21.4  

            	
              Accounting
                Terms

            

    

    All
      accounting expressions which are not otherwise defined herein shall be construed
      in accordance with US GAAP or UK GAAP, as applicable, it being understood that
      insofar as any test or covenant applies to the Guarantor and its subsidiaries
      on
      a consolidated basis, such accounting expressions shall be construed in
      accordance with US GAAP.

     

     

    
      	
              22.  

            	
              GENERAL
                UNDERTAKINGS

            

    

     

    
      	
              22.1  

            	
              Insurance

            

    

    The
      Guarantor will maintain, and will cause each of its subsidiaries to maintain
      (either in the name of the Guarantor or in the subsidiary's own name) with
      financially sound and reputable insurance companies, insurance on their property
      in at least such amounts and against at least such risks as are usually insured
      against in the same general area by companies of established repute engaged
      in
      the same or similar businesses.

     

    
      	
              22.2  

            	
              Payment
                of Taxes and other
                Obligations

            

    

    Except
      where the failure to do so would not reasonably be expected, individually or
      in
      aggregate, to have a Material Adverse Effect, the Guarantor will pay and
      discharge, and will cause each of its subsidiaries to pay and
      discharge:

     

    
      	
              22.2.1  

            	
              all
                material income taxes and all other material taxes, assessments and
                governmental charges or levies imposed upon it or upon its income
                or
                profits, or upon any properties belonging to it;
                and

            

    

     

    
      	
              22.2.2  

            	
              all
                other material lawful claims, in each case, on a timely basis prior
                to the
                date on which penalties attach thereto; provided that neither the
                Guarantor nor any of its subsidiaries shall be required to pay any
                such
                tax, assessment, charge, levy or claim which is being contested in
                good
                faith and by proper proceedings if it has maintained adequate reserves
                with respect thereto in accordance with applicable
                GAAP.

            

    

     

    
      	
              22.3  

            	
              Maintenance
                of Existence; Conduct of
                Business

            

    

    
      	
              22.3.1  

            	
              The
                Guarantor shall maintain, and shall cause each of its subsidiaries
                to
                maintain, its existence and the rights, licenses, permits, privileges,
                franchises, patents, copyrights, trademarks and trade names material
                to
                the conduct of its business, provided that the Guarantor shall not
                be
                required to maintain the

            

    

     

    
      
        
        

      

      
        -73-

        
          

        

      

      
        
        

      

    

    existence
      of any of its subsidiaries or any such rights, licenses, permits, privileges,
      franchises, patents, copyrights, trademarks and trade names:

     

    
      	
              (a)  

            	
              if
                the Guarantor shall determine in good faith that the preservation
                thereof
                is no longer desirable in the conduct of the business of the Guarantor
                and
                its subsidiaries, taken as a whole;
                or

            

    

     

    
      	
              (b)  

            	
              in
                connection with a Disposition permitted by Clause 22.13 (Consolidations, Mergers and Sales
                of
                Assets).

            

    

     

    
      	
              22.3.2  

            	
              The
                Guarantor will qualify and remain qualified, and cause each of its
                subsidiaries to qualify and remain qualified, as a foreign corporation
                in
                each jurisdiction where the Guarantor or such subsidiary, as the
                case may
                be, is required to be qualified, except in those jurisdictions in
                which
                the failure to receive or retain such qualifications, either individually
                or in the aggregate, has not had, and would not reasonably be expected
                to
                have, a Material Adverse Effect.

            

    

     

    
      	
              22.4  

            	
              Compliance
                with Statutes, etc.

            

    

    The
      Guarantor will, and will cause each subsidiary to, comply with all applicable
      statutes, regulations and orders of, and all applicable restrictions imposed
      by,
      all governmental bodies, domestic or foreign, in respect of the conduct of
      its
      business and the ownership of its property (including applicable statutes,
      regulations, orders and restrictions relating to environmental standards and
      controls) other than those the non-compliance with which, either individually
      or
      in the aggregate, has not had, and would not reasonably be expected to have,
      a
      Material Adverse Effect.

     

    
      	
              22.5  

            	
              ERISA

            

    

    Promptly
      after the occurrence of any of the events or conditions specified below with
      respect to any Plan or Multiemployer Plan, the Guarantor will furnish to the
      Agent (for distribution to the Lenders), a certificate of an Authorised
      Signatory of the Guarantor setting forth details respecting such event or
      condition and the action if any, that the Guarantor or the applicable ERISA
      Affiliate proposes to take with respect thereto (and a copy of any report or
      notice required to be filed with or given to the PBGC or an applicable foreign
      governmental agency by the Guarantor or such ERISA Affiliate with respect to
      such event or condition).  The events or conditions are:

     

    
      	
              22.5.1  

            	
              any
                reportable event, as defined in subsections (c)(1), (2), (5) and
                (6), and
                subsection (d)(2) of Section 4043 of ERISA and the regulations issued
                thereunder, with respect to a Plan;

            

    

     

    
      	
              22.5.2  

            	
              the
                filing under Section 4041(c) of ERISA of a notice of intent to terminate
                any Plan under a distress termination or the distress termination
                of any
                Plan;

            

    

     

    
      	
              22.5.3  

            	
              the
                institution by the PBGC of proceedings under Section 4042 of ERISA
                for the
                termination of, or the appointment of a trustee to administer, any
                Plan,
                or the receipt by the Guarantor or any of its ERISA Affiliates of
                a notice
                from a Multiemployer Plan that such action has been taken by the
                PBGC with
                respect

            

    

     

    
      
        
        

      

      
        -74-

        
          

        

      

      
        
        

      

    

    to
      such
      Multiemployer Plan which would reasonably be expected to result in a liability
      to the Guarantor or any of its subsidiaries in excess of
      $15,000,000;

     

    
      	
              22.5.4  

            	
              the
                receipt by the Guarantor or any of its ERISA Affiliates of notice
                from a
                Multiemployer Plan that the Guarantor or any of its ERISA Affiliates
                has
                incurred withdrawal liability under Section 4201 of ERISA in excess
                of
                $15,000,000 or that such Multiemployer Plan is in reorganisation
                or
                insolvency pursuant to Section 4241 or 4245 of ERISA or that it intends
                to
                terminate or has terminated under Section 4041A of ERISA whereby
                a
                deficiency or additional assessment is levied or threatened to be
                levied
                in excess of $15,000,000 against the Guarantor or any of its ERISA
                Affiliates;

            

    

     

    
      	
              22.5.5  

            	
              the
                institution of a proceeding by a fiduciary of any Plan or Multiemployer
                Plan against the Guarantor or any of its ERISA Affiliates to enforce
                Section 515 or 4219(c)(5) of ERISA asserting liability in excess
                of
                $15,000,000, which proceeding is not dismissed within 30 days;
                and

            

    

     

    
      	
              22.5.6  

            	
              that
                any contribution in excess of $15,000,000 required to be made with
                respect
                to a Foreign Pension Plan has not been timely made, or that the Guarantor
                or any of its subsidiaries may incur any liability in excess of
                $15,000,000 pursuant to any Foreign Pension Plan (other than to make
                contributions in the ordinary course of
                business).

            

    

     

    
      	
              22.6  

            	
              Maintenance
                of Property

            

    

    The
      Guarantor shall, and shall cause each of its subsidiaries to, maintain all
      of
      their properties and assets in good condition, repair and working order,
      ordinary wear and tear excepted, except where failure to maintain the same,
      either individually or in the aggregate, has not had, and would not reasonably
      be expected to have, a Material Adverse Effect.

     

    
      	
              22.7  

            	
              Maintenance
                of Licenses and Permits

            

    

    The
      Guarantor shall, and shall cause each of its subsidiaries to, maintain all
      permits, licenses and consents as may be required for the conduct of its
      business by any state, federal or local government agency or instrumentality,
      except where failure to maintain the same, either individually or in the
      aggregate, has not had, and would not reasonably be expected to have, a Material
      Adverse Effect.

     

    
      	
              22.8  

            	
              Collateral;
                Further Assurances

            

    

    The
      Guarantor shall promptly and duly execute and deliver to the Agent such
      documents and assurances and take such further action as the Agent may from
      time
      to time reasonably request in order to carry out more effectively the intent
      and
      purpose of the Finance Documents and to establish, protect and perfect the
      rights and remedies created or intended to be created in favour of the Finance
      Parties pursuant to the Finance Documents.

     

    
      
        
        

      

      
        -75-

        
          

        

      

      
        
        

      

    

    

     

    
      	
              22.9  

            	
              Substitution
                of Letters of Credit

            

    

    Upon
      any
      Lender assigning or transferring the whole or any part of its Commitment in
      accordance with Clause 24 (Changes to the
      Lenders) the Borrower shall use all commercially reasonable endeavours to
      procure that Lloyd's accepts a new Letter of Credit issued by the new Lenders
      party to that Letter of Credit in replacement for the original Letter of Credit
      and such original Letter of Credit is returned to the Agent.

     

    
      	
              22.10  

            	
              Application
                of Funds at Lloyd's and Cash
                Calls

            

    

    The
      Managing Agent shall, before applying the Funds at Lloyd's of that Account
      Party
      in the payment of any claims, expenses or outgoings made or incurred in
      connection with its underwriting business, make a request for funds of the
      Account Party in its capacity as a member of the Managed Syndicate.

     

    
      	
              22.11  

            	
              Funds
                at Lloyd's compliance

            

    

    Each
      Obligor shall:

     

    
      	
              22.11.1  

            	
              ensure
                the Own FAL of the Account Party shall consist of acceptable assets
                (as
                such phrase is defined in paragraph 8 of the Membership and Underwriting
                Conditions and requirements (Funds at
                Lloyd's));

            

    

     

    
      	
              22.11.2  

            	
              ensure
                that its Own FAL shall be revalued by Lloyd’s in accordance with Lloyd’s
                usual practice on 31 December in each year and on each of the Publication
                Dates referred to in Clause 20.9 (Release
                Test Calculations); and

            

    

     

    
      	
              22.11.3  

            	
              ensure
                that, subject to any claims or losses of the Account Party arising
                on or
                after the date of this Agreement in the ordinary course of its insurance
                business, Own FAL of the Account Party shall not at any time be less
                than
                $215,000,000.

            

    

     

    
      	
              22.12  

            	
              Changes
                in Business or Organisational
                Documents

            

    

    The
      Guarantor shall not, and shall ensure that none of its subsidiaries will, engage
      (directly or indirectly) in any business other than:

     

    
      	
              22.12.1  

            	
              businesses
                in which they are engaged (or proposed to be engaged) as of the date
                of
                this Agreement and reasonable extensions
                thereof;

            

    

     

    
      	
              22.12.2  

            	
              other
                specialty insurance and structured risk insurance and reinsurance
                product
                lines; and

            

    

     

    
      	
              22.12.3  

            	
              any
                other businesses that are complementary or reasonably related thereto
                and
                the conduct of business incidental
                thereto.

            

    

     

    
      	
              22.13  

            	
              Consolidations,
                Mergers and Sales of
                Assets

            

    

    
      	
              22.13.1  

            	
              The
                Guarantor shall not, and shall ensure that none of its subsidiaries
                will,
                consolidate or merge with or into any other person, or permit any
                other
                person to merge into or consolidate with it; provided that, in each
                case
                subject to compliance with Clause 22.24
                (Investments, Loans, Advances and
                Guarantees):

            

    

     

    
      
        
        

      

      
        -76-

        
          

        

      

      
        
        

      

    

    

     

    
      	
              (a)  

            	
              the
                Guarantor may merge with another person,
                if:

            

    

     

    
      	
              (i)  

            	
              the
                Guarantor is the entity surviving such merger;
                and

            

    

     

    
      	
              (ii)  

            	
              immediately
                after giving effect to such merger, no Default or Event of Default
                shall
                have occurred and be continuing;

            

    

     

    
      	
              (b)  

            	
              any
                subsidiary of the Guarantor may merge with another person,
                if:

            

    

     

    
      	
              (i)  

            	
              such
                subsidiary is the entity surviving such merger;
                and

            

    

     

    
      	
              (ii)  

            	
              immediately
                after giving effect to such merger, no Default or Event of Default
                shall
                have occurred and be continuing;
                and

            

    

     

    
      	
              (c)  

            	
              Wholly-Owned
                Subsidiaries of the Guarantor may merge with one
                another.

            

    

     

    
      	
              22.13.2  

            	
              In
                addition, the Guarantor shall not, and shall ensure that none of
                its
                subsidiaries will, sell, convey, assign, lease, abandon or otherwise
                transfer or dispose of, voluntarily or involuntarily, any of its
                properties or assets, tangible or intangible (each, a
                "Disposition"),
                except:

            

    

     

    
      	
              (a)  

            	
              Dispositions
                in the ordinary course of its
                business;

            

    

     

    
      	
              (b)  

            	
              such
                Dispositions by the Guarantor or any of their subsidiaries of any
                of their
                respective properties or assets to the Guarantor or any Wholly-Owned
                Subsidiary of the Guarantor;

            

    

     

    
      	
              (c)  

            	
              subject
                to Clause 22.3 (Maintenance of Existence;
                Conduct of Business), the dissolution or winding up of any subsidiary
                other than an Obligor or the Account
                Party;

            

    

     

    
      	
              (d)  

            	
              Dispositions
                of used, worn out, obsolete or surplus property of the Guarantor
                or any
                subsidiary in the ordinary course of
                business;

            

    

     

    
      	
              (e)  

            	
              licenses
                (as licensor) of intellectual property so long as such licenses do
                not
                materially interfere with the business of the Guarantor or any of
                its
                subsidiaries;

            

    

     

    
      	
              (f)  

            	
              Dispositions
                of Cash, Cash Equivalents and investment securities (including pursuant
                to
                any securities lending arrangements permitted by sub-clause 22.14.21 of Clause 22.14 (Liens)
                and including in
                connection with the posting of collateral in connection with this
                Agreement or in connection with the Five-Year Secured Letter of Credit
                Facility);

            

    

     

    
      	
              (g)  

            	
              releases,
                surrenders or waivers of contracts, torts or other claims of any
                kind as a
                result of the settlement of any litigation or threatened
                litigation;

            

    

     

    
      	
              (h)  

            	
              the
                granting or existence of Liens permitted under this
                Agreement;

            

    

     

    
      
        
        

      

      
        -77-

        
          

        

      

      
        
        

      

    

    

     

    
      	
              (i)  

            	
              leases
                or subleases of real property so long as such leases or subleases
                do not
                materially interfere with the business of the Guarantor or any of
                its
                subsidiaries;

            

    

     

    
      	
              (j)  

            	
              Dividends
                permitted under Clause 22.19 (Restricted
                Payments);

            

    

     

    
      	
              (k)  

            	
              ceding
                of insurance or reinsurance in the ordinary course of
                business;

            

    

     

    
      	
              (l)  

            	
              other
                Dispositions of assets with a fair market value which in the aggregate
                do
                not exceed 10 per cent. of the lesser of the book or fair market
                value of
                the property and assets of the Guarantor determined on a consolidated
                basis as of the last day of the previous financial year of the Guarantor
                provided that immediately after giving effect (including
                pro forma effect) to any Disposition made pursuant to this sub-paragraph
                (l), no Event of Default shall have occurred
                and be continuing; and

            

    

     

    
      	
              (m)  

            	
              Dispositions
                of investments made pursuant to sub-clause 22.24.8 of Clause 22.24 (Investments,
                Loans, Advances and
                Guarantees), provided that for the avoidance of
                doubt, Dispositions of Collateral shall only be made to the extent
                permitted under Sections 4.04 or 4.05 of the Security Agreement and
                this
                sub-clause (m) shall not serve as a waiver or
                modification of the requirements under Clause 9 (Collateralisation and
                Redesignation of Letters of
                Credit).

            

    

     

    
      	
              22.14  

            	
              Liens

            

    

    The
      Guarantor shall not, and shall ensure that none of its subsidiaries will,
      permit, create, assume, incur or suffer to exist any Lien on any asset tangible
      or intangible now owned or hereafter acquired by it, except:

     

    
      	
              22.14.1  

            	
              Liens
                existing on the date of this Agreement and listed in Schedule 11
                (Existing Liens) hereto, including any amendment or variation
                thereof (except to the extent that such amendment or variation results
                in
                an increase of the principal amount secured by such
                Lien);

            

    

     

    
      	
              22.14.2  

            	
              Liens
                securing repurchase agreements constituting a borrowing of funds
                by the
                Guarantor or any subsidiary of the Guarantor in the ordinary course
                of
                business for liquidity purposes and in no event for a period exceeding
                90
                days in each case;

            

    

     

    
      	
              22.14.3  

            	
              Liens
                arising pursuant to purchase money mortgages, capital leases or security
                interests securing Indebtedness representing the purchase price (or
                financing of the purchase price within 90 days after the respective
                purchase) of assets acquired by any Obligor or any of its
                subsidiaries;

            

    

     

    
      	
              22.14.4  

            	
              Liens
                on any asset of any person existing at the time such person is merged
                or
                consolidated with or into, or otherwise acquired by, the Guarantor
                or any
                of its subsidiaries or becomes a member of the Group or at the time
                of
                acquisition of

            

    

     

    
      
        
        

      

      
        -78-

        
          

        

      

      
        
        

      

    

    such
      asset by the Guarantor or any of its subsidiaries and not created in
      contemplation of such event;

     

    
      	
              22.14.5  

            	
              Liens
                securing obligations owed by the Guarantor to any of its subsidiaries
                or
                owed by any subsidiary of the Guarantor to the Guarantor or any other
                subsidiary of the Guarantor, in each case solely to the extent that
                such
                Liens are required by an Applicable Insurance Regulatory Authority
                for
                such person to maintain such
                obligations;

            

    

     

    
      	
              22.14.6  

            	
              Liens
                securing insurance or reinsurance obligations of subsidiaries of
                the
                Guarantor owed by such subsidiary to the Guarantor or any other subsidiary
                of the Guarantor, in each case solely to the extent that such Liens
                are
                required or requested by rating agencies, regulatory agencies, clients
                or
                brokers for such person to maintain such insurance and reinsurance
                obligations;

            

    

     

    
      	
              22.14.7  

            	
              Liens
                on investments and cash balances of any Regulated Insurance Company
                securing obligations of such Regulated Insurance Company in respect
                of
                trust or similar arrangements formed, letters of credit issued or
                funds
                withheld balances established, in each case, in the ordinary course
                of
                business for the benefit of policyholders or cedents to secure insurance
                or reinsurance recoverables owed to them by such Regulated Insurance
                Company;

            

    

     

    
      	
              22.14.8  

            	
              inchoate
                Liens for taxes, assessments or governmental charges or levies not
                yet due
                or Liens for taxes, assessments or governmental charges or levies
                being
                contested in good faith and by appropriate proceedings for which
                adequate
                reserves have been established in accordance with applicable
                GAAP;

            

    

     

    
      	
              22.14.9  

            	
              Liens
                in respect of property or assets of the Guarantor or any of its
                subsidiaries imposed by law, which were incurred in the ordinary
                course of
                business and do not secure Indebtedness for borrowed money, such
                as
                carriers', warehousemen's, materialmen's and mechanics' liens and
                other
                similar Liens arising in the ordinary course of business,
                and:

            

    

     

    
      	
              (a)  

            	
              which
                do not in the aggregate materially detract from the value of the
                Guarantor
                or such subsidiary's property or assets or materially impair the
                use
                thereof in the operation of the business of the Guarantor or such
                subsidiary; or

            

    

     

    
      	
              (b)  

            	
              which
                are being contested in good faith by appropriate proceedings, which
                proceedings have the effect of preventing the forfeiture or sale
                of the
                property or assets subject to any such
                Lien;

            

    

     

    
      	
              22.14.10  

            	
              licenses,
                sublicenses, leases, or subleases granted to other persons not materially
                interfering with the conduct of the business of the Guarantor or
                any of
                its subsidiaries;

            

    

     

    
      	
              22.14.11  

            	
              easements,
                rights-of-way, restrictions, encroachments and other similar charges
                or
                encumbrances, and minor title deficiencies, in each case not
                securing

            

    

     

    
      
        
        

      

      
        -79-

        
          

        

      

      
        
        

      

    

    Indebtedness
      and not materially interfering with the conduct of the business of the Guarantor
      or any of its subsidiaries;

     

    
      	
              22.14.12  

            	
              Liens
                arising out of the existence of judgments or awards not constituting
                an
                Event of Default under Clause 23.7
                (Judgments);

            

    

     

    
      	
              22.14.13  

            	
              Liens
                (other than Liens imposed under ERISA) incurred in the ordinary course
                of
                business in connection with workers compensation claims, unemployment
                insurance and social security benefits and Liens securing the performance
                of bids, reinsurance obligations, tenders, leases and contracts in
                the
                ordinary course of business, statutory obligations, surety bonds,
                performance bonds and other obligations of a like nature incurred
                in the
                ordinary course of business and consistent with past practice (exclusive
                of obligations in respect of payment for borrowed
                money);

            

    

     

    
      	
              22.14.14  

            	
              bankers'
                Liens, rights of setoff and other similar Liens existing solely with
                respect to Cash and Cash Equivalents on deposit in one or more accounts
                maintained by the Guarantor or any of its subsidiaries, in each case
                granted in the ordinary course of business in favour of the bank
                or banks
                with which such accounts are
                maintained;

            

    

     

    
      	
              22.14.15  

            	
              Liens
                arising out of the refinancing, extension, renewal or refunding of
                any
                Indebtedness secured by any Lien permitted by any of the clauses
                of this
                Clause 22.14 (Liens), provided that
                such Indebtedness is not increased and is not secured by any additional
                assets;

            

    

     

    
      	
              22.14.16  

            	
              Liens
                created pursuant to the Finance Documents and Liens created pursuant
                to
                the Five-Year Secured Letter of Credit
                Facility;

            

    

     

    
      	
              22.14.17  

            	
              Liens
                in respect of property or assets of any subsidiary of the Guarantor
                securing Indebtedness of the type described in paragraph (e) of the
                definition of "Permitted Subsidiary
                Indebtedness";

            

    

     

    
      	
              22.14.18  

            	
              Liens
                in respect of property or assets of any subsidiary of the Guarantor
                securing Indebtedness of the type described in paragraph (i) of the
                definition of "Permitted Subsidiary Indebtedness" provided
                that:

            

    

     

    
      	
              (a)  

            	
              the
                aggregate amount of such Liens (measured, as to each such Lien permitted
                under this sub-clause 22.14.18, as the
                greater of the amount secured by such Lien and the fair market value
                at
                such time of the assets subject to such Lien) shall not, when added
                to the
                aggregate amount of all Liens (measured as set forth in this sub-clause
22.14.18) incurred pursuant to sub-clause 22.14.26 and
                the aggregate amount of outstanding
                unsecured Indebtedness of subsidiaries incurred pursuant to paragraph
                (i)
                of the definition of "Permitted Subsidiary Indebtedness", exceed
                at any
                time 5 per cent. of Consolidated Net Worth at the time of incurrence
                of
                any new Liens under this sub-clause 22.14.18;
                and

            

    

     

    
      
        
        

      

      
        -80-

        
          

        

      

      
        
        

      

    

    

     

    
      	
              (b)  

            	
              immediately
                after giving effect to the incurrence of any Lien pursuant to this
                sub-clause 22.14.18, no Event of Default
                shall have occurred and be
                continuing;

            

    

     

    
      	
              22.14.19  

            	
              Liens
                on assets received by or of the Guarantor or its subsidiaries and
                held in
                trust in respect of, or deposited or segregated to secure, liabilities
                assumed in the course of the reinsurance business or under any Insurance
                Contracts, Reinsurance Agreements, Fronting Arrangements or other
                indemnity arrangements entered in the ordinary course of business,
                Liens
                on assets held in any Lloyd’s Trust Fund and/or Liens on assets held in
                any insurance brokering account;

            

    

     

    
      	
              22.14.20  

            	
              Liens
                not securing indebtedness for borrowed money on Cash and securities
                arising in the ordinary course of business in connection with the
                structured risk insurance and reinsurance product lines of the Guarantor
                or its subsidiaries;

            

    

     

    
      	
              22.14.21  

            	
              Liens
                arising in connection with securities lending arrangements entered
                into by
                the Guarantor or any of its subsidiaries with financial institutions
                in
                the ordinary course of business so long as any securities subject
                to any
                such securities lending arrangement do not constitute
                Collateral;

            

    

     

    
      	
              22.14.22  

            	
              any
                title transfer or retention of title arrangement entered into by
                any
                member of the Group in the normal course of its trading activities
                on the
                counterparty's standard or usual
                terms;

            

    

     

    
      	
              22.14.23  

            	
              any
                Lien over or affecting any asset forming part of a trust fund (or
                whose
                proceeds will form part of a trust fund) which is held subject to
                the
                provisions of any deed or agreement of the kind referred to in sub-clause
                22.14.24 below, where such Lien is created
                to
                secure obligations arising under a Syndicate
                Arrangement;

            

    

     

    
      	
              22.14.24  

            	
              any
                Lien granted or subsisting under any deed or agreement required by
                Lloyd's
                to be executed or entered into by or on behalf of a member of the
                Group in
                connection with its insurance business at
                Lloyd's;

            

    

     

    
      	
              22.14.25  

            	
              Liens
                pursuant to any agreement entered into from time to time between
                the
                Managing Agent and any custodian and any investment manager of or
                in
                respect of the syndicate's assets;
                and

            

    

     

    
      	
              22.14.26  

            	
              without
                duplication of the Liens described in sub-clauses 22.14.1 through 22.14.25 above,
                additional Liens securing
                obligations of the Guarantor or its subsidiaries provided
                that:

            

    

     

    
      	
              (a)  

            	
              the
                aggregate amount of such Liens (measured, as to each such Lien permitted
                under this sub-clause 22.14.26, as the
                greater of the amount secured by such Lien and the fair market value
                at
                such time of the assets subject to such Lien) shall not, when added
                to the
                aggregate amount of all

            

    

     

    
      
        
        

      

      
        -81-

        
          

        

      

      
        
        

      

    

    Liens
      (measured as set forth in this sub-clause 22.14.26,
      above) incurred pursuant to sub-clause 22.14.18 and
      the aggregate amount of outstanding unsecured Indebtedness of subsidiaries
      of
      the Guarantor incurred pursuant to paragraph (i) of the definition of "Permitted
      Subsidiary Indebtedness", exceed at any time 5 per cent. of Consolidated Net
      Worth at the time of incurrence of any new Liens under this sub-clause 22.14.26; and

     

    
      	
              (b)  

            	
              immediately
                after giving effect to the incurrence of any Lien pursuant to this
                sub-clause 22.14.26, no Event of Default
                shall have occurred and be
                continuing.

            

    

     

    
      	
              22.15  

            	
              Indebtedness

            

    

    
      	
              22.15.1  

            	
              The
                Guarantor shall not 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 for the Indebtedness under the
                Finance
                Documents, Indebtedness under the Five-Year Secured Letter of Credit
                Facility, Indebtedness under the Three-Year Unsecured Letter of Credit
                Facility and other Indebtedness which either ranks pari passu
                with, or subordinate in right of payment to, any such Indebtedness
                (it being understood that unsecured Indebtedness is not subordinate
                to
                secured Indebtedness solely because it is unsecured, and Indebtedness
                that
                is not guaranteed by a particular person is not deemed to be subordinate
                to Indebtedness that is so guaranteed solely because it is not so
                guaranteed).

            

    

     

    
      	
              22.15.2  

            	
              The
                Guarantor shall ensure that none of its subsidiaries will 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
                for
                Permitted Subsidiary Indebtedness.

            

    

     

    
      	
              22.16  

            	
              Sale
                and Lease-Back
                Transactions

            

    

    The
      Guarantor shall not, and shall ensure that none of its subsidiaries will, enter
      into any arrangement, directly or indirectly, whereby it shall sell or transfer
      any property, real or personal, used or useful in its business, whether now
      owned or hereafter acquired, and thereafter rent or lease such property or
      other
      property that it intends to use for substantially the same purpose or purposes
      as the property sold or transferred, except for any such sale of any fixed
      or
      capital assets by the Guarantor or any subsidiary that is made for cash
      consideration in an amount not less than the fair value of such fixed or capital
      asset and is consummated within 90 days after the Guarantor or any subsidiary
      acquires or completes the construction of such fixed or capital asset, provided
      that, if such sale and leaseback results in a Capital Lease Obligation, such
      Capital Lease Obligation is permitted by Clause 22.15 (Indebtedness) and any Lien made the
      subject of such Capital Lease Obligation is permitted by Clause 22.14 (Liens); provided, that this Clause 22.16 shall
      not prohibit Capital Markets Products
      entered into in the ordinary course of business and not for speculative
      purposes.

     

    
      
        
        

      

      
        -82-

        
          

        

      

      
        
        

      

    

    

     

    
      	
              22.17  

            	
              Issuance
                of Stock

            

    

    The
      Guarantor shall not, and shall ensure that none of its subsidiaries will,
      directly or indirectly issue, sell, assign, pledge, or otherwise encumber or
      dispose of any shares of its preferred or preference equity securities or
      options to acquire preferred or preference equity securities, except the
      issuance of preferred (including trust preferred) or preference equity
      securities or Hybrid Capital, so long as:

     

    
      	
              22.17.1  

            	
              either:

            

    

     

    
      	
              (a)  

            	
              no
                part of such preferred or preference equity securities or Hybrid
                Capital
                is mandatorily redeemable (whether on a scheduled basis or as a result
                of
                the occurrence of any event or circumstance) prior to the date occurring
                six months after 31 December 2012;
                or

            

    

     

    
      	
              (b)  

            	
              all
                such preferred or preference equity securities or Hybrid Capital
                or
                options therefor are issued to and held by the Guarantor or its
                Wholly-Owned Subsidiaries; and

            

    

     

    
      	
              22.17.2  

            	
              such
                preferred or preference equity securities or Hybrid Capital do not
                contain
                any financial performance related covenants or incurrence covenants
                which
                restrict the operations of the issuer
                thereof,

            

    

     

    provided
      that such preferred or preference securities or Hybrid Capital may
      contain financial performance related covenants or incurrence covenants which
      are no more restrictive (taken as a whole) than the terms, provisions and
      covenants contained herein (taken as a whole). For the avoidance of doubt,
      this
      Clause 22.17 does not relate to ordinary or common
      equity or options relating thereto.

     

    
      	
              22.18  

            	
              Dissolution

            

    

    No
      Obligor shall suffer or permit its dissolution or liquidation either in whole
      or
      in part, except through a corporate reorganisation to the extent permitted
      by
      Clause 22.13 (Consolidations, Mergers and Sales
      of Assets).

     

    
      	
              22.19  

            	
              Restricted
                Payments

            

    

    
      	
              22.19.1  

            	
              The
                Guarantor shall not declare or pay any dividends, purchase, redeem,
                retire, defease or otherwise acquire for value any of its Equity
                Interests
                now or hereafter outstanding, return any capital to its stockholders,
                partners or members (or the equivalent persons thereof) as such,
                make any
                distribution of assets, Equity Interests, obligations or securities
                to its
                stockholders, partners or members (or the equivalent persons thereof)
                as
                such, or permit any of its subsidiaries to purchase, redeem, retire,
                defease or otherwise acquire for value any Equity Interests in the
                Guarantor or to sell any Equity Interests therein (each of the foregoing
                a
                "Dividend" and, collectively,
                "Dividends") provided that this Clause 22.19 shall not prohibit
                Dividends so long as
                before and after giving effect (including pro forma effect) thereto,
                no
                Default or Event of Default shall have occurred and be continuing.
                

            

    

     

    
      
        
        

      

      
        -83-

        
          

        

      

      
        
        

      

    

    

     

    
      	
              22.19.2  

            	
              Notwithstanding
                sub-clause 22.19.1 above, the Guarantor may
                declare and pay cash dividends or distributions in respect
                of:

            

    

     

    
      	
              (a)  

            	
              any
                trust preferred security, deferrable interest subordinated debt security,
                mandatory convertible debt or other hybrid security (including Hybrid
                Capital) that, at the time of issuance thereof or at any time prior
                to the
                initial dividend or distribution thereunder, was accorded equity
                treatment
                by S&P; and/or

            

    

     

    
      	
              (b)  

            	
              any
                Preferred Security,

            

    

     

    if,
      at
      the time of and after giving pro forma effect to such dividend or distribution,
      no Event of Default under Clause 23.1 (Failure
      to Pay), sub-clause 23.4.1 of Clause 23.4 (Default
      under other Agreements) or
      Clause 23.5 (Bankruptcy, etc) shall have
      occurred and be continuing.

     

    
      	
              22.20  

            	
              Transactions
                with Affiliates

            

    

    Neither
      the Guarantor nor any of its subsidiaries shall enter into or be a party to,
      a
      transaction with any Affiliate of the Guarantor or such subsidiary (which
      Affiliate is not the Guarantor or a subsidiary thereof) involving aggregate
      payments or consideration (with respect to any single or series of related
      transactions) in excess of $1,000,000, except:

     

    
      	
              22.20.1  

            	
              transactions
                with Affiliates on terms not materially less favourable to the Guarantor
                or such subsidiary than those that could have been obtained in a
                comparable transaction on an arm’s length basis from an unrelated
                person;

            

    

     

    
      	
              22.20.2  

            	
              Dividends
                not prohibited by Clause 22.19
                (Restricted Payments);

            

    

     

    
      	
              22.20.3  

            	
              fees
                and compensation paid to and indemnities provided on behalf of officers
                and directors of the Guarantor or any of its subsidiaries as reasonably
                determined in good faith by the board of directors, the audit committee
                or
                senior management of the Guarantor;

            

    

     

    
      	
              22.20.4  

            	
              the
                issuance of shares or common stock by the Obligors or by any of their
                subsidiaries for the purposes referred to in Clause 22.24.3;
                and

            

    

     

    
      	
              22.20.5  

            	
              any
                Existing Affiliate Transaction and amendments thereto that are not
                materially adverse to the Lenders, as reasonably determined by the
                board
                of directors of the Guarantor, a duly authorised committee thereof
                or an
                authorised officer of the
                Guarantor.

            

    

     

    
      	
              22.21  

            	
              Limitation
                on Certain Restrictions on
                subsidiaries

            

    

    The
      Guarantor shall not, and shall ensure that none of its subsidiaries will,
      directly or indirectly, create or otherwise cause or suffer to exist or become
      effective any encumbrance or restriction on the ability of any such subsidiary
      to:

     

    
      	
              22.21.1  

            	
              pay
                dividends or make any other distributions on its capital stock or
                any
                other interest or participation in its profits owned by the Guarantor
                or
                any of its

            

    

     

    
      
        
        

      

      
        -84-

        
          

        

      

      
        
        

      

    

    subsidiaries,
      or pay any Indebtedness owed to the Guarantor or any of its
      subsidiaries;

     

    
      	
              22.21.2  

            	
              make
                loans or advances to the Guarantor or any of its subsidiaries;
                or

            

    

     

    
      	
              22.21.3  

            	
              transfer
                any of its properties or assets to the Guarantor or any of its
                subsidiaries,

            

    

     

    except
      for such encumbrances or restrictions existing under or by reason
      of:

     

    
      	
              (a)  

            	
              applicable
                Legal Requirements, including any Applicable Insurance Regulatory
                Authority;

            

    

     

    
      	
              (b)  

            	
              this
                Agreement and the other Finance
                Documents;

            

    

     

    
      	
              (c)  

            	
              customary
                provisions restricting subletting or assignment of any lease governing
                any
                leasehold interest of the Guarantor or any of its
                subsidiaries;

            

    

     

    
      	
              (d)  

            	
              customary
                provisions restricting assignment of any licensing agreement (in
                which the
                Guarantor or any of its subsidiaries is the licensee) or other contract
                (including leases) entered into by the Guarantor or any of its
                subsidiaries in the ordinary course of
                business;

            

    

     

    
      	
              (e)  

            	
              restrictions
                on the transfer of any asset pending the close of the sale of such
                asset;

            

    

     

    
      	
              (f)  

            	
              restrictions
                on the transfer of any asset as a result of a Lien permitted by Clause
22.14
                (Liens);

            

    

     

    
      	
              (g)  

            	
              agreements
                entered into by a Regulated Insurance Company with an Applicable
                Insurance
                Regulatory Authority or ratings agency in the ordinary course of
                business;

            

    

     

    
      	
              (h)  

            	
              customary
                provisions in partnership agreements, limited liability company
                organisational governance documents, joint venture agreements and
                other
                similar agreements entered into in the ordinary course of business
                that
                restrict the transfer of ownership interests in such partnership,
                limited
                liability company, joint venture or similar
                person;

            

    

     

    
      	
              (i)  

            	
              restrictions
                on Cash or other deposits or net worth imposed by customers under
                contracts (including Insurance Contracts, Fronting Arrangements and
                Reinsurance Agreements) entered into in the ordinary course of business,
                pursuant to an agreement or instrument relating to any Permitted
                Subsidiary Indebtedness of the type described in paragraph (d) of
                the
                definition thereof if the encumbrances and restrictions contained
                in any
                such agreement or instrument taken as a whole are not materially
                less
                favourable to the Finance Parties than the encumbrances and restrictions
                contained in the Finance Documents;

            

    

     

    
      
        
        

      

      
        -85-

        
          

        

      

      
        
        

      

    

    

     

    
      	
              (j)  

            	
              any
                encumbrances or restrictions imposed by any amendments or refinancings
                of
                the contracts, instruments or obligations referred to in paragraph
                (i)
                above provided that such amendments or refinancings are no more materially
                restrictive with respect to such encumbrances and restrictions than
                those
                prior to such amendment or
                refinancing;

            

    

     

    
      	
              (k)  

            	
              restrictions
                placed in accordance with the Segregated Account Companies Act 2000
                of
                Bermuda on the transfer of any asset held, carried or deposited in
                a
                segregated account of a Protected Cell
                Company;

            

    

     

    
      	
              (l)  

            	
              restrictions
                contained in the Five-Year Secured Letter of Credit Facility and
                restrictions contained in the Three-Year Unsecured Letter of Credit
                Facility;

            

    

     

    
      	
              (m)  

            	
              agreements
                and arrangements listed in Schedule 12 (Existing Intercompany
                Agreements and Arrangements);
                and

            

    

     

    
      	
              (n)  

            	
              agreements
                or arrangements in respect of:

            

    

     

    
      	
              (i)  

            	
              assets
                held in trust in any Lloyd’s Trust
                Fund;

            

    

     

    
      	
              (ii)  

            	
              assets
                held in any insurance brokering account;
                and/or

            

    

     

    
      	
              (iii)  

            	
              assets
                held in trust for the benefit of an insured party pursuant to an
                insurance
                or reinsurance arrangement entered into in the ordinary course of
                business.

            

    

     

    
      	
              22.22  

            	
              Private
                Act

            

    

    No
      Obligor will become subject to a Private Act.

     

    
      	
              22.23  

            	
              End
                of Financial Years; Financial
                Quarters

            

    

    The
      Guarantor will cause:

     

    
      	
              22.23.1  

            	
              each
                of its, and each of its material subsidiaries’, financial years to end on
                December 31 of each year; and

            

    

     

    
      	
              22.23.2  

            	
              each
                of its, and each of its material subsidiaries’, financial quarters to end
                on dates which are consistent with a financial year end as described
                above.

            

    

     

    
      	
              22.24  

            	
              Investments,
                Loans, Advances and
                Guarantees

            

    

    The
      Guarantor will not, and will not permit any of its subsidiaries to, purchase,
      hold or acquire (including pursuant to any merger with any person that was
      not a
      wholly owned subsidiary prior to such merger) any capital stock, evidences
      of
      indebtedness or other securities (including any option, warrant or other right
      to acquire any of the foregoing) of, make or permit to exist any loans or
      advances to, Guarantee any obligations of, or make or permit to exist any
      investment or any other interest in, any other person, or purchase or otherwise
      acquire (in one transaction or a series of transactions) any assets of any
      other
      person constituting a business unit, except for:

     

    
      
        
        

      

      
        -86-

        
          

        

      

      
        
        

      

    

    

     

    
      	
              22.24.1  

            	
              Cash
                Equivalents, Eligible Securities and/or Permitted Investment Portfolio
                Securities;

            

    

     

    
      	
              22.24.2  

            	
              Existing
                Investments;

            

    

     

    
      	
              22.24.3  

            	
              investments
                by the Guarantor or its subsidiaries in the shares or capital stock
                of its
                direct or indirect subsidiaries;

            

    

     

    
      	
              22.24.4  

            	
              loans
                or advances made by the Guarantor to any subsidiary and made by any
                subsidiary to the Guarantor or any other subsidiary of the
                Guarantor;

            

    

     

    
      	
              22.24.5  

            	
              Guarantees
                constituting Indebtedness permitted by Clause 22.15
                (Indebtedness);

            

    

     

    
      	
              22.24.6  

            	
              intercompany
                Indebtedness permitted under Clause 22.15
                (Indebtedness);

            

    

     

    
      	
              22.24.7  

            	
              any
                assets which are the subject of the Lloyd's Trust Deed, which may
                be
                invested in any manner permitted by that Deed; and
                

            

    

     

    
      	
              22.24.8  

            	
              investments
                that are not permitted by any other clause of this Clause 22.24 and that, in the aggregate, do not
                exceed
                25 per cent. of Consolidated Net Worth at the time of the making
                of any
                new investment under this sub-clause 22.24.8,
                provided that immediately after giving pro forma effect to any such
                investment, no Default shall have occurred and be
                continuing.

            

    

     

    
      	
              22.25  

            	
              Letter
                of Comfort

            

    

    The
      Borrower:

     

    
      	
              22.25.1  

            	
              shall
                use all reasonable endeavours to obtain a Letter of Comfort from
                Lloyd's
                and deliver such Letter of Comfort to the Agent on or prior to the
                first
                Utilisation Date; and

            

    

     

    
      	
              22.25.2  

            	
              shall,
                notwithstanding sub-clause 22.25.1 above,
                procure that a Letter of Comfort is issued by Lloyd's and delivered
                to the
                Agent no later than the date falling 15 Business Days after the date
                of
                this Agreement or such later date as may be agreed by the
                Agent.

            

    

     

     

    
      	
              23.  

            	
              EVENTS
                OF DEFAULT

            

    

     

    Each
      of
      the events of circumstances set out in this Clause 23 (other than Clause 23.14 (Acceleration
      and Cancellation)) is an
      Event of Default.

     

    
      	
              23.1  

            	
              Failure
                to Pay

            

    

    An
      Obligor shall:

     

    
      	
              23.1.1  

            	
              default
                in the payment when due of any Unpaid Sum payable pursuant to sub-clause
                7.1.1 of Clause 7.1 (Borrower's
                Indemnity to Lenders),
                unless such default is caused by a Disruption Event and payment is
                subsequently made within three Business Days of its due
                date;

            

    

     

    
      
        
        

      

      
        -87-

        
          

        

      

      
        
        

      

    

    

     

    
      	
              23.1.2  

            	
              default,
                and such default shall continue for three more Business Days, in
                the
                payment when due of any interest on any Unpaid Sum payable pursuant
                to
                sub-clause 7.1.1 of Clause 7.1 (Borrower's
                Indemnity to Lenders);
                or

            

    

     

    
      	
              23.1.3  

            	
              default,
                and such default shall continue for five or more Business Days, in
                the
                payment when due of any fees or any other amounts payable hereunder
                or
                pursuant to any other Finance
                Documents.

            

    

     

    
      	
              23.2  

            	
              Representations,
                etc.

            

    

    Any
      representation, warranty or statement made (or deemed made) by any Obligor
      or
      any other member of the Group that is party to a Finance Document herein or
      in
      any other Finance Document or in any certificate or statement delivered or
      required to be delivered pursuant hereto or thereto shall prove to be untrue
      in
      any material respect on the date as of which made or deemed made, and such
      misrepresentation or breach, or the circumstances giving rise to it, if capable
      of remedy is not remedied within 10 Business Days of the earlier of the relevant
      Obligor or other member of the Group becoming aware of it and the Agent giving
      notice to the relevant Obligor or other member of the Group requiring such
      remedy.

     

    
      	
              23.3  

            	
              Covenants

            

    

    Any
      Obligor or other member of the Group that is party to a Finance Document
      shall:

     

    
      	
              23.3.1  

            	
              default
                in the due performance or observance by it of any term, covenant
                or
                agreement contained in Clause 20.6
                (Notice of Default or Litigation), sub-clause 20.13.2 of Clause 20.13
                (Books, Records and Inspections),
                sub-clause 22.3.1 of Clause 22.3 (Maintenance
                of Existence; Conduct of
                Business) or Clause 9.2 (Secured
                Letters of Credit); or

            

    

     

    
      	
              23.3.2  

            	
              default
                in the due performance or observance by it of any term, covenant
                or
                agreement (other than those referred to in Clause 23.1 (Failure to
                pay), Clause 23.2 (Representations,
                etc.) and
                sub-clause 23.3.1 of this Clause 23.3) contained
                in this Agreement or any other
                Finance Document and such default shall continue unremedied for a
                period
                of 30 days after written notice to the Borrower from the Agent or
                the
                Majority Lenders.

            

    

     

    
      	
              23.4  

            	
              Default
                under other Agreements

            

    

    Any
      Obligor, any Regulated Insurance Company or any material subsidiary of Validus
      Reinsurance, Ltd. shall:

     

    
      	
              23.4.1  

            	
              default
                in any payment of principal or interest with respect to Indebtedness
                (other than any Indebtedness hereunder) in excess of $50,000,000
                individually or in the aggregate (such Indebtedness being
                "Material
                Indebtedness");   or

            

    

     

    
      	
              23.4.2  

            	
              default
                in the observance or performance of any agreement or condition relating
                to
                any such Material Indebtedness or contained in any instrument or
                agreement
                evidencing, securing or relating thereto, or any other event shall
                occur
                or condition exist, the effect of which default or other event or
                condition is to cause, or to permit the holder or holders of such
                Material
                Indebtedness (or a

            

    

     

    
      
        
        

      

      
        -88-

        
          

        

      

      
        
        

      

    

    trustee
      or agent on behalf of such holder or holders) to cause (with or without the
      giving of notice, the lapse of time or both), any such Material Indebtedness
      to
      become due prior to its stated maturity.

     

    
      	
              23.5  

            	
              Bankruptcy,
                etc.

            

    

    
      	
              23.5.1  

            	
              Any
                Obligor, any Regulated Insurance Company or any material subsidiary
                of
                Validus Reinsurance, Ltd. shall commence a voluntary case concerning
                itself under Title 11 of the US Code entitled
                "Bankruptcy", as now or hereafter in effect, or any
                successor thereto (the "Bankruptcy
                Code");

            

    

     

    
      	
              23.5.2  

            	
              an
                involuntary case is commenced against any such person and the petition
                is
                not dismissed within 60 days, after commencement of the
                case;

            

    

     

    
      	
              23.5.3  

            	
              a
                custodian (as defined in the Bankruptcy Code) is appointed for, or
                takes
                charge of, all or substantially all of the property of any such person
                or
                any such person commences (including by way of applying for or consenting
                to the appointment of, or the taking of possession by, a rehabilitator,
                receiver, custodian, bankruptcy trustee, conservator or liquidator
                (collectively, a "conservator") of itself or all or any
                substantial portion of its property) any other proceeding under any
                reorganisation, arrangement, adjustment of debt, relief of debtors,
                dissolution, insolvency, liquidation, rehabilitation, supervision,
                conservatorship or similar law of any jurisdiction or the Bermuda
                Companies Law whether now or hereafter in effect relating to any
                such
                person;

            

    

     

    
      	
              23.5.4  

            	
              any
                such proceeding is commenced against any such person and such proceeding
                is not dismissed within 60 days;

            

    

     

    
      	
              23.5.5  

            	
              any
                such person is adjudicated insolvent or bankrupt; or any order of
                relief
                or other order approving any such case or proceeding is
                entered;

            

    

     

    
      	
              23.5.6  

            	
              any
                such person suffers any appointment of any conservator or the like
                for it
                or any substantial part of its property which continues undischarged
                or
                unstayed for a period of 60 days;
                or

            

    

     

    
      	
              23.5.7  

            	
              any
                such person makes a general assignment for the benefit of creditors;
                or
                any corporate action is taken by any such person for the purpose
                of
                effecting any of the foregoing.

            

    

     

    
      	
              23.6  

            	
              ERISA

            

    

    
      	
              23.6.1  

            	
              An
                event or condition specified in sub-clauses 22.5.1 to 22.5.6
                Clause 22.5 (ERISA) shall occur or
                exist with respect to any Plan or Multiemployer Plan or Foreign Pension
                Plan;

            

    

     

    
      	
              23.6.2  

            	
              the
                Guarantor or any of its ERISA Affiliates shall fail to pay when due
                any
                amount which they shall have become liable to pay to the PBGC or
                to a Plan
                or a Multiemployer Plan under Title IV of ERISA;
                or

            

    

     

    
      
        
        

      

      
        -89-

        
          

        

      

      
        
        

      

    

    

     

    
      	
              23.6.3  

            	
              a
                condition shall exist by reason of which the PBGC would be entitled
                to
                obtain a decree adjudicating that any Plan must be
                terminated,

            

    

     

    and
      as a
      result of such event, failure or condition, together with all such other events,
      failures or conditions, the Guarantor or any of its ERISA Affiliates shall
      be
      reasonably likely to incur a liability to a Plan, a Multiemployer Plan, a
      Foreign Pension Plan or PBGC (or any combination of the foregoing) in an
      aggregate amount of $50,000,000 or more.

     

    
      	
              23.7  

            	
              Judgments

            

    

    One
      or
      more judgments or decrees shall be entered against the Guarantor, any Regulated
      Insurance Company or any material subsidiary of Validus Reinsurance, Ltd.
      involving a liability, net of undisputed insurance and reinsurance, of
      $50,000,000 or more in the case of any one such judgment or decree or in the
      aggregate for all such judgments and decrees for such person and any such
      judgments or decrees shall not have been vacated, discharged, satisfied, stayed
      or bonded pending appeal within 60 days from the entry thereof.

     

    
      	
              23.8  

            	
              Insurance
                Licenses

            

    

    Any
      one
      or more Insurance Licenses of the Guarantor or any of its subsidiaries shall
      be
      suspended, limited or terminated or shall not be renewed, or any other action
      shall be taken by any Governmental Authority, and such suspension, limitation,
      termination, non-renewal or action, either individually or in the aggregate,
      has
      had, or would reasonably be expected to have, a Material Adverse
      Effect.

     

    
      	
              23.9  

            	
              Change
                of Control

            

    

    A
      Change
      of Control shall occur.

     

    
      	
              23.10  

            	
              Security
                Documents

            

    

    
      	
              23.10.1  

            	
              Any
                Security Document shall cease to be in full force and effect, or
                shall
                cease to give the Security Trustee the Liens, rights, powers and
                privileges purported to be created thereby (including a first priority
                security interest in, and Lien on, all of the Collateral subject
                thereto,
                in favour of the Security Trustee, subject to the Legal Reservations
                and
                to Liens having priority by operation of law, superior to and prior
                to the
                rights of all third persons and subject to no other Liens), except
                to the
                extent resulting from the Security Trustee's failure to maintain
                possession of Collateral delivered to it by any Obligor, any of their
                respective subsidiaries or the Account Party;
                or

            

    

     

    
      	
              23.10.2  

            	
              any
                other pledgor thereunder shall default in the due performance or
                observance of:

            

    

     

    
      	
              (a)  

            	
              any
                material term, covenant or agreement on its part to be performed
                or
                observed pursuant to any Security Document;
                or

            

    

     

    
      	
              (b)  

            	
              any
                other term, covenant or agreement on its part to be performed or
                observed
                pursuant to any Security Document and such default
                shall

            

    

     

    
      
        
        

      

      
        -90-

        
          

        

      

      
        
        

      

    

    continue
      unremedied for a period of 30 days after written notice to the Borrower from
      the
      Agent or the Majority Lenders.

     

    
      	
              23.11  

            	
              Validus
                Guarantee

            

    

    The
      Validus Guarantee or any provision thereof shall cease to be in full force
      or
      effect and the same is not remedied within 15 Business Days after the Agent
      has
      given written notice to the Guarantor of such defect, or any person acting
      by or
      on behalf of the Guarantor shall deny or disaffirm in writing the Guarantor's
      obligations under the Validus Guarantee.

     

    
      	
              23.12  

            	
              Unlawfulness

            

    

    It
      is or
      becomes unlawful for an Obligor or any other member of the Group to perform
      any
      of its financial obligations under the Finance Documents or any Transaction
      Security created or expressed to be created or evidenced by the Security
      Documents ceases to be effective.

     

    
      	
              23.13  

            	
              Repudiation

            

    

    An
      Obligor or any other member of the Group that is party to a Finance Document
      repudiates that Finance Document or any of the Transaction Security or evidences
      an intention to repudiate a Finance Document or any of the Transaction Security
      or denies or disaffirms its enforceability.

     

    
      	
              23.14  

            	
              Acceleration
                and Cancellation

            

    

    Upon
      the
      occurrence of an Event of Default and at any time thereafter while that Event
      of
      Default is continuing, the Agent may (and, if so instructed by the Majority
      Lenders, shall) by written notice to the Guarantor, take any or all of the
      following actions, without prejudice to the rights of the Agent or any Lender
      to
      enforce its claims against any Obligor, except as otherwise specifically
      provided for in this Agreement (provided that if an Event of Default specified
      in Clause 23.5 (Bankruptcy, Etc.) shall
      occur with respect to any Obligor, the result which would occur upon the giving
      of written notice by the Agent as specified in sub-clauses 23.14.1 through 23.14.5
      below shall occur automatically without the giving of any such
      notice):

     

    
      	
              23.14.1  

            	
              require
                the Borrower to procure that the liabilities of the Lenders under
                each
                Letter of Credit are promptly reduced to zero and/or provide Collateral
                (valued for this purpose based on the respective Advance Rate applicable
                thereto) as is necessary to ensure that the Borrowing Base is equal
                to or
                greater than the Outstandings (whereupon the Borrower shall do so);
                and/or

            

    

     

    
      	
              23.14.2  

            	
              declare
                that any unutilised portion of the Facility shall be cancelled, whereupon
                the same shall be cancelled and the Available Commitment of each
                Lender
                shall be reduced to zero; and/or

            

    

     

    
      	
              23.14.3  

            	
              require
                the Borrower to use all reasonable endeavours to procure that all
                Letters
                of Credit are cancelled and returned by Lloyd's to the Agent;
                and/or

            

    

     

    
      
        
        

      

      
        -91-

        
          

        

      

      
        
        

      

    

    

     

    
      	
              23.14.4  

            	
              direct
                the Security Trustee to enforce any or all of the Liens and security
                interests created pursuant to the Security Documents and/or exercise
                any
                of the rights and remedies provided therein;
                and/or

            

    

     

    
      	
              23.14.5  

            	
              deliver
                a Notice of Non-Extension to Lloyd's in relation to each Letter of
                Credit
                then outstanding.

            

    

     

    

     

    
      
        
        

      

      
        -92-

        
          

        

      

      
        
        

      

    

    SECTION
      9

    CHANGES
      TO PARTIES

     

     

    
      	
              24.  

            	
              CHANGES
                TO THE LENDERS

            

    

     

    
      	
              24.1  

            	
              Assignments
                and transfers by the
                Lenders

            

    

    Subject
      to this Clause 24, a Lender (the "Existing
      Lender") may, with the prior written consent of the Guarantor (such
      consent not to be unreasonably withheld or delayed):

     

    
      	
              24.1.1  

            	
              assign
                any of its rights; or

            

    

     

    
      	
              24.1.2  

            	
              transfer
                by novation any of its rights and
                obligations,

            

    

     

    to
      another bank or financial institution or to a trust, fund or other entity which
      is regularly engaged in or established for the purpose of making, purchasing
      or
      investing in loans, securities or other financial assets (the "New
      Lender") provided that no such assignment or transfer
      may be made unless it is to an Approved Credit Institution.

     

    
      	
              24.2  

            	
              Conditions
                of assignment or transfer

            

    

    
      	
              24.2.1  

            	
              The
                consent of the Guarantor is required for an assignment or transfer
                by an
                Existing Lender, unless the assignment or transfer
                is:

            

    

     

    
      	
              (a)  

            	
              to
                another Lender or an Affiliate of a Lender;
                or

            

    

     

    
      	
              (b)  

            	
              made
                at a time when an Event of Default is
                continuing.

            

    

     

    
      	
              24.2.2  

            	
              The
                consent of the Guarantor to an assignment or transfer must not be
                unreasonably withheld or delayed.  The Guarantor will be deemed
                to have given its consent five Business Days after the Existing Lender
                has
                requested it unless consent is expressly refused by the Guarantor
                within
                that time.

            

    

     

    
      	
              24.2.3  

            	
              An
                assignment will only be effective
                on:

            

    

     

    
      	
              (a)  

            	
              receipt
                by the Agent of written confirmation from the New Lender (in form
                and
                substance satisfactory to the Agent) that the New Lender will assume
                the
                same obligations to the other Finance Parties and the other Secured
                Parties as it would have been under if it was an Original Lender;
                and

            

    

     

    
      	
              (b)  

            	
              performance
                by the Agent of all necessary "know your customer" or
                other similar checks under all applicable laws and regulations in
                relation
                to such assignment to a New Lender, the completion of which the Agent
                shall promptly notify to the Existing Lender and the New
                Lender.

            

    

     

    
      	
              24.2.4  

            	
              A
                transfer will only be effective if the procedure set out in Clause
24.5 (Procedure for transfer) is
                complied with.

            

    

     

    
      
        
        

      

      
        -93-

        
          

        

      

      
        
        

      

    

    

     

    
      	
              24.2.5  

            	
              If:

            

    

     

    
      	
              (a)  

            	
              a
                Lender assigns or transfers any of its rights or obligations under
                the
                Finance Documents or changes its Facility Office;
                and

            

    

     

    
      	
              (b)  

            	
              as
                a result of circumstances existing at the date the assignment, transfer
                or
                change occurs, an Obligor would be obliged to make a payment to the
                New
                Lender or Lender acting through its new Facility Office under Clause
10 (Tax Gross-up and Indemnities) or
                Clause 11 (Increased
                Costs),

            

    

     

    then
      the
      New Lender or Lender acting through its new Facility Office is only entitled
      to
      receive payment under those Clauses to the same extent as the Existing Lender
      or
      Lender acting through its previous Facility Office would have been if the
      assignment, transfer or change had not occurred.

     

    
      	
              24.3  

            	
              Limitation
                of responsibility of Existing
                Lenders

            

    

    
      	
              24.3.1  

            	
              Unless
                expressly agreed to the contrary, an Existing Lender makes no
                representation or warranty and assumes no responsibility to a New
                Lender
                for:

            

    

     

    
      	
              (a)  

            	
              the
                legality, validity, effectiveness, adequacy or enforceability of
                the
                Finance Documents, the Transaction Security or any other
                documents;

            

    

     

    
      	
              (b)  

            	
              the
                financial condition of any Obligor or any other member of the Group
                that
                is party to a Finance Document;

            

    

     

    
      	
              (c)  

            	
              the
                performance and observance by any Obligor or any other member of
                the Group
                that is party to a Finance Document of its obligations under the
                Finance
                Documents or any other documents;
                or

            

    

     

    
      	
              (d)  

            	
              the
                accuracy of any statements (whether written or oral) made in or in
                connection with any Finance Document or any other
                document,

            

    

     

    and
      any
      representations or warranties implied by law are excluded.

     

    
      	
              24.3.2  

            	
              Each
                New Lender confirms to the Existing Lender and the other Finance
                Parties
                that it:

            

    

     

    
      	
              (a)  

            	
              has
                made (and shall continue to make) its own independent investigation
                and
                assessment of the financial condition and affairs of each Obligor,
                each
                other member of the Group that is party to a Finance Document 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
                Existing Lender in connection with any Finance Document;
                and

            

    

     

    
      	
              (b)  

            	
              will
                continue to make its own independent appraisal of the creditworthiness
                of
                each Obligor, each other member of the Group that is party to a Finance
                Document and its related entities whilst any amount
                is

            

    

     

    
      
        
        

      

      
        -94-

        
          

        

      

      
        
        

      

    

    or
      may be
      outstanding under the Finance Documents or any Commitment is in
      force.

     

    
      	
              24.3.3  

            	
              Nothing
                in any Finance Document obliges an Existing Lender
                to:

            

    

     

    
      	
              (a)  

            	
              accept
                a re-transfer from a New Lender of any of the rights and obligations
                assigned or transferred under this Clause 24;
                or

            

    

     

    
      	
              (b)  

            	
              support
                any losses directly or indirectly incurred by the New Lender by reason
                of
                the non-performance by any Obligor or any other member of the Group
                that
                is party to a Finance Document of its obligations under the Finance
                Documents or otherwise.

            

    

     

    
      	
              24.4  

            	
              Transfer
                Fees

            

    

    The
      New
      Lender shall, on the date upon which an assignment or transfer takes effect,
      pay
      to the Agent (for its own account) a fee of £2,000.

     

    
      	
              24.5  

            	
              Procedure
                for transfer

            

    

    
      	
              24.5.1  

            	
              Subject
                to the conditions set out in Clause 24.2
                (Conditions of assignment or transfer) a transfer is effected in
                accordance with sub-clause 24.5.3 below when
                the Agent executes an otherwise duly completed Transfer Certificate
                delivered to it by the Existing Lender and the New Lender.  The
                Agent shall, subject to sub-clause 24.5.2
                below, as soon as reasonably practicable after receipt by it of a
                duly
                completed Transfer Certificate appearing on its face to comply with
                the
                terms of this Agreement and delivered in accordance with the terms
                of this
                Agreement, execute that Transfer
                Certificate.

            

    

     

    
      	
              24.5.2  

            	
              The
                Agent shall only be obliged to execute a Transfer Certificate delivered
                to
                it by the Existing Lender and the New Lender once it is satisfied
                it has
                complied with all necessary "know your customer" or other similar
                checks
                under all applicable laws and regulations in relation to the transfer
                to
                such New Lender. Upon execution of the Transfer Certificate, the
                Agent may
                specify a Transfer Date to the Existing Lender and the New Lender
                provided that if no such date is specified by the Agent
                upon such execution, the Transfer Date shall be the proposed Transfer
                Date
                specified in the Transfer
                Certificate.

            

    

     

    
      	
              24.5.3  

            	
              On
                the Transfer Date:

            

    

     

    
      	
              (a)  

            	
              to
                the extent that in the Transfer Certificate the Existing Lender seeks
                to
                transfer by novation its rights and obligations under the Finance
                Documents and in respect of the Transaction Security each of the
                Obligors,
                each other member of the Group that is party to a Finance Document
                and the
                Existing Lender shall be released from further obligations towards
                one
                another under the Finance Documents and in respect of the Transaction
                Security and their respective rights against one another shall be
                cancelled (being the "Discharged Rights and
                Obligations");

            

    

     

    
      
        
        

      

      
        -95-

        
          

        

      

      
        
        

      

    

    

     

    
      	
              (b)  

            	
              each
                of the Obligors, each other member of the Group that is party to
                a Finance
                Document and the New Lender shall assume obligations towards one
                another
                and/or acquire rights against one another which differ from the Discharged
                Rights and Obligations only insofar as that Obligor, other member
                of the
                Group and the New Lender have assumed and/or acquired the same in
                place of
                that Obligor, other member of the Group and the Existing
                Lender;

            

    

     

    
      	
              (c)  

            	
              the
                Agent, the Arranger, the Security Trustee, the New Lender and the
                other
                Lenders shall acquire the same rights and assume the same obligations
                between themselves and in respect of the Transaction Security as
                they
                would have acquired and assumed had the New Lender been an Original
                Lender
                with the rights and/or obligations acquired or assumed by it as a
                result
                of the transfer and to that extent the Agent, the Arranger, the Security
                Trustee and the Existing Lender shall each be released from further
                obligations to each other under the Finance Documents;
                and

            

    

     

    
      	
              (d)  

            	
              the
                New Lender shall become a Party as a
                "Lender".

            

    

     

    
      	
              24.6  

            	
              Copy
                of Transfer Certificate to
                Borrower

            

    

    The
      Agent
      shall, as soon as reasonably practicable after it has executed a Transfer
      Certificate, send to the Borrower a copy of that Transfer
      Certificate.

     

    
      	
              24.7  

            	
              Disclosure
                of Information

            

    

    
      	
              24.7.1  

            	
              Subject
                to Clause 42 (Confidentiality), any
                Lender may disclose to any person:

            

    

     

    
      	
              (a)  

            	
              to
                (or through) whom such Lender assigns or transfers (or may potentially
                assign or transfer) all or any of its rights, benefits and obligations
                under the Finance Documents;

            

    

     

    
      	
              (b)  

            	
              with
                (or through) whom such Lender enters into (or may potentially enter
                into)
                any sub-participation in relation to, or any other transaction under
                which
                payments are to be made by reference to, this Agreement or any Obligor;
                or

            

    

     

    
      	
              (c)  

            	
              to
                whom information may be required to be disclosed by any applicable
                law,

            

    

     

    such
      information about any Obligor or the Group and the Finance Documents as such
      Lender shall consider appropriate if, in relation to paragraphs (a) and (b)
      above the person to whom the information is to be given has entered into a
      Confidentiality Undertaking in favour of the Borrower.

     

     

    
      	
              25.  

            	
              CHANGES
                TO THE OBLIGORS

            

    

     

    No
      Obligor or any other member of the Group that is party to a Finance Document
      may
      assign any of its rights or transfer any of its rights or obligations under
      the
      Finance Documents it being understood that new or replacement Grantors (as
      defined in the

     

    
      
        
        

      

      
        -96-

        
          

        

      

      
        
        

      

    

    Security
      Documents) may accede to the Security Documents in accordance with their
      terms.

     

    
      
        
        

      

      
        -97-

        
          

        

      

      
        
        

      

    

    SECTION
      10

    THE
      FINANCE PARTIES

     

     

    
      	
              26.  

            	
              ROLE
                OF THE AGENTAND THE
                ARRANGER

            

    

     

    
      	
              26.1  

            	
              Appointment
                of the Agent

            

    

    
      	
              26.1.1  

            	
              Each
                other Finance Party (other than the Security Trustee) appoints the
                Agent
                to act as its agent under and in connection with the Finance
                Documents.

            

    

     

    
      	
              26.1.2  

            	
              Each
                other Finance Party authorises the Agent to exercise the rights,
                powers,
                authorities and discretions specifically given to the Agent under
                or in
                connection with the Finance Documents together with any other incidental
                rights, powers, authorities and
                discretions.

            

    

     

    
      	
              26.2  

            	
              Duties
                of the Agent

            

    

    
      	
              26.2.1  

            	
              The
                Agent shall promptly forward to a Party the original or a copy of
                any
                document which is delivered to the Agent for that Party by any other
                Party.

            

    

     

    
      	
              26.2.2  

            	
              Except
                where a Finance Document specifically provides otherwise, the Agent
                is not
                obliged to review or check the adequacy, accuracy or completeness
                of any
                document it forwards to another
                Party.

            

    

     

    
      	
              26.2.3  

            	
              If
                the Agent receives notice from a Party referring to this Agreement,
                describing a Default and stating that the circumstance described
                is a
                Default, it shall promptly notify the other Finance
                Parties.

            

    

     

    
      	
              26.2.4  

            	
              If
                the Agent is aware of the non-payment of any principal, interest,
                commitment fee or other fee payable to a Finance Party (other than
                the
                Agent, the Arranger or the Security Trustee) under this Agreement
                it shall
                promptly notify the other Finance
                Parties.

            

    

     

    
      	
              26.2.5  

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

            

    

     

    
      	
              26.3  

            	
              Role
                of the Arranger

            

    

    Except
      as
      specifically provided in the Finance Documents, the Arranger has no obligations
      of any kind to any other Party under or in connection with any Finance
      Document.

     

    
      	
              26.4  

            	
              No
                fiduciary duties

            

    

    
      	
              26.4.1  

            	
              Nothing
                in this Agreement constitutes the Agent or the Arranger as a trustee
                or
                fiduciary of any other person.

            

    

     

    
      	
              26.4.2  

            	
              Neither
                the Agent nor the Arranger shall be bound to account to any Lender
                for any
                sum or the profit element of any sum received by it for its own
                account.

            

    

     

    
      
        
        

      

      
        -98-

        
          

        

      

      
        
        

      

    

    

     

    
      	
              26.5  

            	
              Business
                with the Group

            

    

    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 member of the Group.

     

    
      	
              26.6  

            	
              Rights
                and discretions of the
                Agent

            

    

    
      	
              26.6.1  

            	
              The
                Agent may rely on:

            

    

     

    
      	
              (a)  

            	
              any
                representation, notice or document believed by it to be genuine,
                correct
                and appropriately authorised; and

            

    

     

    
      	
              (b)  

            	
              any
                statement made by a director, Authorised Signatory or employee of
                any
                person regarding any matters which may reasonably be assumed to be
                within
                his knowledge or within his power to
                verify.

            

    

     

    
      	
              26.6.2  

            	
              The
                Agent may assume (unless it has received notice to the contrary in
                its
                capacity as agent for the Lenders)
                that:

            

    

     

    
      	
              (a)  

            	
              no
                Default has occurred (unless it has actual knowledge of a Default
                arising
                under Clause 23.1 (Failure to
                pay));

            

    

     

    
      	
              (b)  

            	
              any
                right, power, authority or discretion vested in any Party or the
                Majority
                Lenders has not been exercised; and

            

    

     

    
      	
              (c)  

            	
              any
                notice or request made by the Borrower (other than a Utilisation
                Request)
                is made on behalf of and with the consent and knowledge of the
                Guarantor.

            

    

     

    
      	
              26.6.3  

            	
              The
                Agent may engage, pay for and rely on the advice or services of any
                lawyers, accountants, surveyors or other
                experts.

            

    

     

    
      	
              26.6.4  

            	
              The
                Agent may act in relation to the Finance Documents through its personnel
                and agents.

            

    

     

    
      	
              26.6.5  

            	
              The
                Agent may disclose to any other Party any information it reasonably
                believes it has received as Agent under this
                Agreement.

            

    

     

    
      	
              26.6.6  

            	
              Notwithstanding
                any other provision of any Finance Document to the contrary, neither
                the
                Agent nor the Arranger is obliged to do or omit to do anything if
                it would
                or might in its reasonable opinion constitute a breach of any law
                or
                regulation or a breach of a fiduciary duty or duty of
                confidentiality.

            

    

     

    
      	
              26.7  

            	
              Majority
                Lenders' instructions

            

    

    
      	
              26.7.1  

            	
              Unless
                a contrary indication appears in a Finance Document, the Agent shall
                (i)
                exercise any right, power, authority or discretion vested in it as
                Agent
                in accordance with any instructions given to it by the Majority Lenders
                (or, if so instructed by the Majority Lenders, refrain from exercising
                any
                right, power, authority or discretion vested in it as Agent) and
                (ii) not
                be liable for any act (or

            

    

     

    
      
        
        

      

      
        -99-

        
          

        

      

      
        
        

      

    

    omission)
      if it acts (or refrains from taking any action) in accordance with an
      instruction of the Majority Lenders.

     

    
      	
              26.7.2  

            	
              Unless
                a contrary indication appears in a Finance Document, any instructions
                given by the Majority Lenders will be binding on all the Finance
                Parties
                other than the Security Trustee.

            

    

     

    
      	
              26.7.3  

            	
              The
                Agent may refrain from acting in accordance with the instructions
                of the
                Majority Lenders (or, if appropriate, the Lenders) until it has received
                such security as it may require for any cost, loss or liability (together
                with any associated VAT) which it may incur in complying with the
                instructions.

            

    

     

    
      	
              26.7.4  

            	
              In
                the absence of instructions from the Majority Lenders, (or, if
                appropriate, the Lenders) the Agent may act (or refrain from taking
                action) as it considers to be in the best interest of the
                Lenders.

            

    

     

    
      	
              26.7.5  

            	
              The
                Agent is not authorised to act on behalf of a Lender (without first
                obtaining that Lender's consent) in any legal or arbitration proceedings
                relating to any Finance Document.

            

    

     

    
      	
              26.8  

            	
              Responsibility
                for documentation

            

    

    Neither
      the Agent nor the Arranger is responsible for:

     

    
      	
              26.8.1  

            	
              the
                adequacy, accuracy and/or completeness of any information (whether
                oral or
                written) provided by the Agent, the Arranger, an Obligor or any other
                person given in or in connection with any Finance Document or the
                transactions contemplated by the Finance Documents;
                or

            

    

     

    
      	
              26.8.2  

            	
              the
                legality, validity, effectiveness, adequacy or enforceability of
                any
                Finance Document or the Transaction Security or any other agreement,
                arrangement or document entered into, made or executed in anticipation
                of
                or in connection with any Finance Document or the Transaction
                Security.

            

    

     

    
      	
              26.9  

            	
              Exclusion
                of liability

            

    

    
      	
              26.9.1  

            	
              Without
                limiting sub-clause 26.9.2 below (and without
                prejudice to the provisions of sub-clause 30.10.5 of Clause 30.10 (Disruption
                to Payment Systems
                etc.), the Agent will not be liable (including, without limitation,
                for negligence or any other category of liability whatsoever) for
                any
                action taken by it under or in connection with any Finance Document
                or the
                Transaction Security, unless caused by its gross negligence or wilful
                misconduct.

            

    

     

    
      	
              26.9.2  

            	
              No
                Party (other than the Agent) may take any proceedings against any
                officer,
                employee or agent of the Agent in respect of any claim it might have
                against the Agent or in respect of any act or omission of any kind
                by that
                officer, employee or agent in relation to any Finance Document and
                any
                officer, employee or agent of the Agent may rely on this
                Clause.

            

    

     

    
      
        
        

      

      
        -100-

        
          

        

      

      
        
        

      

    

    

     

    
      	
              26.9.3  

            	
              The
                Agent will not be liable for any delay (or any related consequences)
                in
                crediting an account with an amount required under the Finance Documents
                to be paid by the Agent if the Agent has taken all necessary steps
                as soon
                as reasonably practicable to comply with the regulations or operating
                procedures of any recognised clearing or settlement system used by
                the
                Agent for that purpose.

            

    

     

    
      	
              26.9.4  

            	
              Nothing
                in this Agreement shall oblige the Agent or the Arranger to carry
                out any
                "know your customer" or other checks in relation to any person on
                behalf
                of any Lender and each Lender confirms to the Agent and the Arranger
                that
                it is solely responsible for any such checks it is required to carry
                out
                and that it may not rely on any statement in relation to such checks
                made
                by the Agent or the Arranger.

            

    

     

    
      	
              26.10  

            	
              Lenders'
                indemnity to the Agent

            

    

    Each
      Lender shall (in proportion to its share of the Total Commitments or, if the
      Total Commitments are then zero, to its share of the Total Commitments
      immediately prior to their reduction to zero) indemnify the Agent, within three
      Business Days of demand, against any cost, loss or liability including, without
      limitation, for negligence or any other category of liability whatsoever)
      incurred by the Agent (otherwise than by reason of the Agent's gross negligence
      or wilful misconduct) (or, in the case of any cost, loss or liability pursuant
      to Clause 30.10 (Disruption to Payment Systems
      etc.) notwithstanding the Agent's negligence, gross negligence or any other
      category of liability whatsoever but not including any claim based on the fraud
      of the Agent) in acting as Agent under the Finance Documents (unless the Agent
      has been reimbursed by an Obligor or any other member of the Group that is
      party
      to a Finance Document pursuant to a Finance Document).

     

    
      	
              26.11  

            	
              Resignation
                of the Agent

            

    

    
      	
              26.11.1  

            	
              The
                Agent may resign and appoint one of its Affiliates acting through
                an
                office in the United Kingdom as successor by giving notice to the
                other
                Finance Parties and the Borrower.

            

    

     

    
      	
              26.11.2  

            	
              Alternatively
                the Agent may resign by giving notice to the other Finance Parties
                and the
                Borrower, in which case the Majority Lenders (after consultation
                with the
                Borrower) may appoint a successor
                Agent.

            

    

     

    
      	
              26.11.3  

            	
              If
                the Majority Lenders have not appointed a successor Agent in accordance
                with sub-clause 26.11.2 above within 30 days
                after notice of resignation was given, the Agent (after consultation
                with
                the Borrower) may appoint a successor Agent (acting through an office
                in
                the United Kingdom).

            

    

     

    
      	
              26.11.4  

            	
              The
                retiring Agent shall, at its own cost, make available to the successor
                Agent such documents and records and provide such assistance as the
                successor Agent may reasonably request for the purposes of performing
                its
                functions as Agent under the Finance
                Documents.

            

    

     

    
      
        
        

      

      
        -101-

        
          

        

      

      
        
        

      

    

    

     

    
      	
              26.11.5  

            	
              The
                Agent's resignation notice shall only take effect upon the appointment
                of
                a successor.

            

    

     

    
      	
              26.11.6  

            	
              Upon
                the appointment of a successor, the retiring Agent shall be discharged
                from any further obligation in respect of the Finance Documents but
                shall
                remain entitled to the benefit of this Clause 26.  Its successor and each of the
                other Parties shall have the same rights and obligations amongst
                themselves as they would have had if such successor had been an original
                Party.

            

    

     

    
      	
              26.11.7  

            	
              After
                consultation with the Borrower, the Majority Lenders may, by notice
                to the
                Agent, require it to resign in accordance with sub-clause 26.11.2 above.  In this event, the
                Agent shall resign in accordance with sub-clause 26.11.2
                above.

            

    

     

    
      	
              26.12  

            	
              Confidentiality

            

    

    
      	
              26.12.1  

            	
              In
                acting as agent for the Finance Parties, 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.

            

    

     

    
      	
              26.12.2  

            	
              If
                information is received by another division or department of the
                Agent, it
                may be treated as confidential to that division or department and
                the
                Agent shall not be deemed to have notice of
                it.

            

    

     

    
      	
              26.13  

            	
              Relationship
                with the Lenders

            

    

    
      	
              26.13.1  

            	
              The
                Agent may treat each Lender as a Lender, entitled to payments under
                this
                Agreement and acting through its Facility Office unless it has received
                not less than five Business Days' prior notice from that Lender to
                the
                contrary in accordance with the terms of this
                Agreement.

            

    

     

    
      	
              26.13.2  

            	
              Each
                Lender shall supply the Agent with any information required by the
                Agent
                in order to calculate the Mandatory Cost in accordance with Schedule
                7
                (Mandatory Costs Rate).

            

    

     

    
      	
              26.13.3  

            	
              Each
                Secured Party shall supply the Agent with any information that the
                Security Trustee may reasonably specify (through the Agent) as being
                necessary or desirable to enable the Security Trustee to perform
                its
                functions as security trustee.  Each Lender shall deal with the
                Security Trustee exclusively through the Agent and shall not deal
                directly
                with the Security Trustee.

            

    

     

    
      	
              26.14  

            	
              Credit
                appraisal by the Lenders

            

    

    Without
      affecting the responsibility of any Obligor or any other member of the Group
      that is party to a Finance Document for information supplied by it or on its
      behalf in connection with any Finance Document, each Lender confirms to the
      Agent and the Arranger that it has been, and will continue to be, solely
      responsible for making its own independent appraisal and investigation of all
      risks arising under or in connection with any Finance Document including but
      not
      limited to:

     

    
      
        
        

      

      
        -102-

        
          

        

      

      
        
        

      

    

    

     

    
      	
              26.14.1  

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

            

    

     

    
      	
              26.14.2  

            	
              the
                legality, validity, effectiveness, adequacy or enforceability of
                any
                Finance Document and the Transaction Security and any other agreement,
                arrangement or document entered into, made or executed in anticipation
                of,
                under or in connection with any Finance Document or the Transaction
                Security;

            

    

     

    
      	
              26.14.3  

            	
              whether
                that Lender has recourse, and the nature and extent of that recourse,
                against any Party or any of its respective assets under or in connection
                with any Finance Document, the Transaction Security, the transactions
                contemplated by the Finance Documents or any other agreement, arrangement
                or document entered into, made or executed in anticipation of, under
                or in
                connection with any Finance
                Document;

            

    

     

    
      	
              26.14.4  

            	
              the
                adequacy, accuracy and/or completeness of any information provided
                by the
                Agent, the Security Trustee, any Party or by any other person under
                or in
                connection with any Finance Document, the transactions contemplated
                by the
                Finance Documents or any other agreement, arrangement or document
                entered
                into, made or executed in anticipation of, under or in connection
                with any
                Finance Document; and

            

    

     

    
      	
              26.14.5  

            	
              the
                right or title of any person in or to, or the value or sufficiency
                of any
                part of the Charged Property, the priority of any of the Transaction
                Security or the existence of any Liens affecting the Charged
                Property,

            

    

     

    and
      each
      Lender warrants to the Agent and the Arranger that it has not relied on and
      will
      not at any time rely on the Agent or the Arranger in respect of any of these
      matters.

     

    
      	
              26.15  

            	
              Agent's
                Management Time

            

    

    Any
      amount payable to the Agent under Clause 13.3
      (Indemnity to the Agent), Clause 16
      (Costs and expenses) and Clause 26.10
      (Lenders' indemnity to the Agent) shall include the cost of utilising
      the Agent's management time or other resources for any purpose not expressly
      contemplated by this Agreement and will be calculated on the basis of such
      reasonable daily or hourly rates as the Agent may notify to the Borrower and
      the
      Lenders, and is in addition to any fee paid or payable to the Agent under Clause
      15 (Commitment Commission and
      Fees).

     

    
      	
              26.16  

            	
              Deduction
                from amounts payable by the
                Agent

            

    

    If
      any
      Finance Party owes an amount to the Agent under the Finance Documents the Agent
      may, after giving notice to that Finance Party, deduct an amount not exceeding
      that amount from any payment to that Finance Party which the Agent would
      otherwise be obliged to make under the Finance Documents and apply the amount
      deducted in or towards satisfaction of the amount owed.  For the
      purposes of the Finance Documents that Finance Party shall be regarded as having
      received any amount so deducted.

     

    
      
        
        

      

      
        -103-

        
          

        

      

      
        
        

      

    

    

     

     

    
      	
              27.  

            	
              ROLE
                OF SECURITY TRUSTEE

            

    

     

    
      	
              27.1  

            	
              Trust

            

    

    The
      Security Trustee declares that it shall hold the Transaction Security on trust
      for the Secured Parties on the terms contained in this
      Agreement.  Each of the parties to this Agreement agrees that the
      Security Trustee shall have only those duties, obligations and responsibilities
      expressly specified in this Agreement or in the Security Documents (and no
      others shall be implied).

     

    
      	
              27.2  

            	
              No
                Independent Power

            

    

    The
      Secured Parties shall not have any independent power to enforce, or have
      recourse to, any of the Transaction Security or to exercise any rights or powers
      arising under the Security Documents except through the Security
      Trustee.

     

    
      	
              27.3  

            	
              Security
                Trustee's Instructions

            

    

    The
      Security Trustee shall:

     

    
      	
              27.3.1  

            	
              unless
                a contrary indication appears in a Finance Document, act in accordance
                with any instructions given to it by the Agent and shall be entitled
                to
                assume that (i) any instructions received by it from the Agent are
                duly
                given by or on behalf of the Majority Lenders or, as the case may
                be, the
                Lenders in accordance with the terms of the Finance Documents and
                (ii)
                unless it has received actual notice of revocation that any instructions
                or directions given by the Agent have not been
                revoked;

            

    

     

    
      	
              27.3.2  

            	
              be
                entitled to request instructions, or clarification of any direction,
                from
                the Agent as to whether, and in what manner, it should exercise or
                refrain
                from exercising any rights, powers and discretions and the Security
                Trustee may refrain from acting unless and until those instructions
                or
                clarification are received by it;
                and

            

    

     

    
      	
              27.3.3  

            	
              be
                entitled to, carry out all dealings with the Lenders through the
                Agent and
                may give to the Agent any notice or other communication required
                to be
                given by the Security Trustee to the
                Lenders.

            

    

     

    
      	
              27.4  

            	
              Security
                Trustee's Actions

            

    

    Subject
      to the provisions of this Clause 27:

     

    
      	
              27.4.1  

            	
              the
                Security Trustee may, in the absence of any instructions to the contrary,
                take such action in the exercise of any of its powers and duties
                under the
                Finance Documents which in its absolute discretion it considers to
                be for
                the protection and benefit of all the Secured Parties;
                and

            

    

     

    
      	
              27.4.2  

            	
              at
                any time after receipt by the Security Trustee of notice from the
                Agent
                directing the Security Trustee to exercise all or any of its rights,
                remedies, powers or discretions under any of the Finance Documents,
                the
                Security Trustee may, and shall if so directed by the Agent, take
                any
                action as in its sole discretion it thinks fit to enforce the Transaction
                Security.

            

    

     

    
      
        
        

      

      
        -104-

        
          

        

      

      
        
        

      

    

    

     

    
      	
              27.5  

            	
              Security
                Trustee's Discretions

            

    

    The
      Security Trustee may:

     

    
      	
              27.5.1  

            	
              assume
                (unless it has received actual notice to the contrary in its capacity
                as
                Security Trustee for the Secured Parties) that (i) no Default has
                occurred
                and no Obligor or any other member of the Group that is party to
                a Finance
                Document is in breach of or default under its obligations under any
                of the
                Finance Documents; and (ii) any right, power, authority or discretion
                vested in any person has not been
                exercised;

            

    

     

    
      	
              27.5.2  

            	
              if
                it receives any instructions or directions from the Agent to take
                any
                action in relation to the Transaction Security, assume that all applicable
                conditions under the Finance Documents for taking that action have
                been
                satisfied;

            

    

     

    
      	
              27.5.3  

            	
              engage,
                pay for and rely on the advice or services of any lawyers, accountants,
                surveyors or other experts (whether obtained by the Security Trustee
                or by
                any other Secured Party) whose advice or services may at any time
                seem
                necessary, expedient or desirable;

            

    

     

    
      	
              27.5.4  

            	
              rely
                upon any communication or document believed by it to be genuine and,
                as to
                any matters of fact which might reasonably be expected to be within
                the
                knowledge of a Secured Party, an Obligor or any other member of the
                Group
                that is party to a Finance Document, upon a certificate signed by
                or on
                behalf of that person; and

            

    

     

    
      	
              27.5.5  

            	
              refrain
                from acting in accordance with the instructions of the Agent or Lenders
                (including bringing any legal action or proceeding arising out of
                or in
                connection with the Finance Documents) until it has received any
                indemnification and/or security that it may in its absolute discretion
                require (whether by way of payment in advance or otherwise) for all
                costs,
                losses and liabilities which it may incur in bringing such action
                or
                proceedings.

            

    

     

    
      	
              27.6  

            	
              Security
                Trustee's Obligations

            

    

    The
      Security Trustee shall promptly inform the Agent of:

     

    
      	
              27.6.1  

            	
              the
                contents of any notice or document received by it in its capacity
                as
                Security Trustee from any Obligor or any other member of the Group
                that is
                party to a Finance Document under any Finance Document;
                and

            

    

     

    
      	
              27.6.2  

            	
              the
                occurrence of any Default or any default by an Obligor or any other
                member
                of the Group that is party to a Finance Document in the due performance
                of
                or compliance with its obligations under any Finance Document of
                which the
                Security Trustee has received notice from any other party to this
                Agreement or any other Finance
                Document.

            

    

     

    
      
        
        

      

      
        -105-

        
          

        

      

      
        
        

      

    

    

     

    
      	
              27.7  

            	
              Excluded
                Obligations

            

    

    Notwithstanding
      anything to the contrary expressed or implied in the Finance Documents, the
      Security Trustee shall not:

     

    
      	
              27.7.1  

            	
              be
                bound to enquire as to (i) whether or not any Default has occurred
                or (ii)
                the performance, default or any breach by an Obligor or any other
                member
                of the Group that is party to a Finance Document of its obligations
                under
                any of the Finance Documents;

            

    

     

    
      	
              27.7.2  

            	
              be
                bound to account to any other Secured Party for any sum or the profit
                element of any sum received by it for its own
                account;

            

    

     

    
      	
              27.7.3  

            	
              be
                bound to disclose to any other person (including but not limited
                to any
                Secured Party) (i) any confidential information or (ii) any other
                information if disclosure would, or might in its reasonable opinion,
                constitute a breach of any law or be a breach of fiduciary
                duty;

            

    

     

    
      	
              27.7.4  

            	
              be
                under any obligations other than those which are specifically provided
                for
                in the Finance Documents; or

            

    

     

    
      	
              27.7.5  

            	
              without
                prejudice to Clause 32.1 (Order of
                Application), have or be deemed to have any duty, obligation or
                responsibility to, or relationship of trust or agency with, any Obligor
                or
                any other member of the Group that is party to a Finance Document
                except
                those to or with the Obligors which are expressly set forth in the
                relevant Finance Document (to the extent that the Parties are permitted
                by
                law to exclude such duty, obligation, responsibility or relationship,
                except to the extent arising as a result of its gross negligence
                or wilful
                misconduct).

            

    

     

    
      	
              27.8  

            	
              Exclusion
                of Security Trustee's
                liability

            

    

    The
      Security Trustee is not responsible or liable for:

     

    
      	
              27.8.1  

            	
              the
                adequacy, accuracy and/or completeness of any information (whether
                oral or
                written) supplied by the Security Trustee or any other person in
                or in
                connection with any Finance Document or the transactions contemplated
                in
                the Finance Documents;

            

    

     

    
      	
              27.8.2  

            	
              the
                legality, validity, effectiveness, adequacy or enforceability of
                any
                Finance Document or the Transaction Security or any other agreement,
                arrangement or document entered into, made or executed in anticipation
                of
                or in connection with any Finance Document or the Transaction
                Security;

            

    

     

    
      	
              27.8.3  

            	
              any
                losses to any person or any liability arising as a result of taking
                or
                refraining from taking any action in relation to any of the Finance
                Documents or the Transaction Security or otherwise, whether in accordance
                with an instruction from the Agent or otherwise, unless caused by
                its
                gross negligence or wilful
                misconduct;

            

    

     

    
      
        
        

      

      
        -106-

        
          

        

      

      
        
        

      

    

    

     

    
      	
              27.8.4  

            	
              the
                exercise of, or the failure to exercise, any judgement, discretion
                or
                power given to it by or in connection with any of the Finance Documents,
                the Transaction Security or any other agreement, arrangement or document
                entered into, made or executed in anticipation of, under or in connection
                with, the Finance Documents or the Transaction Security;
                or

            

    

     

    
      	
              27.8.5  

            	
              any
                shortfall which arises on the enforcement of the Transaction Security
                (to
                the extent that the Parties are permitted by law to exclude such
                responsibility or liability).

            

    

     

    
      	
              27.9  

            	
              No
                proceedings

            

    

    No
      Party
      (other than the Security Trustee) may take any proceedings against any officer,
      employee or agent of the Security Trustee in respect of any claim it might
      have
      against the Security Trustee or in respect of any act or omission of any kind
      by
      that officer, employee or agent in relation to any Finance Document or any
      Transaction Security and any officer, employee or agent of the Security Trustee
      may rely on this Clause.

     

    
      	
              27.10  

            	
              Own
                responsibility

            

    

    Without
      affecting the responsibility of any Obligor or any other member of the Group
      that is party to a Finance Document for information supplied by it or on its
      behalf in connection with any Finance Document, each Secured Party confirms
      to
      the Security Trustee that it has at all times been, and will continue to be,
      solely responsible for making its own independent appraisal and investigation
      of
      all risks arising under or in connection with any Finance Document including
      but
      not limited to:

     

    
      	
              27.10.1  

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

            

    

     

    
      	
              27.10.2  

            	
              the
                legality, validity, effectiveness, adequacy and enforceability of
                any
                Finance Document and the Transaction Security and any other agreement,
                arrangement or document entered into, made or executed in anticipation
                of,
                under or in connection with, any Finance Document or the Transaction
                Security;

            

    

     

    
      	
              27.10.3  

            	
              whether
                that Secured Party has recourse, and the nature and extent of that
                recourse, against any Party or any other person or any of their respective
                assets under or in connection with any Finance Document, the Transaction
                Security, the transactions contemplated by the Finance Documents
                or any
                other agreement, arrangement or document entered into, made or executed
                in
                anticipation of, under or in connection with, any Finance Document
                or the
                Transaction Security;

            

    

     

    
      	
              27.10.4  

            	
              the
                adequacy, accuracy and/or completeness of any information provided
                by the
                Security Trustee or by any other person under or in connection with
                any
                Finance Document, the transactions contemplated by the Finance Documents
                or any other agreement, arrangement or document entered into, made
                or
                executed

            

    

     

    
      
        
        

      

      
        -107-

        
          

        

      

      
        
        

      

    

    in
      anticipation of, under or in connection with, any Finance Document;
      and

     

    
      	
              27.10.5  

            	
              the
                right or title of any person in or to, or the value or sufficiency
                of any
                part of the Charged Property, the priority of any of the Transaction
                Security or the existence of any Liens affecting the Charged
                Property,

            

    

     

    and
      each
      Secured Party warrants to the Security Trustee that it has not relied on and
      will not at any time rely on the Security Trustee in respect of any of these
      matters.

     

    
      	
              27.11  

            	
              No
                responsibility to perfect Transaction
                Security

            

    

    The
      Security Trustee shall not be liable for any failure to:

     

    
      	
              27.11.1  

            	
              require
                the deposit with it of any deed or document certifying, representing
                or
                constituting the title of any Obligor or any other member of the
                Group
                that is party to a Finance Document to any of the Charged
                Property;

            

    

     

    
      	
              27.11.2  

            	
              obtain
                any license, consent or other authority for the execution, delivery,
                legality, validity, enforceability or admissibility in evidence of
                any of
                the Finance Documents or the Transaction
                Security;

            

    

     

    
      	
              27.11.3  

            	
              register,
                file or record or otherwise protect any of the Transaction Security
                (or
                the priority of any of the Transaction Security) under any applicable
                laws
                in any jurisdiction or to give notice to any person of the execution
                of
                any of the Finance Documents or of the Transaction
                Security;

            

    

     

    
      	
              27.11.4  

            	
              take,
                or to require any of the Obligors or any other member of the Group
                that is
                party to a Finance Document to take, any steps to perfect its title
                to any
                of the Charged Property or to render the Transaction Security effective
                or
                to secure the creation of any ancillary Liens under the laws of any
                jurisdiction; or

            

    

     

    
      	
              27.11.5  

            	
              require
                any further assurances in relation to any of the Security
                Documents.

            

    

     

    
      	
              27.12  

            	
              Insurance
                by Security Trustee

            

    

    
      	
              27.12.1  

            	
              The
                Security Trustee shall not be under any obligation to insure any
                of the
                Charged Property, to require any other person to maintain any insurance
                or
                to verify any obligation to arrange or maintain insurance contained
                in the
                Finance Documents.  The Security Trustee shall not be
                responsible for any loss which may be suffered by any person as a
                result
                of the lack of or inadequacy of any such
                insurance.

            

    

     

    
      	
              27.12.2  

            	
              Where
                the Security Trustee is named on any insurance policy as an insured
                party,
                it shall not be responsible for any loss which may be suffered by
                reason
                of, directly or indirectly, its failure to notify the insurers of
                any
                material fact relating to the risk assumed by the insurers or any
                other
                information of any kind, unless any Secured Party has requested it
                to do
                so in writing and the

            

    

     

    
      
        
        

      

      
        -108-

        
          

        

      

      
        
        

      

    

    Security
      Trustee has failed to do so within fourteen days after receipt of that
      request.

     

    
      	
              27.13  

            	
              Custodians
                and Nominees

            

    

    The
      Security Trustee may (after consultation with the Borrower) appoint and pay
      any
      person to act as a custodian or nominee on any terms in relation to any assets
      of the trust as the Security Trustee may determine, including for the purpose
      of
      depositing with a custodian this Agreement or any document relating to the
      trust
      created under this Agreement and the Security Trustee shall not be responsible
      for any loss, liability, expense, demand, cost, claim or proceedings incurred
      by
      reason of the misconduct, omission or default on the part of any person
      appointed by it under this Agreement or be bound to supervise the proceedings
      or
      acts of any person.

     

    
      	
              27.14  

            	
              Acceptance
                of Title

            

    

    The
      Security Trustee shall be entitled to accept without enquiry, and shall not
      be
      obliged to investigate, the right and title that each of the Obligors or any
      other member of the Group that is party to a Finance Document may have to any
      of
      the Charged Property and shall not be liable for or bound to require any Obligor
      or any other member of the Group that is party to a Finance Document to remedy
      any defect in its right or title.

     

    
      	
              27.15  

            	
              Refrain
                from Illegality

            

    

    The
      Security Trustee may refrain from doing anything which in its opinion will
      or
      may be contrary to any relevant law, directive or regulation of any jurisdiction
      which would or might otherwise render it liable to any person, and the Security
      Trustee may do anything which is, in its opinion, necessary to comply with
      any
      law, directive or regulation.

     

    
      	
              27.16  

            	
              Business
                with the Obligors

            

    

    The
      Security Trustee may accept deposits from, lend money to, and generally engage
      in any kind of banking or other business with any of the Obligors.

     

    
      	
              27.17  

            	
              Releases

            

    

    Upon
      a
      disposal of any of the Charged Property:

     

    
      	
              27.17.1  

            	
              pursuant
                to the enforcement of the Transaction Security by a Receiver or the
                Security Trustee; or

            

    

     

    
      	
              27.17.2  

            	
              if
                that disposal is permitted under the Finance
                Documents,

            

    

     

    the
      Security Trustee shall (at the cost of the Obligors) release that property
      from
      the Transaction Security and is authorised to execute, without the need for
      any
      further authority from the Secured Parties, any release of the Transaction
      Security or other claim over that asset and to issue any certificates of
      non-crystallisation of floating charges that may be required or
      desirable.

     

    
      
        
        

      

      
        -109-

        
          

        

      

      
        
        

      

    

    

     

    
      	
              27.18  

            	
              Winding
                up of Trust

            

    

    If
      the
      Security Trustee, with the approval of the Majority Lenders, determines that
      (a)
      all of the Secured Obligations and all other obligations secured by any of
      the
      Security Documents have been fully and finally discharged and (b) none of the
      Secured Parties is under any commitment, obligation or liability (actual or
      contingent) to make advances or provide other financial accommodation to any
      Obligor pursuant to the Finance Documents, the trusts set out in this Agreement
      shall be wound up and the Security Trustee shall release, without recourse
      or
      warranty, all of the Transaction Security and the rights of the Security Trustee
      under each of the Security Documents.

     

    
      	
              27.19  

            	
              Perpetuity
                Period

            

    

    The
      perpetuity period under the rule against perpetuities, if applicable to this
      Agreement, shall be the period of eighty years from the date of this
      Agreement.

     

    
      	
              27.20  

            	
              Powers
                Supplemental

            

    

    The
      rights, powers and discretions conferred upon the Security Trustee by this
      Agreement shall be supplemental to the Trustee Act 1925 and the Trustee Act
      2000
      and in addition to any which may be vested in the Security Trustee by general
      law or otherwise.

     

    
      	
              27.21  

            	
              Trustee
                division separate

            

    

    
      	
              27.21.1  

            	
              In
                acting as trustee for the Secured Parties, the Security Trustee shall
                be
                regarded as acting through its agency or trustee division which shall
                be
                treated as a separate entity from any other of its divisions or
                departments.

            

    

     

    
      	
              27.21.2  

            	
              If
                information is received by another division or department of the
                Security
                Trustee, it may be treated as confidential to that division or department
                and the Security Trustee shall not be deemed to have notice of
                it.

            

    

     

    
      	
              27.22  

            	
              Lender's
                indemnity to the Security
                Trustee

            

    

    Each
      Lender shall  (in proportion to its share of the Total Commitments or,
      if the Total Commitments are then zero, to its share of the Total Commitments
      immediately prior to their reduction to zero) indemnify the Security Trustee,
      within three Business Days of demand, against any cost, loss or liability
      incurred by the Security Trustee (otherwise than by reason of the Security
      Trustee's gross negligence or wilful misconduct) in acting as Security Trustee
      under the Finance Documents (unless the Security Trustee has been reimbursed
      by
      an Obligor or any other member of the Group that is party to a Finance Document
      pursuant to a Finance Document).

     

    
      	
              27.23  

            	
              Disapplication

            

    

    Section
      1
      of the Trustee Act 2000 shall not apply to the duties of the Security Trustee
      in
      relation to the trusts constituted by this Agreement.  Where there are
      any inconsistencies between the Trustee Act 1925 and the Trustee Act 2000 and
      the provisions of this Agreement, the provisions of this Agreement shall, to
      the
      extent allowed by law, prevail and, in the case of any inconsistency with the
      Trustee Act 2000, the provisions of this Agreement shall constitute a
      restriction or exclusion for the purposes of that Act.

     

    
      
        
        

      

      
        -110-

        
          

        

      

      
        
        

      

    

    

     

    
      	
              27.24  

            	
              Resignation
                of Security Trustee

            

    

    
      	
              27.24.1  

            	
              The
                Security Trustee may resign and appoint one of its Affiliates as
                successor
                by giving notice to the other Parties (or to the Agent on behalf
                of the
                Lenders).

            

    

     

    
      	
              27.24.2  

            	
              Alternatively
                the Security Trustee may resign by giving notice to the other Parties
                (or
                to the Agent on behalf of the Lenders) in which case the Majority
                Lenders
                may (after consultation with the Borrower) appoint a successor Security
                Trustee.

            

    

     

    
      	
              27.24.3  

            	
              If
                the Majority Lenders have not appointed a successor Security Trustee
                in
                accordance with sub-clause 27.24.2 above
                within 30 days after the notice of resignation was given, the Security
                Trustee (after consultation with the Agent) may appoint a successor
                Security Trustee.

            

    

     

    
      	
              27.24.4  

            	
              The
                retiring Security Trustee shall, at its own cost, make available
                to the
                successor Security Trustee such documents and records and provide
                such
                assistance as the successor Security Trustee may reasonably request
                for
                the purposes of performing its functions as Security Trustee under
                the
                Finance Documents.

            

    

     

    
      	
              27.24.5  

            	
              The
                Security Trustee's resignation notice shall only take effect upon
                (i) the
                appointment of a successor and (ii) the transfer of all of the Transaction
                Security to that successor.

            

    

     

    
      	
              27.24.6  

            	
              Upon
                the appointment of a successor, the retiring Security Trustee shall
                be
                discharged from any further obligation in respect of the Finance
                Documents
                but shall remain entitled to the benefit of Clauses 26 (Role of the
                Agentandthe Arranger) and 27 (Role of
                Security
                Trustee).  Its successor and each of the other Parties
                shall have the same rights and obligations amongst themselves as
                they
                would have had if such successor had been an original
                Party.

            

    

     

    
      	
              27.24.7  

            	
              The
                Majority Lenders may, by notice to the Security Trustee, require
                it to
                resign in accordance with sub-clause 27.24.2
                above. In this event, the Security Trustee shall resign in accordance
                with
                sub-clause 27.24.2
                above.

            

    

     

    
      	
              27.25  

            	
              Delegation

            

    

    
      	
              27.25.1  

            	
              The
                Security Trustee may, at any time, delegate by power of attorney
                or
                otherwise to any person for any period, all or any of the rights,
                powers
                and discretions vested in it by any of the Finance
                Documents.

            

    

     

    
      	
              27.25.2  

            	
              The
                delegation may be made upon any terms and conditions (including the
                power
                to sub-delegate) and subject to any restrictions that the Security
                Trustee
                may think fit in the interests of the Secured Parties and it 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 Delegate or
                sub-delegate.

            

    

     

    
      
        
        

      

      
        -111-

        
          

        

      

      
        
        

      

    

    

     

    
      	
              27.26  

            	
              Additional
                Security Trustees

            

    

    
      	
              27.26.1  

            	
              The
                Security Trustee may at any time appoint (and subsequently remove)
                any
                person to act as a separate security trustee or as a co-security
                trustee
                jointly with it (i) if it considers that appointment to be in the
                interests of the Secured Parties or (ii) for the purposes of conforming
                to
                any legal requirements, restrictions or conditions which the Security
                Trustee deems to be relevant or (iii) for obtaining or enforcing
                any
                judgment in any jurisdiction, and the Security Trustee shall give
                prior
                notice to the Borrower and the Agent of that
                appointment.

            

    

     

    
      	
              27.26.2  

            	
              Any
                person so appointed shall have the rights, powers and discretions
                (not
                exceeding those conferred on the Security Trustee by this Agreement)
                and
                the duties and obligations that are conferred or imposed by the instrument
                of appointment.

            

    

     

    
      	
              27.26.3  

            	
              The
                remuneration that the Security Trustee may pay to any person, and
                any
                costs and expenses incurred by that person in performing its functions
                pursuant to that appointment shall, for the purposes of this Agreement,
                be
                treated as costs and expenses incurred by the Security
                Trustee.

            

    

     

     

    
      	
              28.  

            	
              CONDUCT
                OF BUSINESS BY THE FINANCE
                PARTIES

            

    

     

    No
      provision of this Agreement will:

     

    
      	
              28.1.1  

            	
              interfere
                with the right of any Finance Party to arrange its affairs (tax or
                otherwise) in whatever manner it thinks
                fit;

            

    

     

    
      	
              28.1.2  

            	
              oblige
                any Finance Party to investigate or claim any credit, relief, remission
                or
                repayment available to it or the extent, order and manner of any
                claim;
                or

            

    

     

    
      	
              28.1.3  

            	
              oblige
                any Finance Party to disclose any information relating to its affairs
                (tax
                or otherwise) or any computations in respect of
                Tax.

            

    

     

     

    
      	
              29.  

            	
              SHARING
                AMONG THE FINANCE PARTIES

            

    

     

    
      	
              29.1  

            	
              Payments
                to Finance Parties

            

    

    If
      a
      Finance Party (a "Recovering Finance Party") receives or
      recovers any amount from an Obligor other than in accordance with Clause 30 (Payment mechanics) or Clause 32 (Application
      of Proceeds) and applies that
      amount to a payment due under the Finance Documents then:

     

    
      	
              29.1.1  

            	
              the
                Recovering Finance Party shall, within three Business Days, notify
                details
                of the receipt or recovery, to the
                Agent;

            

    

     

    
      	
              29.1.2  

            	
              the
                Agent shall determine whether the receipt or recovery is in excess
                of the
                amount the Recovering Finance Party would have been paid had the
                receipt
                or recovery been received or made by the Agent and distributed in
                accordance with Clause 30 (Payment
                mechanics), without taking account of any Tax
                which

            

    

     

    
      
        
        

      

      
        -112-

        
          

        

      

      
        
        

      

    

    would
      be
      imposed on the Agent in relation to the receipt, recovery or distribution;
      and

     

    
      	
              29.1.3  

            	
              the
                Recovering Finance Party shall, within three Business Days of demand
                by
                the Agent, pay to the Agent an amount (the "Sharing
                Payment") equal to such receipt or recovery less any amount which
                the Agent determines may be retained by the Recovering Finance Party
                as
                its share of any payment to be made, in accordance with Clause 30.5 (Partial
                payments).

            

    

     

    
      	
              29.2  

            	
              Redistribution
                of payments

            

    

    The
      Agent
      shall treat the Sharing Payment as if it had been paid by the relevant Obligor
      and distribute it between the Finance Parties (other than the Recovering Finance
      Party) in accordance with Clause 30.5 (Partial
      payments).

     

    
      	
              29.3  

            	
              Recovering
                Finance Party's rights

            

    

    
      	
              29.3.1  

            	
              On
                a distribution by the Agent under Clause 29.2
                (Redistribution of payments), the Recovering Finance Party will
                be subrogated to the rights of the Finance Parties which have shared
                in
                the redistribution.

            

    

     

    
      	
              29.3.2  

            	
              If
                and to the extent that the Recovering Finance Party is not able to
                rely on
                its rights under sub-clause 29.3.1 above, the
                relevant Obligor shall be liable to the Recovering Finance Party
                for a
                debt equal to the Sharing Payment which is immediately due and
                payable.

            

    

     

    
      	
              29.4  

            	
              Reversal
                of redistribution

            

    

    If
      any
      part of the Sharing Payment received or recovered by a Recovering Finance Party
      becomes repayable and is repaid by that Recovering Finance Party,
      then:

     

    
      	
              29.4.1  

            	
              each
                Finance Party which has received a share of the relevant Sharing
                Payment
                pursuant to Clause 29.2 (Redistribution
                of payments) shall, upon request of the Agent, pay to the Agent for
                account of that Recovering Finance Party an amount equal to the
                appropriate part of its share of the  Sharing Payment (together
                with an amount as is necessary to reimburse that Recovering Finance
                Party
                for its proportion of any interest on the Sharing Payment which that
                Recovering Finance Party is required to pay);
                and

            

    

     

    
      	
              29.4.2  

            	
              that
                Recovering Finance Party's rights of subrogation in respect of any
                reimbursement shall be cancelled and the relevant Obligor will be
                liable
                to the reimbursing Finance Party for the amount so
                reimbursed.

            

    

     

    
      	
              29.5  

            	
              Exceptions

            

    

    
      	
              29.5.1  

            	
              This
                Clause 29 shall not apply to the extent that
                the Recovering Finance Party would not, after making any payment
                pursuant
                to this Clause 29, have a valid and
                enforceable claim against the relevant
                Obligor.

            

    

     

    
      
        
        

      

      
        -113-

        
          

        

      

      
        
        

      

    

    

     

    
      	
              29.5.2  

            	
              A
                Recovering Finance Party is not obliged to share with any other Finance
                Party any amount which the Recovering Finance Party has received
                or
                recovered as a result of taking legal or arbitration proceedings,
                if:

            

    

     

    
      	
              (a)  

            	
              it
                notified that other Finance Party of the legal or arbitration proceedings;
                and

            

    

     

    
      	
              (b)  

            	
              that
                other Finance Party had an opportunity to participate in those legal
                or
                arbitration proceedings but did not do so as soon as reasonably
                practicable having received notice and did not take separate legal
                or
                arbitration proceedings.

            

    

     

    

     

    
      
        
        

      

      
        -114-

        
          

        

      

      
        
        

      

    

    SECTION
      11

    ADMINISTRATION

     

     

    
      	
              30.  

            	
              PAYMENT
                MECHANICS

            

    

     

    
      	
              30.1  

            	
              Payments
                to the Agent

            

    

    
      	
              30.1.1  

            	
              On
                each date on which an Obligor or a Lender is required to make a payment
                under a Finance Document, that Obligor or Lender shall make the same
                available to the Agent (unless a contrary indication appears in a
                Finance
                Document) for value on the due date at the time and in such funds
                specified by the Agent as being customary at the time for settlement
                of
                transactions in the relevant currency in the place of
                payment.

            

    

     

    
      	
              30.1.2  

            	
              Payment
                shall be made to such account in the principal financial centre of
                the
                country of that currency with such bank as the Agent
                specifies.

            

    

     

    
      	
              30.2  

            	
              Distributions
                by the Agent

            

    

    Each
      payment received by the Agent under the Finance Documents for another Party
      shall, subject to Clause 30.3 (Distributions to
      an Obligor), Clause 30.4 (Clawback)
      and Clause 26.16 (Deduction from amounts
      payable by the Agent) be made available by the Agent as soon as practicable
      after receipt to the Party entitled to receive payment in accordance with this
      Agreement (in the case of a Lender, for the account of its Facility Office),
      to
      such account as that Party may notify to the Agent by not less than five
      Business Days' notice with a bank in the principal financial centre of the
      country of that currency.

     

    
      	
              30.3  

            	
              Distributions
                to an Obligor

            

    

    The
      Agent
      may (with the consent of the relevant Obligor or in accordance with Clause 31 (Set-off)) apply any amount received by it
      for that Obligor in or towards payment (on the date and in the currency and
      funds of receipt) of any amount due from that Obligor under the Finance
      Documents or in or towards purchase of any amount of any currency to be so
      applied.

     

    
      	
              30.4  

            	
              Clawback

            

    

    
      	
              30.4.1  

            	
              Where
                a sum is to be paid to the Agent under the Finance Documents for
                another
                Party, the Agent is not obliged to pay that sum to that other Party
                (or to
                enter into or perform any related exchange contract) until it has
                been
                able to establish to its satisfaction that it has actually received
                that
                sum.

            

    

     

    
      	
              30.4.2  

            	
              If
                the Agent pays an amount to another Party and it proves to be the
                case
                that the Agent had not actually received that amount, then the Party
                to
                whom that amount (or the proceeds of any related exchange contract)
                was
                paid by the Agent shall on demand refund the same to the Agent together
                with interest on that amount from the date of payment to the date
                of
                receipt by the Agent, calculated by the Agent to reflect its cost
                of
                funds.

            

    

     

    
      
        
        

      

      
        -115-

        
          

        

      

      
        
        

      

    

    

     

    
      	
              30.5  

            	
              Partial
                payments

            

    

    
      	
              30.5.1  

            	
              If
                the Agent receives a payment that is insufficient to discharge all
                the
                amounts then due and payable by an Obligor under the Finance Documents,
                the Agent shall apply that payment towards the obligations of that
                Obligor
                under the Finance Documents in the following
                order:

            

    

     

    
      	
              (a)  

            	
              first,
                in or towards payment pro rata of any unpaid fees, costs and expenses
                of
                the Agent, the Security Trustee (including of any Receiver or Delegate)
                and the Arranger under the Finance
                Documents;

            

    

     

    
      	
              (b)  

            	
              secondly,
                in or towards payment pro rata of any accrued interest, fee or commission
                due but unpaid under this
                Agreement;

            

    

     

    
      	
              (c)  

            	
              thirdly,
                in or towards payment pro rata of any principal due but unpaid under
                this
                Agreement; and

            

    

     

    
      	
              (d)  

            	
              fourthly,
                in or towards payment pro rata of any other sum due but unpaid under
                the
                Finance Documents.

            

    

     

    
      	
              30.5.2  

            	
              The
                Agent shall, if so directed by the Majority Lenders, vary the order
                set
                out in paragraphs (a) to (d) of sub-clause 30.5.1
                above.

            

    

     

    
      	
              30.5.3  

            	
              Sub-clauses
                30.5.1 and 30.5.2 above
                will override any appropriation
                made by an Obligor.

            

    

     

    
      	
              30.6  

            	
              No
                set-off by Obligors

            

    

    All
      payments to be made by an Obligor or other member of the Group under the Finance
      Documents shall be calculated and be made without (and free and clear of any
      deduction for) set-off or counterclaim.

     

    
      	
              30.7  

            	
              Business
                Days

            

    

    
      	
              30.7.1  

            	
              Any
                payment which is due to be made on a day that is not a Business Day
                shall
                be made on the next Business Day and such payment shall be deemed
                made on
                the date due.

            

    

     

    
      	
              30.7.2  

            	
              During
                any extension of the due date for payment of any principal or Unpaid
                Sum
                under this Agreement interest is payable on the principal or Unpaid
                Sum at
                the rate payable on the original due
                date.

            

    

     

    
      	
              30.8  

            	
              Currency
                of account

            

    

    
      	
              30.8.1  

            	
              Subject
                to sub-clauses 30.8.2 to 30.8.5 below,
                the Base Currency is the currency
                of account and payment for any sum due from an Obligor or other member
                of
                the Group under any Finance
                Document.

            

    

     

    
      	
              30.8.2  

            	
              A
                repayment of an Unpaid Sum or a part of an Unpaid Sum shall be made
                in the
                currency in which that Unpaid Sum is denominated on its due
                date.

            

    

     

    
      
        
        

      

      
        -116-

        
          

        

      

      
        
        

      

    

    

     

    
      	
              30.8.3  

            	
              Each
                payment of interest shall be made in the currency in which the sum
                in
                respect of which the interest is payable was denominated when that
                interest accrued.

            

    

     

    
      	
              30.8.4  

            	
              Each
                payment in respect of costs, expenses or Taxes shall be made in the
                currency in which the costs, expenses or Taxes are
                incurred.

            

    

     

    
      	
              30.8.5  

            	
              Any
                amount expressed to be payable in a currency other than the Base
                Currency
                shall be paid in that other
                currency.

            

    

     

    
      	
              30.9  

            	
              Change
                of currency

            

    

    
      	
              30.9.1  

            	
              Unless
                otherwise prohibited by law, if more than one currency or currency
                unit
                are at the same time recognised by the central bank of any country
                as the
                lawful currency of that country,
                then:

            

    

     

    
      	
              (a)  

            	
              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 (after consultation with the Borrower);
                and

            

    

     

    
      	
              (b)  

            	
              any
                translation from one currency or currency unit to another shall be
                at the
                official rate of exchange 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).

            

    

     

    
      	
              30.9.2  

            	
              If
                a change in any currency of a country occurs, this Agreement will,
                to the
                extent the Agent (acting reasonably and after consultation with the
                Borrower) specifies to be necessary, be amended to comply with any
                generally accepted conventions and market practice in the Relevant
                Interbank Market and otherwise to reflect the change in
                currency.

            

    

     

    
      	
              30.10  

            	
              Disruption
                to Payment Systems etc.

            

    

    If
      either
      the Agent determines (in its discretion) that a Disruption Event has occurred
      or
      the Agent is notified by the Borrower that a Disruption Event has
      occurred:

     

    
      	
              30.10.1  

            	
              the
                Agent may, and shall if requested to do so by the Borrower, consult
                with
                the Borrower with a view to agreeing with the Borrower such changes
                to the
                operation or administration of the Facility as the Agent may deem
                necessary in the circumstances;

            

    

     

    
      	
              30.10.2  

            	
              the
                Agent shall not be obliged to consult with the Borrower in relation
                to any
                changes mentioned in sub-clause 30.10.1 above
                if, in its opinion (acting reasonably), it is not practicable to
                do so in
                the circumstances and, in any event, shall have no obligation to
                agree to
                such changes;

            

    

     

    
      	
              30.10.3  

            	
              the
                Agent may consult with the Finance Parties in relation to any changes
                mentioned in sub-clause 30.10.1 above but
                shall not be obliged to do so if, in its opinion, it is not practicable
                to
                do so in the circumstances;

            

    

     

    
      
        
        

      

      
        -117-

        
          

        

      

      
        
        

      

    

    

     

    
      	
              30.10.4  

            	
              any
                such changes agreed upon by the Agent and the Borrower shall (whether
                or
                not it is finally determined that a Disruption Event has occurred)
                be
                binding upon the Parties as an amendment to (or, as the case may
                be,
                waiver of) the terms of the Finance Documents notwithstanding the
                provisions of Clause 38 (Amendments and
                Waivers);

            

    

     

    
      	
              30.10.5  

            	
              the
                Agent shall not be liable for any damages, costs or losses
                whatsoever  (including, without limitation for negligence, gross
                negligence or any other category of liability whatsoever but not
                including
                any claim based on the fraud of the Agent) arising as a result of
                its
                taking, or failing to take, any actions pursuant to or in connection
                with
                this Clause 30.10;
                and

            

    

     

    
      	
              30.10.6  

            	
              the
                Agent shall notify the Finance Parties of all changes agreed pursuant
                to
                sub-clause 30.10.4
                above.

            

    

     

     

    
      	
              31.  

            	
              SET-OFF

            

    

     

    For
      so
      long as an Event of Default is continuing, a Finance Party may set off any
      matured obligation due from an Obligor under the Finance Documents (to the
      extent beneficially owned by that Finance Party) against any matured obligation
      owed by that Finance Party to that Obligor, regardless of the place of payment,
      booking branch or currency of either obligation.  If the obligations
      are in different currencies, the Finance Party may convert either obligation
      at
      a market rate of exchange in its usual course of business for the purpose of
      the
      set-off.

     

     

    
      	
              32.  

            	
              APPLICATION
                OF PROCEEDS

            

    

     

    
      	
              32.1  

            	
              Order
                of Application

            

    

    All
      moneys from time to time received or recovered by the Security Trustee in
      connection with the realisation or enforcement of all or any part of the
      Transaction Security shall be held by the Security Trustee on trust to apply
      them at such times as the Security Trustee sees fit, to the extent permitted
      by
      applicable law, in the following order of priority:

     

    
      	
              32.1.1  

            	
              in
                discharging any sums owing to the Security Trustee (in its capacity
                as
                trustee), any Receiver or any
                Delegate;

            

    

     

    
      	
              32.1.2  

            	
              in
                payment to the Agent, on behalf of the Secured Parties, for application
                towards the discharge of all sums due and payable by any Obligor
                or other
                member of the Group under any of the Finance Documents in accordance
                with
                Clause 30.5 (Partial
                payments);

            

    

     

    
      	
              32.1.3  

            	
              if
                none of the Obligors or any other member of the Group is under any
                further
                actual or contingent liability under any Finance Document, in payment
                to
                any person to whom the Security Trustee is obliged to pay in priority
                to
                any Obligor or other member of the Group pursuant to the Finance
                Documents; and

            

    

     

    
      
        
        

      

      
        -118-

        
          

        

      

      
        
        

      

    

    

     

    
      	
              32.1.4  

            	
              the
                balance, if any, in payment to the relevant Obligor or other member
                of the
                Group.

            

    

     

    
      	
              32.2  

            	
              Investment
                of Proceeds

            

    

    Prior
      to
      the application of the proceeds of the Transaction Security in accordance with
      Clause 32.1 (Order of Application) the
      Security Trustee may, at its discretion, hold all or part of those proceeds
      in
      an interest bearing suspense or impersonal account(s) in the name of the
      Security Trustee or Agent with any financial institution (including itself)
      and
      for so long as the Security Trustee thinks fit (the interest being credited
      to
      the relevant account) pending the application from time to time of those monies
      at the Security Trustee's discretion in accordance with the provisions of this
      Clause 32.

     

    
      	
              32.3  

            	
              Currency
                Conversion

            

    

    
      	
              32.3.1  

            	
              For
                the purpose of or pending the discharge of any of the Secured Obligations
                the Security Trustee may convert any moneys received or recovered
                by the
                Security Trustee from one currency to another, at the spot rate at
                which
                the Security Trustee is able to purchase the currency (in accordance
                with
                its customary procedures) in which the Secured Obligations are due
                with
                the amount received.

            

    

     

    
      	
              32.3.2  

            	
              The
                obligations of any Obligor to pay in the due currency shall only
                be
                satisfied to the extent of the amount of the due currency purchased
                after
                deducting the costs of conversion.

            

    

     

    
      	
              32.4  

            	
              Permitted
                Deductions

            

    

    The
      Security Trustee shall be entitled (a) to set aside by way of reserve amounts
      required to meet and (b) to make and pay, any deductions and withholdings (on
      account of Tax or otherwise) which it is or may be required by any applicable
      law to make from any distribution or payment made by it under this Agreement,
      and to pay all Tax which may be assessed against it in respect of any of the
      Charged Property, or as a consequence of performing its duties, or by virtue
      of
      its capacity as Security Trustee under any of the Finance Documents or otherwise
      (except in connection with its remuneration for performing its duties under
      this
      Agreement).

     

    
      	
              32.5  

            	
              Discharge
                of Secured Obligations

            

    

    
      	
              32.5.1  

            	
              Any
                payment to be made in respect of the Secured Obligations by the Security
                Trustee may be made to the Agent on behalf of the Lenders and that
                payment
                shall be a good discharge to the extent of that payment, to the Security
                Trustee.

            

    

     

    
      	
              32.5.2  

            	
              The
                Security Trustee is under no obligation to make payment to the Agent
                in
                the same currency as that in which any Unpaid Sum is
                denominated.

            

    

     

    
      	
              32.6  

            	
              Sums
                received by Obligors

            

    

    If
      any of
      the Obligors receives any sum which, pursuant to any of the Finance Documents,
      should have been paid to the Security Trustee, that sum shall promptly be paid
      to the Security Trustee for application in accordance with this Clause 32.

     

    
      
        
        

      

      
        -119-

        
          

        

      

      
        
        

      

    

    

     

     

    
      	
              33.  

            	
              NOTICES

            

    

     

    
      	
              33.1  

            	
              Communications
                in writing

            

    

    Any
      communication to be made under or in connection with the Finance Documents
      shall
      be made in writing and, unless otherwise stated, may be made by fax or
      letter.

     

    
      	
              33.2  

            	
              Addresses

            

    

    The
      address and fax number (and the department or officer, if any, for whose
      attention the communication is to be made) of each Party for any communication
      or document to be made or delivered under or in connection with the Finance
      Documents is:

     

    
      	
              33.2.1  

            	
              in
                the case of any Obligor or any other member of the Group party to
                any
                Finance Document, to:

            

    

     

    
      	
              Address:

            	
              Validus
                Holdings, Ltd.

            	 
	 	
              19
                Par-La-Ville Road

            	 
	 	
              Hamilton
                HM11 Bermuda,

            
	 	 	 
	
              Attention:

            	
              Chief
                Financial Officer

            	 
	
              Facsimile:

            	
              +1
                (441) 278-9091,

            	 
	 	 	 
	
              with
                a copy to:

            	 	 
	 	 	 
	
              Address:

            	
              Talbot
                Holdings Ltd.

            	 
	 	
              19
                Par-La-Ville Road

            	 
	 	
              Hamilton
                HM11 Bermuda,

            
	 	 	 
	
              Attention:

            	
              Chief
                Financial Officer

            	 
	
              Facsimile:

            	
              +1(441)
                278-9091; and

            	 
	 
	
              a
                copy by fax to +44 (0)20 7550 3555, marked for the attention of Nigel
                Wachman and (in the case of notice of a Default only) a copy
                to:

            
	 	 	 
	
              Address:

            	
              Cahill
                Gordon & Reindel LLP

            	 
	 	
              80
                Pine St.

            	 
	 	
              New
                York

            	 
	 	
              New
                York 10005

            	 
	 	 	 
	
              Attention:

            	
              Michael
                A. Becker, Esq. and John Schuster, Esq.

            	 
	
              Facsimile:

            	
              +1
                (212) 269-5420;

            	 

    

    

     

    in
      the
      case of each Lender, that notified in writing to the Agent on or prior to the
      date on which it becomes a Party; and

     

    
      	
              33.2.2  

            	
              in
                the case of the Agent and Security Trustee,
                to:

            

    

     

    
      
        
        

      

      
        -120-

        
          

        

      

      
        
        

      

    

    

     

    
      	
              Address:

            	
              Loans
                Administration

            
	 	
              Bank
                House

            
	 	
              Wine
                Street

            
	 	
              Bristol
                BS1 2AN

            
	 	 
	
              Fax:

            	
              0117
                923 3367

            
	
              Attention:

            	
              Loans
                Administration,

            

    

    

     

    or
      any
      substitute address or fax number or department or officer as the Party may
      notify to the Agent (or the Agent may notify to the other Parties, if a change
      is made by the Agent) by not less than five Business Days' notice.

     

    
      	
              33.3  

            	
              Delivery

            

    

    
      	
              33.3.1  

            	
              Any
                communication or document made or delivered by one person to another
                under
                or in connection with the Finance Documents will only be
                effective:

            

    

     

    
      	
              (a)  

            	
              if
                by way of fax, when received in legible form;
                or

            

    

     

    
      	
              (b)  

            	
              if
                by way of letter, when it has been left at the relevant address or
                five
                Business Days after being deposited in the post postage prepaid in
                an
                envelope addressed to it at that
                address,

            

    

     

    and,
      if a
      particular department or officer is specified as part of its address details
      provided under Clause 33.2 (Addresses), if
      addressed to that department or officer.

     

    
      	
              33.3.2  

            	
              Any
                communication or document to be made or delivered to the Agent or
                to the
                Security Trustee will be effective only when actually received by
                the
                Agent or the Security Trustee and then only if it is expressly marked
                for
                the attention of the department or officer identified with the Agent's
                or
                the Security Trustee's signature below (or any substitute department
                or
                officer as the Agent shall specify for this
                purpose).

            

    

     

    
      	
              33.3.3  

            	
              All
                notices from or to an Obligor shall be sent through the
                Agent.

            

    

     

    
      	
              33.3.4  

            	
              Any
                communication or document made or delivered to the Borrower in accordance
                with this Clause will be deemed to have been made or delivered to
                the
                Guarantor.

            

    

     

    
      
        
        

      

      
        -121-

        
          

        

      

      
        
        

      

    

    

     

    
      	
              33.3.5  

            	
              All
                notices to a Lender from the Security Trustee shall be sent through
                the
                Agent.

            

    

     

    
      	
              33.4  

            	
              Notification
                of address and fax number 

            

    

    Promptly
      upon receipt of notification of an address and fax number or change of address
      or fax number pursuant to Clause 33.2
      (Addresses) or changing its own address or fax number, the Agent shall
      notify the other Parties.

     

    
      	
              33.5  

            	
              Electronic
                communication

            

    

    
      	
              33.5.1  

            	
              Any
                communication to be made between the Agent or the Security Trustee
                and a
                Lender under or in connection with the Finance Documents may be made
                by
                electronic mail or other electronic means, if the Agent, the Security
                Trustee and the relevant Lender:

            

    

     

    
      	
              (a)  

            	
              agree
                that, unless and until notified to the contrary, this is to be an
                accepted
                form of communication;

            

    

     

    
      	
              (b)  

            	
              notify
                each other in writing of their electronic mail address and/or any
                other
                information required to enable the sending and receipt of information
                by
                that means; and

            

    

     

    
      	
              (c)  

            	
              notify
                each other of any change to their address or any other such information
                supplied by them.

            

    

     

    
      	
              33.5.2  

            	
              Any
                electronic communication made between the Agent and a Lender or the
                Security Trustee will be effective only when actually received in
                readable
                form and in the case of any electronic communication made by a Lender
                to
                the Agent or the Security Trustee only if it is addressed in such
                a manner
                as the Agent or Security Trustee shall specify for this
                purpose.

            

    

     

    
      	
              33.6  

            	
              English
                language

            

    

    
      	
              33.6.1  

            	
              Any
                notice given under or in connection with any Finance Document must
                be in
                English.

            

    

     

    
      	
              33.6.2  

            	
              All
                other documents provided under or in connection with any Finance
                Document
                must be:

            

    

     

    
      	
              (a)  

            	
              in
                English; or

            

    

     

    
      	
              (b)  

            	
              if
                not in English, and if so required by the Agent, accompanied by a
                certified English translation and, in this case, the English translation
                will prevail unless the document is a constitutional, statutory or
                other
                official document.

            

    

     

     

    
      	
              34.  

            	
              CALCULATIONS
                AND CERTIFICATES

            

    

     

    
      	
              34.1  

            	
              Accounts

            

    

    In
      any
      litigation or arbitration proceedings arising out of or in connection with
      a
      Finance Document, the entries made in the accounts maintained by a Finance
      Party
      are prima facie evidence of the matters to which they
      relate.

     

    
      	
              34.2  

            	
              Certificates
                and Determinations

            

    

    Any
      certification or determination by a Finance Party of a rate or amount under
      any
      Finance Document is, in the absence of manifest error, conclusive evidence
      of
      the matters to which it relates.

     

    
      
        
        

      

      
        -122-

        
          

        

      

      
        
        

      

    

    

     

    
      	
              34.3  

            	
              Day
                count convention

            

    

    Any
      interest, commission or fee accruing under a Finance Document will accrue from
      day to day and is calculated on the basis of the actual number of days elapsed
      and a year of 360 days or, in any case where the practice in the Relevant
      Interbank Market differs, in accordance with that market practice.

     

     

    
      	
              35.  

            	
              PARTIAL
                INVALIDITY

            

    

     

    If,
      at
      any time, any provision of the Finance Documents is or becomes illegal, invalid
      or unenforceable in any respect under any law of any jurisdiction, neither
      the
      legality, validity or enforceability of the remaining provisions nor the
      legality, validity or enforceability of such provision under the law of any
      other jurisdiction will in any way be affected or impaired.

     

     

    
      	
              36.  

            	
              REMEDIES
                AND WAIVERS

            

    

     

    No
      failure to exercise, nor any delay in exercising, on the part of any Secured
      Party or the Arranger, any right or remedy under the Finance Documents shall
      operate as a waiver, nor shall any single or partial exercise of any right
      or
      remedy prevent any further or other exercise or the exercise of any other right
      or remedy.  The rights and remedies provided in this Agreement are
      cumulative and not exclusive of any rights or remedies provided by
      law.

     

     

    
      	
              37.  

            	
              COUNTERPARTS

            

    

     

    This
      Agreement may be executed in any number of counterparts, all of which taken
      together shall constitute one and the same instrument.

     

     

    
      	
              38.  

            	
              AMENDMENTS
                AND WAIVERS

            

    

     

    
      	
              38.1  

            	
              Required
                consents

            

    

    
      	
              38.1.1  

            	
              Subject
                to Clause 38.2 (Exceptions) and
                Clause 27.17 (Releases) any term of
                the Finance Documents may be amended or waived only with the consent
                of
                the Majority Lenders and the Obligors and any such amendment or waiver
                will be binding on all Parties.

            

    

     

    
      	
              38.1.2  

            	
              The
                Agent, or in respect of the Security Documents the Security Trustee,
                may
                effect, on behalf of any Finance Party, any amendment or waiver permitted
                by this Clause.

            

    

     

    
      	
              38.2  

            	
              Exceptions

            

    

    
      	
              38.2.1  

            	
              An
                amendment or waiver that has the effect of changing or which relates
                to:

            

    

     

    
      	
              (a)  

            	
              Clause
                29 (Sharing Among the Finance
                Parties) or this Clause 38;

            

    

     

    
      	
              (b)  

            	
              the
                definition of "Majority Lenders" or "Super Majority Lenders" in Clause
1.1
                (Definitions);

            

    

     

    
      	
              (c)  

            	
              an
                extension to the date of payment of any amount under the Finance
                Documents;

            

    

     

    
      
        
        

      

      
        -123-

        
          

        

      

      
        
        

      

    

    

     

    
      	
              (d)  

            	
              a
                reduction in the amount of any payment of principal, interest, fees
                or
                commission payable;

            

    

     

    
      	
              (e)  

            	
              an
                increase in or an extension of any
                Commitment;

            

    

     

    
      	
              (f)  

            	
              Clause
                2.8 (Several Rights), Clause 9
                (Collateralisation And Redesignation Of
                Letters Of Credit), Clause 18
                (Guarantee and Indemnity), Clause 24
                (Changes to the Lenders) or Clause 25 (Changes to the
                Obligors);

            

    

     

    
      	
              (g)  

            	
              any
                provision which expressly contemplates the need for the consent or
                approval of all the Lenders;

            

    

     

    
      	
              (h)  

            	
              a
                material change to the nature or scope of the Charged Property or
                the
                manner in which the proceeds of enforcement of the Transaction Security
                are distributed;

            

    

     

    
      	
              (i)  

            	
              the
                release of all or substantially all of the Transaction Security other
                than
                in accordance with the Security Documents;
                or

            

    

     

    
      	
              (j)  

            	
              any
                material change to the definition of "Advance Rate", "Borrowing Base"
                or
                "Eligible Securities" in Clause 1.1
                (Definitions) or any material change to Schedule 9 (Eligible
                Collateral Table) or the proviso set out in Clause 3.1 (Utilisation Conditions for
                the
                Facility),

            

    

     

    shall
      not
      be made without the prior consent of all the Lenders.

     

    
      	
              38.2.2  

            	
              An
                amendment or waiver which relates to the rights or obligations of
                the
                Agent, the Security Trustee or the Arranger may not be effected without
                the consent of the Agent, the Security Trustee or the Arranger as
                the case
                may be.

            

    

     

    
      	
              38.2.3  

            	
              Notwithstanding
                the foregoing or any other provision of this Agreement, any provision
                of
                this Agreement may be amended by an agreement in writing entered
                into by
                the Guarantor, the Super-Majority Lenders and the Agent
                if:

            

    

     

    
      	
              (a)  

            	
              by
                the terms of such agreement, the Commitment of each Lender not consenting
                to the amendment provided for therein shall terminate (it being understood
                that the Guarantor may cause the Commitment of any such non-consenting
                Lender to be transferred to one or more new Lenders in accordance
                with
                Clause 24 (Changes to the Lenders)
                provided that no action shall be required to be taken by
                such non-consenting Lender (including the execution of any Transfer
                Certificate)); and

            

    

     

    
      	
              (b)  

            	
              at
                the time such amendment becomes effective, each Lender not consenting
                thereto receives payment in full of all amounts owing to it or accrued
                for
                its account under any Finance
                Document.

            

    

     

    
      
        
        

      

      
        -124-

        
          

        

      

      
        
        

      

    

    

     

    
      	
              38.3  

            	
              Exceptions

            

    

    Notwithstanding
      any other provisions in this Clause 38, the Agent
      shall not be obliged to agree to any such amendment or waiver if the same
      would:

     

    
      	
              38.3.1  

            	
              amend
                or waive this Clause 38, Clause 16 (Costs
                and Expenses) or Clause 26 (Role of the Agent and the
                Arranger); or

            

    

     

    
      	
              38.3.2  

            	
              otherwise
                amend or waive any of the Agent's rights hereunder or subject the
                Agent or
                the Arrangers to any additional obligations
                hereunder.

            

    

     

     

    
      	
              39.  

            	
              COUNTERPARTS

            

    

     

    Each
      Finance Document may be executed in any number of counterparts, and this has
      the
      same effect as if the signatures on the counterparts were on a single copy
      of
      the Finance Document.

    

    
      
        
        

      

      
        -125-

        
          

        

      

      
        
        

      

    

    SECTION
      12

    GOVERNING
      LAW AND ENFORCEMENT

     

    
      	
              40.  

            	
              GOVERNING
                LAW

            

    

     

    This
      Agreement is governed by English law.

     

     

    
      	
              41.  

            	
              ENFORCEMENT

            

    

     

    
      	
              41.1  

            	
              Jurisdiction

            

    

    
      	
              41.1.1  

            	
              The
                courts of England have exclusive jurisdiction to settle any dispute
                arising out of or in connection with this Agreement (including a
                dispute
                regarding the existence, validity or termination of this Agreement)
                (a
                "Dispute").

            

    

     

    
      	
              41.1.2  

            	
              The
                parties hereto agree that the courts of England are the most appropriate
                and convenient courts to settle Disputes and accordingly no Party
                to this
                Agreement will argue to the
                contrary.

            

    

     

    
      	
              41.1.3  

            	
              This
                Clause 41.1 is for the benefit of the Finance
                Parties only.  As a result, no Finance Party shall be prevented
                from taking proceedings relating to a Dispute in any other courts
                with
                jurisdiction.  To the extent allowed by law, the Finance Parties
                may take concurrent proceedings in any number of
                jurisdictions.

            

    

     

    
      	
              41.2  

            	
              Service
                of Process

            

    

    Without
      prejudice to any other mode of service allowed under any relevant law, each
      Obligor (other than an Obligor incorporated in England and Wales):

     

    
      	
              41.2.1  

            	
              irrevocably
                appoints Talbot Underwriting Services Limited as its agent for service
                of
                process in relation to any proceedings before the English courts
                in
                connection with any Finance Document;
                and

            

    

     

    
      	
              41.2.2  

            	
              agrees
                that failure by a process agent to notify the relevant Obligor of
                the
                process will not invalidate the proceedings
                concerned.

            

    

     

     

    
      	
              42.  

            	
              CONFIDENTIALITY

            

    

     

    The
      Agent
      and each Lender agrees to maintain the confidentiality of the Information (as
      defined below), except that Information may be disclosed:

     

    
      	
              42.1.1  

            	
              to
                its and its Affiliates’ directors, officers, employees and agents,
                including accountants, legal counsel and other advisors, it being
                understood that:

            

    

     

    
      	
              (a)  

            	
              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 in accordance with the terms of this Agreement;
                and

            

    

     

    
      	
              (b)  

            	
              the
                applicable Agent or Lender shall be responsible for any breach of
                this
                Clause 42 by any of its and its Affiliates’ directors, officers and
                employees;

            

    

     

    
      
        
        

      

      
        -126-

        
          

        

      

      
        
        

      

    

    

     

    
      	
              42.1.2  

            	
              to
                the extent requested by any regulatory authority or self-regulatory
                body;

            

    

     

    
      	
              42.1.3  

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

            

    

     

    
      	
              42.1.4  

            	
              to
                any other party to this Agreement;

            

    

     

    
      	
              42.1.5  

            	
              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;

            

    

     

    
      	
              42.1.6  

            	
              subject
                to an agreement containing provisions substantially the same as those
                of
                this Clause 42,
                to:

            

    

     

    
      	
              (a)  

            	
              any
                assignee of, or any prospective assignee of, 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 Obligor and its
                obligations;

            

    

     

    
      	
              42.1.7  

            	
              with
                the consent of the Guarantor; or

            

    

     

    
      	
              42.1.8  

            	
              to
                the extent such Information:

            

    

     

    
      	
              (a)  

            	
              becomes
                publicly available other than as a result of a breach of this Clause
42; or

            

    

     

    
      	
              (b)  

            	
              becomes
                available to the Agent or any Lender on a non-confidential basis
                from a
                source other than the Guarantor or its subsidiaries that, to the
                applicable Agent’s or Lender’s knowledge, is not subject to a
                confidentiality undertaking with respect to the applicable
                Information.

            

    

     

    For
      the
      purposes of this Clause 42,
      "Information" means all information now or hereafter received
      from any Obligor or any other member of the Group that is party to a Finance
      Document relating to the Guarantor, any subsidiary of the Guarantor or their
      respective businesses, other than any such information that is available to
      the
      Agent or any Lender on a non-confidential basis prior to disclosure by such
      Obligor or other member of the Group. Any person required to maintain the
      confidentiality of Information as provided in this Clause 42 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 or, in the case of
      any
      Lender, such Lender has treated such Information in a manner consistent with
      banking industry standards for the treatment of confidential information. The
      provisions of this Clause 42 shall survive the
      termination of the Total Commitments under this Agreement and the other
      obligations arising hereunder, but such survival shall only be for a period
      of
      two (2) years thereafter.

     

    
      
        
        

      

      
        -127-

        
          

        

      

      
        
        

      

    

    

     

    AS
      WITNESS the hands of the duly authorised representatives of the parties
      hereto the day and year first before written.

     

    
      
        
        

      

      
        -128-

        
          

        

      

      
        
        

      

    

    

     

    SCHEDULE
      1

     

    The
      Original Lenders

     

    
      	
              Lender

            	
              Commitment
                ($)

            
	 	 
	
              ING
                Bank N.V., London Branch

            	
              40,000,000

            
	 	 
	
              Lloyds
                TSB Bank plc

            	
              40,000,000

            
	 	 
	
              CALYON

            	
              20,000,000

            
	 	 
	
              Total

            	
              100,000,000

            

    

    

     

    

     

    

     

    
      
        
        

      

      
        -129-

        
          

        

      

      
        
        

      

    

    SCHEDULE
      2

     

    Conditions
      Precedent

     

    
      	
              1.  

            	
              Corporate
                Documents

            

    

     

    
      	
              (a)  

            	
              A
                copy of the constitutional documents of each Obligor and each other
                member
                of the Group that is party to a Finance
                Document.

            

    

     

    
      	
              (b)  

            	
              A
                copy of a resolution of the board of directors of each Obligor and
                each
                other member of the Group that is party to a Finance
                Document:

            

    

     

    
      	
              (i)  

            	
              approving
                the terms of, and the transactions contemplated by, the Finance Documents
                to which it is a party and resolving that it execute the Finance
                Documents
                to which it is a party;

            

    

     

    
      	
              (ii)  

            	
              authorising
                a specified person or persons to execute the Finance Documents to
                which it
                is a party on its behalf; and

            

    

     

    
      	
              (iii)  

            	
              authorising
                a specified person or persons, on its behalf, to sign and/or despatch
                all
                documents and notices (including, if relevant, any Utilisation Request)
                to
                be signed and/or despatched by it under or in connection with the
                Finance
                Documents to which it is a party.

            

    

     

    
      	
              (c)  

            	
              A
                specimen of the signature of each person authorised by the resolution
                referred to in paragraph (b) above.

            

    

     

    
      	
              (d)  

            	
              A
                certificate of the Guarantor (signed by a director or officer of
                the
                Guarantor) confirming that neither the execution, delivery and performance
                by the Guarantor or any of its subsidiaries that is party to any
                Finance
                Document of this Agreement or the other Finance Documents to which
                it is a
                party nor compliance with the terms and provisions thereof, nor the
                consummation of the transactions contemplated
                therein:

            

    

     

    
      	
              (i)  

            	
              will
                contravene any applicable provision of any law, statute, rule, regulation,
                order, writ, injunction or decree of any court or governmental
                instrumentality;

            

    

     

    
      	
              (ii)  

            	
              will
                conflict or be inconsistent with or result in any breach of any of
                the
                terms, covenants, conditions or provisions of, or constitute a default
                under, or result in the creation or imposition of (or the obligation
                to
                create or impose) any Lien (other than Liens in favour of the Security
                Trustee pursuant to the Security Documents) upon any of its property
                or
                assets or those of any of its subsidiaries pursuant to the terms
                of any
                material indenture, mortgage, deed of trust, loan agreement, credit
                agreement or any other material instrument to which it or any of
                its
                subsidiaries is a party or by which it or any of its property or
                assets
                are bound or to which it may be subject;
                or

            

    

     

    
      
        
        

      

      
        -130-

        
          

        

      

      
        
        

      

    

    

     

    
      	
              (iii)  

            	
              will
                violate any provision of its certificate of incorporation, by-laws
                or
                other organisational documents, nor those of its
                subsidiaries.

            

    

     

    
      	
              (e)  

            	
              A
                copy of a resolution of the Guarantor in its capacity as holder of
                the
                outstanding shares of Validus Reinsurance, Ltd., approving the terms
                of,
                and the transactions contemplated by, the Security Agreement and
                the
                Control Agreement.

            

    

     

    
      	
              (f)  

            	
              A
                certificate of the Guarantor (signed by a director or officer of
                the
                Guarantor) certifying that each copy document delivered to the Agent
                pursuant to paragraphs 1(a), 1(b), 1(e) and 4(c) of this Schedule
                2 is
                correct, complete and in full force and effect as at a date no earlier
                than the date of this Agreement.

            

    

     

    
      	
              2.  

            	
              Security
                Documents

            

    

     

    
      	
              (a)  

            	
              The
                Security Agreement and Account Control Agreement duly executed by
                the
                relevant Obligors, Validus Reinsurance, Ltd., the Custodian, the
                Special
                Report Agent and the Security
                Trustee.

            

    

     

    
      	
              (b)  

            	
              A
                copy of all documents and instruments, including UCC financing statements
                where applicable, required by law in each applicable jurisdiction
                or
                reasonably requested by the Agent to be filed, registered or recorded
                to
                create and perfect the Liens intended to be created under the Security
                Agreement.

            

    

     

    
      	
              (c)  

            	
              A
                copy of the results of a recent search of the UCC (or equivalent)
                filings
                made with respect to each Obligor in the jurisdictions contemplated
                in
                paragraph (b) above (including Washington, D.C., and Bermuda) and
                in such
                other jurisdictions in which Collateral is located which may be reasonably
                requested by the Agent, and copies of the financing statements (or
                similar
                documents) disclosed by such search and evidence reasonably satisfactory
                to the Agent that the Liens indicated by such financing statements
                (or
                similar documents) are permitted under the terms of the Finance Documents
                or have been released.

            

    

     

    
      	
              3.  

            	
              Legal
                opinions

            

    

     

    
      	
              (a)  

            	
              A
                legal opinion of Clifford Chance LLP, legal advisers to the Arranger
                and
                the Agent in England, substantially in the form distributed to the
                Original Lenders prior to signing this
                Agreement.

            

    

     

    
      	
              (b)  

            	
              A
                legal opinion of Clifford Chance LLP, legal advisers to the Arranger
                and
                the Agent in New York, substantially in the form distributed to the
                Original Lenders prior to signing this
                Agreement.

            

    

     

    
      	
              (c)  

            	
              A
                legal opinion of Appleby, legal advisers to the Arranger and the
                Agent in
                Bermuda, substantially in the form distributed to the Original Lenders
                prior to signing this Agreement.

            

    

     

    
      
        
        

      

      
        -131-

        
          

        

      

      
        
        

      

    

    

     

    
      	
              4.  

            	
              Other
                documents and evidence

            

    

     

    
      	
              (a)  

            	
              Evidence
                that any agent for service of process referred to in Clause 41.2 (Service of process), if not an
                Obligor, has accepted its
                appointment.

            

    

     

    
      	
              (b)  

            	
              A
                copy of any other Authorisation or other document, opinion or assurance
                which the Agent considers to be necessary or desirable (if it has
                notified
                the Borrower accordingly) in connection with the entry into and
                performance of the transactions contemplated by any Finance Document
                or
                for the validity and enforceability of any Finance
                Document.

            

    

     

    
      	
              (c)  

            	
              The
                Original Financial Statements.

            

    

     

    
      	
              (d)  

            	
              The
                executed Fee Letters.

            

    

     

    
      	
              (e)  

            	
              A
                copy of all necessary governmental or regulatory consents required
                by each
                Obligor and each other member of the Group in relation to the security
                contained in the Security Documents (including any governmental or
                regulatory consents required from the Bermuda Monetary Authority
                or the UK
                Financial Services Authority). 

            

    

     

    
      	
              (f)  

            	
              Evidence
                that as at a date no earlier than the date of this Agreement, the
                value of
                the Own FAL of the Account Party is no less than
                $215,000,000.

            

    

     

    
      	
              (g)  

            	
              A
                statement provided by the Bank of New York in relation to the value
                of the
                collateral in the Collateral Accounts as of the date of this
                Agreement.

            

    

     

    
      	
              (h)  

            	
              Evidence
                that Validus Reinsurance, Ltd. has an A.M. Best financial strength
                rating
                of at least "A-".

            

    

     

    
      	
              (i)  

            	
              The
                Business Plan.

            

    

     

    
      	
              (j)  

            	
              Evidence
                that all amounts outstanding under the Existing Facility have been
                or will
                be repaid in full and all commitments and liabilities thereunder
                have been
                irrevocably cancelled and discharged, on or before the first Utilisation
                Date.

            

    

     

    
      	
              (k)  

            	
              Evidence
                that any Security issued in respect of the Existing Facility shall
                be
                released on or before the first Utilisation
                Date.

            

    

     

    
      
        
        

      

      
        -132-

        
          

        

      

      
        
        

      

    

    SCHEDULE
      3

     

    Form
      of Utilisation Request

     

    From:                      Talbot
      Holdings Ltd.

     

    To:           [Agent]

     

    Dated:

     

    

     

    Dear
      Sirs,

     

    
      	
              1.  

            	
              We
                refer to an agreement (the "Credit Agreement") dated 28
                November 2007 (as, from time to time, amended, varied, novated or
                supplemented) and made between Talbot Holdings Ltd. as borrower,
                Validus
                Holdings, Ltd. as guarantor, ING Bank N.V., London Branch and Lloyds
                TSB
                Bank plc as mandated lead arrangers, Lloyds TSB Bank plc as agent
                and
                security trustee, the financial institutions defined therein as Lenders
                and others.

            

    

     

    
      	
              2.  

            	
              Terms
                defined in the Credit Agreement shall have the same meaning in this
                notice.

            

    

     

    
      	
              3.  

            	
              This
                notice is irrevocable.

            

    

     

    
      	
              4.  

            	
              We
                hereby give you notice that, pursuant to the Credit Agreement we
                wish the
                Lenders to issue a Letter of Credit as
                follows:

            

    

     

    
      	
              (a)  

            	
              Face
                amount:                                 [$/£][                      ]

            

    

     

    
      	
              (b)  

            	
              Type
                of Letter of
                Credit:              [Secured/Unsecured]

            

    

     

    
      	
              (c)  

            	
              Utilisation
                Date:                            [          ]

            

    

     

    
      	
              (d)  

            	
              Term:                                             
                 [          ]

            

    

     

    
      	
              (e)  

            	
              Expiry
                Date:                                  
                [          ]

            

    

     

    
      	
              5.  

            	
              We
                would like this Letter of Credit to be denominated in
                [sterling/dollars].

            

    

     

    
      	
              6.  

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

            

    

     

    
      	
              7.  

            	
              The
                Letter of Credit should be issued in favour of Lloyd's in the form
                attached and delivered to the recipient at [address of
                recipient].  The purpose of its issue is
                [•].

            

    

     

    Yours
      faithfully

     

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

    Authorised
      Signatory

    for
      and
      on behalf of

    Talbot
      Holdings Ltd.

    
      
        
        

      

      
        -133-

        
          

        

      

      
        
        

      

    

    SCHEDULE
      4

     

    Form
      of Transfer Certificate

     

    To:           Lloyds
      TSB Bank plc

     

    TRANSFER
      CERTIFICATE

     

    relating
      to the agreement (as, from time to time, amended, varied, novated or
      supplemented, the "Credit Agreement") dated 28 November 2007
      whereby a letter of credit facility was made available to Talbot Holdings Ltd.
      as borrower by a group of banks on whose behalf Lloyds TSB Bank plc acted as
      agent in connection therewith.

     

    
      	
              1.  

            	
              Terms
                defined in the Credit Agreement shall, subject to any contrary indication,
                have the same meanings herein.  The terms Lender, Transferee and
                Portion Transferred are defined in the schedule
                hereto.

            

    

     

    
      	
              2.  

            	
              The
                Lender (a) confirms that the details in the schedule hereto under
                the
                heading "Letters of Credit" accurately summarises its
                participation in the Credit Agreement and the Term of any existing
                Letters
                of Credit and (b) requests the Transferee to accept and procure the
                transfer by novation to the Transferee of the Portion Transferred
                (specified in the schedule hereto) of its Commitment and/or its
                participation in such Letters of Credit by counter-signing and delivering
                this Transfer Certificate to the Agent at its address for the service
                of
                notices specified in the Credit
                Agreement.

            

    

     

    
      	
              3.  

            	
              The
                Transferee hereby requests the Agent to accept this Transfer Certificate
                as being delivered to the Agent pursuant to and for the purposes
                of Clause
                24 (Changes to the Lenders) of the
                Credit Agreement so as to take effect in accordance with the terms
                thereof
                on the Transfer Date or on such later date as may be determined in
                accordance with the terms thereof.

            

    

     

    
      	
              4.  

            	
              The
                Transferee confirms that it has received a copy of the Credit Agreement
                together with such other information as it has required in connection
                with
                this transaction and that it has not relied and will not hereafter
                rely on
                the Lender to check or enquire on its behalf into the legality, validity,
                effectiveness, adequacy, accuracy or completeness of any such information
                and further agrees that it has not relied and will not rely on the
                Lender
                to assess or keep under review on its behalf the financial condition,
                creditworthiness, condition, affairs, status or nature of the Obligors
                or
                any other member of the Group that is party to a Finance
                Document.

            

    

     

    
      	
              5.  

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

            

    

     

    
      	
              6.  

            	
              The
                Lender makes no representation or warranty and assumes no responsibility
                with respect to the legality, validity, effectiveness, adequacy or
                enforceability of the Finance

            

    

     

    
      
        
        

      

      
        -134-

        
          

        

      

      
        
        

      

    

    Documents
      or any document relating thereto and assumes no responsibility for the financial
      condition of the Obligors or any other member of the Group that is party to
      a
      Finance Document or for the performance and observance by the Obligors or any
      other member of the Group that is party to a Finance Document of any of its
      obligations under the Finance Documents or any document relating thereto and
      any
      and all such conditions and warranties, whether express or implied by law or
      otherwise, are hereby excluded.

     

    
      	
              7.  

            	
              The
                Lender hereby gives notice that nothing herein or in the Finance
                Documents
                (or any document relating thereto) shall oblige the Lender to
                (a) accept a re-transfer from the Transferee of the whole or any part
                of its rights, benefits and/or obligations under the Finance Documents
                transferred pursuant hereto or (b) support any losses directly or
                indirectly sustained or incurred by the Transferee for any reason
                whatsoever including the non-performance by an Obligor or any other
                party
                to the Finance Documents (or any document relating thereto) of its
                obligations under any such document.  The Transferee hereby
                acknowledges the absence of any such obligation as is referred to
                in (a)
                or (b) above.

            

    

     

    
      	
              8.  

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

            

    

     

    

     

    
      
        
        

      

      
        -135-

        
          

        

      

      
        
        

      

    

    THE
      SCHEDULE

     

    
      	
              1.  

            	
              Lender:

            

    

     

    
      	
              2.  

            	
              Transferee:

            

    

     

    
      	
              3.  

            	
              Transfer
                Date:

            

    

     

    
      	
              4.  

            	
              Lender's
                Participation in the Facility:

            

    

    Lender's
      Commitment                                            Portion
      Transferred

     

    
      	
              5.  

            	
              Letter(s)
                of
                Credit                                                  
                Term
                and                      Portion
                Transferred

            

    

    Lender's
      Participation                                            Expiry
      Date

     

     

     

    
      	[Transferor
              Lender] 	 [Transferee
              Lender]
	 	 
	By:	 By:
	 	 
	Date:	Date: 

    

     

     

     
      
        

      

    

     

    ADMINISTRATIVE
      DETAILS OF TRANSFEREE

     

    Address:

     

    Contact
      Name:

     

    Account
      for Payments

    in
      sterling:

     

    Fax:

     

    Telephone:

     

    

    
      
        
        

      

      
        -136-

        
          

        

      

      
        
        

      

    

    SCHEDULE
      5

     

    Form
      of Credit Institution Confirmation

     

    [Letterhead
      of Agent]

     

    

     

    To:           The
      Society and Council of Lloyd's

    c/o
      The Manager, Members' Funds
      Department

    Gun
      Wharf, Dock Road

    Chatham,
      Kent ME4 4TU

     

    

     

    Date:                      [•]

     

    We,
      Lloyds TSB Bank plc, (the "Agent") acting as agent on behalf of
      each of [name of each bank participating in the Letter of Credit] (the
      "Lenders"), hereby confirm the following:

     

    
      	
              (a)  

            	
              We
                have provided a multi bank Letter of Credit as agent on behalf of
                the
                Lenders which will be included in the Lloyd's Deposit of [•] (the
                "Corporate
                Member").

            

    

     

    
      	
              (b)  

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

            

    

     

    
      	
              (c)  

            	
              The
                obligations of the Lenders under the Letter of Credit constitute
                legal,
                valid and binding obligations.

            

    

     

    

     

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

     

    Signature
      of Authorised Signature

    For
      and
      on behalf of Lloyds TSB Bank plc

    acting
      as
      Agent on behalf of the Lenders

     

    
 

    
      
        
        

      

      
        -137-

        
          

        

      

      
        
        

      

    

    SCHEDULE
      6

     

    Form
      of Letter of Credit

     

    To:          The
      Society and the Council of Lloyd's,

    c/o
      General Manager, Members' Financial
      Services,

    Gun
      Wharf, Dock Road,

    Chatham,
      Kent ME4 4TU

     

    

     

    Dated
      ________1

     

    Dear
      Sirs:

     

    Irrevocable
      Standby Letter of Credit No. [•]

     

    Re:  [Name
      of Corporate Member of Lloyd's] (the
      "Applicant")

     

    This
      Clean Irrevocable Standby Letter of Credit (the "Credit") is
      issued by the banks whose names are set out in Schedule 1 hereto (the
      "Issuing Lenders", and each an "Issuing Lender") in favour of
      the Society of Lloyd's ("Lloyd's") on the following
      terms:

     

    
      	
              1.  

            	
              Subject
                to the terms hereof, the Issuing Lenders shall make payments within
                two
                business days of demand of Lloyds TSB Bank plc (the
                "Agent") in accordance with paragraph 4
                below.

            

    

     

    
      	
              2.  

            	
              Upon
                a demand being made by Lloyd's pursuant to paragraph 4 below each
                Issuing
                Lender shall pay that proportion of the amount demanded which is
                equal to
                the proportion which its Commitment set out in Schedule 1 hereto
                bears to
                the aggregate Commitments of all the Issuing Lenders set out on Schedule
                1
                hereto provided that the obligations of the Issuing
                Lenders under this Credit shall be several and no Issuing Lender
                shall be
                required to pay an amount exceeding its Commitment set out in Schedule
                1
                hereto and the Issuing Lenders shall not be obliged to make payments
                hereunder in aggregate exceeding a maximum amount of [£/$][•]. Any payment
                by an Issuing Lender hereunder shall be made in sterling to Lloyd's
                account specified in the demand made by Lloyd's pursuant to paragraph
                4
                below.

            

    

     

    
      	
              3.  

            	
              This
                Credit is effective from [•] (the "Commencement Date")
                and will expire on the Final Expiration Date.  This Credit shall
                remain in force until we give you not less than four years notice
                in
                writing terminating the same on the later of (a) the fourth anniversary
                of
                the Commencement Date and (b) any date subsequent to 31 December
                2012 as
                specified in such notice (the "Final Expiration Date"),
                our notice to be sent by registered mail for the attention of the
                General
                Manager, Members' Financial Services, at the above
                address.

            

    

     

    

      

    

      
      
        	
                1

              	
                Date
                  of Letter of Credit.

              

      

       

    

    
      
        
        

      

      
        -138-

        
          

        

      

      
        
        

      

    

    

     

    
      	
              4.  

            	
              Subject
                to paragraph 3 above, the Issuing Lenders shall pay to Lloyd's under
                this
                Credit upon presentation of a demand by Lloyd's on the Agent, Lloyds
                TSB
                Bank plc at [•], marked for the attention of [•] substantially in the form
                set out in Schedule 4 (Form of Transfer Certificate) hereto the
                amount specified therein (which amount shall not, when aggregated
                with all
                other amounts paid by the Issuing Lenders to Lloyd's under this Credit,
                exceed the maximum amount referred to in paragraph 2
                above).

            

    

     

    
      	
              5.  

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

            

    

     

    
      	
              6.  

            	
              All
                charges are for the Applicant's
                account.

            

    

     

    
      	
              7.  

            	
              Subject
                to any contrary indication herein, this Credit is subject to the
                International Standby Practices – ISP98 (1998 publication – International
                Chamber of Commerce Publication No.
                590).

            

    

     

    
      	
              8.  

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

            

    

     

    
      	
              9.  

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

            

    

     

    Yours
      faithfully,

     

    LLOYDS
      TSB BANK PLC

    as
      agent

     

    for
      and
      on behalf of

     

    [Names
      of all Issuing Lenders including Agent]

     

     

    
      	
               

            	
              By:

            

    

     

     

    
      	
               

            	
              Name:

            

    

     

     

    
      	
               

            	
              Title:

            

    

     

    
      
        
        

      

      
        -139-

        
          

        

      

      
        
        

      

    

    Issuing
      Lenders' Commitments

     

     

     

    
      	Name
              and Address of Issuing Lender 	 Commitment
	 	 ([Sterling/Dollars])
	 	 
	 	 
	 Total
              Value	 _____________

    

                                                                                         

     

     

    
      
        
        

      

      
        -140-

        
          

        

      

      
        
        

      

    

    Form
      of Demand (Pounds Sterling)

     

    [on
      Lloyd's letterhead]

     

    Dear
      Sir/Madam

     

    THE
      SOCIETY OF LLOYD'S

     

    SECURITY
      TRUSTEE OF

     

    LETTER
      OF CREDIT NO.

     

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

     

     

    
      	[National
              Westminster Bank Plc 	 Sort
              Code 60-00-01
	 	 
	 City
              of London Office 	 Account
              13637444
	 P.O.
              Box 12258	 
	 1
              Princes Street	 
	 London
              EC2R 8AP]	 

    

     

     

    Please
      quote Member Code:

     

    
      	 Yours
              faithfully,
	 
	 
	 
	 for
              Manager
	 Members'
              Funds Department
	 Members'
              Services Unit
	 
	 By:___________________
	 Name:
	 Title:

    

     

     

     

    
      
        
        

      

      
        -141-

        
          

        

      

      
        
        

      

    

    Your
      ref:

     

    Our
      ref:      MEM/    /     /      /C911f

     

    Extn:

     

    

     

    BILL
      OF EXCHANGE

     

    The
      Society of Lloyd's

     

    Security
      Trustee of

     

    Letter
      of
      Credit No.

     

    Please
      pay in accordance with the terms of the Letter of Credit to our order the amount
      of [£/$]____________.

     

    For
      and
      on behalf of

     

    

     

    Authorised
      Signatory

     

    Members'
      Funds Department

     

    
      	
              To:

            	
              [insert
                name of bank/credit institution]
as the
                Agent

            

    

     

    

     

     

    
      
        
        

      

      
        -142-

        
          

        

      

      
        
        

      

    

    SCHEDULE
      7

    Mandatory
      Costs Rate

     

    
      	
              1.  

            	
              The
                Mandatory Costs Rate is an addition to the interest rate to compensate
                Lenders for the cost of compliance with (a) the requirements of the
                Bank
                of England and/or the Financial Services Authority (or, in either
                case,
                any other authority which replaces all or any of its functions) or
                (b) the
                requirements of the European Central
                Bank.

            

    

     

    
      	
              2.  

            	
              On
                the first day of each Term (or as soon as possible thereafter) the
                Agent
                shall calculate, as a percentage rate, a rate (the "Additional
                Cost Rate") for each Lender, in accordance with the paragraphs
                set out below.  The Mandatory Cost will be calculated by the
                Agent as a weighted average of the Lenders' Additional Cost Rates
                (weighted in proportion to the percentage participation of each Lender
                in
                the relevant Unpaid Sum) and will be expressed as a percentage rate
                per
                annum.

            

    

     

    
      	
              3.  

            	
              The
                Additional Cost Rate for any Lender lending from a Facility Office
                in a
                participating member state will be the percentage notified by that
                Lender
                to the Agent.  This percentage will be certified by that Lender
                in its notice to the Agent to be its reasonable determination of
                the cost
                (expressed as a percentage of that Lender's participation in all
                Unpaid
                Sums made that Facility Office) of complying with the minimum reserve
                requirements of the European Central Bank in respect of loans made
                from
                that Facility Office.

            

    

     

    
      	
              4.  

            	
              The
                Additional Cost Rate for any Lender lending from a Facility Office
                in the
                United Kingdom will be calculated by the Agent as
                follows:

            

    

     

    
      	
              (a)  

            	
              in
                relation to a sterling Unpaid Sum:

            

    

     

    [Missing
      Graphic Reference] per cent. per annum

     

    
      	
              (b)  

            	
              in
                relation to an Unpaid Sum in any currency other than
                sterling:

            

    

     

    [Missing
      Graphic Reference] per cent. per annum.

     

    Where:

     

    
      	
               

            	
              A

            	
              is
                the percentage of Eligible Liabilities (assuming these to be in excess
                of
                any stated minimum) which that Lender is from time to time required
                to
                maintain as an interest free cash ratio deposit with the Bank of
                England
                to comply with cash ratio
                requirements.

            

    

     

    
      	
               

            	
              B

            	
              is
                the percentage rate of interest (excluding the Mandatory Costs Rate
                and
                the additional rate of interest specified in Clause 17.2 (Default interest) payable on any
                Unpaid Sum) payable for the relevant Interest Period on the Unpaid
                Sum.

            

    

     

    
      
        
        

      

      
        -143-

        
          

        

      

      
        
        

      

    

    

     

    
      	
               

            	
              C

            	
              is
                the percentage (if any) of Eligible Liabilities which that Lender
                is
                required from time to time to maintain as interest bearing Special
                Deposits with the Bank of England.

            

    

     

    
      	
               

            	
              D

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

            

    

     

    
      	
               

            	
              E

            	
              is
                designed to compensate Lenders for amounts payable under the Fees
                Rules
                and is calculated by the Agent as being the average of the most recent
                rates of charge supplied by the Reference Banks to the Agent pursuant
                to
                paragraph 7 below and expressed in pounds per
                £1,000,000.

            

    

     

    
      	
              5.  

            	
              For
                the purposes of this Schedule:

            

    

     

    
      	
              (a)  

            	
              "Eligible
                Liabilities" and "Special Deposits" have the
                meanings given to them from time to time under or pursuant to the
                Bank of
                England Act 1998 or (as may be appropriate) by the Bank of
                England;

            

    

     

    
      	
              (b)  

            	
              "Fees
                Rules" means the rules on periodic fees contained in the FSA
                Supervision Manual or such other law or regulation as may be in force
                from
                time to time in respect of the payment of fees for the acceptance
                of
                deposits;

            

    

     

    
      	
              (c)  

            	
              "Fee
                Tariffs" means the fee tariffs specified in the Fees Rules under
                the activity group A.1 Deposit acceptors (ignoring any minimum fee
                or zero
                rated fee required pursuant to the Fees Rules but taking into account
                any
                applicable discount rate); and

            

    

     

    
      	
              (d)  

            	
              "Tariff
                Base" has the meaning given to it in, and will be calculated
                in
                accordance with, the Fees Rules.

            

    

     

    
      	
              6.  

            	
              In
                application of the above formulae, A, B, C and D will be included
                in the
                formulae as percentages (i.e. 5 per cent. will be included in the
                formula
                as 5 and not as 0.05).  A negative result obtained by
                subtracting D from B shall be taken as zero.  The resulting
                figures shall be rounded to four decimal
                places.

            

    

     

    
      	
              7.  

            	
              If
                requested by the Agent, each Reference Bank shall, as soon as practicable
                after publication by the Financial Services Authority, supply to
                the
                Agent, the rate of charge payable by that Reference Bank to the Financial
                Services Authority pursuant to the Fees Rules in respect of the relevant
                financial year of the Financial Services Authority (calculated for
                this
                purpose by that Reference Bank as being the average of the Fee Tariffs
                applicable to that Reference Bank for that financial year) and expressed
                in pounds per £1,000,000 of the Tariff Base of that Reference
                Bank.

            

    

     

    
      	
              8.  

            	
              Each
                Lender shall supply any information required by the Agent for the
                purpose
                of calculating its Additional Cost Rate.  In particular, but
                without limitation, each Lender shall supply the following information
                on
                or prior to the date on which it becomes a
                Lender:

            

    

     

    
      	
              (a)  

            	
              the
                jurisdiction of its Facility Office;
                and

            

    

     

    
      
        
        

      

      
        -144-

        
          

        

      

      
        
        

      

    

    

     

    
      	
              (b)  

            	
              any
                other information that the Agent may reasonably require for such
                purpose.

            

    

     

    Each
      Lender shall promptly notify the Agent of any change to the information provided
      by it pursuant to this paragraph.

     

    
      	
              9.  

            	
              The
                percentages of each Lender for the purpose of A and C above and the
                rates
                of charge of each Reference Bank for the purpose of E above shall
                be
                determined by the Agent based upon the information supplied to it
                pursuant
                to paragraphs 7 and 8 above and on the assumption that, unless a
                Lender
                notifies the Agent to the contrary, each Lender's obligations in
                relation
                to cash ratio deposits and Special Deposits are the same as those
                of a
                typical bank from its jurisdiction of incorporation with a Facility
                Office
                in the same jurisdiction as its Facility
                Office.

            

    

     

    
      	
              10.  

            	
              The
                Agent shall have no liability to any person if such determination
                results
                in an Additional Cost Rate which over or under compensates any Lender
                and
                shall be entitled to assume that the information provided by any
                Lender or
                Reference Bank pursuant to paragraphs 3, 7 and 8 above is true and
                correct
                in all respects.

            

    

     

    
      	
              11.  

            	
              The
                Agent shall distribute the additional amounts received as a result
                of the
                Mandatory Cost to the Lenders on the basis of the Additional Cost
                Rate for
                each Lender based on the information provided by each Lender and
                each
                Reference Bank pursuant to paragraphs 3, 7 and 8
                above.

            

    

     

    
      	
              12.  

            	
              Any
                determination by the Agent pursuant to this Schedule in relation
                to a
                formula, the Mandatory Cost, an Additional Cost Rate or any amount
                payable
                to a Lender shall, in the absence of manifest error, be conclusive
                and
                binding on all parties.

            

    

     

    
      	
              13.  

            	
              The
                Agent may from time to time, after consultation with the Borrower
                and the
                Lenders, determine and notify to all parties any amendments which
                are
                required to be made to this Schedule in order to comply with any
                change in
                law, regulation or any requirements from time to time imposed by
                the Bank
                of England, the Financial Services Authority or the European Central
                Bank
                (or, in any case, any other authority which replaces all or any of
                its
                functions) and any such determination shall, in the absence of manifest
                error, be conclusive and binding on all
                parties.

            

    

     

    
      
        
        

      

      
        -145-

        
          

        

      

      
        
        

      

    

    SCHEDULE
      8

     

    Letter
      Of Comfort

     

    [on
      Lloyd's letterhead]

     

    Dear
      Sir/Madam

     

    I
      understand that Talbot Holdings Ltd. on behalf of itself and the underwriting
      subsidiary of Talbot Holdings Ltd. named Talbot 2002 Underwriting Capital Ltd.
      (the"CorporateMember") has procured or may
      procure the provision to Lloyd's of one or more letters of credit, each with
      a
      commencement date of [•], having a maximum aggregate value of up to [$/£][•] to
      form part of their Funds at Lloyd's (the "LTSB
      L/C").  [The LTSB L/C is to replace the letters of credit
      currently provided to Lloyd's in respect of the Corporate Members which total
      [$/£] [•]].

     

    You
      have
      asked whether, in the event of monies having to be applied out of the Corporate
      Member's Funds at Lloyd's, the letters of credit and other Funds at Lloyd's
      of
      the Corporate Member may be drawn down in a pre-determined order whereby any
      drawdown on the LTSB L/C would not be made until such time as all other of
      the
      Corporate Member's Funds at Lloyd's had been applied.

     

    As
      you
      are aware, the letters of credit are held by Lloyd's in its capacity as Security
      Trustee under the terms of the Security and Trust Deed (substantially in the
      form STD (CM) G93 CM 123) entered into by the Corporate Member.  Any
      decision to draw down on any letter of credit involves an exercise of discretion
      in the light of the circumstances prevailing at the relevant time, and thus
      no
      binding undertaking can be given now.

     

    However,
      I can confirm that at the time of considering the drawdown of the Corporate
      Member's Funds at Lloyd's, Lloyd's would take into account the requested order
      of drawdown set out in the second paragraph of this letter.

     

    For
      the
      avoidance of doubt, Lloyd's shall not be responsible to you or any other person
      for any losses incurred by you or such other person as a consequence of acting
      in reliance upon this letter.

     

    Yours
      faithfully

     

    
      
        
        

      

      
        -146-

        
          

        

      

      
        
        

      

    

    SCHEDULE
      9

     

    Eligible
      Collateral Table

     

    
      	
              Collateral
                Description

               

            	
              Advance
                Rate

            
	 	
              Matching
                Currency*

            	
              Non-Matching
                Currency*

            
	
              Cash:

               

              U.S.
                Dollars or Sterling, including time deposits, certificates of deposit
                and
                money market deposits held at Bank of New York, as custodian, or
                that are
                subject to a first priority security interest of the Facility Agent
                or
                Security Trustee.

               

            	
              100%.

            	
              95%.

            
	
              U.S.
                Government Securities:

               

              Securities
                issued or directly and fully guaranteed or insured by the US or any
                agency
                or instrumentality thereof (provided that the full faith and credit
                of the
                US is pledged in support thereof), including assets issued by the
                Federal
                National Mortgage Association, the Federal Home Loan Mortgage Corporation,
                Federal Home Loan Bank or the Government National Mortgage
                Association.

            	
              With
                maturities of (x) two years or less from the date of acquisition,
                95%, (y) three to ten years from the date of acquisition, 90% and
                (z) more than 10 years from the date of acquisition,
                85%.

               

            	
              With
                maturities of (x) two years or less from the date of acquisition,
                90%, (y) three to ten years from the date of acquisition, 85% and
                (z) more than 10 years from the date of acquisition,
                80%.

            
	
              Investment
                Grade Municipal Bonds:

               

              Municipal
                Bonds rated at least (i) A by S&P and (ii) A2 by Moody's and
                maturing within five years from the date of acquisition.

               

            	
              85%.

            	
              80%.

            
	
              Investment
                Grade Non-Convertible U.S. Corporate Bonds Level I:

               

              Non-convertible
                corporate bonds issued by any entity organised in the US which are
                "publicly traded" on a nationally recognised exchange, eligible to
                be
                settled by DTC and rated at least (i) AA- by S&P and
                (ii) Aa3 by Moody's.

            	
              With
                maturities of (x) two years or less from the date of acquisition, 90%
                and (y) three to ten years from the date of acquisition,
                85%.

               

            	
              With
                maturities of (x) two years or less from the date of acquisition, 85%
                and (y) three to ten years from the date of acquisition,
                80%.

            

    

    
      
        
        

      

      
        -147-

        
          

        

      

      
        
        

      

    

    

     

    
      	
              Investment
                Grade Non-Convertible U.S. Corporate Bonds Level II:

               

              Non-convertible
                corporate bonds issued by any entity organised in the US which are
                "publicly traded" on a nationally recognised exchange, eligible to
                be
                settled by DTC and rated at least (i) A- by S&P and (ii) A3
                by Moody's, but no higher than (x) A+ from S&P and (y) A1
                from Moody's.

            	
              With
                maturities of (x) two years or less from the date of acquisition, 85%
                and (y) three to ten years from the date of acquisition,
                80%.

               

            	
              With
                maturities of (x) two years or less from the date of acquisition, 80%
                and (y) three to ten years from the date of acquisition,
                75%.

            
	
              Commercial
                Paper:

               

              Commercial
                paper issued by any entity organised in the US rated at least (i) A-1
                or the equivalent thereof by S&P and (ii) P-1 or the equivalent
                thereof by Moody's and maturing not more than one year after the
                date of
                acquisition.

               

            	
              90%.

            	
              85%.

            
	
              UK
                Government Securities:

               

              Securities
                issued by the United Kingdom government.

            	
              With
                maturities of (x) two years or less from the date of acquisition,
                95%, (y) three to ten years from the date of acquisition, 90% and
                (z) more than 10 years from the date of acquisition,
                85%.

               

            	
              With
                maturities of (x) two years or less from the date of acquisition,
                90%, (y) three to ten years from the date of acquisition, 85% and
                (z) more than 10 years from the date of acquisition,
                80%.

               

            
	
              OECD
                Sovereign Debt:

               

              Debt
                 issued or guaranteed by OECD countries, rated at least (i) AA- by
                S&P and (ii) Aa3 by Moody's.

            	
              With
                maturities of (x) two years or less from the date of acquisition,
                95%, (y) three to ten years from the date of acquisition, 90% and
                (z) more than 10 years from the date of acquisition,
                85%.

               

            	
              With
                maturities of (x) two years or less from the date of acquisition,
                90%, (y) three to ten years from the date of acquisition, 85% and
                (z) more than 10 years from the date of acquisition,
                80%.

               

            

    

    
      
        
        

      

      
        -148-

        
          

        

      

      
        
        

      

    

    

     

    
      	
              Other
                Securities:

               

              All
                other investments, obligations or securities.

               

            	
              0.0%.

            	
              0.0%.

            

    

    

    
      	
              *

            	
              For
                the avoidance of doubt, in respect of any calculation relating to
                a Letter
                of Credit, "Matching Currency" is a reference to Collateral denominated
                in
                the same currency as the relevant Letter of Credit and "Non-Matching
                Currency" is a reference to Collateral denominated in any other
                currency.

            

    

    
      
        
        

      

      
        -149-

        
          

        

      

      
        
        

      

    

    SCHEDULE
      10

     

    Form
      of Borrowing Base Certificate

     

    

     

    To:           Lloyds
      TSB Bank plc

    as
      Agent under the Credit Agreement
      referred to below

     

    [Date]

     

    Ladies
      and Gentlemen:

     

    Pursuant
      to Clause 20.8 of the Standby Letter of Credit Facility Agreement dated as
      of 28
      November 2007 (as amended, supplemented or otherwise modified from time to
      time,
      the "Credit Agreement"; capitalised terms used herein and not
      otherwise defined herein have the meanings assigned to such terms in the Credit
      Agreement), among Talbot Holdings Ltd., Validus Holdings, Ltd., the lenders
      from
      time to time party thereto (the "Lenders"), Lloyds TSB Bank plc
      as agent (in such capacity, the "Agent") and security trustee
      (in such capacity, the "Security Trustee") and ING Bank N.V.,
      London Branch as structuring agent, this certificate together with Annex 1
      attached hereto is the Borrowing Base Certificate as of [•], 200[•]. The amount
      and valuation of each of the components of the Borrowing Base set forth on
      Annex
      1 has been determined pursuant to the Credit Agreement.

     

    This
      Borrowing Base Certificate is a complete and correct representation of the
      Borrowing Base as of [•], 200[•].

     

    

     

    Sincerely,

     

    __________________________________

     

    Name:

     

    Title:

     

    

     

    
      
        
        

      

      
        -150-

        
          

        

      

      
        
        

      

    

    ANNEX
      1

     

    
      	 	
              Value

            	
              Advance
                Rate

            	 	
              Borrowing
                Base Contribution

            
	
              Cash

            	
              $_________

            	
              x
                _________

            	
              =

            	
              $________________

            
	
              Category
                of Eligible Securities

            	 	 	
               

            	 
	 	 	 	 	 
	 	
              $_________

            	
              x
                _________

            	
              =

            	
              $________________

            
	 	 	 	 	 
	 	
              $_________

            	
              x
                _________

            	
              =

            	
              $________________

            
	 	 	 	 	 
	 	
              $_________

            	
              x
                _________

            	
              =

            	
              $________________

            
	 	 	 	 	 
	 	
              $_________

            	
              x
                _________

            	
              =

            	
              $________________

            
	 	 	 	 	 
	 	
              $_________

            	
              x
                _________

            	
              =

            	
              $________________

            
	 	 	 	 	 
	 	
              $_________

            	
              x
                _________

            	
              =

            	
              $________________

            
	 	 	 	 	 
	 	
              $_________

            	
              x
                _________

            	
              =

            	
              $________________

            
	 	 	 	 	 
	 	
              $_________

            	
              x
                _________

            	
              =

            	
              $________________

            
	 	 	 	 	 
	 	
              $_________

            	
              x
                _________

            	
              =

            	
              $________________

            
	 	 	 	 	 
	 	
              $_________

            	
              x
                _________

            	
              =

            	
              $________________

            
	 	 	 	 	 
	 	
              $_________

            	
              x
                _________

            	
              =

            	
              $________________

            
	 	 	 	 	 
	 	
              $_________

            	
              x
                _________

            	
              =

            	
              $________________

            
	 	 	 	 	 
	 	
              $_________

            	
              x
                _________

            	
              =

            	
              $________________

            
	 	 	 	 	 
	 	
              $_________

            	
              x
                _________

            	
              =

            	
              $________________

            
	 	 	 	 	 
	 	
              $_________

            	
              x
                _________

            	
              =

            	
              $________________

            
	 	 	 	 	 
	 	
              $_________

            	
              x
                _________

            	
              =

            	
              $________________

            
	 	 	 	 	 
	 	
              $_________

            	
              x
                _________

            	
              =

            	
              $________________

            
	 	 	 	 	 
	
              Total
                Borrowing Base

            	 	 	 	
              $________________

            

    

    

     

    

     

    
      
        
        

      

      
        -151-

        
          

        

      

      
        
        

      

    

    SCHEDULE
      11

     

    Existing
      Liens

     

    
      	
              1.  

            	
              Debenture
                dated 25 March 2003 and granted by the Borrower in favour of Lloyds
                TSB
                Bank plc securing all money and liabilities due, owing or incurred
                by the
                Borrower to Lloyds TSB Bank plc.

            

    

     

    
      	
              2.  

            	
              Liens
                over monies held in insurance broking accounts by Underwriting Risk
                Services Ltd held in trust for the policyholders and
                underwriters.

            

    

     

    
      	
              3.  

            	
              Liens
                over monies held in insurance broking accounts by Talbot Risk Services
                Pte
                Ltd held in trust for the policyholders and
                underwriters.

            

    

     

    
      
        
        

      

      
        -152-

        
          

        

      

      
        
        

      

    

    SCHEDULE
      12

     

    Existing
      Intercompany Arrangements and Agreements

     

    
      	
              1.  

            	
              Talbot
                Insurance (Bermuda), Ltd.'s reinsurance/FAL arrangements with the
                Account
                Party pursuant to the slips entered into in November 2004, November
                2005, November 2006 and the slip to be entered in November
                2007.

            

    

     

    
      	
              2.  

            	
              The
                Borrower's FAL procurement and contingent fee agreement with Talbot
                2002
                Underwriting Capital Ltd, to be amended and restated in November
                2007.

            

    

     

    
      	
              3.  

            	
              Restrictions
                on the movement of assets as a result of the Lloyd's Deeds entered
                into by
                the Borrower and its subsidiaries.

            

    

     

    
      	
              4.  

            	
              Liens
                over monies held in the insurance broking accounts of Underwriting
                Risk
                Services Ltd and Talbot Risk Services Pte Ltd (as
                described in Schedule 11 (Existing
                Liens)).

            

    

     

    

    
      
        
        

      

      
        -153-

        
          

        

      

      
        
        

      

    

    SCHEDULE
      13

    Permitted
      Subsidiary Indebtedness

     

    
      	
              1.  

            	
              The
                revolving credit facilities provided by the Lloyds TSB Bank plc to
                the
                Borrower dated 10 March 2006 in the amount of $7,500,000 (and any
                renewal
                or increase thereof).

            

    

     

    
      	
              2.  

            	
              A
                Guarantee and Indemnity granted by Talbot Underwriting Holdings Ltd
                ("TUHL") in favour of Lloyds TSB Bank plc in respect
                of
                certain obligations of Talbot Underwriting Services Ltd
                ("TUSL"), a wholly-owned subsidiary of TUHL, pursuant
                to
                which TUHL guarantees the discharge of all monies and liabilities
                now or
                hereafter due owing or incurred by TUSL to the Bank, up to a limit
                of
                £3,000,000, together with interest, commission and costs as therein
                provided.

            

    

     

    
      	
              3.  

            	
              A
                Guarantee and Indemnity granted by TUHL in favour of Lloyds TSB Bank
                plc
                in respect of certain obligations of Underwriting Risk Services Ltd
                ("URSL"), a wholly-owned subsidiary of TUHL, pursuant
                to
                which TUHL guarantees the discharge of all monies and liabilities
                now or
                hereafter due owing or incurred by URSL to Lloyds TSB Bank plc, up
                to a
                limit of £3,000,000, together with interest, commission and costs as
                therein provided.

            

    

     

    
      	
              4.  

            	
              The
                Existing Facility.

            

    

     

    
      
        
        

      

      
        -154-

        
          

        

      

      
        
        

      

    

    SCHEDULE
      14

     

    Subsidiaries

     

    
      	
              Name
                of Subsidiary:

            	
              Jurisdiction
                of 
Organisation:

            	
                 
                Direct Owners:

            	
              Percentage
                
Ownership:

            
	 	 	 	 
	
              Validus
                Reinsurance, Ltd.

            	
              Bermuda

            	
              Validus
                Holdings, Ltd.

            	
              100%

            
	 	 	 	 
	
              Validus
                Research, Inc.

            	
              Canada

            	
              Validus
                Reinsurance, Ltd.

            	
              100%

            
	 	 	 	 
	
              Validus
                Specialty, Inc.

            	
              Delaware,
                USA

            	
              Validus
                Reinsurance, Ltd.

            	
              100%

            
	 	 	 	 
	
              Validus
                Reaseguros, Inc.

            	
              Florida,
                USA

            	
              Validus
                Specialty, Inc.

            	
              100%

            
	 	 	 	 
	 	 	 	 
	
              Talbot
                Entities:

            	 	 	 
	 	 	 	 
	
              Talbot
                Holdings, Ltd.

            	
              Bermuda

            	
              Validus
                Holdings, Ltd.

            	
              100%

            
	 	 	 	 
	
              Talbot
                Capital Ltd.

            	
              Bermuda

            	
              Talbot
                Holdings, Ltd.

            	
              100%

            
	 	 	 	 
	
              Talbot
                2002 Underwriting Capital Ltd.

            	
              UK

            	
              Talbot
                Holdings, Ltd.

            	
              100%

            
	 	 	 	 
	
              Talbot
                Underwriting Holdings Ltd.

            	
              UK

            	
              Talbot
                Holdings, Ltd.

            	
              100%

            
	 	 	 	 
	
              Talbot
                Insurance (Bermuda) Ltd.

            	
              Bermuda

            	
              Talbot
                Holdings, Ltd.

            	
              100%

            
	 	 	 	 
	
              Talbot
                Underwriting Capital Ltd. (Dormant)

            	
              UK

            	
              Talbot
                Holdings, Ltd.

            	
                 
                100%

            
	 	 	 	 
	
              Talbot
                Underwriting Ltd.

            	
              UK

            	
              Talbot
                Underwriting Holdings Ltd.

            	
                 
                100%

            
	 	 	 	 
	
              Underwriting
                Risk Services Ltd.

            	
              UK

            	
              Talbot
                Underwriting Holdings Ltd.

            	
                 
                100%

            
	 	 	 	 
	
              Talbot
                Underwriting Services Ltd.

            	
              UK

            	
              Talbot
                Underwriting Holdings Ltd.

            	
                 
                100%

            
	 	 	 	 
	
              Yachtsure
                Ltd. (Dormant)

            	
              UK

            	
              Talbot
                Underwriting Holdings Ltd.

            	
                 
                100%

            
	 	 	 	 
	
              Marinasure
                Ltd. (Dormant)

            	
              UK

            	
              Talbot
                Underwriting Holdings Ltd.

            	
                 
                100%

            
	 	 	 	 
	
              Talbot
                Risk Services Pte Ltd.

            	
              Singapore

            	
                  
                Talbot Underwriting Ltd.

            	
                 
                100%

            	 
	 	 	 	 	 
	
              Talbot
                Risk Services Italia SRL

            	
              Italy

            	
                  
                Underwriting Risk Services Ltd.

            	
                 
                100%

            
	 	 	 	 

    

    

     

    
      
        
        

      

      
        -155-

        
          

        

      

      
        
        

      

    

    SCHEDULE
      15

     

    Existing
      Affiliate Transactions

     

    
      	
              1.  

            	
              The
                Guarantor and Aquiline engaged Merrill Lynch to provide services
                in
                connection with the initial capitalization of the
                Guarantor.

            

    

     

    
      	
              2.  

            	
              Merrill
                Lynch was engaged by the Company to provide financial advisory services
                related to the purchase of the Borrower and its
                subsidiaries.

            

    

     

    
      	
              3.  

            	
              The
                Guarantor paid Goldman Sachs $4,045,000 for financial advisory consulting
                services related to initial public offering and the purchase of the
                Borrower and its subsidiaries.

            

    

     

    
      	
              4.  

            	
              The
                Guarantor completed its initial public offering and subsequent offering
                per the underwriters' option to purchase additional common shares
                on July
                30, 2007.

            

    

     

    
      	
              5.  

            	
              Reinsurance
                agreement with Group Ark Insurance Holdings Ltd. in which Validus
                Reinsurance, Ltd. and/or its subsidiaries has ceded premiums to Group
                Ark.

            

    

     

    
      	
              6.  

            	
              Subscription
                Agreements dated December 9, 2005 by and between Holdings and each
                of its
                Members, for the purchase of the Voting Common Stock or Non-Voting
                Common
                Stock, as the case may be, and the transactions contemplated
                thereby.

            

    

     

    
      	
              7.  

            	
              Shareholders’
                Agreement dated December 12, 2005 by and among Holdings and its Members
                listed on the signature pages thereto, and the transactions contemplated
                thereby.

            

    

     

    
      	
              8.  

            	
              Warrant
                Agreements dated December 12, 2005, by and among Holdings and certain
                of
                its Members, to purchase Voting Common Stock of
                Holdings.

            

    

     

    
      	
              9.  

            	
              Warrant
                Agreements dated December 12, 2005, by and among Holdings and certain
                of
                its Members, to purchase Non-Voting Common Stock of the
                Company.

            

    

     

    
      	
              10.  

            	
              Founder
                Agreement dated December 7, 2005 by and among the Guarantor and Aquiline
                Capital Partners LLC as amended by Amendment to Founder Agreement
                dated
                March 3, 2006.

            

    

     

    
      	
              11.  

            	
              Advisory
                Agreement dated December 7, 2005 by and among Holdings and Aquiline
                Capital Partners LLC.

            

    

     

    
      	
              12.  

            	
              Property
                Quota Share Reinsurance Contract dated November 2006 by and among
                the
                Guarantor and a subsidiary of Allied World Assurance Holdings Ltd.
                (AWAC).

            

    

     

    
      	
              13.  

            	
              Discretionary
                Advisory Agreement and Risk Reporting and Investment Accounting Services
                Agreement dated December 8, 2005 by and among the Guarantor and Goldman
                Sachs Asset Management, LP.

            

    

     

    
      	
              14.  

            	
              Investment
                Manager Agreement dated December 8, 2005 by and among the Guarantor
                and
                BlackRock Financial Management,
                Inc.

            

    

     

    
      
        
        

      

      
        -156-

        
          

        

      

      
        
        

      

    

    

     

    
      	
              15.  

            	
              Financial
                Advisory and Placement Agent Agreement dated October 11, 2005 by
                and among
                the Guarantor, Aquiline Capital Partners, LLC and Merrill Lynch,
                Pierce,
                Fenner & Smith Incorporated.

            

    

     

    
      
        
        

      

      
        -157-

        
          

        

      

      
        
        

      

    

    SCHEDULE
      16

     

    Existing
      Investments

     

    
      	
              As
                at September 30, 2007

            	 
	 	 
	
              Investment
                sector

            	
              Market
                Value

            
	 	 
	
              U.S.
                Government and Government Agency

            	
               $   375,617,000.00

            
	 	 
	
              Corporate

            	
               $   495,561,000.00

            
	 	 
	
              Non-U.S.
                Government and Government Agency

            	
               $     43,118,000.00

            
	 	 
	
              Asset-backed
                and mortgage-backed securities

            	
               $   857,825,000.00

            
	 	 
	
              Short-term
                investments

            	
               $   580,765,000.00

            
	 	 
	
              Cash
                and cash equivalents

            	
               $   651,428,000.00

            
	 	 
	
              Total
                cash and investments

            	
               $
                3,004,314,000.00

            

    

    

     

    
      
        
        

      

      
        -158-

        
          

        

      

      
        
        

      

    

    

    SCHEDULE
      17

     

    Permitted
      Investors

     

    
      	
              2005
                CGR Partnership

            	
              Allegheny
                New Mountain Partners (Cayman), L.P.

            
	 	 
	
              Aquiline
                Capital Partners GP LLC

            	
              Aquiline
                Financial Services Fund L.P.

            
	 	 
	
              BERCO
                Limited

            	
              Caisse
                de Depot et Placement du Québec

            
	 	 
	
              Chrystallite
                Investment Pte Ltd

            	
              Conan
                Ward

            
	 	 
	
              ContiInvestments
                Corp.

            	
              ContiInvestments
                LLC

            
	 	 
	
              DK
                Acquisition Partners, L.P.

            	
              Edward
                J. Noonan

            
	 	 
	
              FFHSJ
                VA Investment 2005 LLC

            	
              Financial
                Stocks Capital Partners IV L.P.

            
	 	 
	
              GCP
                Managing Partner II, L.P

            	
              George
                P. Reeth

            
	 	 
	
              Greenhill
                Capital Partners (Cayman) II, L.P.

            	
              Greenhill
                Capital Partners (Employees) II, L.P.

            
	 	 
	
              Greenhill
                Capital Partners (Executives) II, L.P.

            	
              Greenhill
                Capital Partners II, L.P.

            
	 	 
	
              Greenhill
                Capital Partners, LLC

            	
              GS
                Advisors V AIV, Ltd.

            
	 	 
	
              GS
                Advisors V, L.L.C.

            	
              GS
                Capital Partners V Employee Fund, L.P.

            
	 	 
	
              GS
                Capital Partners V Employee Funds GP, L.L.C.

            	
              GS
                Capital Partners V GmbH & CO. KG

            
	 	 
	
              GS
                Capital Partners V Offshore, L.P.

            	
              GS
                PEP 1999 Advisors, L.L.C.

            
	 	 
	
              GS
                PEP 1999 Offshore Advisors, Inc.

            	
              GS
                PEP 2000 Advisors, L.L.C.

            
	 	 
	
              GS
                PEP 2000 Direct Investment Advisors, L.L.C.

            	
              GS
                PEP 2000 Offshore Holdings Advisors, Inc.

            
	 	 
	
              GS
                Private Equity 1999 Offshore, L.P.

            	
              GS
                Private Equity Partners 1999 Offshore, L.P.

            
	 	 
	
              GS
                Private Equity Partners 1999, L.P.

            	
              GS
                Private Equity Partners 1999 - Direct Investments Fund,
                L.P.

            
	 	 
	
              GS
                Private Equity Partners 2000, L.P.

            	
              GS
                Private Equity Partners 2000 - Direct Investment Fund,
                L.P.

            
	 	 
	
              GS
                Private Equity Partners 2000 Offshore Holdings, L.P.

            	
              GSAM
                Gen-Par, L.L.C.

            
	 	 
	
              GSAM
                Gen-Par, L.L.C. Managing Member

            	
              GSCP
                V AIV, L.P.

            
	 	 

    

     

    
 

    
      
        
        

      

      
        -159-

        
          

        

      

      
        
        

      

    

    

     

    
      	
              GSCP
                V Institutional AIV, Ltd.

            	
              Joseph
                E. (Jeff ) Consolino

            
	 	 
	
              Jeffrey
                Clements

            	
              Kean
                Driscoll

            
	 	 
	
              Lemming
                Capital Partners, LLC

            	
              Loeb
                Arbitrage Fund

            
	 	 
	
              Loeb
                Arbitrage Management

            	
              Loeb
                Marathon Fund, LP

            
	 	 
	
              Loeb
                Marathon Offshore Fund, LTD.

            	
              Loeb
                Offshore Fund, LTD.

            
	 	 
	
              Loeb
                Partners Corporation

            	
              M.H.
                Davidson & Co.

            
	 	 
	
              Mercury
                Trust

            	
              Merrill
                Lynch Ventures L.P. 2001

            
	 	 
	
              Merrill
                Lynch Ventures, LLC

            	
              ML
                Global Private Equity Fund, L.P.

            
	 	 
	
              MLGPE
                Ltd.

            	
              New
                Mountain Affiliated Investors II (Cayman), L.P.

            
	 	 
	
              New
                Mountain Investments II (Cayman), L.P.

            	
              New
                Mountain Partners II (Cayman), L.P.

            
	 	 
	
              Nigel
                David Wachman

            	
              Paul
                Roberts

            
	 	 
	
              Pequot
                Capital Management, Inc.

            	
              Pequot
                Core Investors Fund, Inc.

            
	 	 
	
              Pequot
                Diversified Master Fund, Ltd.

            	
              Pequot
                Institutional Fund, Inc.

            
	 	 
	
              Pequot
                International Fund, Inc.

            	
              Pequot
                Mariner Master Fund, L.P.

            
	 	 
	
              Pequot
                Navigator Offshore Fund, Inc.

            	
              Pequot
                Scout Fund, L.P.

            
	 	 
	
              Premium
                Series PCC Limited - Cell 33

            	
              Premium
                Series PCC Limited - Cell 34

            
	 	 
	
              Saul
                A. Fox

            	
              SFRi,
                LLC

            
	 	 
	
              Stephen
                C. Bardill

            	
              Stuart
                W. Mercer

            
	 	 
	
              Tietê
                Representações S.A.

            	
              Vestar
                AIV Associates L.P

            
	 	 
	
              Vestar
                AIV Employees Validus Ltd.

            	
              Vestar
                AIV Holdings A L.P.

            
	 	 
	
              Vestar
                AIV Holdings B L.P.

            	
              Vestar
                AIV Managers, Ltd.

            

    

    

     

    
      
        
        

      

      
        -160-

        
          

        

      

      
        
        

      

    

    SIGNATURES

     

    The
      Borrower

     

    TALBOT
      HOLDINGS LTD.

     

    By:

     

    

     

    The
      Guarantor

     

    VALIDUS
      HOLDINGS, LTD.

     

    By:

     

    

     

    The
      Arranger

     

    ING
      BANK N.V., LONDON BRANCH

     

    By:

     

    

     

    LLOYDS
      TSB BANK PLC

     

    By:

     

    

     

    The
      Structuring Agent

     

    ING
      BANK N.V., LONDON BRANCH

     

    By:

     

    

     

    The
      Lenders

     

    
      	
              ING
                BANK N.V., LONDON BRANCH

              By:

            	 	
              LLOYDS
                TSB BANK PLC

               

              By:

            
	 	 	 
	
              CALYON

               

              By:

            	 	 

    

    

     

    
      
        
        

      

      
        -161-

        
          

        

      

      
        
        

      

    

    The
      Agent

     

    LLOYDS
      TSB BANK PLC

     

    By:

     

    Address:                Loans
      Administration

    Bank
      House

    Wine
      Street

    Bristol

    BS1
      2AN

     

     

    Fax:                         
      0117 923 3367

     

    Attention:              Loans
      Administration

     

    

     

    The
      Security Trustee

     

    LLOYDS
      TSB BANK PLC

     

    By:

     

    Address:                Loans
      Administration

    Bank
      House

    Wine
      Street

    Bristol

    BS1
      2AN

     

     

    Fax:                       
       0117 923 3367

     

    Attention:              Loans
      Administration

     

    

    -162-

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00133-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00133-of-00352.parquet"}]]