Document:

EXHIBIT 10.1

                                CREDIT AGREEMENT
                                     among
                              TRENWICK GROUP INC.,
                         VARIOUS LENDING INSTITUTIONS,
                           THE CHASE MANHATTAN BANK,
                            AS ADMINISTRATIVE AGENT,
                           FIRST UNION NATIONAL BANK,
                              AS SYNDICATION AGENT

                                      and

                              FLEET NATIONAL BANK,
                             AS DOCUMENTATION AGENT
                         -----------------------------

                         Dated as of November 24, 1999

                         -----------------------------
                                  $400,000,000

                             CHASE SECURITIES INC.,
                       AS LEAD ARRANGER AND BOOK MANAGER

<PAGE>

                               TABLE OF CONTENTS
                                                                          Page
                                                                          ----
SECTION 1.  Revolving Credit Facility....................................... 1

1.01  Commitments........................................................... 1
1.02  Minimum Amount of Each Borrowing; Maximum Number of Borrowings........ 2
1.03  Notice of Borrowing of Revolving Loans................................ 2
1.04  Disbursement of Funds................................................. 2
1.05  Register.............................................................. 3
1.06  Conversions........................................................... 3
1.07  Pro Rata Borrowings................................................... 4
1.08  Interest.............................................................. 4
1.09  Interest Periods...................................................... 5
1.10  Increased Costs, Illegality, etc...................................... 6
1.11  Compensation.......................................................... 8
1.12  Change of Lending Office.............................................. 8
1.13  Replacement of Banks.................................................. 9

SECTION 2.  Letter of Credit Facility....................................... 9

2.01  Letters of Credit..................................................... 9
2.02  Letter of Credit Request; Notices of Issuance......................... 11
2.03  Agreement to Repay Letter of Credit Payments.......................... 11
2.04  Increased Costs....................................................... 12
2.05  Letter of Credit Expiration Extensions................................ 12
2.06  Changes to Stated Amount.............................................. 13
2.07  Representations and Warranties of L/C Banks........................... 13

SECTION 3.  Fees; Commitments............................................... 13

3.01  Fees.................................................................. 13
3.02  Voluntary Reduction of Commitments.................................... 14
3.03  Mandatory Reductions of Commitments................................... 14

SECTION 4.  Payments........................................................ 15

4.01  Voluntary Prepayments................................................. 15
4.02  Mandatory Repayments and Prepayments.................................. 15
4.03  Method and Place of Payment........................................... 18
4.04  Net Payments.......................................................... 19

SECTION 5.  Conditions Precedent............................................ 20

5.01  Execution of Agreement................................................ 20
5.02  No Default; Representations and Warranties............................ 20
5.03  Officer's Certificate................................................. 21
5.04  Opinions of Counsel................................................... 21
5.05  Corporate Proceedings................................................. 21
5.06  Adverse Change, etc................................................... 21
5.07  Litigation............................................................ 22
5.08  Subsidiary Guaranty................................................... 22
5.09  Consummation of the Refinancing....................................... 22
5.10  Chartwell Senior Notes................................................ 22
5.11  Financial Statements; Projections..................................... 22
5.12  Approvals, etc........................................................ 23
5.13  Indebtedness.......................................................... 24
5.14  Payment of Fees....................................................... 24
5.15  Letter of Credit Request; Notice of Borrowing......................... 24
5.16  Capital Structure..................................................... 24
5.17  Solvency Certificate.................................................. 24
5.18  A.M. Best Rating...................................................... 24

SECTION 6.  Representations, Warranties and Agreements...................... 24

6.01  Corporate Status...................................................... 25
6.02  Corporate Power and Authority; Enforceability......................... 25
6.03  No Contravention of Laws, Agreements or Organizational Documents...... 25
6.04  Litigation and Contingent Liabilities................................. 25
6.05  Use of Proceeds; Margin Regulations................................... 26
6.06  Approvals............................................................. 26
6.07  Investment Company Act................................................ 26
6.08  Public Utility Holding Company Act.................................... 27
6.09  True and Complete Disclosure; Projections and Assumptions............. 27
6.10  Consummation of Transaction........................................... 27
6.11  Financial Condition; Financial Statements............................. 27
6.12  Tax Returns and Payments.............................................. 28
6.13  Compliance with ERISA................................................. 28
6.14  Subsidiaries.......................................................... 30
6.15  Intellectual Property, etc............................................ 30
6.16  Pollution and Other Regulations....................................... 30
6.17  Labor Relations; Collective Bargaining Agreements..................... 30
6.18  Capitalization........................................................ 31
6.19  Indebtedness.......................................................... 31
6.20  Compliance with Statutes, etc......................................... 31
6.21  Insurance Licenses.................................................... 31
6.22  Year 2000 Compliance.................................................. 31
<PAGE>
SECTION 7.  Affirmative Covenants........................................... 32

7.01  Information Covenants................................................. 32
7.02  Books, Records and Inspections........................................ 35
7.03  Insurance............................................................. 35
7.04  Payment of Taxes...................................................... 36
7.05  Corporate Franchises.................................................. 36
7.06  Compliance with Statutes, etc......................................... 36
7.07  ERISA................................................................. 36
7.08  Performance of Obligations............................................ 37
7.09  Good Repair........................................................... 38
7.10  End of Fiscal Years; Fiscal Quarters.................................. 38
7.11  Maintenance of Licenses and Permits................................... 38
7.12  Chartwell Senior Notes................................................ 38
7.13  Subsidiary Guaranties................................................. 38

SECTION 8.  Negative Covenants.............................................. 38

8.01  Changes in Business................................................... 38
8.02  Fundamental Changes; Acquisitions..................................... 38
8.03  Liens................................................................. 39
8.04  Indebtedness.......................................................... 41
8.05  Advances, Investments and Loans....................................... 42
8.06  Dividends, etc........................................................ 44
8.07  Transactions with Affiliates.......................................... 45
8.08  Issuance of Stock..................................................... 45
8.09  Creation of Subsidiaries.............................................. 45
8.10  Partnership Agreements................................................ 45
8.11  Prepayments of Indebtedness, Modifications of Agreements, etc......... 45
8.12  Leverage Ratio........................................................ 46
8.13  Interest Coverage Ratio............................................... 46
8.14  Minimum Risk Based Capital............................................ 46
8.15  Minimum Combined Statutory Surplus.................................... 46
8.16  Minimum Consolidated Tangible Net Worth............................... 46

SECTION 9.  Events of Default............................................... 46

9.01  Payments.............................................................. 46
9.02  Representations, etc.................................................. 47
9.03  Covenants............................................................. 47
9.04  Default Under Other Agreements........................................ 47
9.05  Bankruptcy, etc....................................................... 47
9.06  ERISA................................................................. 48
9.07  Subsidiary Guaranty................................................... 48
9.08  Judgments............................................................. 49
9.09  Change of Control..................................................... 49
9.10  Senior Unsecured Debt Ratings......................................... 49
9.11  A.M. Best Ratings..................................................... 49

SECTION 10.  Definitions.................................................... 50

SECTION 11.  The Administrative Agent....................................... 72

11.01  Appointment.......................................................... 72
11.02  Delegation of Duties................................................. 72
11.03  Exculpatory Provisions............................................... 72
11.04  Reliance by Administrative Agent..................................... 73
11.05  Notice of Default.................................................... 73
11.06  Non-Reliance......................................................... 73
11.07  Indemnification...................................................... 74
11.08  The Administrative Agent in its Individual Capacity.................. 74
11.09  Successor Administrative Agent....................................... 75
11.10  Other Agents......................................................... 75

SECTION 12.  Miscellaneous.................................................. 76

12.01  Payment of Expenses, etc............................................. 76
12.02  Right of Setoff...................................................... 76
12.03  Notices.............................................................. 77
12.04  Benefit of Agreement................................................. 77
12.05  No Waiver; Remedies Cumulative....................................... 79
12.06  Payments Pro Rata.................................................... 79
12.07  Calculations; Computations........................................... 80
12.08  GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE..................... 81
12.09  Counterparts......................................................... 82
12.10  Effectiveness........................................................ 82
12.11  Headings Descriptive................................................. 82
12.12  Amendment or Waiver.................................................. 82
12.13  Survival............................................................. 82
12.14  Domicile of Loans.................................................... 82
12.15  Confidentiality...................................................... 83
12.16  WAIVER OF JURY TRIAL................................................. 83
12.17  Judgment Currency.................................................... 83
12.18  Euro................................................................. 84

<PAGE>

ANNEX I       --   List of Banks and Commitments
ANNEX II      --   Bank Addresses
ANNEX III     --   Existing Indebtedness
ANNEX IV      --   Pension Plans
ANNEX V       --   Subsidiaries
ANNEX VI      --   Collective Bargaining Agreements
ANNEX VII     --   Existing Liens
ANNEX VIII    --   Existing Investments
ANNEX IX      --   Capitalization

EXHIBIT A-1   --   Form of Notice of Borrowing
EXHIBIT A-2   --   Form of Letter of Credit Request
EXHIBIT B     --   Form of Letter of Credit
EXHIBIT C-1   --   Form of Opinion of Baker & McKenzie
EXHIBIT C-2   --   Form of Opinion of the General Counsel of Trenwick Group Inc.
EXHIBIT C-3   --   Form of Opinion of White & Case LLP
EXHIBIT D     --   Form of Officer's Certificate
EXHIBIT E     --   Form of Section 4.04(b)(ii) Certificate
EXHIBIT F     --   Form of Subsidiary Guaranty
EXHIBIT G     --   Form of Solvency Certificate
EXHIBIT H     --   Form of Assignment and Assumption Agreement

<PAGE>

CREDIT  AGREEMENT,  dated as of November 24, 1999,  among TRENWICK GROUP INC., a
Delaware  corporation (the "Borrower"),  the lending  institutions  listed from
time to time on Annex I hereto (each a "Bank" and,  collectively,  the "Banks"),
FIRST UNION NATIONAL BANK, as Syndication Agent (the "Syndication Agent"), FLEET
NATIONAL BANK, as Documentation Agent (the "Documentation  Agent") and THE CHASE
MANHATTAN BANK, as Administrative  Agent (the  "Administrative  Agent").  Unless
otherwise  defined  herein,  all  capitalized  terms used  herein and defined in
Section 10 are used herein as so defined.

                              W I T N E S S E T H:

     WHEREAS,  subject to and upon the terms and  conditions  set forth herein,
the Banks are willing to make  available to the  Borrower the credit  facilities
provided for herein;

     NOW, THEREFORE, IT IS AGREED:

     SECTION 1.  Revolving Credit Facility.

     1.01  Commitments. (a) Subject to and upon the terms and conditions  herein
set forth,  each Bank severally  agrees at any time and from time to time on and
after the Effective Date and prior to the  Conversion  Date, to make a revolving
loan or  revolving  loans  (each  a  "Revolving  Loan"  and,  collectively,  the
"Revolving  Loans") to the Borrower,  which  Revolving Loans (i) may be made and
maintained  in such  Approved  Currency as is requested by the Borrower  (except
that Base Rate Loans may only be denominated in Dollars) and (ii) shall,  at the
option of the Borrower,  be Base Rate Loans or Eurodollar  Loans,  provided that
all Revolving Loans made as part of the same Borrowing  shall,  unless otherwise
specifically provided herein, consist of Revolving Loans of the same Type, (iii)
may be repaid and  reborrowed in accordance  with the  provisions  hereof,  (iv)
shall not exceed for any Bank at any time outstanding  that aggregate  Principal
Amount which equals the Revolving Loan  Commitment of such Bank at such time and
(v)  shall  not  exceed  for all Banks at any time  outstanding  that  aggregate
Principal  Amount which equals the Available  Total Revolving Loan Commitment at
such time.

     (b) Subject  to and upon the  terms and  conditions set forth  herein,  the
Borrower and each Bank which has Revolving Loans  outstanding at such time agree
that at 9:00  A.M.  (New  York  time)  on the  Conversion  Date,  the  aggregate
principal  amount of Revolving  Loans owing to such Bank and outstanding at such
time shall (unless such Revolving  Loans have been declared (or have become) due
and  payable  pursuant to this  Agreement),  without any notice or action by any
party,  automatically  convert to and thereafter  constitute Term Loans owing to
such  Bank  hereunder.  The  Term  Loans  of each  Bank  (i)  shall  be made and
thereafter  maintained  in the same  currencies  in which the related  Revolving
Loans were  denominated as of the Conversion  Date, (ii) shall, at the option of
the  Borrower,  be Base Rate Loans or Eurodollar  Loans,  provided that (A) Base
Rate Loans may only be denominated in Dollars and (B) all Term Loans  comprising
the same Borrowing shall, unless otherwise specifically provided herein, consist
of Term Loans of the same Type and (iii)  shall not exceed in initial  Principal
Amount  for such Bank an amount  which  equals  the  total  Principal  Amount of
Revolving  Loans  owed to such  Bank and  outstanding  immediately  prior to the
Conversion Date. Once repaid, Term Loans may not be reborrowed.

                                       1
<PAGE>

     1.02  Minimum   Amount of Each  Borrowing;  Maximum  Number of  Borrowings.
The aggregate  Principal  Amount of each Borrowing  hereunder  shall not be less
than the Minimum  Borrowing  Amount.  More than one Borrowing may be incurred on
any day;  provided  that at no time shall  there be  outstanding  more than five
Borrowings of Eurodollar Loans.

     1.03 Notice of  Borrowing of  Revolving  Loans.  (a) Whenever  the Borrower
desires to incur Revolving Loans, it shall give the Administrative  Agent at its
Notice Office,  (x) prior to 11:00 A.M. (New York time), at least three Business
Days' prior written notice (or telephonic notice promptly  confirmed in writing)
of each  Borrowing of Eurodollar  Loans in Dollars,  (y) prior to 1:00 P.M. (New
York time) at least four Business  Days' prior written of notice (or  telephonic
notice  promptly  confirmed in writing) of each  Borrowing of  Eurodollar  Loans
constituting  Alternate  Currency  Loans and (z) prior to 11:00  A.M.  (New York
time) at least one Business  Day's prior  written  notice (or  telephone  notice
promptly  confirmed in writing)  each  Borrowing  of Base Rate Loans.  Each such
notice (each, a "Notice of  Borrowing")  shall be in the form of Exhibit A-1 and
shall be  irrevocable  and shall  specify (i) in the case of Alternate  Currency
Loans, the Approved Currency for such Loans, (ii) the aggregate principal amount
of the  Revolving  Loans to be made  pursuant to such  Borrowing  (stated in the
applicable  Approved  Currency),  (iii) the date of Borrowing  (which shall be a
Business Day) and (iv) whether the  respective  Borrowing  shall consist of Base
Rate Loans or Eurodollar  Loans.  The  Administrative  Agent shall promptly give
each Bank written notice (or telephonic notice promptly confirmed in writing) of
each proposed Borrowing, of the portion thereof to be funded by such Bank and of
the other matters covered by the Notice of Borrowing.

     (b) Without in any way limiting the  obligation  of the Borrower to confirm
in  writing  any  telephonic  notice  permitted  to  be  given  hereunder,   the
Administrative  Agent may prior to receipt of written  confirmation  act without
liability upon the basis of such telephonic notice, believed by it in good faith
to be from an  Authorized  Officer  of the  Borrower.  In each  such  case,  the
Borrower hereby waives the right to dispute the Administrative Agent's record of
the terms of such telephonic notice absent manifest error.

     1.04  Disbursement of Funds. (a) No later than  11:00 A.M.  (New York time)
on the date specified in each Notice of Borrowing, each Bank will make available
its pro rata share, if any, of such Borrowing requested to be made on such date.
All such  amounts  shall be made  available to the  Administrative  Agent in the
relevant Approved Currency and immediately available funds at the Payment Office
and the  Administrative  Agent will make available to the Borrower by depositing
to the  account  designated  by  the  Borrower,  which  account  shall  be at an
institution in the same city as the respective  Payment Office, the aggregate of
the  amounts  so made  available  in the  type of  funds  received.  Unless  the
Administrative  Agent shall have been  notified by any Bank  participating  in a
Borrowing  prior to the date of such Borrowing that such Bank does not intend to
make  available  to the  Administrative  Agent its portion of the  Borrowing  or
Borrowings  to be made on such date,  the  Administrative  Agent may assume that
such Bank has made such amount  available  to the  Administrative  Agent on such
date  of  Borrowing,  and  the  Administrative  Agent,  in  reliance  upon  such
assumption,  may (in its sole  discretion  and without any  obligation to do so)
make available to the Borrower a corresponding  amount.  If such  corresponding
amount is not in fact made available to the  Administrative  Agent by such Bank
and the  Administrative  Agent  has made  available  same to the  Borrower,  the
Administrative Agent shall be entitled to recover such corresponding amount from
such Bank. If such Bank does not pay such  corresponding  amount  forthwith upon
the  Administrative  Agent's demand  therefor,  the  Administrative  Agent shall
promptly notify the Borrower in writing or by telephone  (promptly  confirmed in
writing),  and the Borrower shall immediately pay such  corresponding  amount to
the  Administrative  Agent. The  Administrative  Agent shall also be entitled to
recover on demand from such Bank or the Borrower,  as the case may be,  interest
on such  corresponding  amount  in  respect  of each  day  from  the  date  such
corresponding  amount  was made  available  by the  Administrative  Agent to the
Borrower  to  the  date  such   corresponding   amount  is   recovered   by  the
Administrative Agent, at a rate per annum equal to (x) if paid by such Bank, the
overnight Federal Funds Effective Rate or (y) if paid by the Borrower,  the then
applicable rate of interest, calculated in accordance with Section 1.08, for the
type of respective Loans which were required to be repaid.

                                       2
<PAGE>

     (b) Nothing  herein shall be deemed to relieve any Bank from its obligation
to fulfill its commitments  hereunder or to prejudice  rights which the Borrower
may have against any Bank as a result of any default by such Bank hereunder.

     1.05 Register.  (a) The Administrative  Agent shall maintain a register for
the recordation of the Revolving Loan Commitments and the L/C Commitments of the
Banks  from  time to time and,  after  the  Conversion  Date has  occurred,  the
principal  amount of the Term  Loans  owing to each Bank (the  "Register").  The
entries in the Register shall be conclusive and binding for all purposes, absent
manifest  error.  The Register shall be available for inspection by the Borrower
or any Bank at any reasonable time and from time to time upon  reasonable  prior
notice.

     (b) The Borrower hereby agrees to provide a Note, promptly upon the request
of any Bank, to the extent such Bank has requested such Note in connection  with
any pledge or assignment by such Bank of any or all of its Loans  hereunder to a
Federal Reserve Bank.

     1.06 Conversions.  The Borrower  shall  have the  option to  convert on any
Business Day all or a portion at least equal to the applicable Minimum Borrowing
Amount of its outstanding  Loans  denominated in a single Approved  Currency and
constituting  Base Rate Loans or Eurodollar Loans into a Borrowing or Borrowings
of Loans denominated in such Approved Currency and constituting Eurodollar Loans
or Base Rate Loans, respectively, provided that (i) Eurodollar Loans denominated
in a currency other than Dollars may not be converted into Base Rate Loans, (ii)
no partial  conversion  shall  reduce the  outstanding  principal  amount of the
Eurodollar Loans made pursuant to a Borrowing to less than the Minimum Borrowing
Amount  applicable  thereto,  (iii)  Base Rate Loans may not be  converted  into
Eurodollar  Loans when a Default or Event of Default is then in existence if the
Administrative Agent or the Required Banks shall have determined in its or their
sole  discretion not to permit such conversion and (iv) Borrowings of Eurodollar
Loans resulting from this Section 1.06 shall be limited in number as provided in
Section 1.02. Each such conversion  shall be effected by the Borrower giving the
Administrative  Agent at the Notice Office, prior to 11:00 A.M. (New York time),
at least three  Business  Days' (or one Business Day in the case of a conversion
into Base Rate  Loans)  prior  written  notice (or  telephonic  notice  promptly
confirmed in writing) (each, a "Notice of  Conversion")  specifying the Loans to
be so converted,  the Type of Loans (as to interest option) to be converted into
and, if to be  converted  into a Borrowing  of  Eurodollar  Loans,  the Interest
Period to be initially  applicable thereto.  The Administrative Agent shall give
each Bank prompt  notice of any such  proposed  conversion  affecting any of its
Loans.

                                       3
<PAGE>

     1.07 Pro Rata Borrowings. All Revolving Loans under this Agreement shall be
made by the Banks pro rata on the basis of their Revolving Loan Commitments.  It
is  understood  that no Bank shall be  responsible  for any default by any other
Bank in its  obligation  to make  Loans  hereunder  and that each Bank  shall be
obligated to make the Loans  provided to be made by it hereunder,  regardless of
the failure of any other Bank to fulfill its commitments hereunder.

     1.08 Interest. (a) The unpaid principal amount of each Base Rate Loan shall
bear interest  from the date of the  Borrowing  thereof until the earlier of (i)
the maturity  (whether by  acceleration or otherwise) of such Base Rate Loan and
(ii) the  conversion  of such Base Rate Loan to a  Eurodollar  Loan  pursuant to
Section  1.06,  at a rate per  annum  which  shall at all  times be equal to the
Applicable  Margin  then in  effect  for Base Rate  Loans  plus the Base Rate in
effect from time to time.

     (b) The unpaid principal amount of each Eurodollar Loan shall bear interest
from the date of the  Borrowing  thereof  until the earlier of (i) the  maturity
(whether by  acceleration  or  otherwise)  of such  Eurodollar  Loan or (ii) the
conversion of such Eurodollar Loan to a Base Rate Loan pursuant to Section 1.06,
at a rate per annum which shall at all times be equal to the  Applicable  Margin
then in effect for  Eurodollar  Loans plus the  relevant  LIBOR for the Interest
Period applicable to such Eurodollar Loan.

     (c) Overdue principal and, to the extent permitted by law, overdue interest
in respect of each Loan and any other overdue  amount  payable  hereunder  shall
bear  interest at a rate per annum equal to the Base Rate in effect from time to
time plus the sum of (i) 2% and (ii) the  Applicable  Margin  then in effect for
Base Rate  Loans;  provided  that  Eurodollar  Loans shall bear  interest  after
maturity  (whether by acceleration or otherwise) until the end of the applicable
Interest  Period  at a rate  per  annum  equal  to 2% in  excess  of the rate of
interest then applicable thereto.

     (d) Interest  shall accrue from and  including  the date of  any  Borrowing
to but excluding  the date of any repayment  thereof and shall be payable (i) in
respect of each Base Rate Loan, quarterly in arrears on the last Business Day of
each calendar quarter,  (ii) in respect of each Eurodollar Loan, on the last day
of each  Interest  Period  applicable  thereto  and,  in the case of an Interest
Period of six months,  on the date occurring three months after the first day of
such  Interest  Period and (iii) in respect of each Loan,  on any  conversion or
prepayment  (on the amount so  converted or  prepaid),  at maturity  (whether by
acceleration or otherwise) and, after such maturity, on demand.

     (e) All  computations  of interest  hereunder  shall be made in accordance
with Section 12.07(b) and (c).

     (f) The  Administrative  Agent,  upon  determining  the  interest rate  for
any Borrowing of Eurodollar Loans for any Interest Period, shall promptly notify
the Borrower and the Banks thereof.

                                       4
<PAGE>

     1.09 Interest Periods. At the time the Borrower gives a Notice of Borrowing
or Notice of  Conversion  in respect of the making  of, or  conversion  into,  a
Borrowing  of  Eurodollar  Loans  (in the case of the  initial  Interest  Period
applicable thereto) or prior to 11:00 A.M. (New York time) on the third Business
Day prior to the expiration of an Interest  Period  applicable to a Borrowing of
Eurodollar Loans, it shall have the right to elect by giving the  Administrative
Agent written notice (or telephonic notice promptly confirmed in writing) of the
Interest Period to be applicable to such Borrowing, which Interest Period shall,
at the  option  of the  Borrower,  be a one,  two,  three or six  month  period.
Notwithstanding anything to the contrary contained above:

        (i) the initial  Interest  Period for any Borrowing of Eurodollar  Loans
shall  commence  on the  date  of  such  Borrowing  (including  the  date of any
conversion  from a  Borrowing  of Base Rate  Loans)  and each  Interest  Period
occurring  thereafter in respect of such Borrowing shall commence on the day on
which the next preceding Interest Period expires;

       (ii) if any  Interest  Period  begins  on a day  for  which  there  is no
numerically corresponding day in the calendar month at the end of such Interest
Period, such Interest Period shall end on the last Business Day of such calendar
month;

     (iii) if any Interest Period would otherwise expire on a day which is not a
Business Day, such Interest Period shall expire on the next succeeding  Business
Day,  provided that if any Interest Period would otherwise expire on a day which
is not a Business Day but is a day of the month after which no further  Business
Day  occurs  in such  month,  such  Interest  Period  shall  expire  on the next
preceding Business Day;

      (iv) no Interest Period may be elected at any time when a Default or Event
of Default is then in  existence  if the  Administrative  Agent or the  Required
Banks shall have  determined in its or their sole  discretion not to permit such
Interest Period;

       (v) no Interest  Period shall extend beyond the Term Loan Maturity  Date;
and

      (vi) no Interest Period with respect to any Borrowing of Term Loans may be
elected  that would extend  beyond any date upon which a mandatory  repayment of
Term Loans is required to be made under  Section  4.02(i)(a)  if,  after  giving
effect to the selection of such Interest Period, the aggregate  principal amount
of Term Loans  maintained as Eurodollar Loans with Interest Periods ending after
such date would exceed the aggregate principal amount of Term Loans permitted to
be outstanding after such mandatory repayment.

If upon the expiration of any Interest  Period,  the Borrower has failed,  or is
not  permitted,  to  elect  a new  Interest   Period  to be  applicable  to  the
respective  Borrowing of Eurodollar  Loans as provided above, the Borrower shall
be deemed to have elected to convert  such  Borrowing  into a Borrowing of Base
Rate Loans effective as of the expiration date of such current  Interest Period;
provided that if such Eurodollar  Loans are denominated in a currency other than
Dollars,  then such  Eurodollar  Loans  shall not convert to Base Rate Loans but
shall  instead  be  prepaid  by the  Borrower  on the last day of such  Interest
Period.

                                       5
<PAGE>
     1.10 Increased Costs,  Illegality,  etc. (a) In  the event that (x) in  the
case of clause (i) or (iv) below, the Administrative Agent or (y) in the case of
clauses  (ii)  and  (iii)  below,   any  Bank  shall  have   determined   (which
determination  shall, absent manifest error, be final and conclusive and binding
upon all parties hereto,  provided that such determination has been made in good
faith):

        (i) on any date for determining any LIBOR for any Interest Period, that,
by  reason of any  changes  arising  after  the  Effective  Date  affecting  the
interbank  Eurodollar  market,   adequate  and  fair  means  do  not  exist  for
ascertaining  the  applicable  interest  rate on the basis  provided for in the
definition of the respective LIBOR; or

       (ii)  at any  time,  that  such  Bank  shall  incur  increased  costs  or
reductions in the amounts  received or receivable  hereunder with respect to any
Eurodollar  Loans  (other than any  increased  cost or  reduction  in the amount
received or receivable  resulting from the imposition of or a change in the rate
of taxes or similar  charges) because of (x) any change since the Effective Date
in any applicable  law,  governmental  rule,  regulation,  guideline,  order or
request (whether or not having the force of law), or in the  interpretation or
administration  thereof  and  including  the  introduction  of any  new  law or
governmental  rule,  regulation,  guideline,  order or  request  (such as,  for
example, but not limited to, a change in official reserve requirements,  but, in
all  events,  excluding  reserves  required  under  Regulation  D to the  extent
included  in  the  computation  of  the  respective   LIBOR)  and/or  (y)  other
circumstances materially affecting the interbank Eurodollar market generally;

     (iii) at any time,  that the making or continuance  of any Eurodollar  Loan
has become  unlawful due to the  compliance  by such Bank in good faith with any
change  since the  Effective  Date in any law,  governmental  rule,  regulation,
guideline or order,  or the  interpretation  or  application  thereof,  or would
conflict  with any  thereof not having the force of law but with which such Bank
customarily  complies,  or has become impracticable as a result of a contingency
occurring  after the  Effective  Date which  materially  adversely  affects  the
interbank Eurodollar market; or

      (iv)  at  any  time  that  any  Alternate  Currency  is not  available  in
sufficient amounts, as determined in good faith by the Administrative  Agent, to
fund any Borrowing of Loans denominated in such Alternate Currency;

then, and in any such event, such Bank (or the Administrative  Agent in the case
of clause (i) or (iv)  above)  shall (x) on such date and (y) within 10 Business
Days of the date on which such event no longer  exists give notice (by telephone
confirmed in writing) to the Borrower and, except in the case of clauses (i) and
(iv) above, to the Administrative  Agent of such determination (which notice the
Administrative  Agent  shall  promptly  transmit  to each of the  other  Banks).
Thereafter  (w) in the case of clause (i)  above,  Eurodollar  Loans,  priced in
respect of the affected  LIBOR,  shall no longer be available until such time as
the  Administrative   Agent  notifies  the  Borrower  and  the  Banks  that  the
circumstances  giving rise to such notice by the Administrative Agent no longer
exist, and any Notice of Borrowing or Notice of Conversion given by the Borrower
with  respect to  Eurodollar  Loans  which have not yet been  incurred  shall be
deemed  rescinded  by the  Borrower  or, in the case of a Notice  of  Borrowing,
shall,  at the  option of the  Borrower,  be deemed  converted  into a Notice of
Borrowing  for Base Rate Loans to be made on the date of Borrowing  contained in
such Notice of  Borrowing,  (x) in the case of clause (ii) above,  the  Borrower
shall  pay to such  Bank,  within  10  days of its  receipt  of  written  demand
therefor,  such  additional  amounts (in the form of an increased  rate of, or a
different  method of  calculating,  interest  or  otherwise  as such Bank shall
determine)  as shall be required  to  compensate  such Bank for such  increased
costs or reductions in amounts receivable hereunder (a written notice as to the
additional  amounts  owed to such Bank,  showing  the basis for the  calculation
thereof, which basis shall be reasonable and consistently applied,  submitted to
the Borrower by such Bank shall,  absent manifest error, be final and conclusive
and binding upon all parties hereto), (y) in the case of clause (iii) above, the
Borrower shall take one of the actions  specified in Section 1.10(b) as promptly
as possible and, in any event, within the time period required by applicable law
and (z) in the  case of  clause  (iv)  above,  Loans in the  affected  Alternate
Currency  shall no longer be  available  until  such time as the  Administrative
Agent notifies the Borrower and the Banks that the circumstances giving rise to
such  notice by the  Administrative  Agent no longer  exist in  accordance  with
clause (y) of the preceding  sentence,  and any Notice of Borrowing or Notice of
Conversion  given by a Borrower with respect to such  Alternate  Currency  Loans
which have not yet been incurred shall be deemed rescinded by the Borrower.

                                       6
<PAGE>
     (b) At any time that any Eurodollar Loan is affected  by the  circumstances
described in Section  1.10(a)(ii) or (iii), the Borrower may (and in the case of
a Eurodollar Loan affected pursuant to Section  1.10(a)(iii) the Borrower shall)
either (i) if the  affected  Eurodollar  Loan is then being made  pursuant  to a
Borrowing,  by giving the  Administrative  Agent telephonic  notice  (confirmed
promptly in writing)  thereof on the same date that the Borrower was notified in
writing  by a Bank  pursuant  to  Section  1.10(a)(ii)  or  (iii),  cancel  said
Borrowing,  convert  the  related  Notice of  Borrowing  into one  requesting  a
Borrowing of Base Rate Loans or require the affected  Bank to make its requested
Loan  as a Base  Rate  Loan,  or (ii) if the  affected  Eurodollar  Loan is then
outstanding,  upon at least three  Business  Days' notice to the  Administrative
Agent, (A) in the case of a Eurodollar Loan denominated in Dollars,  require the
affected Bank to convert each such  Eurodollar  Loan into a Base Rate Loan,  and
(B) in the case of a Eurodollar Loan denominated in an Alternate Currency, repay
all  such  Eurodollar  Loans  in full,  provided  that if more  than one Bank is
affected at any time, then all affected Banks must be treated in the same manner
pursuant to this Section 1.10(b).

     (c) If  any  Bank  shall have determined  that after the Effective Date the
adoption or  effectiveness  of any applicable law, rule or regulation  regarding
capital adequacy, or any change therein, or any change in the interpretation or
administration thereof by any Governmental Authority, central bank or comparable
agency charged by law with the  interpretation  or  administration  thereof,  or
compliance by such Bank or its parent  corporation with any request or directive
regarding  capital adequacy (whether or not having the force of law) of any such
Governmental  Authority,  central bank or comparable  agency,  in each case made
subsequent to the Effective  Date,  has or would have the effect of reducing the
rate of return on such Bank's or its parent corporation's capital or assets as a
consequence of such Bank's commitments or obligations hereunder to a level below
that which such Bank or its parent  corporation could have achieved but for such
adoption,  effectiveness,  change or compliance  (taking into consideration such
Bank's or its parent  corporation's  policies with respect to capital adequacy),
then from time to time,  the  Borrower  shall  within 10 days of its  receipt of
written demand by such Bank (with a copy to the  Administrative  Agent),  pay to
such Bank such additional amount or amounts as will compensate such Bank or its
parent  corporation  for such reduction.  Each Bank,  upon  determining in good
faith that any  additional  amounts  will be payable  pursuant to this  Section
1.10(c),  will give prompt written notice thereof to the Borrower,  which notice
shall set  forth in  reasonable  detail  the  basis of the  calculation  of such
additional  amounts,  which basis must be reasonable and  consistently  applied,
although  the failure to give any such notice  shall not release or diminish any
of the Borrower's obligations to pay additional amounts pursuant to this Section
1.10(c) upon the subsequent receipt of such notice.

                                       7
<PAGE>

     1.11  Compensation.  The  Borrower shall  compensate  each  Bank, upon  its
written  request (which  request shall set forth the basis for  requesting  such
compensation),  for all reasonable losses, expenses and liabilities (including,
without  limitation,  any loss,  expense or liability  incurred by reason of the
liquidation or  reemployment of deposits or other funds required by such Bank to
fund its Eurodollar  Loans but  excluding  any loss of anticipated  profit with
respect  to such  Loans)  which  such Bank may  sustain:  (i) if for any reason
(other than a default by such Bank or the  Administrative  Agent) a Borrowing of
Eurodollar  Loans  does not occur on a date  specified  therefor  in a Notice of
Borrowing or Notice of  Conversion  (whether or not withdrawn by the Borrower or
deemed withdrawn pursuant to Section 1.10(a)); (ii) if any repayment, prepayment
or conversion of any of its  Eurodollar  Loans occurs on a date which is not the
last day of an Interest Period  applicable  thereto;  (iii) if any prepayment of
any of its  Eurodollar  Loans is not made on any date  specified  in a notice of
prepayment  given by the  Borrower;  or (iv) as a  consequence  of (x) any other
failure by the  Borrower  to repay its Loans when  required by the terms of this
Agreement or (y) an election made pursuant to Section  1.10(b).  Calculation of
all amounts  payable to a Bank under this  Section  1.11 shall be made as though
that Bank had actually funded its relevant  Eurodollar Loan through the purchase
of a Eurodollar  deposit  bearing  interest at the  relevant  LIBOR in an amount
equal to the amount of that Loan,  having a maturity  comparable to the relevant
Interest  Period and through the  transfer of such  Eurodollar  deposit  from an
offshore  office of that Bank or other bank to a domestic office of that Bank in
the United States of America; provided, however, that each Bank may fund each of
its  Eurodollar  Loans in any  manner it sees fit and the  foregoing  assumption
shall be  utilized  only for the  calculation  of  amounts  payable  under this
Section 1.11.

     1.12 Change of Lending  Office.  Each Bank agrees that, upon the occurrence
of any event  giving rise to the  operation of Section  1.10(a)(ii)  or (iii) or
Section 4.04 with respect to such Bank,  it will,  if requested by the Borrower,
use reasonable efforts (subject to overall policy  considerations of such Bank)
to  designate  another  lending  office for any Loans  affected  by such  event;
provided  that such  designation  is made on such terms that,  in the opinion of
such  Bank,  such Bank and its  lending  office  suffer no  economic,  legal or
regulatory  disadvantage,  with the object of avoiding  the  consequence  of the
event giving rise to the operation of any such Section.  Nothing in this Section
1.12 shall  affect or postpone  any of the  obligations  of the  Borrower or the
right of any Bank provided in Section 1.10 or 4.04.

                                       8
<PAGE>

     1.13 Replacement of Banks. (x) If any Bank becomes a Defaulting Bank or (y)
upon the  occurrence  of any  event  giving  rise to the  operation  of  Section
1.10(a)(ii) or (iii),  Section  1.10(c) or Section 4.04 with respect to any Bank
which results in such Bank charging to the Borrower increased costs in excess of
those being  generally  charged by the other Banks,  the Borrower shall have the
right, if no Default or Event of Default then exists,  to replace such Bank (the
"Replaced Bank") with one or more other banks or financial institutions, none of
whom  shall  constitute  a  Defaulting  Bank at the  time  of  such  replacement
(collectively,   the   "Replacement   Bank")   reasonably   acceptable   to  the
Administrative  Agent, provided that (i) at the time of any replacement pursuant
to this  Section  1.13,  the  Replacement  Bank  shall  enter  into  one or more
Assignment and Assumption  Agreements pursuant to Section 12.04(b) (and with all
fees  payable  pursuant to said Section  12.04(b) to be paid by the  Replacement
Bank) pursuant to which the Replacement  Bank shall acquire all of the Revolving
Loan  Commitments  (if  prior  to the  Conversion  Date)  and  all  of  the  L/C
Commitments  and all of the  outstanding  Loans of the  Replaced  Bank  and,  in
connection  therewith,  shall pay to the  Replaced  Bank in  respect  thereof an
amount  equal  to (A)  the  principal  of,  and all  accrued  interest  on,  all
outstanding  Loans of the Replaced  Bank plus (B) all accrued,  but  theretofore
unpaid,  Fees owing to the Replaced Bank pursuant to Section 3.01, and (ii) all
obligations  (including,  without limitation,  all such amounts, if any, due and
owing under  Section  1.11) of the Borrower  due and owing to the Replaced  Bank
(other than those specifically described in clause (i) above in respect of which
the assignment  purchase  price has been, or is concurrently  being, paid) shall
be paid in full to such Replaced Bank concurrently with such replacement.  Upon
the execution of the respective Assignment and Assumption Agreement, the payment
of amounts referred to in clauses (i) and (ii) above, the Replacement Bank shall
become a Bank  hereunder and the Replaced Bank shall cease to constitute a Bank
hereunder,   except  with  respect  to  indemnification  provisions  under  this
Agreement (including, without limitation,  Sections 1.10, 1.11, 4.04, 11.07 and
12.01), which shall survive as to such Replaced Bank.

     SECTION 2.  Letter of Credit Facility.

     2.01 Letters of Credit.  (a) Subject to and upon the terms  and  conditions
herein set forth,  the  Borrower  may request the Issuing  Agent at any time and
from  time to time on or  after  the  Effective  Date and on or prior to the L/C
Issuance  Expiration Date to issue, for the benefit of Lloyds and in support of,
on a standby basis,  L/C  Supportable  Obligations,  and subject to and upon the
terms and  conditions  herein set forth the Issuing Agent agrees to issue at any
time and from time to time on or after the Effective Date and on or prior to the
L/C Issuance  Expiration Date, one or more irrevocable standby letters of credit
in the form of Exhibit B (each such letter of credit,  a "Letter of Credit" and,
collectively,  the "Letters of Credit").  Notwithstanding  the  foregoing,  the
Issuing  Agent shall be under no  obligation to issue any Letter of Credit if at
the time of such issuance:

        (i) any  order,  judgment  or decree of any  governmental  authority  or
arbitrator shall purport by its terms to enjoin or restrain the Issuing Agent or
any L/C Bank from  issuing  such  Letter of  Credit  or any  requirement  of law
applicable  to the  Issuing  Agent or any L/C Bank or any  request or  directive
(whether or not having the force of law) from any  governmental  authority with
jurisdiction  over the Issuing Agent or any L/C Bank shall prohibit,  or request
that the Issuing Agent or any L/C Bank refrain from,  the issuance of letters of
credit generally or such Letter of Credit in particular or shall impose upon the
Issuing  Agent or any L/C  Bank  with  respect  to such  Letter  of  Credit  any
restriction or reserve or capital  requirement  (for which the Issuing Agent or
any L/C Bank is not otherwise compensated) not in effect on the date hereof, or
any  unreimbursed  loss, cost or expense which was not applicable,  in effect or
known to the  Issuing  Agent or any L/C Bank as of the date hereof and which the
Issuing Agent or any L/C Bank in good faith deems material to it; or

       (ii) the conditions precedent set forth in Section 5 are not satisfied at
that time.

                                       9
<PAGE>

     (b) Each Letter of Credit  will be issued  by the Issuing  Agent on  behalf
of the L/C Banks,  and each L/C Bank will  participate  in each Letter of Credit
pro rata in accordance with its L/C Percentage. The obligations of each L/C Bank
under and in respect of each  Letter of Credit are  several,  and the failure by
any L/C Bank to perform its obligations  hereunder or under any Letter of Credit
shall not affect the  obligations of the Borrower  toward any other party hereto
nor shall any other  such  party be liable  for the  failure by such L/C Bank to
perform its obligations hereunder or under any Letter of Credit.

     (c)  Notwithstanding  the  foregoing,  (i) the  aggregate  Stated Amount of
each Letter of Credit shall not exceed an amount which, when added to the Letter
of Credit  Outstandings  at the time of issuance  thereof,  equals the Total L/C
Commitment  at the time of  issuance  thereof;  (ii) no L/C Bank's L/C  Exposure
shall  exceed  such L/C Bank's L/C  Commitment  at the time of  issuance  of any
Letter of Credit (and after giving effect to such  issuance);  (iii) each Letter
of Credit (x) issued after the Effective  Date and prior to the Lloyds Coming in
Line Date occurring in November,  2000 shall have an initial  expiration date of
December 31, 2004 and (y) issued  thereafter  but prior to the Lloyds  Coming in
Line Date  occurring  in  November,  2001 (to the extent  permitted to be issued
hereunder) shall have an initial expiration date of December 31, 2005; (iv) each
Letter of Credit may be  denominated  in any Approved  Currency as determined by
the Borrower at the time of issuance,  and payable on a sight basis; and (v) the
Issuing  Agent will not issue any Letter of Credit after it has received  notice
from the Borrower or the Required Banks stating that any condition precedent set
forth in Section 5 is not  satisfied at that time until the Issuing  Agent shall
have received a written  notice of (x)  rescission of such notice from the party
or  parties  originally  delivering  the same or (y) a waiver of such  condition
precedent by the Required Banks.

     (d) Subject to and on  the  terms  and  conditions  set forth  herein,  the
Issuing Agent is hereby  authorized by the Borrower and the L/C Banks to arrange
for the  issuance of any Letter of Credit  pursuant  to Section  2.01(a) and the
amendment of any Letter of Credit pursuant to Section 2.06 and/or 12.04(b) by:

        (i) completing the commencement date and the expiry date of such Letter
of Credit;

       (ii) (in the case of an  amendment  increasing  or  reducing  the  amount
thereof) amending such Letter of Credit in such manner as Lloyd's may agree;

     (iii)   completing   Schedule  1  to  such   Letter  of  Credit   with  the
participation of each L/C Bank as allocated pursuant to the terms hereof; and

      (iv)  executing  such  Letter  of  Credit  on  behalf of each L/C Bank and
following such execution delivering such Letter of Credit to Lloyd's.

     (e) Each L/C Bank hereby makes, constitute  and appoints the Issuing  Agent
its true and lawful  attorney-in-fact,  in its name, place and stead, giving the
Issuing  Agent full power to issue,  amend and take other action with respect to
each Letter of Credit as contemplated by this Agreement.

                                       10
<PAGE>
     2.02 Letter of Credit Request; Notices of Issuance. (a) Whenever it desires
a Letter of Credit to be  issued,  the  Borrower  shall give the  Issuing  Agent
written notice that it desires such Letter of Credit to be issued, which written
notice shall be in the form of Exhibit A-2 (the "Letter of Credit Request"). The
Letter of Credit Request shall include any other documents as the Administrative
Agent customarily requires in connection therewith.

     (b) Upon its issuance of or amendment to any Letter of Credit,  the Issuing
Agent shall  promptly  notify the Borrower and the L/C Banks of such issuance or
amendment,  which notice shall  include a summary  description  of the Letter of
Credit actually issued and any amendments thereto.

     2.03  Agreement to Repay Letter of Credit Payments. (a) The Borrower hereby
agrees to reimburse each L/C Bank, by making  payment  directly to each L/C Bank
in immediately available funds, for any payment or disbursement made by such L/C
Bank under any Letter of Credit  (each such  amount so paid or  disbursed  until
reimbursed,  an "Unpaid  Drawing") no later than one Business Day  following the
date that the  Borrower  receives  notice in writing or by  telephone  (promptly
confirmed in writing) from the Issuing Agent of such payment or  disbursement,
with  interest on the amount so paid or disbursed by such L/C Bank to the extent
not reimbursed prior to 1:00 P.M. (New York time) on the date of such payment or
disbursement,  from  and  including  the  date  paid  or  disbursed  to but not
including the date that such L/C Bank is reimbursed therefor at a rate per annum
which shall be the  Applicable  Margin plus the Base Rate as in effect from time
to time (plus an additional 2% per annum if not reimbursed by the third Business
Day  after  the date the  Borrower  receives  notice  from such L/C Bank of such
payment or disbursement),  such interest also to be payable on demand,  provided
that if a Default or an Event of Default  under Section 9.05 shall have occurred
and be continuing,  such Unpaid  Drawings shall be due and payable  immediately
without  presentment,  demand,  protest  or notice of any kind (all of which are
hereby waived by the Borrower) and shall bear interest at a rate per annum which
shall be the Base Rate plus the Applicable  Margin (plus an additional 2% on and
after the third Business Day following the respective drawing).

     (b) The Borrower's obligation under this Section 2.03 to reimburse each L/C
Bank with respect to Unpaid Drawings (including, in each case, interest thereon)
shall  be  absolute  and  unconditional  under  any  and all  circumstances  and
irrespective  of any  setoff,  counterclaim  or  defense  to  payment  which the
Borrower  may have or have had  against  such  L/C  Bank or the  Issuing  Agent,
including, without limitation, any defense based upon the failure of any drawing
under any Letter of Credit to substantially  conform to the terms of such Letter
of Credit or any  non-application  or misapplication by the beneficiary of the
proceeds of such  drawing;  provided,  however,  that the Borrower  shall not be
obligated to reimburse  any L/C Bank for any wrongful  payment made by such L/C
Bank  under a Letter  of Credit  issued  by it as a result of acts or  omissions
constituting  willful  misconduct  or gross  negligence on the part of such L/C
Bank.

                                       11
<PAGE>
     2.04  Increased Costs.   If  after  the  Effective Date,  the  adoption  or
effectiveness of any applicable law, rule or regulation,  or any change therein,
or  any  change  in  the  interpretation  or  administration   thereof  by  any
Governmental  Authority,  central  bank or  comparable  agency  charged with the
interpretation or administration thereof, or compliance by any L/C Bank with any
request  or  directive  (whether  or not  having  the  force of law) by any such
Governmental  Authority,  central  bank or  comparable  agency  shall either (i)
impose,  modify or make  applicable any reserve,  deposit,  capital  adequacy or
similar  requirement  against letters of credit issued by or participated in by
such L/C Bank,  or (ii) impose on such L/C Bank any other  conditions  affecting
this Agreement or any Letter of Credit and the result of any of the foregoing is
to  increase  the cost to such L/C  Bank,  or to  reduce  the  amount of any sum
received or  receivable by such L/C Bank,  then from time to time,  the Borrower
shall  within 10 days of its receipt of written  demand by such L/C Bank (with a
copy to the Administrative  Agent) pay to such L/C Bank such additional amounts
as will compensate such L/C Bank for such cost or reduction. Each L/C Bank, upon
determining in good faith that any additional  amounts will be payable  pursuant
to this Section 2.04,  will give prompt  written notice thereof to the Borrower,
which notice shall set forth in reasonable  detail the basis of the  calculation
of such  additional  amounts,  which basis must be reasonable  and  consistently
applied,  although  the failure to deliver any such notice  shall not release or
diminish the Borrower's  obligations to pay additional amounts pursuant to this
Section 2.04 upon subsequent receipt of such notice.

     2.05 Letter of Credit Expiration Extensions. (a) Each L/C Bank acknowledges
that in accordance  with the terms of each Letter of Credit the expiration  date
of such Letter of Credit will be automatically  extended for an additional year,
without written amendment, unless, at least 30 days prior to December 31 of each
year (commencing  with December 31, 2000),  notice is given by the Issuing Agent
in accordance  with the terms of the  respective  Letter of Credit (a "Notice of
Non-Extension")  that the  Letter  of Credit  will not be  extended  beyond  its
current expiration date.

     (b) In   connection  with  the  first  possible  extension  of  Letters  of
Credit  (occurring in the year 2000),  the Issuing Agent shall not give a Notice
of Non-Extension in respect of any Letter of Credit unless a Default or Event of
Default  exists at such  time,  in which  case the  Issuing  Agent  may,  and if
requested by the Required Banks will, give a Notice of  Non-Extension to Lloyd's
in  respect  of each  Letter  of Credit  no later  than  December  1,  2000.  In
connection with any subsequent  possible extension of the Letters of Credit, the
Issuing Agent may, and if requested by any L/C Bank (which  request any L/C Bank
may make in its sole  discretion)  the  Issuing  Agent  will,  give a Notice  of
Non-Extension  to  Lloyd's  in  respect  of each  Letter of Credit no later than
December 1st of such year.

     (c) Each L/C Bank agrees that on or prior to  the  date  occurring  90 days
prior to the Lloyds Coming in Line Date  occurring in November,  2001,  such L/C
Bank will notify the Borrower as to whether such L/C Bank intends to request the
Issuing Agent to deliver Notices of Non-Extension in respect of then outstanding
Letters of Credit in accordance with the last sentence of Section 2.05(b) above,
provided  that the failure of any L/C Bank to give such  notice to the  Borrower
shall not preclude such L/C Bank from  subsequently  delivering  such request to
the  Issuing  Agent  or the  Issuing  Agent  from  giving  any such  Notices  of
Non-Extension to Lloyds.

                                       12
<PAGE>

     2.06  Changes  to  Stated  Amount.  At any time  when any Letter of  Credit
is  outstanding,  at the request of the  Borrower,  the Issuing Agent will enter
into an amendment  increasing  or reducing  the Stated  Amount of such Letter of
Credit,  provided that (i) in no event shall the Stated Amount of such Letter of
Credit be  increased  to an amount  which,  when  added to the  Letter of Credit
Outstandings  at such time,  exceeds the Total L/C Commitment at such time, (ii)
the Stated  Amount of a Letter of Credit may not be increased at any time if the
conditions  precedent  set forth in Section 5.02 are not satisfied at such time,
and (iii) the Stated  Amount of a Letter of Credit may not be  increased  at any
time after the L/C Issuance Expiration Date.

     2.07  Representations and Warranties of L/C Banks. Each L/C Bank represents
and warrants that each Letter of Credit  constitutes a legal,  valid and binding
obligation of such L/C Bank enforceable in accordance with its terms.

     SECTION 3.  Fees; Commitments.

     3.01 Fees. (a) The Borrower shall pay a commitment fee (the "RL  Commitment
Fee") to the Administrative Agent for distribution to each Non-Defaulting Bank
for the period from the  Effective  Date to but not including the earlier of (A)
the date the Total  Revolving Loan  Commitment  has been  terminated and (B) the
Conversion  Date,  computed  at a rate  per  annum  for  each  day  equal to the
Applicable  Commitment  Fee  Percentage  then in effect on the daily  Unutilized
Revolving Loan Commitment of such Bank.  Accrued RL Commitment Fees shall be due
and  payable  quarterly  in arrears on the last  Business  Day of each  calendar
quarter and the earlier of the date the Total Revolving Loan Commitment has been
terminated and the Conversion Date.

     (b) The Borrower  shall pay a commitment fee (the "L/C  Commitment  Fee")
to the Administrative Agent for distribution to each Non-Defaulting Bank for the
period from the  Effective  Date to but not  including the date that such Bank's
L/C  Commitment has been  terminated,  computed at a rate per annum for each day
equal to the Applicable  Commitment  Fee Percentage  then in effect on the daily
Unutilized L/C Commitment of such Bank. Accrued L/C Commitment Fees shall be due
and  payable  quarterly  in arrears on the last  Business  Day of each  calendar
quarter and the date the Total L/C Commitment has been terminated.

     (c) The  Borrower  shall pay a letter of credit fee (the "Letter of  Credit
Fee") to the Administrative  Agent for distribution to each  Non-Defaulting Bank
with an L/C  Commitment  for the period from the date of issuance of the initial
Letter of Credit to but not including  the date that such Bank's L/C  Commitment
has been  terminated,  computed  at a rate for each day equal to the  Applicable
Margin  then in effect for  Eurodollar  Loans on the daily L/C  Exposure of such
Bank (provided that for purposes of this Section  3.01(c) only,  each L/C Bank's
L/C  Exposure  shall  be  no  less  than  such  L/C  Bank's  L/C  Percentage  of
$150,000,000).  Accrued Letter of Credit Fees shall be due and payable quarterly
in arrears on the last  Business Day of each  calendar  quarter and the date the
Total L/C Commitment has been terminated.

     (d) The Borrower  hereby  agrees to  pay to the  Issuing   Agent upon  each
issuance  of,  payment  under,  and/or  amendment  of, any Letter of Credit such
amount  as shall at the  time of such  issuance,  payment  or  amendment  be the
administrative  charge  which the  Issuing  Agent is  customarily  charging  for
issuances of, payments under or amendments of, letters of credit issued by it.

     (e) The  Borrower  shall  pay  to  the  Administrative  Agent,  for its own
account,  such fees as may be agreed to from time to time in writing between the
Borrower and the Administrative Agent, when and as due.

     (f) All computations of Fees shall be made in accordance with Section 12.07
(b).

                                       13
<PAGE>
     3.02  Voluntary Reduction of Commitments. (a)  At  any  time  prior  to the
Conversion  Date, upon at least three Business Days' prior written notice to the
Administrative Agent at the Notice Office (which notice the Administrative Agent
shall  promptly  transmit to each of the  Banks),  the  Borrower  shall have the
right,  at any  time or from  time to  time,  without  premium  or  penalty,  to
terminate or reduce the Total Unutilized Revolving Loan Commitment,  in whole or
in  part,  pursuant  to  this  Section  3.02(a),  in  an  integral  multiple  of
$5,000,000,  in the case of partial reductions to the Total Unutilized Revolving
Loan Commitment,  provided that each such reduction shall apply  proportionately
to permanently reduce the Revolving Loan Commitment of each Bank.

     (b) At any time, upon at least three Business Days' prior written notice to
the  Administrative  Agent at the Notice Office (which notice the Administrative
Agent shall promptly transmit to each of the Banks), the Borrower shall have the
right,  at any  time or from  time to  time,  without  premium  or  penalty,  to
terminate or reduce the Total  Unutilized L/C  Commitment,  in whole or in part,
pursuant to this Section 3.02(b), in an integral multiple of $5,000,000,  in the
case of partial reductions to the Total Unutilized L/C Commitment, provided that
each such reduction shall apply  proportionately  to permanently  reduce the L/C
Commitment of each Bank.

     3.03  Mandatory  Reductions  of  Commitments.   (a)  The   Total  Revolving
Loan Commitment (and the Revolving Loan Commitment of each Bank) shall terminate
in its  entirety  at 9:00 a.m.  (New York time) on the  Conversion  Date  (after
giving effect to the conversion of outstanding  Revolving  Loans into Term Loans
at such time).

     (b) The  Total  L/C  Commitment   (and the L/C  Commitment  of  each  Bank)
shall  terminate on the later of (i) the L/C Maturity  Date and (ii) the date on
which no Letters of Credit are outstanding and no Unpaid Drawings exist.

     (c) On each date upon which a mandatory  repayment of Revolving  Loans
pursuant to Section 4.02(i)(c) or (d) is required or would be required if (x) an
unlimited amount of Revolving Loans were then outstanding and (y) the conditions
precedent to borrowing set forth in Section 5.02 are not satisfied at such time,
the Total Revolving Loan Commitment  shall be permanently  reduced by the amount
required to be applied  pursuant to said Section  (determined as if an unlimited
amount of Revolving Loans were actually outstanding);  provided,  that except to
the extent resulting from a mandatory  prepayment of Revolving Loans pursuant to
Section  4.02(i)(d)  with the  portion  of net  cash  proceeds  of  Indebtedness
incurred under Section 8.04(h) exceeding $150,000,000 (i) no mandatory reduction
of the Total  Revolving  Loan  Commitment  shall be  required  pursuant  to this
Section 3.03(c) at any time if the Borrower's  senior unsecured debt rating from
S&P is BBB+ or  greater  at such  time,  and (ii) in no event  shall  the  Total
Revolving  Loan  Commitment  be reduced  below  $100,000,000  as a result of the
operation of this Section 3.03(c).

     (d) Each reduction or adjustmen  of the  Total  Revolving  Loan  Commitment
pursuant to this Section 3.03 shall apply  proportionately to the Revolving Loan
Commitment of each Bank with such a Commitment.

                                       14

<PAGE>
     SECTION 4.  Payments.

     4.01 Voluntary Prepayments.  The Borrower shall have  the right  to pre-pay
Loans,  without  premium or penalty  (except  for  amounts  payable  pursuant to
Section 1.11), in whole or in part, from time to time on the following terms and
conditions:  (i) the Borrower shall give the Administrative  Agent at its Notice
Office written notice (or telephonic  notice  promptly  confirmed in writing) of
its intent to prepay the Loans,  whether  such Loans are Term Loans or Revolving
Loans,  the amount of such prepayment and (in the case of Eurodollar  Loans) the
specific  Borrowing(s)  pursuant to which such prepayment is made,  which notice
shall be  received  by the  Administrative  Agent  (x) in the case of Base  Rate
Loans,  no later than 11:00 A.M.  (New York time) one  Business Day prior to the
date of such prepayment,  or (y) in the case of Eurodollar Loans, three Business
Days  prior to the date of such  prepayment,  which  notice  shall  promptly  be
transmitted by the Administrative  Agent to each of the Banks; (ii) each partial
pre-payment  of any Borrowing  shall be in an aggregate  Principal  Amount of at
least $1,000,000,  provided that no partial  prepayment of Eurodollar Loans made
pursuant to a Borrowing shall reduce the aggregate principal amount of the Loans
outstanding  pursuant  to such  Borrowing  to an amount  less  than the  Minimum
Borrowing Amount; (iii) each prepayment in respect of any Loans made pursuant to
a Borrowing shall be applied pro rata among such Loans; and (iv) each prepayment
of Term Loans  pursuant to this  Section  4.01 shall  reduce the then  remaining
Scheduled  Repayments  on a pro  rata  basis  (based  upon  the  then  remaining
principal amount of each such Scheduled Repayment).

     4.02  Mandatory Repayments and Prepayments.

     (i)            Requirements:

     (a)  In addition  to any  other  mandatory repayments pursuant this Section
4.02, on each date set forth below,  the Borrower shall be required to repay the
principal  amount of Term  Loans in an amount  equal to the  product  of (x) the
aggregate  Principal  Amount of Revolving  Loans  converted to Term Loans on the
Conversion  Date  pursuant  to  Section  1.01(b)  hereof  multiplied  by (y) the
percentage set forth below opposite such date (each such repayment,  as the same
may be reduced  pursuant  to  Sections  4.01 and/or  4.02(ii)(a),  a  "Scheduled
Repayment"):

          Scheduled Repayment Date             Percentage

            November 30, 2001                    10.0%

            May 31, 2002                         12.5%

            November 30, 2002                    12.5%

            May 31, 2003                         15.0%

            November 30, 2003                    15.0%

            May 31, 2004                         17.5%

            Term Loan Maturity Date              17.5%

     (b)  In addition to any other mandatory repayments pursuant to this Section
4.02,  not later than the third  Business Day  following the date of the receipt
thereof by the Borrower and/or any of its Subsidiaries,  an amount equal to 100%
of the cash proceeds (net of  underwriting  discounts and  commissions and other
reasonable  fees and costs  associated  therewith)  of the sale or  issuance  of
equity by, or cash capital  contributions  to, the Borrower or any Subsidiary of
the Borrower (other than (i) any issuance of common stock or options to purchase
common stock by the Borrower to the extent  issued to the employees or agents of
the Borrower or its  Subsidiaries,  (ii)  issuances of common stock  pursuant to
warrants  outstanding  on the  Effective  Date and (iii)  issuances  of stock by
Subsidiaries of the Borrower to the Borrower or to Wholly-Owned  Subsidiaries of
the Borrower,  and capital  contributions  by the Borrower to its  Subsidiaries)
shall be applied (i) if prior to the  Conversion  Date,  to repay the  aggregate
Principal  Amount  of  Revolving  Loans,  and  (ii) if the  Conversion  Date has
occurred, to repay the aggregate Principal Amount of the Term Loans.

                                       15
<PAGE>
     (c) In addition to any other mandatory repayments pursuant to this Section
4.02,  not later  than the fifth  Business  Day  following  the date of  receipt
thereof by the Borrower  and/or any of its  Subsidiaries  of the proceeds of any
Asset Sale, an amount equal to 100% of the Net Available  Proceeds of such Asset
Sale  shall be  applied  (i) if prior to the  Conversion  Date  (but only to the
extent that the conditions  precedent to borrowing set forth in Section 5.02 are
not satisfied at such time),  to repay the Principal  Amount of Revolving  Loans
and (ii) if the Conversion Date has occurred,  to repay the aggregate  Principal
Amount of the Term Loans; provided that (A) if the Net Available Proceeds of any
such Asset Sale are less than $5,000,000,  such Net Available Proceeds shall not
be required  to be so applied  until such time as such Net  Available  Proceeds,
when combined with the Net Available  Proceeds from additional  subsequent Asset
Sales, exceed $5,000,000, at which time all such Net Available Proceeds shall be
required to be applied  pursuant  to this  Section  4.02(i)(c),  and (B) the Net
Available  Proceeds  from Asset  Sales shall not be required to be so applied on
such date (i) to the extent that no Default or Event of Default  then exists and
the Borrower delivers a certificate to the  Administrative  Agent on or prior to
such date  stating  that  such Net  Available  Proceeds  shall  within  180 days
following the date of such Asset Sale be used to purchase  assets used, or to be
used, in the business described in Section 8.01 (including,  without limitation,
the equity interest of a Person engaged in any such business), which certificate
shall  set  forth the  estimate  of the  proceeds  to be so  expended,  it being
understood that (1) if all or any portion of such Net Available  Proceeds not so
applied are not so used (or contractually  committed to be used) within such 180
day  period,  such  remaining  portion  shall be applied on the last day of such
period as  provided  above in this  Section  4.02(i)(c)  (without  regard to the
proviso herein) and (2) if all or any portion of such Net Available Proceeds are
not  required  to be  applied on the 180th day  referred  to in clause (1) above
because such amount is contractually committed to be used and subsequent to such
date such contract is terminated or expires  without such portion being so used,
then such remaining  portion shall be applied on the date of such termination or
expiration as provided in this Section 4.02(i)(c) (without regard to the proviso
herein).

     (d)  In addition to any other mandatory repayments pursuant to this Section
4.02,  not later than the third  Business Day  following the date of the receipt
thereof by the Borrower and/or any of its Subsidiaries,  an amount equal to 100%
of the cash proceeds (net of  underwriting  discounts and  commissions and other
reasonable   fees  and  costs   associated   therewith)  of  the  incurrence  of
Indebtedness  for borrowed  money or evidenced by bonds,  notes,  debentures  or
similar  instruments by the Borrower and/or any of its Subsidiaries  (other than
Indebtedness  permitted by Section 8.04 as such Section 8.04 is in effect on the
Effective  Date,  provided  that  notwithstanding  the  foregoing  the net  cash
proceeds of Indebtedness  incurred under Section 8.04(h) shall be required to be
applied  pursuant to this Section  4.02(i)(d))  shall be applied (i) if prior to
the  Conversion  Date (but only to the extent that the  conditions  precedent to
borrowing  set forth in Section 5.02 are not  satisfied at such time),  to repay
the aggregate  Principal  Amount of Revolving  Loans and (ii) if the  Conversion
Date has occurred, to repay the aggregate Principal Amount of the Term Loans.

     (e)  If on any date the aggregate outstanding Principal Amount of Revolving
Loans (after giving effect to all other repayments thereof on such date) exceeds
the Available  Total  Revolving  Loan  Commitment as then in effect  (including,
without  limitation,  as a result of the  determination  of  Dollar  Equivalents
pursuant  to  Section  12.07(d)),  the  Borrower  shall  repay on such  date the
principal of the Revolving Loans in an amount equal to such excess.

                                       16
<PAGE>
     (f) If on any date the Letter  of  Credit Outstandings exceed the Total L/C
Commitment (including,  without limitation,  as a result of the determination of
Dollar Equivalents pursuant to Section 12.07(d)),  the Borrower agrees to pay to
the Administrative Agent an amount in cash and/or Cash Equivalents equal to such
excess and the Administrative  Agent shall hold such payment as security for the
obligations of the Borrower hereunder pursuant to a cash collateral agreement to
be  entered  into  in  form  and  substance   reasonably   satisfactory  to  the
Administrative Agent (which shall permit certain investments in Cash Equivalents
satisfactory to the  Administrative  Agent until the proceeds are applied to the
secured obligations).

     (g)   Notwithstanding  anything to the contrary contained in this Agreement
or in any other Credit Document, all then outstanding Term Loans shall be repaid
in full on the Term Loan Maturity Date.

     (ii)            Application:

     (a) Each mandatory prepayment of Term Loans pursuant to Section 4.02(i)(b),
(c) or (d) shall be applied to reduce the then remaining Scheduled Repayments on
a pro rata basis (based upon the then  remaining  principal  amount of each such
Scheduled Repayment).

     (b)    With respect to  each  prepayment  of Loans required by this Section
4.02,  the Borrower may designate the Types of Loans which are to be prepaid and
the specific Borrowing(s) pursuant to which made; provided that (i) the Borrower
shall first so designate all Base Rate Loans and Eurodollar  Loans with Interest
Periods  ending  on the  date  of  repayment  prior  to  designating  any  other
Eurodollar  Loans; (ii) if any prepayment of Eurodollar Loans made pursuant to a
single  Borrowing  shall  reduce the  outstanding  Loans made  pursuant  to such
Borrowing to an amount less than the Minimum  Borrowing  Amount,  such Borrowing
shall be immediately  converted into Base Rate Loans;  and (iii) each prepayment
of any Loans made  pursuant to a Borrowing  shall be applied pro rata among such
Loans.  In the absence of a  designation  by the  Borrower as  described  in the
preceding sentence,  the Administrative  Agent shall, subject to the above, make
such  designation in its sole  discretion  with a view,  but no  obligation,  to
minimize breakage costs owing under Section 1.11.  Notwithstanding the foregoing
provisions  of this Section  4.02,  if at any time the  mandatory  prepayment of
Loans  pursuant to Section  4.02(i)(b),  (c) or (d) would  result,  after giving
effect to the first  sentence  of this clause  (b),  in the  Borrower  incurring
breakage  costs under Section 1.11 as a result of Eurodollar  Loans being repaid
other  than on the  last  day of an  Interest  Period  applicable  thereto  (the
"Affected  Eurodollar Loans"),  then the Borrower may, if it so elects by notice
to the Administrative  Agent, deposit a portion (up to 100%) of the amounts that
otherwise would have been paid in respect of the Affected  Eurodollar Loans with
the  Administrative  Agent to be held  pursuant  to an  escrow  agreement  to be
entered into in form and substance  satisfactory  to the  Administrative  Agent,
with such escrowed amounts to be released from such escrow (and applied to repay
the principal amount of such Loans) upon each occurrence  thereafter of the last
day of an Interest Period  applicable to the relevant  Eurodollar Loans (or such
earlier date or dates as shall be requested by the Borrower), with the amount to
be so  released  and applied on the last day of each  Interest  Period to be the
amount of the Loans to which such  Interest  Period  applies  (or, if less,  the
amount remaining in such escrow account).

                                       17
<PAGE>
     4.03   Method  and  Place of Payment.    Except as  otherwise  specifically
provided  herein,  all  payments  under  this  Agreement  shall  be  made to the
Administrative  Agent for the ratable account of the Banks entitled thereto, not
later  than 12:00 Noon (New York time) on the date when due and shall be made in
immediately  available  funds at the  Payment  Office  in (x)  Dollars,  if such
payment  is made  in  respect  of any  obligation  of the  Borrower  under  this
Agreement except as provided in the immediately  succeeding  clause (y), and (y)
the  appropriate  Alternate  Currency,  if such  payment  is made in  respect of
principal of or interest on Alternate  Currency Loans or if such payment is made
in  respect of any Unpaid  Drawing  (or  interest  thereon)  with  respect to an
Alternate  Currency  Letter of  Credit,  it being  understood  that  written  or
facsimile notice by the Borrower to the  Administrative  Agent to make a payment
from the funds in the Borrower's  account at the Payment Office shall constitute
the making of such payment to the extent of such funds held in such account. Any
payments  under  this  Agreement  which are made later than 12:00 Noon (New York
time)  shall be deemed to have been made on the next  succeeding  Business  Day.
Whenever  any  payment to be made  hereunder  shall be stated to be due on a day
which is not a Business  Day, the due date thereof shall be extended to the next
succeeding  Business Day and,  with respect to payments of  principal,  interest
shall be payable during such extension  period at the applicable  rate in effect
immediately prior to such extension.

                                       18

<PAGE>
     4.04 Net Payments. (a) All payments made by the Borrower hereunder or under
any Note will be made without setoff,  counterclaim or other defense.  Except as
provided in Section  4.04(b),  all such payments will be made free and clear of,
and without  deduction or withholding for, any present or future taxes,  levies,
imposts,  duties,  fees,  assessments or other charges of whatever nature now or
hereafter imposed by any jurisdiction or by any political  subdivision or taxing
authority  thereof or therein  with  respect to such  payments  (but  excluding,
except as  provided  in the second  succeeding  sentence,  any tax imposed on or
measured by the net income or net profits of a Bank  pursuant to the laws of the
jurisdiction in which it is organized or the jurisdiction in which the principal
office or applicable  lending office of such Bank is located or any  subdivision
thereof or therein)  and all  interest,  penalties or similar  liabilities  with
respect to such non-excluded taxes, levies,  imposts,  duties, fees, assessments
or other charges (all such non-excluded taxes,  levies,  imposts,  duties, fees,
assessments or other charges being referred to collectively as "Taxes").  If any
Taxes are so levied or imposed,  the  Borrower  agrees to pay the full amount of
such  Taxes,  and such  additional  amounts  as may be  necessary  so that every
payment  of all  amounts  due under  this  Agreement  or under  any Note,  after
withholding  or deduction for or on account of any Taxes,  will not be less than
the amount  provided  for herein or in such Note.  If any amounts are payable in
respect of Taxes  pursuant to the  preceding  sentence,  the Borrower  agrees to
reimburse each Bank, upon the written request of such Bank, for taxes imposed on
or measured  by the net income or net profits of such Bank  pursuant to the laws
of the  jurisdiction  in which such Bank is organized or in which the  principal
office or applicable lending office of such Bank is located or under the laws of
any political  subdivision or taxing authority of any such jurisdiction in which
such Bank is organized or in which the principal  office or  applicable  lending
office of such Bank is  located  and for any  withholding  of taxes as such Bank
shall  determine are payable by, or withheld from, such Bank, in respect of such
amounts so paid to or on behalf of such Bank pursuant to the preceding  sentence
and in respect of any amounts paid to or on behalf of such Bank pursuant to this
sentence.  The Borrower will furnish to the Administrative  Agent within 45 days
after  the date the  payment  of any Taxes is due  pursuant  to  applicable  law
certified copies of tax receipts,  evidencing such payment by the Borrower.  The
Borrower  agrees to indemnify and hold harmless  each Bank,  and reimburse  such
Bank upon its written request,  for the amount of any Taxes so levied or imposed
and paid by such Bank.

     (b)  Each  Bank  that  is  not  a  United  States  person  (as such term is
defined in Section 7701(a)(30) of the Code) for U.S. Federal income tax purposes
agrees to deliver to the  Borrower and the  Administrative  Agent on or prior to
the  Effective  Date, or in the case of a Bank that is an assignee or transferee
of an interest under this  Agreement  pursuant to Section  12.04(b)  (unless the
respective  Bank  was  already  a  Bank  hereunder  immediately  prior  to  such
assignment  or  transfer),  on the date of such  assignment  or transfer to such
Bank, (i) two accurate and complete  original signed copies of Internal  Revenue
Service Form W-8ECI or Form W-8BEN (with respect to a complete  exemption  under
an income tax treaty) (or successor forms) certifying to such Bank's entitlement
as of such date to a complete  exemption from United States withholding tax with
respect to payments to be made under this  Agreement and under any Note, or (ii)
if the Bank is not a "bank"  within the meaning of Section  881(c)(3)(A)  of the
Code and cannot  deliver  either  Internal  Revenue  Service Form W-8ECI or Form
W-8BEN  (with  respect  to a  complete  exemption  under an income  tax  treaty)
pursuant to clause (i) above,  (x) a  certificate  substantially  in the form of
Exhibit E (any such certificate,  a "Section  4.04(b)(ii)  Certificate") and (y)
two accurate and complete  original  signed copies of Internal  Revenue  Service
Form W-8BEN (with respect to the  portfolio  interest  exemption)  (or successor
form)  certifying  to such  Bank's  entitlement  as of such  date to a  complete
exemption  from  United  States  withholding  tax with  respect to  payments  of
interest to be made under this  Agreement and under any Note. In addition,  each
Bank agrees  that from time to time after the  Effective  Date,  when a lapse in
time or change in circumstances renders the previous  certification  obsolete or
inaccurate  in any  material  respect,  it will  deliver to the Borrower and the
Administrative  Agent two new accurate and complete  original  signed  copies of

                                       19
<PAGE>

Internal  Revenue Service Form W-8ECI or Form W-8BEN (with respect to a complete
exemption  under an income tax  treaty),  or Form  W-8BEN  (with  respect to the
portfolio interest exemption) and a Section 4.04(b)(ii) Certificate, as the case
may be, and such other forms as may be required in order to confirm or establish
the  entitlement  of such Bank to a continued  exemption  from or  reduction  in
United States  withholding tax with respect to payments under this Agreement and
any Note,  or it shall  immediately  notify the Borrower and the  Administrative
Agent of its  inability to deliver any such Form or  Certificate,  in which case
such Bank shall not be required to deliver any such Form or Certificate pursuant
to this Section 4.04(b).  Notwithstanding  anything to the contrary contained in
Section 4.04(a), but subject to Section 12.04(b) and the immediately  succeeding
sentence, (x) the Borrower shall be entitled, to the extent it is required to do
so by law, to deduct or withhold  income or similar  taxes imposed by the United
States (or any political  sub-division or taxing  authority  thereof or therein)
from interest,  Fees or other amounts  payable  hereunder for the account of any
Bank  which is not a United  States  person  (as such term is defined in Section
7701(a)(30) of the Code) for U.S. Federal income tax purposes to the extent that
such Bank has not provided to the Borrower U.S.  Internal  Revenue Service Forms
that establish a complete  exemption from such deduction or withholding  and (y)
the  Borrower  shall not be  obligated  pursuant  to Section  4.04(a)  hereof to
gross-up  payments  to be made to a Bank in respect  of income or similar  taxes
imposed by the United  States if (I) such Bank has not  provided to the Borrower
the  Internal  Revenue  Service  Forms  required to be provided to the  Borrower
pursuant to this  Section  4.04(b) or (II) in the case of a payment,  other than
interest,  to a Bank  described  in clause (ii)  above,  to the extent that such
Forms do not establish a complete exemption from withholding of such taxes.

     SECTION 5.   Conditions  Precedent.  The obligation of  each  Bank  to make
Revolving  Loans to the Borrower  hereunder  and the  obligation  of the Issuing
Agent to issue or increase the Stated Amount of any Letter of Credit  hereunder,
is  subject,  at the  time  of each  such  Credit  Event  (except  as  otherwise
hereinafter indicated), to the satisfaction of each of the following conditions:

     5.01   Execution of  Agreement.  The  Effective Date shall have occurred as
provided in Section 12.10.

     5.02   No  Default;  Representations  and  Warranties.  At the time of each
Credit  Event and also after  giving  effect  thereto,  (i) there shall exist no
Default or Event of Default and (ii) all  representations and warranties of each
Credit Party contained herein or in the other Credit Documents shall be true and
correct  in  all  material   respects  with  the  same  effect  as  though  such
representations  and  warranties  had  been  made on and as of the  date of such
Credit Event,  unless stated to relate to a specific earlier date, in which case
such  representations  and warranties  shall be true and correct in all material
respects as of such earlier date.

                                       20
<PAGE>

     5.03   Officer's Certificate.   On  the Initial  Credit  Event  Date,   the
Administrative  Agent shall have  received an officer's  certificate  dated such
date, signed by an Authorized  Officer of the Borrower,  stating that all of the
applicable  conditions set forth in Sections  5.02,  5.06,  5.07,  5.09 and 5.13
exist as of such date.

     5.04   Opinions  of  Counsel.  On  the  Initial  Credit  Event  Date,   the
Administrative  Agent  shall have  received an  opinion,  in form and  substance
reasonably  satisfactory to the Administrative  Agent,  addressed to each of the
Banks  and dated the  Initial  Credit  Event  Date,  from (i) Baker &  McKenzie,
counsel to the  Borrower,  which  opinion  shall cover the matters  contained in
Exhibit  C-1,  (ii) John V. Del Col,  General  Counsel  of the  Borrower,  which
opinion shall cover the matters  contained in Exhibit C-2 and (iii) White & Case
LLP, counsel to the Administrative  Agent, which opinion shall cover the matters
contained in Exhibit C-3.

     5.05   Corporate  Proceedings.  (a) On the Initial  Credit Event Date,  the
Banks shall have received from each Credit Party an officer's certificate, dated
the Initial Credit Event Date,  signed by the President or any Vice President of
such Credit Party,  and attested to by the Secretary or any Assistant  Secretary
of such  Credit  Party,  in the  form  of  Exhibit  D  hereto  with  appropriate
insertions,  together with (x) copies of the  Certificate of  Incorporation  and
By-Laws of such Credit  Party and (y) the  resolutions  of such Credit Party and
the other documents referred to in such certificate,  and the foregoing shall be
reasonably satisfactory to the Administrative Agent.

     (b)  All  corporate,  tax  and  legal proceedings and all  instruments  and
agreements in connection with the  transactions  contemplated by this Agreement,
the other Credit  Documents and the  Transaction  Documents  shall be reasonably
satisfactory  in  form  and  substance  to the  Administrative  Agent,  and  the
Administrative  Agent  shall have  received  all  information  and copies of all
certificates, documents and papers, including good standing certificates and any
other records of corporate proceedings and governmental approvals, if any, which
the Administrative Agent reasonably may have requested in connection  therewith,
such documents and papers where  appropriate to be certified by proper corporate
or governmental authorities.

     5.06    Adverse Change,  etc.   On  the  Initial  Credit  Event  Date,  the
Administrative  Agent shall not have become aware of any facts or conditions not
previously known or disclosed,  whether  occurring prior to or after the Initial
Credit Event Date, and since  December 31, 1998 nothing shall have occurred,  in
either  case  which,  when  taken as a whole,  the  Administrative  Agent  shall
reasonably  determine  (i) has,  or is  reasonably  likely to have,  a  material
adverse  effect on the  rights or  remedies  of the Banks or the  Administrative
Agent under this  Agreement or any other Credit  Document,  or on the ability of
any Credit Party to perform its obligations hereunder or thereunder, or (ii) has
or is reasonably likely to have a Material Adverse Effect.

                                       21
<PAGE>

     5.07  Litigation. On the  Initial  Credit  Event  Date,  no  actions, suits
or proceedings shall be pending or, to the knowledge of the Borrower, threatened
(i) with respect to this Agreement or any other Credit Document, the Transaction
Documents or the  transactions  contemplated  hereby or thereby  (including  the
Acquisition) or (ii) which either the Administrative Agent or the Required Banks
shall reasonably  determine has, or is reasonably likely to have, (x) a Material
Adverse Effect or (y) a material adverse effect on the rights or remedies of the
Banks or the  Administrative  Agent hereunder or under any other Credit Document
or on the ability of any Credit  Party to perform its  obligations  hereunder or
thereunder.

     5.08   Subsidiary  Guaranty.  On  the   Initial  Credit  Event  Date,  each
Subsidiary  Guarantor  shall have duly  authorized,  executed  and  delivered  a
Subsidiary  Guaranty  in  the  form  of  Exhibit  F  (as  modified,  amended  or
supplemented  from time to time in accordance with the terms hereof and thereof,
the "Subsidiary  Guaranty"),  and the Subsidiary Guaranty shall be in full force
and effect.

     5.09   Consummation  of the  Refinancing.  On or before the Initial  Credit
Event Date, the Refinancing  shall have been  consummated in accordance with the
Refinancing  Documents,  which  Refinancing  Documents  shall  be  in  form  and
substance  reasonably  satisfactory to the  Administrative  Agent, and all Legal
Requirements,  each  of the  conditions  precedent  to the  consummation  of the
Refinancing  shall have been satisfied in all material  respects and not waived,
except  with  the  reasonable  consent  of  the  Administrative  Agent,  to  the
reasonable   satisfaction  of  the  Administrative  Agent,  all  commitments  in
connection with the existing Indebtedness for borrowed money of the Borrower and
Chartwell and their respective  Subsidiaries  shall have been terminated and all
Liens securing the  Indebtedness  refinanced  pursuant to the Refinancing  shall
have  been  terminated  and  released  to  the  reasonable  satisfaction  of the
Administrative Agent.

     5.10  Chartwell Senior Notes.  On or before the  Initial Credit Event Date,
Chartwell  Re  Holdings  shall have  given an  irrevocable  call  notice for the
redemption  of the  Chartwell  Senior Notes on or before March 1, 2000, it being
understood that the Chartwell  Senior Notes are not required to be prepaid as of
the Initial Credit Event Date.

     5.11 Financial Statements;  Projections.  Prior to the Initial Credit Event
Date,  the  Borrower  shall  have  delivered  or caused to be  delivered  to the
Administrative Agent with copies for each Bank:

     (a) the audited Annual Statement of each Regulated  Insurance Company which
is a Material  Subsidiary for the fiscal year ended December 31, 1998,  prepared
in accordance  with SAP and as filed with the  respective  Applicable  Insurance
Regulatory Authority,  which Annual Statements shall be satisfactory in form and
substance to the Administrative Agent;

     (b) the unaudited  Quarterly Statement of each  Regulated Insurance Company
which is a Material  Subsidiary  for the  fiscal  quarter  ended June 30,  1999,
prepared  in  accordance  with SAP and as filed with the  respective  Applicable
Insurance Regulatory Authority, which Quarterly Statements shall be satisfactory
in form and substance to the Administrative Agent;

                                       22
<PAGE>

     (c) the audited  balance  sheet of (i)  the Borrower and  its  Subsidiaries
(on a  consolidated  basis)  and  (ii)  Chartwell  and  its  Subsidiaries  (on a
consolidated  basis),  in each case for the fiscal year ended December 31, 1998,
and the related statements of income, of stockholders' equity and of cash flows,
in each case prepared in accordance with GAAP;

     (d) the unaudited  balance sheet of (i) the Borrower and its  Subsidiaries
(on a  consolidated  basis)  and  (ii)  Chartwell  and  its  Subsidiaries  (on a
consolidated  basis),  in each case for the fiscal  quarter ended June 30, 1999,
and the related unaudited  statements of income, of stockholders'  equity and of
cash flows, in each case prepared in accordance with GAAP;

     (e)  projected financial statements for the Borrower and  its  Subsidiaries
reflecting  the  projected  financial  condition,  income and   expenses  of the
Borrower and its  Subsidiaries  after giving effect to the  Transaction  and the
other transactions  contemplated  hereby,  which projected financial  statements
shall be reasonably  satisfactory  in form and  substance to the  Administrative
Agent; and

     (f) a pro forma balance sheet of Borrower, as of September 30, 1999,  after
giving effect to the  Transaction  (as if the  Transaction had occurred prior to
such date) and the other transactions contemplated hereby.

     5.12   Approvals,  etc.  On  the Initial  Credit Event Date  the  following
approvals  shall have been obtained to the  satisfaction  of the  Administrative
Agent:

        (i) all necessary and material  governmental  and third party approvals,
permits  and  licenses   (including  without  limitation  the  approval  of  the
respective Insurance Departments of the States of Minnesota,  New York and North
Dakota)  in  connection   with  the  Transaction  and  this  Agreement  and  the
transactions  contemplated by the Transaction  Documents and otherwise referred
to herein or therein  (including  without  limitation the  Acquisition),  to the
extent  such  approvals,  consents,  permits  and  licenses  are  required to be
obtained  or made  prior to the  Initial  Credit  Event  Date,  shall  have been
obtained  and  remain in full  force and  effect,  and all  applicable  waiting
periods shall have  expired,  in each case without any action being taken by any
competent authority  (including any court having  jurisdiction) which restrains,
prevents or imposes,  in the  reasonable  judgment of the Required  Banks or the
Administrative  Agent,  materially  adverse conditions upon the consummation of
the Transaction or any such agreement or transaction;

       (ii) the  Form A filed by the  Borrower  with  the  respective  Insurance
Departments of the States of Minnesota, New York and North Dakota, together with
the  approval  of such  Insurance  Department,  or  other  Applicable  Insurance
Regulatory Authority, of such Form A or equivalent form (and all stipulations or
conditions  relating to such approval),  which approvals (and  stipulations  and
conditions,  if any)  shall be  reasonably  satisfactory  to the  Administrative
Agent; and

     (iii)  all  necessary   shareholder   approvals  in  connection   with  the
Transaction shall have been obtained and remain in full force and effect.

                                       23
<PAGE>

     5.13  Indebtedness.  On  the  Initial Credit  Event  Date  and after giving
effect  to the  consummation  of the  Transaction,  the  only  Indebtedness  for
borrowed  money of the Borrower and its  Subsidiaries,  other than  Indebtedness
permitted  under  Sections  8.04(b) - (i),  shall  consist  of the  Indebtedness
incurred pursuant to the Credit Documents.

     5.14  Payment of Fees.  On the Initial  Credit Event Date, all costs,  fees
and expenses (including,  without limitation,  legal fees and expenses), and all
other compensation contemplated by this Agreement or the other Credit Documents,
due to the Administrative  Agent or any Banks shall have been paid to the extent
due.

     5.15 Letter of Credit Request;  Notice of Borrowing.  Prior to the issuance
of the Letter of Credit, the  Administrative  Agent shall have received a Letter
of Credit Request  satisfying the requirements of Section 2.02; and prior to the
incurrence of any Revolving Loans, the Administrative  Agent shall have received
a Notice of Borrowing satisfying the requirements of Section 1.03.

     5.16  Capital  Structure.  On or prior to the Initial  Credit  Event  Date,
the corporate and capital structure (and all agreements  related thereto) of the
Borrower and its Subsidiaries and all  organizational  documents of the Borrower
and its  Subsidiaries  shall be reasonably  satisfactory  to the  Administrative
Agent.

     5.17 Solvency Certificate.  On  the Initial Credit Event Date, the Borrower
shall have delivered to the Administrative Agent a solvency certificate from the
Chief Financial Officer of the Borrower in the form of Exhibit G.

     5.18  A.M. Best Rating.  On  the Initial  Credit Event  Date,   each  Rated
Ongoing  Regulated  Subsidiary  of the Borrower  shall have an A.M.  Best claims
paying rating of at least A-.

     The  acceptance  of  the  benefits of each Credit  Event  occurring on  the
Initial Credit Event Date shall constitute a representation  and warranty by the
Borrower to each of the Banks that all of the applicable conditions specified in
this Section 5 exist or have been  satisfied as of such date.  The acceptance of
the benefits of each Credit Event  occurring after the Initial Credit Event Date
shall  constitute a  representation  and warranty by the Borrower to each of the
Banks that all of the applicable  conditions specified in Sections 5.02 and 5.15
exist or have been  satisfied as of such date.  All of the  certificates,  legal
opinions and other  documents  and papers  referred to in this Section 5, unless
otherwise  specified,  shall be  delivered  to the  Administrative  Agent at its
Notice Office for the account of each of the Banks.

     SECTION 6.  Representations, Warranties and Agreements.  In order to induce
the Administrative  Agent and the Banks to enter into this Agreement and to make
the Loans and issue the Letters of Credit as provided herein, the Borrower makes
the following representations and warranties to, and agreements with, the Banks,
all of which shall survive the execution and delivery of this  Agreement and the
making  of the  Loans  and the  issuance  of the  Letters  of  Credit  (with the
occurrence of the Effective  Date and the  occurrence of each Credit Event being
deemed to constitute a representation and warranty that the matters specified in
this  Section 6 are true and correct in all  material  respects on and as of the
Effective Date and on the date of each such Credit Event (after giving effect to
the consummation of the  Transaction)  unless such  representation  and warranty
expressly indicates that it is being made as of any other specific date in which
case such  representation and warranty shall be true and correct in all material
respects as of such other specified date):

                                       24
<PAGE>

     6.01 Corporate  Status.  The Borrower and each of its Subsidiaries (i) is a
duly  organized  and  validly  existing  corporation  in  good  standing  (where
applicable)  under the laws of the  jurisdiction of its organization and has the
corporate or other  organizational  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 (ii) has been duly  qualified  and is  authorized  to do
business and is in good standing (where  applicable) in all jurisdictions  where
it is required to be so  qualified,  except where the failure to be so qualified
is not reasonably likely to have a Material Adverse Effect.

     6.02 Corporate  Power and Authority; Enforceability.  Each Credit Party has
the corporate  power and  authority to execute,  deliver and carry out the terms
and provisions of the Transaction Documents to which it is a party and has taken
all  necessary  corporate  action  to  authorize  the  execution,  delivery  and
performance  of the  Transaction  Documents to which it is a party.  Each Credit
Party  and  each of its  Subsidiaries  has  duly  executed  and  delivered  each
Transaction  Document to which it is a party and each such Transaction  Document
constitutes  the  legal,  valid and  binding  obligation  of such  Credit  Party
enforceable  against such Credit Party 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.

     6.03  No Contravention  of  Laws,  Agreements or Organizational  Documents.
Neither the  execution,  delivery  and  performance  by any Credit  Party of the
Transaction  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 Governmental  Authority,
(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  upon any of the  property  or  assets  of the  Borrower  or 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 the
Borrower  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 (iii) will violate
any provision of the Certificate of  Incorporation or By-Laws of the Borrower or
any of its Subsidiaries; except in the case of clauses (i) and (ii) above (other
than with  respect to the Credit  Documents),  such  contraventions,  conflicts,
inconsistencies,  breaches, defaults or Liens which are not reasonably likely to
have a Material Adverse Effect.

     6.04 Litigation and Contingent  Liabilities.   (a) There  are  no  actions,
suits or proceedings pending or, to the knowledge of the Borrower, threatened in
writing  involving the Borrower or any of its Subsidiaries  (including,  without
limitation, with respect to the Transaction, this Agreement or any documentation
executed in  connection  therewith or herewith)  (i) which has or is  reasonably
likely to have a Material  Adverse  Effect or (ii) that is reasonably  likely to
have a material  adverse effect on the rights or remedies of the Banks or on the
ability of any Credit Party to perform its  respective  obligations to the Banks
hereunder  and under the other  Credit  Documents  to which it is, or will be, a
party.  Additionally,  there does not exist any  judgment,  order or  injunction
prohibiting or imposing material adverse  conditions upon the making of any Loan
or the issuance of the Letter of Credit hereunder.

                                       25
<PAGE>

     (b) Except  as fully  reflected in the  financial  statements  described in
Section 6.11(b)  (including the footnotes  thereto),  the Indebtedness  incurred
under this Agreement and in connection  with the Transaction and all obligations
incurred  in the  ordinary  course of business  since the date of the  financial
statements  described in Section  6.11(b),  there were as of the Effective  Date
(and after  giving  effect to the Loans made on such date),  no  liabilities  or
obligations  with  respect to the  Borrower  or any of its  Subsidiaries  of any
nature  whatsoever  (whether  absolute,  accrued,  contingent  or otherwise  and
whether  or not  due),  and the  Borrower  does  not know of any  basis  for the
assertion  against the Borrower or any of its Subsidiaries of any such liability
or obligation,  which,  in the case of any of the foregoing  referred to in this
clause (b),  either  individually  or in the  aggregate,  are or are  reasonably
likely to have a Material Adverse Effect.

     6.05   Use of Proceeds; Margin  Regulations. (a) The  proceeds of all Loans
shall be utilized  for general  corporate  and working  capital  purposes of the
Borrower and its Subsidiaries  (including,  without limitation,  for mergers and
acquisitions permitted hereunder).

     (b) The Letters of Credit  shall only be issued for the benefit of Lloyds
and in support of L/C Supportable Obligations.

     (c)  Neither  the making of any Loan  hereunder, the issuance of the Letter
of Credit, nor the use of the proceeds thereof,  will violate or be inconsistent
with the  provisions  of  Regulation  T, U or X of the Board of Governors of the
Federal  Reserve  System and no part of the proceeds of any Loan will be used to
purchase  or carry any  Margin  Stock or to extend  credit  for the  purpose  of
purchasing or carrying any Margin Stock.

     6.06  Approvals. Except for filings and approvals made or  obtained  on  or
prior to the Effective  Date and for which the failure to make or be obtained is
not  reasonably  likely to result in a Material  Adverse Effect (other than with
respect  to  the  Credit  Documents),  no  order,  consent,  approval,  license,
authorization,  or validation of, or filing,  recording or registration with, or
exemption  by, any foreign or  domestic  Governmental  Authority  is required to
authorize  or is required in  connection  with (i) the  execution,  delivery and
performance of any Transaction Document or (ii) the legality,  validity, binding
effect or enforceability of any Transaction Document.

     6.07  Investment  Company  Act.    Neither  the  Borrower  nor  any of  its
Subsidiaries  is  an  "investment  company"  or a  company  "controlled"  by  an
"investment  company," within the meaning of the Investment Company Act of 1940,
as amended.

                                       26

<PAGE>

     6.08  Public  Utility  Holding  Company Act.  Neither  the Borrower nor any
of its  Subsidiaries  is a "holding  company,"  or a  "subsidiary  company" of a
"holding  company," or an "affiliate" of a "holding company" or of a "subsidiary
company"  of a  "holding  company,"  within the  meaning  of the Public  Utility
Holding Company Act of 1935, as amended.

     6.09  True and  Complete  Disclosure;  Projections   and  Assumptions.  All
factual information (taken as a whole) heretofore or contemporaneously furnished
in writing by or on behalf of the  Borrower  or any of its  Subsidiaries  to the
Administrative Agent or any Bank (including, without limitation, all information
contained in the Transaction  Documents and in the Confidential Bank Memorandum,
but excluding the Projections and any other  projections)  for purposes of or in
connection  with this Agreement or any transaction  contemplated  herein is, and
all other factual  information  (taken as a whole) hereafter  furnished by or on
behalf of any such Persons in writing to the Administrative  Agent will be, true
and accurate in all material  respects on the date as of which such  information
is dated and not  incomplete by omitting to state any material fact necessary to
make such information (taken as a whole) not misleading at such time in light of
the circumstances under which such information was provided. The Projections are
based on good faith  estimates  and  assumptions  believed by the Borrower to be
reasonable  and  attainable at the time made,  it being  recognized by the Banks
that such Projections as to future events are not to be viewed as facts and that
actual results during the period or periods covered by any such  Projections may
differ from the projected results.

     6.10   Consummation of  Transaction.  On or before the Initial Credit Event
Date, the  Transaction  has been  consummated  in accordance  with the terms and
conditions of the Transaction Documents and all Legal Requirements. All consents
and approvals of, and filings and  registrations  with, and all other actions in
respect of, all governmental agencies, authorities or instrumentalities required
in order to  consummate  the  Transaction  in  accordance  with  the  terms  and
conditions of the Transaction Documents and all Legal Requirements have been, or
prior to the time required,  will have been,  obtained,  given,  filed or taken,
except in the case of any Acquisition  Documents and Refinancing Documents where
the failure to consummate the Acquisition and Refinancing in accordance with the
terms and conditions thereof and to obtain such consents, approvals, filings and
registrations is not reasonably likely to have a Material Adverse Effect.

     6.11  Financial  Condition;  Financial  Statements.   (a) On and as of  the
Initial  Credit  Event Date,  on a pro forma basis  after  giving  effect to the
Transaction and all Indebtedness  incurred,  and to be incurred,  on or prior to
the Initial Credit Event Date, and Liens created, and to be created, on or prior
to the Initial  Credit  Event Date,  in  connection  with this  Agreement,  with
respect to each of the  Borrower (on a  stand-alone  basis) and the Borrower and
its Subsidiaries (on a consolidated  basis) (x) the sum of the assets, at a fair
valuation, of each of the Borrower (on a stand-alone basis) and the Borrower and
its  Subsidiaries  (on a  consolidated  basis) will exceed their debts,  (y) the
Borrower (on a stand-alone  basis) and the Borrower and its  Subsidiaries  (on a
consolidated  basis) will not have incurred or intended to, or believe that they
will,  incur debts beyond  their  ability to pay such debts as such debts mature
and  (z)  the  Borrower  (on a  stand-alone  basis)  and  the  Borrower  and its
Subsidiaries (on a consolidated  basis) will have sufficient  capital with which
to conduct its or their business.  For purposes of this Section 6.11(a),  "debt"
means any liability on a claim,  and "claim" means (i) right to payment  whether
or not such a right is reduced to  judgment,  liquidated,  unliquidated,  fixed,
contingent,  matured, unmatured, disputed, undisputed, legal, equitable, secured
or unsecured;  or (ii) right to an equitable remedy for breach of performance if
such breach  gives rise to a payment,  whether or not such right to an equitable
remedy is reduced to judgment, fixed, contingent,  matured, unmatured, disputed,
undisputed, secured or unsecured.

                                       27
<PAGE>

     (b) The financial statements  and  pro forma  balance sheet  (after  giving
effect  to the  Transaction  and the  other  transactions  contemplated  hereby)
delivered to the Administrative Agent pursuant to Section 5.11 present fairly in
all material respects the financial  position of the respective Persons referred
to in such Section at the dates of said statements and the results of operations
for the periods covered thereby (or, in the case of the pro forma balance sheet,
present a good faith estimate of the consolidated pro forma financial  condition
of the Borrower and its Subsidiaries as of the date thereof). All such financial
statements  have been prepared in  accordance  with SAP or GAAP, as indicated in
Section 5.11, consistently applied except to the extent provided in the notes to
said financial statements.

     (c) Since December 31, 1998,  nothing has occurred  which,  individually or
when taken as a whole with other  occurrences,  has or is  reasonably  likely to
have a Material Adverse Effect.

     6.12  Tax Returns and  Payments.  The Borrower and each of its Subsidiaries
has filed all federal  income tax returns and all other  material  tax  returns,
domestic and foreign, required to be filed by it and has paid all material taxes
and assessments  payable by it which have become due, except for those contested
in good faith and  adequately  disclosed and fully provided for in the financial
statements of the Borrower and each of its  Subsidiaries in accordance with GAAP
or SAP, as the case may be. The Borrower and each of its Subsidiaries have paid,
or have provided adequate reserves (in the good faith judgment of the management
of such Person) for the payment of, all federal,  state and foreign income taxes
applicable  for all prior fiscal years and for the current  fiscal year to date.
There is no material action, suit, proceeding, investigation, audit or claim now
pending  or,  to the  knowledge  of  the  Borrower  or any of its  Subsidiaries,
threatened by any authority  regarding any taxes relating to the Borrower or any
of its  Subsidiaries.  Neither  the  Borrower  nor any of its  Subsidiaries  has
entered into an agreement or waiver or been requested to enter into an agreement
or waiver  extending  any  statute of  limitations  relating  to the  payment or
collection of taxes of the Borrower or any of its  Subsidiaries,  or is aware of
any circumstances that would cause the taxable years or other taxable periods of
the  Borrower  or any of its  Subsidiaries  not to be  subject  to the  normally
applicable statute of limitations.

     6.13  Compliance  with  ERISA.  (a)  Annex  IV sets  forth  each  Plan  and
each  Multiemployer  Plan as of the Effective  Date; each Plan (and each related
trust,  insurance contract or fund) is in substantial  compliance with its terms
and with all applicable laws,  including without  limitation ERISA and the Code,
except to the extent that any such non-compliance could not result in a material
liability;  each Plan (and each related  trust,  if any) which is intended to be
qualified under Section 401(a) of the Code has received a  determination  letter
from the Internal  Revenue Service to the effect that it meets the  requirements
of Sections 401(a) and 501(a) of the Code; no Reportable Event has occurred;  no
Multi-employer  Plan is insolvent or in reorganization;  no Plan has an Unfunded
Current  Liability;  no Plan  which is  subject  to  Section  412 of the Code or
Section 302 of ERISA has an accumulated funding  deficiency,  within the meaning
of such  sections of the Code or ERISA,  or has applied for or received a waiver
of an accumulated funding deficiency or an extension of any amortization period,
within the  meaning of Section  412 of the Code or Section  303 or 304 of ERISA;
except as would not result in any material liability, all contributions required
to be made with respect to a Plan and each  Multiemployer  Plan have been timely
made;  neither the  Borrower  nor any  Subsidiary  of the Borrower nor any ERISA
Affiliate  has  incurred  any  material   liability   (including  any  indirect,
contingent  or  secondary  liability)  to or on  account of a Plan  pursuant  to
Section 409,  502(i),  502(1),  4062,  4063,  4064,  or 4069 of ERISA or Section
401(a)(29), 4971 or 4975 of the Code or to or on account of a Multiemployer Plan
pursuant to Section 515,  4201,  4204 or 4212 of ERISA or reasonably  expects to
incur any of such liability under any of the foregoing  sections with respect to
any Plan or Multiemployer Plan; to the Borrower's  knowledge no condition exists
which presents a material risk to the Borrower or any Subsidiary of the Borrower
or any ERISA  Affiliate of incurring a material  liability to or on account of a
Plan or Multiemployer Plan pursuant to the foregoing provisions of ERISA and the
Code; no proceedings  have been  instituted to terminate or appoint a trustee to
administer  any Plan which is subject to Title IV of ERISA;  except as would not
result in any material liability, no action, suit, proceeding, hearing, audit or
investigation with respect to the administration, operation or the investment of
assets  of any Plan  (other  than  routine  claims  for  benefits)  is  pending,
reasonably expected or to the Borrower's knowledge  threatened;  using actuarial
assumptions  and  computation  methods  consistent  with Part 1 of subtitle E of

                                       28

<PAGE>

Title  IV  of  ERISA,  the  aggregate   liabilities  of  the  Borrower  and  its
Subsidiaries and its ERISA Affiliates to each Multiemployer Plan in the event of
a complete withdrawal therefrom,  as of the close of the most recent fiscal year
of each  such  Multiemployer  Plan  ended  prior to the date of the most  recent
Credit Event, would not exceed  $10,000,000;  each group health plan (as defined
in Section  607(1) of ERISA or  Section  4980B(g)(2)  of the Code)  other than a
multiemployer plan described in Section 3(37) of ERISA maintained or contributed
to by the  Borrower,  a Subsidiary of the Borrower or an ERISA  Affiliate  which
covers  or has  covered  employees  or former  employees  of the  Borrower,  any
Subsidiary of the Borrower or any ERISA Affiliate has at all times been operated
in compliance  with the  provisions of Part 6 of sub-title B of Title I of ERISA
and  Section  4980B of the Code  except  as would  not  result  in any  material
liability; no lien imposed under the Code or ERISA on the assets of the Borrower
or any  Subsidiary  of the  Borrower  or any ERISA  Affiliate  exists or, to the
Borrower's knowledge, is likely to arise on account of any Plan or Multiemployer
Plan; and the Borrower and its Subsidiaries do not maintain or contribute to any
employee  welfare  benefit  plan (as  defined  in Section  3(1) of ERISA)  which
provides  benefits to retired employees or other former employees (other than as
required by Section 601 of ERISA) or any Plan  obligations with respect to which
could reasonably be expected to have a material adverse effect on the ability of
the Borrower to perform its obligations under this Agreement.

     (b)  Except as  would not result  in a  material  liability,  each  Foreign
Pension Plan has been  maintained in substantial  compliance  with its terms and
with  the  requirements  of  any  and  all  applicable  laws,  statutes,  rules,
regulations and orders and has been maintained, where required, in good standing
with applicable regulatory authorities. Except as would not result in a material
liability,  all  contributions  required  to be made with  respect  to a Foreign
Pension  Plan  have  been  timely  made.  Neither  the  Borrower  nor any of its
Subsidiaries  has  incurred  any  material  obligation  in  connection  with the
termination of or withdrawal from any Foreign Pension Plan.  Except as set forth
in Annex IV, the present value of the accrued  benefit  liabilities  (whether or
not vested)  under each Foreign  Pension  Plan,  determined as of the end of the
Borrower'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.

                                       29

<PAGE>

     6.14 Subsidiaries. (a) Annex V hereto lists each Subsidiary of the Borrower
(and the direct and indirect  ownership  interest of the  Borrower  therein) and
also  identifies  the owner thereof in each case existing on the Effective  Date
(after  giving effect to the  Transaction).  Except as set forth on Annex V, all
such  Subsidiaries  are  direct or  indirect  Wholly-Owned  Subsidiaries  of the
Borrower.

     (b)  There are no restrictions on the  Borrower or any of its  Subsidiaries
which  prohibit or otherwise  restrict the transfer of cash or other assets from
any  Subsidiary  of the Borrower to the  Borrower,  other than  prohibitions  or
restrictions existing under or by reason of (i) this Agreement, the other Credit
Documents,  the Chartwell Senior Notes or the Trenwick Senior Notes,  (ii) Legal
Requirements,  (iii) customary  non-assignment  provisions in contracts  entered
into in the ordinary course of business and consistent with past practices,  and
(iv) purchase money  obligations for property acquired in the ordinary course of
business, so long as such obligations are permitted under this Agreement.

     6.15  Intellectual Property, etc. The Borrower and each of its Subsidiaries
own or possess the right to use all material patents, trademarks,  servicemarks,
trade  names,  copyrights,  licenses  and other  rights,  free  from  burdensome
restrictions,   that  are  necessary  for  the  operation  of  their  respective
businesses as presently conducted and as proposed to be conducted.

     6.16  Pollution  and  Other  Regulations.  The  Borrower and  each  of  its
Subsidiaries  are in  compliance  with  all  laws and  regulations  relating  to
pollution and environmental  control,  equal employment opportunity and employee
safety in all domestic and foreign  jurisdictions in which the Borrower and each
of its  Subsidiaries is presently  doing business,  and the Borrower will comply
and cause each of its  Subsidiaries to comply with all such laws and regulations
which may be imposed in the future in  jurisdictions  in which the  Borrower  or
such  Subsidiary may then be doing  business;  in each case other than those the
non-compliance  with which is not reasonably  likely to have a Material  Adverse
Effect.

     6.17  Labor Relations;  Collective Bargaining Agreements.  (a) Set forth on
Annex VI is a list and  description  (including  dates  of  termination)  of all
collective  bargaining  and  similar  agreements  between or  applicable  to the
Borrower or any of its Subsidiaries and any union,  labor  organization or other
bargaining  agent  in  respect  of the  employees  of the  Borrower  and/or  any
Subsidiary on the Effective Date.

     (b) Neither  the  Borrower nor any of  its  Subsidiaries  is engaged in any
unfair  labor  practice  that is  reasonably  likely to have a Material  Adverse
Effect.  (i) There is no  significant  unfair labor practice  complaint  pending
against the Borrower or any of its Subsidiaries or threatened in writing against
any of them,  before the National  Labor  Relations  Board,  and no  significant
grievance  or  significant  arbitration  proceeding  arising out of or under any
collective  bargaining  agreement is now pending  against the Borrower or any of
its  Subsidiaries or threatened in writing against any of them, (ii) there is no
significant  strike,  labor dispute,  slowdown or stoppage  pending  against the
Borrower  or any of its  Subsidiaries  or  threatened  in  writing  against  the
Borrower  or any of its  Subsidiaries  and  (iii) to the best  knowledge  of the
Borrower, no union representation  question exists with respect to the employees
of the Borrower or any of its  Subsidiaries,  except (with respect to any matter
specified in clause (i),  (ii) or (iii)  above,  either  individually  or in the
aggregate)  such as could not reasonably be expected to have a Material  Adverse
Effect.

                                       30

<PAGE>

     6.18  Capitalization.  On the  Effective Date,  and after giving  effect to
the Transaction and the other transactions  contemplated  hereby, the authorized
capital stock of the Borrower consists of (i) 30,000,000 shares of common stock,
$.10 par value  per  share,  17,747,808  shares  of which  shall be  issued  and
outstanding  and (ii) 2,000,000  shares of preferred  stock,  $.10 par value per
share, of which none shall be issued and outstanding.  As of the Effective Date,
all such  outstanding  shares of the Borrower have been duly and validly  issued
and are fully paid and  nonassessable.  On the  Effective  Date and after giving
effect to the Transaction and the other  transactions  contemplated  hereby, the
Borrower  does  not  have   outstanding  any  securities   convertible  into  or
exchangeable for its capital stock or outstanding any rights to subscribe for or
to purchase, or any options for the purchase of, or any agreements providing for
the issuance  (contingent or otherwise) of, or any calls,  commitments or claims
of any character  relating to, its capital stock,  except for options,  warrants
and grants outstanding in the aggregate amounts set forth on Annex IX.

     6.19  Indebtedness.  Annex  III sets forth a true and complete  list of all
Indebtedness  outstanding under Sections 8.04(c) and (i) of the Borrower and its
Subsidiaries as of the Effective Date (after giving effect to the  Transaction),
in each case showing the aggregate  principal  amount  thereof,  the name of the
lender in respect thereof and the name of the respective  borrower and any other
entity which has directly or indirectly guaranteed such Indebtedness.

     6.20   Compliance  with  Statutes, etc. The   Borrower  and  each  of   its
Subsidiaries  is in compliance  with all applicable  statutes,  regulations  and
orders  of,  and  all  applicable  restrictions  imposed  by,  all  Governmental
Authorities  in respect of the conduct of its business and the  ownership of its
property (including  compliance with all applicable  environmental laws), except
those the noncompliance  with which, in the aggregate,  is not reasonably likely
to have a Material Adverse Effect.

     6.21  Insurance  Licenses.  Each Regulated  Insurance Company  has obtained
and  maintains  in full force and  effect  all  licenses  and  permits  from all
regulatory  authorities  necessary to operate in the jurisdictions in which such
Regulated Insurance Company operates,  in each case other than such licenses and
permits  the  failure  of which to obtain or  maintain,  individually  or in the
aggregate, is not reasonably likely to have a Material Adverse Effect.

     6.22  Year 2000  Compliance.  Any  reprogramming  required   to permit  the
proper  functioning,  in and following the year 2000, of (i) the  Borrower's and
its  Subsidiaries'  computer  systems  and (ii)  equipment  containing  embedded
microchips  (including  systems and equipment supplied by others and used by the
Borrower and one or more of its  Subsidiaries  or with which  Borrower's  or its
Subsidiaries'  systems  interface)  and the  testing  of all  such  systems  and
equipment, as so reprogrammed, have been completed. The cost to the Borrower and
its  Subsidiaries  of  such  reprogramming  and  testing  and of the  reasonably
foreseeable  consequences  of year  2000 to the  Borrower  and its  Subsidiaries
(including, without limitation,  reprogramming errors and the failure of others'
systems or equipment) will not result in a Default or a Material Adverse Effect.
Except for such of the  reprogramming  referred to in the preceding  sentence as
may be  necessary,  the  computer  and  management  information  systems  of the
Borrower and its  Subsidiaries  are and,  with  ordinary  course  upgrading  and
maintenance,  will continue for the term of this Agreement to be,  sufficient to
permit the Borrower to conduct its business without a Material Adverse Effect.

                                       31
<PAGE>

     SECTION 7.  Affirmative Covenants. The Borrower hereby covenants and agrees
that on the Effective Date and  thereafter,  for so long as this Agreement is in
effect and until the Total  Commitment  and the Letter of Credit are  terminated
and all the Loans and Unpaid  Drawings,  together  with  interest,  Fees and all
other Obligations incurred hereunder, are paid in full:

     7.01  Information  Covenants.   The  Borrower will  furnish  or cause to be
furnished to each Bank:

     (a)  Annual  Financial  Statements.  (i) As soon as  available  and in any
event  within 90 days after the close of each  fiscal  year of the Borrower, (x)
the  consolidated  balance sheet of the Borrower and its  Subsidiaries,  in each
case, as at the end of such fiscal year and the related consolidated  statements
of income,  of  stockholders'  equity and of cash flows for such fiscal year and
(y) the consolidating balance sheet of the Borrower and each of its Subsidiaries
as at the end of the fiscal year and the  related  consolidating  statements  of
income, of stockholders'  equity and of cash flows for such fiscal year; in each
case prepared in accordance with GAAP and setting forth comparative  figures for
the preceding  fiscal year,  and, in the case of such  consolidated  statements,
examined by independent  certified  public  accountants  of recognized  national
standing  whose opinion shall not be qualified as to the scope of audit or as to
the status of the Borrower and its  Subsidiaries  as a going  concern,  together
with a  certificate  of such  accounting  firm stating that in the course of its
regular audit of the business of the Borrower and its Subsidiaries,  which audit
was  conducted in accordance  with GAAP,  such  accounting  firm has obtained no
knowledge  of any  Default  or  Event  of  Default  which  has  occurred  and is
continuing or, if in the opinion of such accounting firm such a Default or Event
of Default has occurred and is continuing, a statement as to the nature thereof.

     (ii)  As soon as  available and in any event within 90 days after the close
of each  fiscal year of each  Regulated  Insurance  Company  which is a Material
Subsidiary,  the Annual  Statement  (prepared in  accordance  with SAP) for such
fiscal year of such Regulated  Insurance  Company,  as filed with the Applicable
Insurance Regulatory Authority in compliance with the requirements thereof (or a
report containing equivalent information for any Regulated Insurance Company not
so required  to file the  foregoing  with the  Applicable  Insurance  Regulatory
Authority)  together with the opinion thereon of the Chief Financial  Officer or
other Authorized  Officer of such Regulated  Insurance Company stating that such
Annual  Statement  presents  fairly  in  all  material  respects  the  financial
condition  and results of  operations  of such  Regulated  Insurance  Company in
accordance with SAP.

     (iii)  As soon as available and in any event within 90 days after the close
of each fiscal  year of the  Borrower,  a copy of the  "Statement  of  Actuarial
Opinion" and "Management  Discussion and Analysis" for each Regulated  Insurance
Company  which is a Material  Subsidiary  and Domestic  Subsidiary  (prepared in
accordance  with  SAP) for such  fiscal  year and as filed  with the  Applicable
Regulatory Insurance Authority in compliance with the requirements thereof (or a
report containing equivalent information for any Regulated Insurance Company not
so required  to file the  foregoing  with the  Applicable  Regulatory  Insurance
Authority).

                                       32
<PAGE>

     (b) Quarterly  Financial  Statements.  (i) As soon as available and in any
event  within  45 days  after the  close of each of the  first  three  quarterly
accounting  periods in each fiscal year of the  Borrower,  (x) the  consolidated
balance  sheet of the  Borrower and its  Subsidiaries  at the end of such fiscal
quarter and the related  consolidated  statements  of income,  of  stockholders'
equity and of cash flows for such quarterly  period and for the elapsed  portion
of the fiscal year ended with the last day of such quarterly  period and (y) the
consolidating  balance sheet of the Borrower and each of its  Subsidiaries as at
the end of such  fiscal  quarter  and the related  consolidating  statements  of
income, of stockholders'  equity and of cash flows for such quarterly period and
for the  elapsed  portion  of the  fiscal  year  ended with the last day of such
quarterly period; in each case setting forth comparative figures for the related
periods  in the  prior  fiscal  year,  and all of  which  shall be  prepared  in
accordance  with GAAP and  certified  by the Chief  Financial  Officer  or other
Authorized  Officer  of the  Borrower,  as the case may be,  subject  to changes
resulting from normal year-end audit adjustments.

     (ii)  As soon as available and in any event within 45 days  after the close
of each of the first three quarterly  accounting  periods in each fiscal year of
each  Regulated  Insurance  Company  which is a Material  Subsidiary,  quarterly
financial statements (prepared in accordance with SAP) for such fiscal period of
such  Regulated  Insurance  Company,  as  filed  with the  Applicable  Insurance
Regulatory  Authority,  together with the opinion thereon of the Chief Financial
Officer or other Authorized Officer of such Regulated  Insurance Company stating
that such  financial  statements  present  fairly in all  material  respects the
financial  condition  and  results of  operations  of such  Regulated  Insurance
Company in accordance with SAP.

     (c) Financial Plans, etc.  No later than 45 days following the first day of
each fiscal year of the Borrower,  copies of the annual financial plan or budget
for such fiscal year prepared by management of the Borrower for its internal use
and  distributed  to the Board of Directors of the Borrower.  Together with each
delivery of financial  statements pursuant to Section 7.01(a)(ii) and (b)(ii), a
comparison of the current year to date financial  results (other than in respect
of the  balance  sheets  included  therein)  against  the plans  required  to be
submitted pursuant to this clause (c) shall be presented.

     (d)  Officer's  Certificates.  At the time of the delivery of the financial
statements  provided for in Sections  7.01(a)(i) and (ii) and (b)(i) and (ii), a
certificate of the Chief Financial  Officer or other Authorized  Officer of the
Borrower  to the effect  that no  Default or Event of Default  exists or, if any
Default  or Event of  Default  does  exist,  specifying  the  nature  and extent
thereof,  which  certificate  shall  set  forth  the  calculations  required  to
establish  whether the Borrower and its Subsidiaries were in compliance with the
provisions  of Sections  8.12  through  8.16,  inclusive,  as at the end of such
fiscal year or quarter, as the case may be.

     (e) Notice of Default or  Litigation.  Promptly,  and in any event  within
five  Business  Days  after  the  Borrower  or any of its  Subsidiaries  obtains
knowledge thereof, (x) notice of the occurrence of any event which constitutes a
Default or Event of Default,  which notice shall specify the nature thereof, the
period of existence  thereof and what action the Borrower  proposes to take with
respect  thereto and (y) promptly after the Borrower or any of its  Subsidiaries
obtains knowledge thereof,  notice of any outstanding litigation or governmental
or regulatory proceeding pending against the Borrower or any of its Subsidiaries
which is  reasonably  likely to have a Material  Adverse  Effect,  or a material
adverse  effect on the  ability of any Credit  Party to perform  its  respective
obligations hereunder or under any other Credit Document.

                                       33
<PAGE>

     (f)  Reserve  Reports.  Promptly  upon  receipt  thereof,  a copy of each
report  submitted to the Borrower or any of its  Subsidiaries by any independent
actuary with respect to reserve adequacy.

     (g)  Reserve  Adequacy  Report.  Promptly  following  a  request  from  the
Administrative  Agent or the Required Banks (which request may only be made when
an Event of Default has occurred  and is  continuing),  a report  prepared by an
independent  actuarial  consulting  firm  of  recognized  professional  standing
reasonably  satisfactory to the  Administrative  Agent or the Required Banks, as
the case may be, reviewing the adequacy of reserves of each Regulated  Insurance
Company  determined in accordance  with SAP, which firm shall be provided access
to or copies of all reserve  analyses and  valuations  relating to the insurance
business of each Regulated  Insurance  Company in the possession of or available
to the Borrower or its Subsidiaries.

     (h)  Annual Report for  Managed Syndicate.  As  soon  as  the  same becomes
available, but in any event within 90 days after the end of each year of account
of the Managed Syndicate, the annual report in respect thereof.

     (i)  Business Plan and Realistic Disaster Scenarios for Managed  Syndicate.
As soon as the same becomes available, the business plan prepared in relation to
the  Managed  Syndicate  and (if  separate)  the  Realistic  Disaster  Scenarios
relating thereto.

     (j)  Syndicate  Quarterly  Report.  As soon as the same becomes  available,
the Syndicate Quarterly Report for the Managed Syndicate.

     (k)  Other  Regulatory  Statements and Reports. Promptly (A)  after receipt
thereof,  copies of all triennial examinations and risk adjusted capital reports
of any Regulated  Insurance Company,  delivered to such Person by any Applicable
Insurance  Regulatory  Authority,  insurance  commission  or similar  regulatory
authority,  (B) after receipt  thereof,  written  notice of any assertion by any
Applicable Insurance Regulatory Authority or any governmental agency or agencies
substituted  therefor,  as to a  violation  of  any  Legal  Requirement  by  any
Regulated  Insurance  Company  which is  reasonably  likely  to have a  Material
Adverse Effect,  (C) after receipt  thereof,  a copy of the final report to each
Regulated  Insurance  Company  from the NAIC for each  fiscal  year,  as to such
Regulated Insurance Company's  compliance or noncompliance with each of the NAIC
Tests,  (D)  after  receipt  thereof,  a copy  of  any  notice  of  termination,
cancellation or recapture of any Reinsurance Agreement or Retrocession Agreement
to which a Regulated Insurance Company is a party to the extent such termination
or cancellation is reasonably likely to have a Material Adverse Effect,  (E) and
in any event  within ten  Business  Days after  receipt  thereof,  copies of any
notice of actual  suspension,  termination  or  revocation of any license of any
Regulated Insurance Company by any Applicable  Insurance  Regulatory  Authority,
including  any request by an Applicable  Insurance  Regulatory  Authority  which
commits a Regulated  Insurance Company to take or refrain from taking any action
or which otherwise affects the authority of such Regulated  Insurance Company to
conduct its business, except where such suspension, termination or revocation is
not reasonably  likely to have a Material  Adverse Effect,  and (F) in any event
within ten Business Days after the Borrower or any of its  Subsidiaries  obtains
knowledge thereof, notice of any actual changes in the insurance laws enacted in
any  state in which  any  Regulated  Insurance  Company  is  domiciled  which is
reasonably likely to have a Material Adverse Effect.

                                       34
<PAGE>

     (l) Other  Information.  Promptly  upon  filing thereof  with  the  SEC  or
transmission  thereof, as the case may be, copies of any final registrations and
documents,  and other reports  specified in Section 13 and 15(d) of the Exchange
Act  filed  by  the  Borrower  or  any  of  its  Subsidiaries  (other  than  any
registration  statement on Form S-8) and copies of all financial  statements and
proxy  statements,  and material notices and reports,  as the Borrower or any of
its  Subsidiaries  shall  send to  analysts  generally  or the  holders of their
capital stock in their  capacity as such holders (in each case to the extent not
theretofore  delivered  to the  Banks  pursuant  to this  Agreement)  and,  with
reasonable  promptness,  such other information or existing documents (financial
or otherwise) as the  Administrative  Agent or any Bank may  reasonably  request
from time to time.

     7.02 Books,  Records and Inspections.  The  Borrower will, and  will  cause
each of its Subsidiaries to, permit officers and designated  representatives  of
the Administrative  Agent or any Bank to visit and inspect any of the properties
or assets of the Borrower and any of its Subsidiaries in whomsoever's possession
(but only to the extent the Borrower or such  Subsidiary  has the right to do so
to the extent in the possession of another Person),  and to examine the books of
account of the  Borrower  and any of its  Subsidiaries  and discuss the affairs,
finances and accounts of the Borrower and of any of its  Subsidiaries  with, and
be advised as to the same by, its and their officers and independent accountants
and independent  actuaries,  if any, all at such reasonable intervals and during
business hours,  upon reasonable  prior notice and to such reasonable  extent as
the  Administrative  Agent or any Bank may request.  All such visits shall be at
the expense of the Administrative  Agent or the respective Bank unless and until
a Default or Event of Default exists.

     7.03 Insurance.  The Borrower will, and will cause each of its Subsidiaries
to, at all times  maintain in full force and effect  insurance in such  amounts,
covering such risks and  liabilities  and with such  deductibles or self-insured
retentions as are in accordance with normal industry practice.

                                       35
<PAGE>

     7.04  Payment of Taxes. The Borrower will pay and discharge, and will cause
each of its  Subsidiaries  to pay and  discharge,  all  taxes,  assessments  and
governmental charges or levies imposed upon it or upon its income or profits, or
upon any properties belonging to it, prior to the date on which penalties attach
thereto,  and all lawful claims for sums that have become due and payable which,
if unpaid,  might become a Lien not otherwise  permitted under Section  8.03(a);
provided that neither the Borrower nor any  Subsidiary  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 GAAP.

     7.05  Corporate Franchises.  The  Borrower  will  do, and  will  cause each
Subsidiary  to do,  or cause to be done,  all  things  reasonably  necessary  to
preserve and keep in full force and effect its corporate  existence,  rights and
authority,  except where the failure to do so is not reasonably likely to have a
Material Adverse Effect; provided that any transaction permitted by Section 8.02
will not constitute a breach of this Section 7.05.

     7.06  Compliance  with  Statutes,  etc. The Borrower  will, and will cause
each Subsidiary to, comply with all applicable statutes,  regulations and orders
of, and all applicable restrictions imposed by, all Government  Authorities,  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 is not reasonably likely to have a Material Adverse Effect.

     7.07  ERISA.  As soon as possible  and, in any event,  within 15 days after
the Borrower, any Subsidiary of the Borrower or any ERISA Affiliate knows or has
reason to know of the  occurrence  of any of the  following,  the Borrower  will
deliver to each of the Banks a certificate of the chief financial officer of the
Borrower setting forth the full details as to such occurrence and the action, if
any, that the Borrower,  such  Subsidiary or such ERISA Affiliate is required or
proposes to take,  together with any notices required or proposed to be given or
filed by such Borrower,  such Subsidiary,  the Plan  administrator or such ERISA
Affiliate,  to or with the PBGC or any  other  government  agency,  or a Plan or
Multiemployer  Plan participant and any notices received by such Borrower,  such
Subsidiary or ERISA Affiliate from the PBGC or any other government agency, or a
Plan or Multiemployer  Plan participant with respect thereto:  that a Reportable
Event has  occurred  (except  to the extent  that the  Borrower  has  previously
delivered to the Banks a certificate  and notices (if any) concerning such event
pursuant to the next clause hereof);  that a contributing sponsor (as defined in
Section  4001(a)(13) of ERISA) of a Plan subject to Title IV of ERISA is subject
to the advance reporting requirement of PBGC Regulation Section 4043.61 (without
regard to  subparagraph  (b)(1)  thereof),  and an event described in subsection
 .62,  .63,  .64,  .65,  .66,  .67 or .68 of  PBGC  Regulation  Section  4043  is
reasonably  expected to occur with respect to such Plan within the  following 30
days; that an accumulated funding deficiency,  within the meaning of Section 412
of the Code or Section 302 of ERISA,  has been  incurred or an  application  may
reasonably  expected to be or has been made for a waiver or  modification of the
minimum funding  standard  (including any required  installment  payments) or an
extension of any  amortization  period under  Section 412 of the Code or Section
303 or 304 of ERISA  with  respect  to a Plan;  except as would not  result in a
material  liability that any contribution  required to be made with respect to a
Plan,  Multiemployer Plan or Foreign Pension Plan has not been timely made; that
a Plan has  been or may be  terminated,  reorganized,  partitioned  or  declared
insolvent  under  Title  IV of  ERISA;  that a  Plan  has  an  Unfunded  Current

                                       36
<PAGE>

Liability;  that  proceedings  are  reasonably  expected  to  be  or  have  been
instituted  to  terminate  or  appoint a trustee to  administer  a Plan which is
subject to Title IV of ERISA; that a proceeding has been instituted  pursuant to
Section 515 of ERISA to collect a  delinquent  contribution  to a  Multiemployer
Plan;  that the Borrower,  any Subsidiary of the Borrower or any ERISA Affiliate
will or are reasonably  expected to incur any material liability  (including any
indirect,   contingent,  or  secondary  liability)  to  or  on  account  of  the
termination of a Plan under Section 4062,  4063,  4064, or 4069 of ERISA or with
respect to the withdrawal from a Multiemployer  Plan under Section 4201, 4204 or
4212 of ERISA or with respect to a Plan under Section 401(a)(29),  4971, 4975 or
4980 of the Code or Section 409,  502(i) or 502(l) of ERISA or with respect to a
group health plan (as defined in Section 607(1) of ERISA or Section  4980B(g)(2)
of the Code)  under  Section  4980B of the  Code;  or that the  Borrower  or any
Subsidiary  of the  Borrower may incur any  material  liability  pursuant to any
employee  welfare  benefit  plan (as  defined  in  Section  3(1) of ERISA)  that
provides  benefits to retired employees or other former employees (other than as
required by Section 601 of ERISA) or any Plan or any Foreign  Pension Plan.  The
Borrower  will deliver to each of the Banks copies of any records,  documents or
other  information  that must be  furnished to the PBGC with respect to any Plan
pursuant to Section 4010 of ERISA. The Borrower will also deliver to each of the
Banks a complete  copy of the annual  report (on Internal  Revenue  Service Form
5500-series)  of each Plan  (including,  to the  extent  required,  the  related
financial and actuarial statements and opinions and other supporting statements,
certifications,  schedules  and  information)  required  to be  filed  with  the
Internal Revenue Service.  In addition to any certificates or notices  delivered
to the Banks pursuant to the first sentence hereof, copies of annual reports and
any records, documents or other information required to be furnished to the PBGC
or any  other  government  agency,  and any  material  notices  received  by the
Borrower,  any  Subsidiary  of the  Borrower  or any  ERISA  Affiliate  from any
relevant  government agency with respect to any Plan or any Foreign Pension Plan
or  received  from any  government  agency or plan  administrator  or sponsor or
trustee with respect to any  Multiemployer  Plan shall be delivered to the Banks
no later than 15 days after the date such annual  report has been filed with the
Internal Revenue Service or such records,  documents and/or information has been
furnished  to the PBGC or any other  government  agency or such  notice has been
received by the Borrower, the Subsidiary or the ERISA Affiliate,  as applicable.
The  Borrower  and each of its  applicable  Subsidiaries  shall  ensure that all
Foreign Pension Plans administered by it or into which it makes payments obtains
or retains (as applicable) registered status under and as required by applicable
law and is  administered  in a timely manner in all respects in compliance  with
all  applicable  laws except where the failure to do any of the foregoing  would
not be  reasonably  likely to  result  in a  material  adverse  effect  upon the
business,  operations,  condition  (financial  or otherwise) or prospects of the
Borrower or any Subsidiary of the Borrower.

     7.08  Performance of Obligations.  The Borrower will, and will  cause  each
of its Subsidiaries to, perform in all material  respects all of its obligations
under the terms of each  mortgage,  indenture,  security  agreement,  other debt
instrument and material contract by which it is bound or to which it is a party;
provided, that the failure to pay any Indebtedness shall not constitute a breach
of this  Section  7.08  unless it shall give rise to an Event of  Default  under
Section 9.04.

                                       37
<PAGE>

     7.09  Good  Repair.  The  Borrower  will, and  will cause  each  of  its
Subsidiaries  to,  ensure that its material  properties  and  equipment  used or
useful in its business in whomsoever's  possession they may be, are kept in good
repair,  working order and condition,  normal wear and tear  excepted,  and that
from time to time there are made in such  properties  and  equipment all needful
and proper repairs, renewals, replacements,  extensions,  additions, betterments
and  improvements  thereto,  to  the  extent  and in the  manner  customary  for
companies in similar businesses.

     7.10  End of  Fiscal  Years;  Fiscal  Quarters.  The   Borrower  will,  for
financial  reporting  purposes,  cause (i) each of its, and each of its Domestic
Subsidiaries',  fiscal years to end on December 31 of each year and (ii) each of
its, and each of its Domestic Subsidiaries', fiscal quarters to end on March 31,
June 30, September 30 and December 31 of each year.

     7.11 Maintenance of Licenses and Permits. The Borrower will, and will 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
is not reasonably likely to have a Material Adverse Effect.

     7.12 Chartwell  Senior Notes. The Borrower will cause Chartwell Re Holdings
to repay all  principal of and  interest  and premium (if any) on the  Chartwell
Senior Notes in full no later than March 1, 2000.

     7.13 Subsidiary Guaranties. Promptly, and in any event within ten Business
Days,  following the repayment of the Chartwell  Senior Notes in accordance with
Section  7.12,  the  Borrower  will cause  Chartwell Re Holdings and each of its
Domestic Subsidiaries which is a Material Subsidiary and a Non-Regulated Company
to (i)  become  party  to the  Subsidiary  Guaranty  as a  Subsidiary  Guarantor
pursuant  to   documentation   in  form  and  substance   satisfactory   to  the
Administrative Agent and (ii) deliver all legal opinions, officers' certificates
and corporate  documentation  as would have been  required  pursuant to Sections
5.04 and 5.05 if such  Persons  had been Credit  Parties on the  Initial  Credit
Event Date.

     SECTION 8.  Negative  Covenants.  The Borrower hereby covenants  and agrees
that on the Effective Date and  thereafter,  for so long as this Agreement is in
effect and until the Total  Commitment  and the Letter of Credit are  terminated
and all Loans and Unpaid  Drawings,  together with interest,  Fees and all other
Obligations incurred hereunder, are paid in full:

     8.01 Changes in Business. The Borrower and its Subsidiaries will not engage
in any business other than the property and casualty  insurance and  reinsurance
business  and  any  other  businesses   engaged  in  by  the  Borrower  and  its
Subsidiaries  as of the Effective Date (after giving effect to the  Transaction)
and activities related, ancillary or complimentary thereto.

     8.02  Fundamental  Changes;  Acquisitions.   (a) The Borrower will not, and
will not permit any of its  Material  Subsidiaries  to,  wind up,  liquidate  or
dissolve its affairs,  or enter into any transaction of merger or consolidation,
or sell or otherwise  dispose of all or  substantially  all of its assets to any
other Person,  provided  that (x) the Borrower may merge with another  Person if
(i) the Borrower is the corporation  surviving such merger and (ii)  immediately
after giving  effect to such merger,  no Default or Event of Default  shall have
occurred and is continuing;  (y) Subsidiaries of the Borrower may merge with one
another,  provided  that the  Borrower's  ownership  percentage of the surviving
entity  is at  least  equal  to  the  Borrower's  ownership  percentage  of  the
Subsidiary  party  to such  merger  in  which  the  Borrower  owns  the  greater
percentage  equity interest prior to such merger;  and (z) the Transaction shall
be permitted.

                                       38
<PAGE>

     (b) The  Borrower  will not,  and will  not permit any of its  Subsidiaries
to,  purchase,  lease or otherwise  acquire (in one  transaction  or a series of
related  transactions)  all or any part of the  property or assets of any Person
(excluding any purchases, leases or other acquisitions of property or assets in,
and for use in,  the  ordinary  course  of  business)  or agree to do any of the
foregoing at any future time, except that the following shall be permitted:

        (i) The  investments, acquisitions  and  transfers  or  dispositions  of
property permitted pursuant to Section 8.05;
       (ii) Any  Regulated  Insurance  Company  may  enter  into  any  Insurance
Contract, Reinsurance Agreement or Retrocession Agreement in the ordinary course
of business in accordance with its normal underwriting,  indemnity and retention
policies,  provided  that no Regulated  Insurance  Company  shall enter into any
Financial  Reinsurance  Agreements  unless the  Indebtedness  arising under such
Financial Reinsurance Agreements is permitted under Section 8.04(i); and

     (iii) so long as no Default or Event of Default then exists or would result
therefrom,  the Borrower and its  Subsidiaries may acquire assets or the capital
stock of any Person (any such  acquisitions  permitted by this clause  (iii),  a
"Permitted  Acquisition"),  provided,  that (A) such  Person  (or the  assets so
acquired)  was,  immediately  prior  to  such  acquisition,  engaged  (or  used)
primarily in the  businesses  permitted  pursuant to Section 8.01, (B) each such
acquisition  shall be for an  amount  not  greater  than the fair  market  value
thereof (as determined in good faith by the Board of Directors of the Borrower),
(C) the aggregate amount (both cash and non-cash, including capital stock of the
Borrower)   expended  by  the  Borrower  and  its   Subsidiaries  for  Permitted
Acquisitions  after the Effective Date shall not exceed  $400,000,000,  (D) on a
pro forma basis  determined as if such  acquisition had been  consummated on the
date  occurring  twelve months prior to the last day of the most recently  ended
fiscal  quarter of the Borrower,  the Borrower and its  Subsidiaries  would have
been in compliance  with Sections 8.12 through 8.16 of this  Agreement as of, or
for the relevant period ended on, the last day of such fiscal  quarter,  and (E)
on a pro forma basis determined as if such acquisition had been consummated, the
covenants  contained in Sections  8.12 through 8.16 will  continue to be met for
the twelve-month period following the last day of the fiscal quarter ended after
the date of the consummation of such acquisition.

     8.03  Liens.  The  Borrower will  not, and  will  not  permit  any  of  its
Subsidiaries to, create,  incur, assume or suffer to exist any Lien upon or with
respect to any  property  or assets of any kind (real or  personal,  tangible or
intangible)  of the  Borrower  or any  such  Subsidiary  whether  now  owned  or
hereafter  acquired,  or  sell  any  such  property  or  assets  subject  to  an
understanding or agreement, contingent or otherwise, to repurchase such property
or assets (including sales of accounts  receivable or notes with recourse to the
Borrower or any of its  Subsidiaries) or assign any right to receive income,  or
file or permit the filing of any financing  statement under the UCC or any other
similar notice of Lien under any similar recording or notice statute relating to
any such property, except:

     (a) Liens for taxes and other assessments not yet due or being contested in
good faith and by appropriate  proceedings  for which adequate  reserves (in the
good faith judgment of the management of the Borrower) have been established;

     (b) Liens  in  respect  of property or  assets  imposed  by law which were
incurred in the ordinary course of business,  such as carriers',  warehousemen's
and mechanics'  Liens and other similar Liens arising in the ordinary  course of
business,  and (x) which do not in the  aggregate  materially  detract  from the
value of such  property  or assets or  materially  impair the use thereof in the
operation  of the business of the  Borrower or any  Subsidiary  or (y) 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 asset subject
to such Lien;

                                       39

<PAGE>

     (c) Cash  collateral  requirements  in  respect of  outstanding  Letters of
Credit pursuant to this Agreement and the other Credit Documents;

     (d) Liens in existence on  the Effective  Date  which are  listed,  and the
property subject thereto on the Effective Date described, in Annex VII, together
with any extensions or renewals  thereof so long as the obligations  secured and
assets  encumbered  by such  Liens are not  increased  in  connection  with such
extension  or  renewal by more than  $5,000,000  (provided  that the  securities
subject  to any such Lien may be  replaced  by other  securities  of no  greater
principal amount);

     (e) Liens arising  from judgments,  decrees or attachments in circumstances
not constituting an Event of Default under Section 9.08;

     (f) Liens  (other  than  any Lien  imposed by  ERISA)  incurred or deposits
made  in  the  ordinary   course  of  business  in   connection   with  workers'
compensation,  unemployment  insurance and other types of social security, or to
secure the  performance  of tenders,  statutory  obligations,  surety and appeal
bonds,  bids,  leases,  government  contracts,  performance and  return-of-money
bonds,  Reinsurance  Agreements,   Retrocession  Agreements  and  other  similar
obligations   incurred  in  the  ordinary  course  of  business   (exclusive  of
obligations in respect of the payment for borrowed money);

     (g)  Leases or subleases granted to others not interfering in any  material
respect  with the business of the  Borrower or any of its  Subsidiaries  and any
interest  or  title  of a  lessor  under  any  lease  not in  violation  of this
Agreement;

     (h) Easements, rights-of-way, restrictions, minor defects or irregularities
in title and other  similar  charges  or  encumbrances  not  interfering  in any
material  respect with the  ordinary  conduct of the business of the Borrower or
any of its Subsidiaries;

     (i) Liens  arising from UCC  financing  statements  regarding leases not in
violation of this Agreement;

     (j) Liens  on  pledges  or  deposits   of  cash or  securities  made by any
Regulated  Insurance  Company as a condition  to obtaining  or  maintaining  any
licenses issued to it by any Applicable Insurance Regulatory Authority;

     (k) 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 after the Initial Credit Event Date,  provided that (i) any such
Liens attach only to the assets so purchased,  (ii) the Indebtedness  secured by
any such Lien does not exceed  100%,  nor is less than 80%, of the lesser of the
fair market value or the purchase price of the property  being  purchased at the
time of the incurrence of such  Indebtedness and (iii) the Indebtedness  secured
thereby is permitted to be incurred pursuant to Section 8.04(b);

     (l) Liens  on  property or assets  acquired  pursuant  to  an  acquisition,
or on property or assets of a  Subsidiary  of the  Borrower in  existence at the
time such Subsidiary is acquired  pursuant to an acquisition,  provided that (i)
any  Indebtedness  that is  secured by such Liens is  permitted  to exist  under
Section  8.04(f) and (ii) such Liens are not incurred in  connection  with or in
contemplation or anticipation of such acquisition and do not attach to any other
asset of the Borrower or any of its Subsidiaries; and

     (m) Liens  consisting  of customary  set-off  rights or  bankers' liens  on
amounts on deposit and securing reimbursement  obligations in respect of letters
of credit  issued for the account of the  Borrower  or any of its  Subsidiaries,
whether  arising by contract or operation of law, to the extent  incurred in the
ordinary course of business.

                                       40
<PAGE>

     8.04  Indebtedness.  The  Borrower will  not,  and will not  permit  any of
its  Subsidiaries  to, contract,  create,  incur,  assume or suffer to exist any
Indebtedness, except:

     (a)   Indebtedness incurred pursuant to this Agreement and the other Credit
Documents;

     (b)  Capitalized  Lease  Obligations and Indebtedness  of the Borrower and
its  Subsidiaries  incurred  pursuant to purchase  money Liens  permitted  under
Section 8.03(k);

     (c)  Indebtedness  in existence on the  Effective  Date which is listed in
Annex III,  together with extension,  renewal or refinancing  thereof so long as
the principal  amount of any such  Indebtedness  is not increased as a result of
any such extension, renewal or refinancing;

     (d) Obligations  of any  Regulated  Insurance  Company with  respect to (i)
letters of credit securing obligations (A) under Reinsurance  Agreements and (B)
required by Lloyds  entered into in the ordinary  course of business of any such
Regulated  Insurance Company,  (ii) letters of credit issued in lieu of deposits
to satisfy Legal  Requirements or (iii) letters of credit or surety bonds issued
in lieu of  depositing  securities  with  any  Applicable  Insurance  Regulatory
Authority  to satisfy  regulatory  requirements;  in any case to the extent such
letters of credit are not drawn upon or, if and to the extent  drawn upon,  such
drawing is reimbursed no later than 10 days following receipt by the Borrower or
such Subsidiary of notice of payment on such letter of credit;

     (e) Indebtedness under Interest Rate Agreements or Other Hedging Agreements
entered  into in respect of the  Obligations  or otherwise in the conduct of its
business and not for speculative purposes;

     (f) Indebtedness  of  the  Borrower  or a Wholly-Owned  Subsidiary  of  the
Borrower  acquired  pursuant to an acquisition (or  Indebtedness  assumed at the
time of a permitted acquisition of an asset securing such Indebtedness), and any
refinancing of such  Indebtedness so long as the principal amount thereof is not
increased,  provided that (i) such  Indebtedness  was not incurred in connection
with or in contemplation of such  acquisition,  (ii) such  Indebtedness does not
constitute  Indebtedness for borrowed money, it being understood and agreed that
Capitalized  Lease  Obligations  and  purchase  money   Indebtedness  shall  not
constitute  Indebtedness for borrowed money for purposes of this clause (i), and
(iii) at the time of such acquisition,  such Indebtedness does not exceed 10% of
the total value of the assets of the Subsidiary so acquired, or of the assets so
acquired, as the case may be;

     (g)  Indebtedness  constituting  a loan from the  Borrower  or any  Wholly-
Owned Subsidiary to the Borrower or any Wholly-Owned Subsidiary;

                                       41
<PAGE>

     (h)  Indebtedness  consisting  of  senior  notes  issued by  the   Borrower
in an aggregate outstanding principal amount not to exceed $200,000,000, so long
as the maturity date of any such senior notes is no earlier than March 31, 2005;
and

     (i) Other Indebtedness of the Borrower and its Subsidiaries in an aggregate
outstanding principal amount not to exceed $50,000,000 at any time.

     8.05 Advances, Investments and Loans. The Borrower will not, and will not
permit any of its  Subsidiaries to, lend money or credit or make advances to any
Person,  or purchase or acquire any stock,  obligations or securities of, or any
other interest in, or make any capital contribution to, any Person, except:

     (a) The Transaction shall be permitted;

     (b) The  Borrower  and  its  Subsidiaries  may  make  investments  (i)  in
accordance  with the Borrower's and  Subsidiaries'  investment  guidelines as in
effect on the Effective  Date (in the form delivered to the Banks on or prior to
such date) or (ii) in accordance with modified  investment  guidelines from time
to time so long as such modified  guidelines are not materially less restrictive
on the Borrower and its Subsidiaries than those referred to in clause (i) above;

     (c) The  Borrower  and its Subsidiaries  may  acquire  and hold receivables
owing to them in the ordinary course of business and payable or dischargeable in
accordance with customary trade terms;

     (d) Loans and advances to  employees for  business-related travel expenses,
moving  expenses  and  other  similar  expenses,  in each case  incurred  in the
ordinary course of business;

     (e) The transactions described in Section 8.02 shall be permitted;

     (f) Any Regulated Insurance Company may make investments in companies which
are  Wholly-Owned  Subsidiaries of such Person (or any other  Subsidiary of such
Person  created or acquired in  accordance  with  Section  8.09) but only to the
extent that any such  investment,  at the time made,  does not reduce  Statutory
Surplus of such Regulated Insurance Company;

     (g)  Investments pursuant to commitments in effect as of the Effective Date
and described (as to matter and amount) on Annex VIII;

                                       42
<PAGE>

     (h)  Investments  acquired  by the  Borrower  or any  of  its  Subsidiaries
(x) in  exchange  for any  other  investment  held by the  Borrower  or any such
Subsidiary  in  connection  with  or  as  a  result  of a  bankruptcy,  workout,
reorganization or recapitalization  of the issuer of such other investment,  (y)
as a result of a  foreclosure  by the Borrower or any of its  Subsidiaries  with
respect to any secured investment or other transfer of title with respect to any
secured investment in default or (z) in settlement of delinquent obligations of,
and other disputes with,  customers and suppliers arising in the ordinary course
of business;

     (i)  Investments  existing on the  Effective  Date which  are identified on
Annex VIII;

     (j) the Borrower may acquire and hold  obligations of one or more  officers
or  employees  of the  Borrower  or its  Subsidiaries  in  connection  with such
officers' or employees'  acquisition  of shares of capital stock of the Borrower
or options to  purchase  shares of capital  stock of the  Borrower so long as no
cash is paid by the Borrower or any of its  Subsidiaries  in connection with the
acquisition of any such obligations and such obligations;

     (k) Investments  consisting of  intercompany  loans to the extent permitted
under Section 8.04(g);

     (l) Investments  by  the   Borrower  in  Wholly-Owned   Subsidiaries,   and
investments by Wholly-Owned Subsidiaries in other Wholly-Owned Subsidiaries;

     (m) Investments consisting of prepaid expenses;

     (n) Investments consisting of non-cash consideration received in connection
with a sale of assets  permitted  under  Section 8.02 (it being  understood  and
agreed that the  consideration  received in respect of any such asset sale shall
be at least 75% cash); and

     (o) additional  investments   (including   such   additional    investments
identified  pursuant  to this  Section  8.05(o) in Annex  VIII) in an  aggregate
outstanding  amount not to exceed,  at the time any such  investment is made, an
amount equal to 5% of the invested  assets of the Borrower and its  Subsidiaries
at such time.

                                       43
<PAGE>

     8.06  Dividends,  etc. (a) The  Borrower will not, and will  not permit any
of its  Subsidiaries  to,  declare or pay any  dividends  (other than  dividends
payable  solely in common  stock of such  Person) or return any  capital to, its
stockholders or authorize or make any other distribution, payment or delivery of
property or cash to its  stockholders  as such, or redeem,  retire,  purchase or
otherwise acquire,  directly or indirectly,  for a consideration,  any shares of
any class of its capital stock now or hereafter outstanding (or any warrants for
or options or stock  appreciation  rights in respect of any of such shares),  or
set aside any funds for any of the foregoing purposes,  or purchase or otherwise
acquire or permit any of its  Subsidiaries to purchase or otherwise  acquire for
consideration  any shares of any class of the capital  stock of the  Borrower or
any of its  Subsidiaries,  as the case may be, now or hereafter  outstanding (or
any options or warrants or stock appreciation  rights issued by such Person with
respect to its capital stock) (all of the foregoing "Dividends"), except that:

        (i) Any Subsidiary of the Borrower may pay cash dividends to its parent
if such parent is the Borrower or a Wholly-Owned Subsidiary of the Borrower;

       (ii) The Borrower may redeem or purchase its capital stock at any time so
long as no  Default  or Event of  Default  exists  at such  time or would  exist
immediately after giving effect to such redemption or purchase; and

     (iii) The  Borrower  may pay cash  dividends  on its  capital  stock in any
fiscal  quarter,  provided  that the aggregate  amount of dividends  paid in any
fiscal  quarter  shall not  exceed an amount  equal to the  greater of (A) $0.26
multiplied by the number of shares of the Borrower's common stock outstanding as
of the record date declared by the Borrower's Board of Directors for such fiscal
quarter; provided that to the extent there is more than one record date for such
fiscal  quarter,  the first record date for such fiscal quarter shall be used in
determining the numbers of shares of the Borrower's common stock outstanding for
such  period  and (B) an amount,  if  positive,  equal to 50% of the  Borrower's
Consolidated Net Income for the four most recently completed  consecutive fiscal
quarters of the Borrower ending on the last day of such fiscal quarter (taken as
one accounting  period) divided by four;  provided that no dividends may be paid
pursuant to this Section  8.06(a)(iii) if any Default or Event of Default exists
at the time of the payment of such cash  dividends  or would  exist  immediately
after giving effect thereto.

                                       44
<PAGE>

     (b)  The  Borrower will not,  and will not  permit any of its  Subsidiaries
to, create or otherwise  cause or suffer to exist any encumbrance or restriction
which prohibits or otherwise  restricts (i) the ability of any Subsidiary to (A)
pay dividends or make other  distributions or pay any  Indebtedness  owed to the
Borrower or any of its Subsidiaries,  as applicable,  (B) make loans or advances
to the  Borrower or any  Subsidiary,  as  applicable,  (C)  transfer  any of its
properties or assets to the Borrower or any  Subsidiary,  as applicable,  or (D)
guarantee the  Obligations or (ii) the ability of the Borrower or any Subsidiary
of the  Borrower to create,  incur,  assume or suffer to exist any Lien upon its
property  or  assets to secure  the  Obligations,  other  than  prohibitions  or
restrictions  existing  under or by reason of (I) this  Agreement  and the other
Credit  Documents,  (II) the Chartwell  Senior Notes,  (III) the Trenwick Senior
Notes and (IV) Legal Requirements.

     8.07  Transactions  with Affiliates.   The Borrower  will not, and will not
permit any Subsidiary to, enter into any  transaction or series of  transactions
with any Affiliate (excluding the Borrower or any Wholly-Owned Subsidiary of the
Borrower) other than on terms and conditions  substantially  as favorable to the
Borrower  or such  Subsidiary  as would be  obtainable  by the  Borrower or such
Subsidiary at the time in a comparable  arm's-length  transaction  with a Person
other than an Affiliate.

     8.08  Issuance of Stock.  (a) The Borrower  will not directly or indirectly
issue, sell,  assign,  pledge, or otherwise encumber or dispose of any shares of
its capital stock or other equity securities (or warrants,  rights or options to
acquire  shares or other equity  securities),  except (i) the issuance of common
stock (and warrants,  options and other rights to acquire common stock), so long
as no Event of Default  occurs  under  Section  9.09,  and (ii) the  issuance of
preferred  stock,  so long as (x) no part of such preferred stock is mandatorily
redeemable (whether on a scheduled basis or as a result of the occurrence of any
event or  circumstance)  and (y) any dividends  associated  with such  preferred
stock are solely payable in kind.

     (b) The  Borrower  will  not permit any  of  its  Subsidiaries  directly or
indirectly to issue, sell,  assign,  pledge, or otherwise encumber or dispose of
any shares of its capital stock or other equity securities (or warrants,  rights
or options to acquire  shares or other equity  securities)  of such  Subsidiary,
except (i) to the Borrower or to a Wholly-Owned  Subsidiary of the Borrower, and
(ii) to qualify directors if required by applicable law.

     8.09  Creation of  Subsidiaries. The  Borrower  shall not create or acquire
any Subsidiary other than (i) Regulated  Insurance Companies which are direct or
indirect  Wholly-Owned  Subsidiaries  of the  Borrower;  and (ii)  Non-Regulated
Companies which are not Subsidiaries of any Regulated Insurance Company, so long
as such new Subsidiary executes a counterpart of the Subsidiary Guaranty (to the
extent such Subsidiary is a Domestic Subsidiary and a Material  Subsidiary).  In
addition,  at the request of the Administrative  Agent, each new Subsidiary that
is required to execute any Credit  Document shall execute and deliver,  or cause
to be executed  and  delivered,  all other  relevant  documentation  of the type
described in Section 5 as such new Subsidiary  would have had to deliver if such
new Subsidiary were a Credit Party on the Initial Credit Event Date.

     8.10  Partnership Agreements.   The  Borrower  will  not   enter  into  any
partnership agreement as a general partner.

     8.11  Prepayments of Indebtedness,  Modifications of Agreements, etc.   The
Borrower will not, and will not permit any of its Subsidiaries to:

                                       45
<PAGE>

     (a) make (or give any notice in respect thereof) any voluntary or  optional
payment or prepayment or redemption  or  acquisition  for value of  (including,
without limitation,  by way of depositing with the trustee with respect thereto
money or securities  before due for the purpose of payment when due) or exchange
of, any Contingent Interest Notes or Trust Preferred Notes; and/or

     (b) amend or modify (or permit the amendment or modification of) any of the
terms or provisions  of the documents or agreements  evidencing or governing the
Contingent Interest Notes or the Trust Preferred Notes.

     8.12  Leverage Ratio.  The  Borrower  will  not  permit  the  ratio  of (i)
Consolidated  Indebtedness of the Borrower to (ii) Consolidated Total Capital of
the Borrower at any time to be greater than 0.325:1.00.

     8.13  Interest Coverage Ratio.  The Borrowe  will  not  permit the Interest
Coverage  Ratio for any Test Period ending during a period set forth below to be
less than the ratio set forth opposite such period below:

                  Period                             Ratio
                  ------                             -----
            Fiscal Year ending 12/31/00              2.25:1.00

            Fiscal Year ending 12/31/01              2.50:1.00

            Fiscal Year ending 12/31/02              2.75:1.00

            Thereafter                               3.00:1.00

     8.14 Minimum Risk Based Capital.  (a) The Borrower will not permit the Risk
Based Capital Ratio for Trenwick America Reinsurance Corporation to be less than
325%.

     (b) The  Borrower  will not  permit  the Risk Based Capital  Ratio  for any
Regulated  Insurance Company which is a Domestic Subsidiary (other than Trenwick
America Reinsurance Corporation) to be less than 275%.

     8.15  Minimum  Combined  Statutory  Surplus. The  Borrower  will not permit
the Regulated Insurance  Companies,  collectively,  on a Combined basis, to have
Statutory Surplus at any time of less than $400,000,000.

     8.16  Minimum Consolidated Tangible Net Worth. The Borrower will not permit
its Consolidated Tangible Net Worth to be less than $325,000,000 at any time.

     SECTION 9.  Events of Default.  Upon the occurrence of any of the following
specified events (each an "Event of Default"):

     9.01  Payments.  The  Borrower shall (i) default in the payment when due of
any principal of the Loans or any Unpaid Drawing, (ii) default, and such default
shall  continue for three or more Business  Days, in the payment when due of any
interest  on the  Loans or any Fees or (iii)  default,  and such  default  shall
continue  for five or more  Business  Days in the  payment of any other  amounts
owing hereunder or under any other Credit Document; or

                                       46
<PAGE>

     9.02  Representations, etc.  Any representation, warranty or statement made
or deemed made by the  Borrower or any other Credit Party herein or in any other
Credit  Document or in any statement or certificate  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; or

     9.03  Covenants.  Any Credit Party shall (a) default in the due performance
or observance by it of any term, covenant or agreement contained in Section 7.10
or 8 (except  for  Sections  8.01,  8.07 and  8.09),  or (b)  default in the due
performance or observance by it of any term,  covenant or agreement  (other than
those referred to in Section 9.01 or clause (a) of this Section 9.03)  contained
in this Agreement and such default shall continue  unremedied for a period of at
least 30 days; or

     9.04  Default  Under  Other  Agreements.   (a) The  Borrower or any of  its
Subsidiaries  shall (i)  default in any  payment  with  respect to  Indebtedness
(other than the  Obligations),  in excess of $10,000,000  individually or in the
aggregate,  for the  Borrower  and  its  Subsidiaries  (collectively,  "Material
Indebtedness"),  beyond the period of grace, if any,  provided in the instrument
or agreement  under which such  Indebtedness  was created or (ii) 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 trustee or
agent  on  behalf  of such  holder  or  holders)  to  cause  any  such  Material
Indebtedness  to  become  due  prior  to its  stated  maturity;  or (b) any such
Material  Indebtedness  of the  Borrower  or any of its  Subsidiaries  shall  be
declared  to be due and  payable,  or  required  to be  prepaid  other than by a
regularly  scheduled  required  prepayment or as a mandatory  prepayment (unless
such  required  pre-payment  or  mandatory  prepayment  results  from a  default
thereunder or an event of the type that constitutes an Event of Default),  prior
to the stated maturity thereof; or

     9.05  Bankruptcy,  etc.   The  Borrower  or  any  of its Subsidiaries shall
commence a voluntary case concerning  itself under Title 11 of the United States
Code  entitled  "Bankruptcy,"  as now or hereafter in effect,  or any  successor
thereto (the "Bankruptcy Code"); or an involuntary case is commenced against the
Borrower or any of its Subsidiaries and the petition is not controverted  within
10 days, or is not dismissed within 60 days, after  commencement of the case; or
a  custodian  (as defined in the  Bankruptcy  Code) is  appointed  for, or takes
charge of, all or  substantially  all of the  property of the Borrower or any of
its  Subsidiaries;  or  the  Borrower  or  any  of  its  Subsidiaries  commences
(including by way of applying for or consenting  to the  appointment  of, or the
taking  of  possession  by,  a  rehabilitator,   receiver,  custodian,  trustee,
conservator or liquidator  (collectively,  a "conservator")  of itself or all or
any  substantial  portion  of its  property)  any  other  proceeding  under  any
reorganization, arrangement, adjustment of debt, relief of debtors, dissolution,
insolvency, liquidation,  rehabilitation,  conservatorship or similar law of any
jurisdiction  whether now or hereafter in effect relating to the Borrower or any
of its Subsidiaries; or any such proceeding is commenced against the Borrower or
any of its Subsidiaries and remains  undismissed for a period of 60 days; or the
Borrower or any of its Subsidiaries is adjudicated insolvent or bankrupt; or any
order of relief or other order approving any such case or proceeding is entered;
or (a) any  Regulated  Insurance  Company  which is engaged in the  business  of
underwriting  insurance  and/or  reinsurance  in the United  States  suffers any
appointment of any conservator or the like for it or any substantial part of its
property,  or (b)  the  Borrower  or any of its  Subsidiaries  (other  than  any
Regulated  Insurance Company described in the immediately  preceding clause (a))
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 the Borrower or any of its Subsidiaries  makes a general assignment for
the benefit of creditors;  or any  corporate  action is taken by the Borrower or
any of its Subsidiaries for the purpose of effecting any of the foregoing; or

                                       47
<PAGE>

     9.06  ERISA.  (a)  Any  Plan  shall  fail  to satisfy the  minimum  funding
standard  required  for any plan year or part thereof  under  Section 412 of the
Code or Section 302 of ERISA or a waiver of such  standard or  extension  of any
amortization  period is  sought  or  granted  under  Section  412 of the Code or
Section  303 or 304  of  ERISA,  a  Reportable  Event  shall  have  occurred,  a
contributing  sponsor  (as  defined in Section  4001(a)(13)  of ERISA) of a Plan
subject  to  Title  IV of  ERISA  shall  be  subject  to the  advance  reporting
requirement of PBGC Regulation  Section 4043.61  (without regard to subparagraph
(b)(1)  thereof) and an event  described in subsection  .62, .63, .64, .65, .66,
 .67 or .68 of PBGC Regulation Section 4043 shall be reasonably expected to occur
with  respect  to such Plan  within  the  following  30 days,  any Plan which is
subject  to Title IV of ERISA  shall  have had or is  likely  to have a  trustee
appointed by the PBGC to administer  such Plan, any Plan or  Multiemployer  Plan
which is  subject  to Title IV of ERISA is,  shall  have been or is likely to be
terminated or to be the subject of termination proceedings under ERISA, any Plan
shall have an Unfunded  Current  Liability,  a contribution  required to be made
with respect to a Plan,  Multiemployer Plan or Foreign Pension Plan has not been
timely  made,  the  Borrower  or any  Subsidiary  of the  Borrower  or any ERISA
Affiliate has incurred or is likely to incur any liability to or on account of a
Plan or Multiemployer Plan under Section 409, 502(i),  502(l),  515, 4062, 4063,
4064, 4069, 4201, 4204 or 4212 of ERISA or Section  401(a)(29),  4971 or 4975 of
the Code or on account of a group  health plan (as defined in Section  607(1) of
ERISA or Section  4980B(g)(2)  of the Code) under  Section 4980B of the Code, or
the  Borrower or any  Subsidiary  of the  Borrower  has incurred or is likely to
incur  liabilities  pursuant to one or more employee  welfare  benefit plans (as
defined in Section 3(1) of ERISA) that provide benefits to retired  employees or
other former employees (other than as required by Section 601 of ERISA) or Plans
or Foreign Pension Plans, a "default," within the meaning of Section  4219(c)(5)
of ERISA,  shall occur with respect to any  Multiemployer  Plan;  any applicable
law,   rule  or  regulation  is  adopted,   changed  or   interpreted,   or  the
interpretation or administration thereof is changed, in each case after the date
hereof,  by any  governmental  authority or agency or by any court (a "Change in
Law"), or, as a result of a Change in Law, an event occurs following a Change in
Law, with respect to or otherwise  affecting any Plan or Multiemployer Plan; (b)
there shall result from any such event or events the  imposition of a lien,  the
granting of a security interest,  or a liability or a material risk of incurring
a liability;  and (c) such lien,  security  interest or liability,  individually
and/or in the aggregate,  in the opinion of the Required Banks has had, or could
reasonably be expected to have, a Material Adverse Effect; or

     9.07  Subsidiary Guaranty. The Subsidiary Guaranty or any provision thereof
shall cease to be in full force and effect,  or any Subsidiary  Guarantor or any
Person  acting  by or on  behalf  of such  Subsidiary  Guarantor  shall  deny or
disaffirm such Subsidiary Guarantor's  obligations under the Subsidiary Guaranty
or any Subsidiary  Guarantor  shall default in the due performance or observance
of any term,  covenant  or  agreement  on its part to be  performed  or observed
pursuant to the Subsidiary Guaranty; or

                                       48
<PAGE>

     9.08  Judgments.  One or more judgments or decrees shall be entered against
the Borrower or any of its Subsidiaries involving a liability, net of undisputed
reinsurance,  of  $10,000,000  or more in the case of any one such  judgment  or
decree or in the aggregate  for all such  judgments and decrees for the Borrower
and its  Subsidiaries  and any such  judgments  or  decrees  shall not have been
vacated,  discharged,  stayed or bonded  pending  appeal within 60 days from the
entry thereof; or

     9.09  Change of Control.  A Change of Control shall occur; or

     9.10 Senior Unsecured Debt Ratings. By the 90th day following the Effective
Date, the Borrower shall not have received a confirmed S&P Credit Rating (taking
into account the  Acquisition)  of at least BBB- and a confirmed  Moody's Credit
Rating (taking into account the Acquisition) of at least Baa3; or

     9.11   A.M. Best Ratings. Any Rated Ongoing Regulated Subsidiary shall fail
to have an A.M. Best claims paying rating of at least A-;

then, and in any such event, and at any time thereafter, if any Event of Default
shall then be  continuing,  the  Administrative  Agent  shall,  upon the written
request of the Required  Banks,  by written notice to the Borrower,  take any or
all  of  the  following  actions,   without  prejudice  to  the  rights  of  the
Administrative  Agent or any Bank to enforce its claims  against the Borrower or
any other Credit Party,  except as otherwise  specifically  provided for in this
Agreement  (provided that if an Event of Default specified in Section 9.05 shall
occur with respect to the Borrower, the result which would occur upon the giving
of written notice by the Administrative Agent as specified in clauses (i), (ii),
(iii) and (v) below  shall  occur  automatically  without the giving of any such
notice): (i) declare the Total Revolving Loan Commitment  terminated,  whereupon
the  Revolving  Loan   Commitment  of  each  Bank  shall   forthwith   terminate
immediately,  (ii)  declare  the Total  Unutilized  L/C  Commitment  terminated,
whereupon the Unutilized L/C Commitment of each Bank shall  forthwith  terminate
immediately,  (iii) declare the principal of and any accrued interest in respect
of all Loans  and all  other  Obligations  owing  hereunder  and under the other
Credit  Documents to be,  whereupon  the same shall  become,  forthwith  due and
payable without presentment, demand, protest or other notice of any kind, all of
which are hereby waived by the Borrower,  (iv) terminate any Letter of Credit if
permitted in accordance with its terms,  and (v) direct the Borrower to pay (and
the Borrower  hereby agrees upon receipt of such notice,  or upon the occurrence
of any Event of Default specified in Section 9.05, to pay) to the Administrative
Agent at the  Payment  Office an amount of cash to be held as  security  for the
Borrower's  reimbursement  obligations  in respect of all Letters of Credit then
outstanding,  equal to the  aggregate  Stated Amount of all Letters of Credit at
such time.

                                       49

<PAGE>

     SECTION 10.  Definitions.  As used herein,  the following  terms shall have
the meanings herein specified  unless the context  otherwise  requires.  Defined
terms in this Agreement  shall include in the singular  number the plural and in
the plural the singular:

     "Acquisition" shall mean the merger of Chartwell with and into the Borrower
on October 27, 1999 pursuant to the Acquisition Agreement.

     "Acquisition  Agreement"  shall mean the Agreement of Merger dated June 21,
1999 between the Borrower and Chartwell.

     "Acquisition  Documents" shall mean the Acquisition Agreement and the Stock
Option  Agreement  dated June 21,  1999  between  the  Borrower  and  Chartwell,
including  the  Annexes  and  Exhibits  thereto,  as the same may be  amended or
modified pursuant to the terms thereof.

     "Administrative  Agent"  shall  have  the  meaning  provided  in the  first
paragraph  of  this   Agreement   and  shall   include  any   successor  to  the
Administrative Agent appointed pursuant to Section 11.09.

     "Affected  Eurodollar  Loans"  shall have the  meaning  provided in Section
4.02(ii)(b).

     "Affiliate"  shall  mean,  with  respect to any  Person,  any other  Person
directly or indirectly  controlling  (including but not limited to all directors
and officers of such Person),  controlled by, or under direct or indirect common
control with, such Person.  A Person shall be deemed to control a corporation if
such Person possesses, directly or indirectly, the power (i) to vote 10% or more
of the securities  having ordinary voting power for the election of directors of
such  corporation or (ii) to direct or cause the direction of the management and
policies  of  such   corporation,   whether  through  the  ownership  of  voting
securities, by contract or otherwise.

     "Agreement" shall mean this Credit Agreement,  as the same may be from time
to time modified, amended and/or supplemented.

     "Alternate  Currency" shall mean each Primary  Alternate  Currency and each
Other Alternate Currency.

     "Alternate  Currency  Letter of Credit"  shall mean the Letter of Credit to
the extent denominated in an Alternate Currency.

     "Alternate  Currency Loan" shall mean any Revolving Loan  denominated in an
Alternate Currency.

     "Annual Statement" shall mean the annual financial statement required to be
filed  by  any  Regulated  Insurance  Company  with  the  Applicable   Insurance
Regulatory Authority.

                                       50
<PAGE>
     "Applicable  Commitment  Fee  Percentage"  shall  mean,  for any  day,  the
percentage set forth below opposite the Applicable Period then in effect:

          Applicable Period              Applicable Commitment Fee Percentage
          -----------------              ------------------------------------
            Category A Period              0.200%

            Category B Period              0.250%

            Category C Period              0.300%

            Category D Period              0.375%

            Category E Period              0.500%

     "Applicable Credit Rating" shall mean (i) the Moody's Credit Rating and the
S&P Credit  Rating,  if the same;  (ii) if the Moody's Credit Rating and the S&P
Credit Rating differ by one rating level, the higher of such Ratings;  and (iii)
if the Moody's  Credit  Rating and the S&P Credit  Rating  differ by two or more
rating levels,  the Applicable Credit Rating shall be one rating level below the
higher of such  Ratings.  If only one Rating  Agency rates the senior  unsecured
debt of the Borrower,  such rating shall be the Applicable  Credit Rating unless
the other Rating Agency ceased rating such senior  unsecured debt at the request
of the Borrower,  in which case the Applicable  Credit Rating shall be deemed to
be below BBB-/Baa3.

     "Applicable  Insurance  Regulatory  Authority"  shall mean,  when used with
respect to any Regulated  Insurance  Company,  (x) the  insurance  department or
similar  administrative  authority  or  agency  located  in each  state or other
jurisdiction  (foreign or domestic) in which such Regulated Insurance Company is
domiciled,  (y) the insurance  department,  authority or agency in each state or
other  jurisdiction  (foreign or  domestic)  in which such  Regulated  Insurance
Company is  licensed,  to the extent it has  regulatory  jurisdiction  over such
Regulated  Insurance  Company,   and  (z)  any  Federal  or  national  insurance
regulatory  department,  authority  or agency  that may be created  and that has
regulatory jurisdiction over such Regulated Insurance Company.

     "Applicable  Lloyds  Coming in Line Date"  shall mean the Lloyds  Coming in
Line Date occurring in November, 2000; provided that if in any year in which the
Applicable Lloyds Coming in Line Date is scheduled to occur, the expiration date
of any Letter of Credit is  extended  in  accordance  with the terms  thereof as
provided in Section  2.05(a),  then the  Applicable  Lloyds  Coming in Line Date
shall be extended to the Lloyds Coming in Line Date occurring in the immediately
succeeding  year (e.g.,  if in 2000, the expiration date of any Letter of Credit
is extended  from  December 31, 2004 to December 31, 2005 as provided in Section
2.05(a),  the  Applicable  Lloyds Coming in Line Date shall be extended from the
Lloyds Coming in Line Date  occurring in November,  2000 to the Lloyds Coming in
Line Date occurring in November, 2001).

     "Applicable  Margin" shall mean,  for any day, the rate per annum set forth
below opposite the Applicable Period then in effect:

                                         Applicable Margin
                                         -----------------
    Applicable Period           Eurodollar Loans     Base Rate Loans
    -----------------           ----------------     -----------------
    Category A Period                1.10%                 0.00%
    Category B Period                1.30%                 0.05%
    Category C Period                1.50%                 0.25%
    Category D Period                1.75%                 0.50%
    Category E Period                2.00%                 0.75%

     "Applicable  Period"  shall mean,  at any time,  the period set forth below
then in effect:
     Applicable Period                            Criteria
     -----------------                            --------
     Category A Period          The Applicable Credit Rating is A-/A3 or above.

     Category B Period          The Applicable Credit Rating is BBB+/Baa1.

     Category C Period          The Applicable Credit Rating is BBB/Baa2.

     Category D Period          The Applicable Credit Rating is BBB-/Baa3.

     Category E Period          None of a Category A Period, a Category B
                                Period  a Category C Period nor a Category D
                                Period is in effect at such time.

Notwithstanding  anything  to the  contrary  set forth  above,  (i) at all times
during the first three  months  following  the Initial  Credit  Event Date,  the
Applicable  Period  shall be a  Category C Period,  and (ii) if  neither  Rating
Agency rates the  unsecured  senior debt of the  Borrower,  then the  Applicable
Period shall be a Category E Period.

                                       51
<PAGE>

     "Approved Bank" shall have the meaning  provided in the definition of "Cash
Equivalents."

     "Approved  Company"  shall have the meaning  provided in the  definition of
"Cash Equivalents."

     "Approved Credit  Institution"  shall mean a credit  institution within the
meaning of the First Council Directive on the coordination 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 comprising a Member's Funds at Lloyd's.

     "Approved  Currency"  shall mean each of Dollars,  each  Primary  Alternate
Currency and each Other Alternate Currency.

     "Asset Sale" shall mean any sale, transfer or other disposition effected on
or after the Effective  Date by the Borrower or any of its  Subsidiaries  of (i)
any capital  stock or equity  securities of a Subsidiary of the Borrower or (ii)
any other  asset,  in each case to any Person  other than the Borrower or any of
its  Wholly-Owned  Subsidiaries  (other  than  (a)  sales,  transfers  or  other
dispositions in the ordinary course of business,  (b) sales,  transfers or other
dispositions of investments made or maintained pursuant to Section 8.05(b), (g),
(i) and (o), and (c) other sales,  transfers and  dispositions the Net Available
Proceeds from which do not exceed $1,000,000).

     "Assignment and Assumption  Agreement"  shall have the meaning  provided in
Section 12.04(b).

     "Associated Cost Rate" shall mean, with respect to each Interest Period for
Pounds  Sterling-denominated Loans, the costs (expressed as a percentage rounded
up to the nearest four decimal places and as determined on the first day of such
Interest Period and any three month  anniversary  thereof by the  Administrative
Agent) of compliance  with then existing  requirements of the Bank of England in
respect of Loans denominated in Pounds Sterling.

     "Authorized Control Level" shall mean "Authorized Control Level" as defined
by the NAIC from time to time and as  applied  in the  context of the Risk Based
Capital Guidelines  promulgated by the NAIC (or any term substituted therefor by
the NAIC).

     "Authorized  Officer"  shall mean, as to any Person,  any senior officer of
such  Person  designated  as such  in  writing  by such  Person  to,  and  found
acceptable by, the Administrative Agent.

     "Available  Total  Revolving Loan  Commitment"  shall mean (i) prior to the
date on which all principal of and accrued  interest and premium (if any) on the
Chartwell  Senior  Notes  have been paid in full,  an amount  equal to the Total
Revolving Loan Commitment at such time minus $48,750,000,  and (ii) on and after
the date on which all principal of and accrued  interest and premium (if any) on
the  Chartwell  Senior Notes have been paid in full,  the Total  Revolving  Loan
Commitment at such time.

     "Bank"  shall have the  meaning  provided  in the first  paragraph  of this
Agreement.

     "Bank Default" shall mean (i) the refusal (which has not been retracted) of
a Bank to make  available  its portion of any  Borrowing or any Letter of Credit
drawing or (ii) a Bank  having  notified  the  Administrative  Agent  and/or the
Borrower  that it does not  intend to comply  with its  obligations  under  this
Agreement with respect to its Revolving Loan  Commitment or L/C  Commitment,  in
the case of either clause (i) or (ii) above, as a result of the appointment of a
receiver or conservator with respect to such Bank at the direction or request of
any regulatory agency or authority.

                                       52
<PAGE>

     "Bankruptcy Code" shall have the meaning provided in Section 9.05.

     "Base  Rate" at any time shall mean the higher of (x) the rate which is 1/2
of 1% in excess of the Federal  Funds  Effective  Rate as in effect at such time
and (y) the Prime Lending Rate as in effect at such time.

     "Base  Rate  Loan"  shall  mean each  Loan  bearing  interest  at the rates
provided in Section 1.08(a).

     "Benchmark  Statement"  shall  mean,  as of any date,  an annual  financial
statement of the Regulated  Insurance  Companies as would be prepared as of such
date utilizing the identical  format  utilized by Trenwick  America  Reinsurance
Corporation in preparing its December 31, 1998 Annual  Statement  filed with the
Insurance Department of the State of Connecticut,  with each page, line item and
column  of a  Benchmark  Statement  to  contain  the same  type of  information,
computed in the same manner, as contained in the identically numbered page, line
item and column of such Annual Statement.

     "Borrower"  shall have the meaning  provided in the first paragraph of this
Agreement.

     "Borrower Cash Flow" shall mean,  for any period,  the sum of (i) dividends
paid by direct  Subsidiaries of the Borrower to the Borrower  (determined as if,
during such period,  each direct and indirect  Subsidiary of the Borrower paid a
dividend to its parent  corporation in an amount equal to (x) for each Regulated
Insurance  Company  which is a  Domestic  Subsidiary,  the  aggregate  amount of
dividends  which  such  Regulated  Insurance  Company  could  pay to its  parent
corporation  under Legal  Requirements  during such  period  (without  obtaining
extraordinary   dividend  approval  from  any  Applicable  Insurance  Regulatory
Authority), in each case whether or not such dividends are actually paid and (y)
for each  Regulated  Insurance  Company which is a Foreign  Subsidiary  and each
Non-Regulated  Company, the net income of such Company for such period, (ii) tax
sharing payments made by Regulated  Insurance Companies directly to the Borrower
during such period  (less cash taxes paid by the Borrower  during such  period),
and (iii) payments during such period of principal and interest on surplus notes
issued by Regulated Insurance Companies to the Borrower.

     "Borrowing"  shall mean the  incurrence by the Borrower of one Type of Loan
(A) denominated in Dollars that are Base Rate Loans on a pro rata basis from all
of the Banks and (B) of a single Approved  Currency that are Eurodollar Loans on
a pro rata  basis  from  all of the  Banks on a given  date (or  resulting  from
conversions  on a given date),  having in the case of Eurodollar  Loans the same
Interest  Period,  provided  that Base Rate Loans  incurred  pursuant to Section
1.10(b) shall be considered part of any related Borrowing of Eurodollar Loans.

     "Business  Day"  shall mean (i) for all  purposes  other than as covered by
clause (ii) below, any day, excluding  Saturday,  Sunday and any day which shall
be in  the  City  of  New  York  a  legal  holiday  or a day  on  which  banking
institutions are authorized by law or other  governmental  actions to close, and
(ii) with respect to all notices and  determinations  in  connection  with,  and
payments of principal, interest on Unpaid Drawings and other amounts, Eurodollar
Loans and Alternate  Currency Letters of Credit, any day which is a Business Day
described in clause (i) and which is also a day for trading by and between banks
in the London interbank market and with respect to any notices or determinations
in respect of Euros,  which is customarily a "Business Day" for such notices and
determinations.

                                       53
<PAGE>

     "Capital  Lease" as  applied  to any  Person,  shall  mean any lease of any
property  (whether real,  personal or mixed) by that Person as lessee which,  in
conformity with GAAP, is, or is required to be, accounted for as a capital lease
on the balance sheet of that Person.

     "Capitalized  Lease  Obligations"  shall mean all obligations under Capital
Leases of the  Borrower  or any of its  Subsidiaries  in each case  taken at the
amount thereof accounted for as liabilities in accordance with GAAP.

     "Cash  Equivalents"  shall mean (i) securities issued or directly and fully
guaranteed  or  insured  by the  United  States  of  America  or any  agency  or
instrumentality  thereof  (provided that the full faith and credit of the United
States of America is pledged in support  thereof) having  maturities of not more
than one year from the date of acquisition,  (ii) U.S. dollar  denominated  time
deposits,  certificates  of  deposit  and  bankers  acceptances  of (x) any FDIC
insured  bank,  in amounts up to the FDIC  insured  limit,  (y) any Bank  having
capital  and surplus in excess of  $500,000,000  or the U.S.  dollar  equivalent
thereof or (z) any bank whose short-term  commercial paper rating from S&P is at
least  A-1 or the  equivalent  thereof  or from  Moody's  is at least P-1 or the
equivalent  thereof  (any such  bank,  an  "Approved  Bank"),  in each case with
maturities  of not  more  than one year  from  the  date of  acquisition,  (iii)
commercial paper issued by any Bank or Approved Bank or by the parent company of
any Bank or Approved Bank and commercial  paper issued by, or guaranteed by, any
industrial or financial company with a short-term  commercial paper rating of at
least A-1 or the  equivalent  thereof  by S&P or at least P-1 or the  equivalent
thereof by Moody's (any such company, an "Approved  Company"),  or guaranteed by
any  industrial  company with a long term unsecured debt rating of at least A or
A2, or the equivalent of each thereof,  from S&P or Moody's, as the case may be,
and in each case maturing within six months after the date of acquisition,  (iv)
commercial paper of any United States municipal, state or local government rated
at least A-1 or the equivalent  thereof by S&P or at least P-1 or the equivalent
thereof by Moody's and maturing  within one year after the date of  acquisition,
(v) any fund or funds  investing  solely in investments of the type described in
clauses  (i) through  (iv) above,  and (vi)  agreements  to sell and  repurchase
direct  obligations of, or obligations that are fully guaranteed as to principal
and interest by, the U.S. Treasury,  such agreements to be with primary treasury
dealers,  to be evidenced by standard  industry forms and to have  maturities of
not  more  than six  months  from the  date of  commencement  of the  repurchase
transaction.

     "Cash  Proceeds"  shall mean, with respect to any Asset Sale, the aggregate
cash payments  (including any cash received by way of deferred  payment pursuant
to a note receivable  issued in connection with such Asset Sale,  other than the
portion of such deferred  payment  constituting  interest,  but only as and when
received)  received by the Borrower  and/or any Subsidiary from such Asset Sale,
provided that any such proceeds received in currency other than Dollars shall be
converted into Dollars at the spot exchange rate for the currency in question on
the date of receipt by the Borrower and/or its Subsidiaries of such proceeds.

     "Change in Law" shall have the meaning provided in Section 9.06.

     "Change  of  Control"  shall mean (i) any  Person or  "group"  (within  the
meaning of Rule 13d-5 of the  Securities  Exchange Act of 1934,  as in effect on
the date hereof), shall (A) have acquired beneficial ownership of 30% or more on
a fully  diluted  basis of the  economic and voting  interest in the  Borrower's
capital stock or (B) have obtained the power (whether or not exercised) to elect
a majority of the  Borrower's  directors  or (ii) the Board of  Directors of the
Borrower shall not consist of a majority of Continuing Directors.

     "Chartwell" shall mean Chartwell Re Corporation, a Delaware corporation.

     "Chartwell Re Holdings"  shall  mean   Chartwell  Re  Holdings Corporation,
a Delaware corporation.

     "Chartwell Senior Notes"  shall  mean  the  10-1/4%  Senior  Notes Due 2004
originally  issued  by  Chartwell  and  subsequently  assumed  by  Chartwell  Re
Holdings.

     "Chase" shall mean The Chase Manhattan  Bank,  together with its successors
by merger.

                                       54
<PAGE>

     "Code" shall mean the Internal  Revenue Code of 1986,  as amended from time
to time, and the regulations promulgated and rulings issued thereunder.  Section
references  to the  Code  are to the  Code,  as in  effect  at the  date of this
Agreement  and  any  subsequent  provisions  of the  Code,  amendatory  thereof,
supplemental thereto or substituted therefor.

     "Combined"  shall mean, when used with reference to any amount or financial
statement,  such amount as determined,  or financial statement as prepared, on a
combined  basis  for  all  of  the  specified   Persons  and  their   respective
Subsidiaries; provided that any such amount or financial statement determined or
prepared  for any  specified  Person and its  Subsidiaries  separately  shall be
determined or prepared on a consolidated  basis in accordance  with GAAP or SAP,
as the case may be.

     "Commitment"  shall mean, with respect to each Bank, such Bank's  Revolving
Loan Commitment (if any) and such Bank's L/C Commitment (if any).

     "Confidential Bank Memorandum" shall mean the Confidential Bank Memorandum,
dated October,  1999,  distributed to Banks and prospective  Banks in connection
with this Agreement.

     "Confidential  Information"  shall  have the  meaning  provided  in Section
12.15.

     "Consolidated   Indebtedness"  shall  mean,  at  any  time,  the  aggregate
outstanding  principal  amount  of all  Indebtedness  of the  Borrower  and  its
Subsidiaries at such time determined on a consolidated  basis in accordance with
GAAP, but excluding  therefrom (i) the Contingent Interest Notes, (ii) the Trust
Preferred  Securities (but including  therein the portion,  if any, of the Trust
Preferred  Securities which exceeds 15% of Consolidated Total Capital) and (iii)
the Letter of Credit and all letters of credit issued under Section  8.04(d) (so
long as no drawing has occurred thereunder) .

     "Consolidated  Interest  Expense"  shall mean, for any period and as to any
Person,  the sum,  without  duplication,  of (i)  total  cash  interest  expense
(including  interest paid in connection with the Trust Preferred  Securities and
the interest  component in respect of Capital  Lease  Obligations  in accordance
with GAAP) of such Person and its Subsidiaries  during such period determined on
a consolidated basis in accordance with GAAP, including, without limitation, all
commissions,  discounts  and other fees and charges owed with respect to letters
of credit and bankers'  acceptance  financing and net costs under  Interest Rate
Agreements,  but excluding however, any amortization of deferred financing costs
plus (ii) all  dividends  on  preferred  stock paid by such  Person  during such
period.

     "Consolidated Net Income" shall mean, for any period,  the consolidated net
after tax income (or loss) of the Borrower and its  Subsidiaries  determined  in
accordance with GAAP.

     "Consolidated  Net Worth" shall mean,  with respect to any Person,  the Net
Worth of such Person and its Subsidiaries  determined on a consolidated basis in
accordance with GAAP after appropriate  deduction for any minority  interests in
Subsidiaries.

                                       55
<PAGE>

     "Consolidated  Tangible  Net  Worth"  shall  mean,  as of the  date  of any
determination thereof,  Consolidated Net Worth of the Borrower at such time less
the amount of all intangible items,  including,  without  limitation,  goodwill,
franchises,  licenses,  patents,  trademarks,  trade names, copyrights,  service
marks,  brand  names,  write-ups of assets and any  unallocated  excess costs of
investments  in  Subsidiaries  over equity in underlying  net assets at dates of
acquisition.

     "Consolidated  Total  Capital"  shall  mean,  at any  time,  the sum of (i)
Consolidated  Indebtedness  (determined  without giving effect to the enumerated
exclusions  set forth in  clauses  (i) and (ii)  therein)  at such time and (ii)
Consolidated Net Worth of the Borrower at such time.

     "Contingent  Interest  Notes" shall mean the Contingent  Interest Notes Due
2006  originally  issued by Piedmont  Management  Company Inc. and in respect of
which the Borrower is the obligor as of the Effective Date.

     "Contingent  Obligations"  shall mean, as to any Person,  any obligation of
such Person  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,
without  limitation,  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  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, however, that
the term Contingent Obligation shall not include (x) endorsements of instruments
for  deposit  or  collection  in the  ordinary  course  of  business  or (y) any
obligations  of any  Regulated  Insurance  Company  under  Insurance  Contracts,
Reinsurance  Agreements or  Retrocession  Agreements  (including  any Liens with
respect thereto).  The amount of any Contingent Obligation shall be deemed to be
an amount equal to the stated or determinable  amount of the primary  obligation
in  respect  of which such  Contingent  Obligation  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.

     "Continuing  Directors"  shall mean the  directors  of the  Borrower on the
Initial Credit Event Date and each other director if such director's  nomination
for the election to the Board of Directors of the Borrower is  recommended  by a
majority of the then Continuing Directors.

     "Conversion Date" shall mean the 364th day following the Effective Date.

     "Credit Documents" shall mean this Agreement,  the Notes and the Subsidiary
Guaranty.

     "Credit Event" shall mean the making of any Revolving Loan, the issuance of
any  Letter of Credit  or an  increase  in the  Stated  Amount of any  Letter of
Credit.

                                       56
<PAGE>

     "Credit Party" shall mean the Borrower and each Subsidiary Guarantor.

     "Default" shall mean any event, act or condition which with notice or lapse
of time, or both, would constitute an Event of Default.

     "Defaulting  Bank" shall mean any Bank with respect to which a Bank Default
is in effect.

     "Dividends" shall have the meaning provided in Section 8.06.

     "Documentation  Agent"  shall  have  the  meaning  provided  in  the  first
paragraph of this Agreement.

     "Dollar Equivalent" shall mean, at any time for the determination  thereof,
the amount of Dollars  which could be purchased  with the amount of the relevant
Alternate  Currency  involved  in such  computation  at the spot  exchange  rate
therefor as quoted by the Administrative Agent as of 11:00 A.M. (London time) on
the date three Business Days prior to the date of any determination  thereof for
purchase on such date.

     "Dollars"  and the "$" shall mean freely  transferable  lawful money of the
United States.

     "Domestic  Subsidiary"  shall mean each Subsidiary of the Borrower which is
not a Foreign Subsidiary.

     "Effective Date" shall have the meaning provided in Section 12.10.

     "EMU  Legislation"  shall mean the  legislative  measures  of the  European
Council for the  introduction  of,  changeover  to or  operation  of a single or
unified European currency.

     "ERISA" shall mean the Employee  Retirement Income Security Act of 1974, as
amended from time to time and the  regulations  promulgated  and rulings  issued
thereunder.  Section  references to ERISA are to ERISA, as in effect at the date
of this Agreement and any subsequent  provisions of ERISA,  amendatory  thereof,
supplemental thereto or substituted therefor.

       "ERISA  Affiliate" shall mean each person (as defined in Section 3(9)  of
ERISA) which together with the Borrower or a Subsidiary of the Borrower would be
deemed to be a "single employer" (i) within the meaning of Section 414(b) or (c)
of the Code,  and for the purpose of Section 302 of ERISA  and/or  Section  412,
4971, 4977 and/or each "applicable section" under Section 414(t)(z) of the code,
within the meaning of Section 414(b), (c), (m) or (o) of the Code.

     "Euro Equivalent"  shall mean, at any time for the  determination  thereof,
the amount of Euros which could be purchased with the amount of Dollars involved
in such  computation  at the  spot  exchange  rate  therefor  as  quoted  by the
Administrative  Agent as of 11:00 A.M.  (London time) on the date three Business
Days prior to the date of any determination thereof for purchase on such date.

                                       57
<PAGE>

     "Euro LIBOR" shall mean,  for each Interest  Period  applicable to any Loan
denominated  in Euros,  the rate per annum  that  appears on page 3750 (or other
appropriate page if such currency does not appear on such page) of the Dow Jones
Telerate  Screen  (or any  successor  page) for Euro  deposits  with  maturities
comparable  to such Interest  Period as of 11:00 A.M.  (London time) on the date
which is three Business Days prior to the  commencement  of such Interest Period
or, if such a rate does not  appear on the Dow  Jones  Telerate  Screen  (or any
successor  page),  the offered  quotations  to  first-class  banks in the London
interbank  market  by Chase  for Euro  deposits  of  amounts  in same day  funds
comparable  to the  outstanding  principal  amount of such Loan with  maturities
comparable to such Interest Period  determined as of 11:00 A.M. (London time) on
the date which is three Business Days prior to the commencement of such Interest
Period.

     "Eurodollar Loan" shall mean each Loan that at the election of any Borrower
is bearing interest at the rate provided in Section 1.08(b).

     "Euros" shall mean the single  currency of  participating  member states of
the European Union.

     "Event of Default" shall have the meaning provided in Section 8.

     "Federal Funds Effective Rate" shall mean for any period, a fluctuating per
annum  interest  rate  equal for each day  during  such  period to the  weighted
average of the rates on overnight Federal Funds transactions with members of the
Federal Reserve System arranged by Federal Funds brokers,  as published for such
day (or, if such day is not a Business Day, for the next preceding Business Day)
by the Federal  Reserve  Bank of New York,  or, if such rate is not so published
for any day which is a Business Day, the average of the  quotations for such day
on such  transactions  received by the  Administrative  Agent from three Federal
Funds brokers of recognized standing selected by the Administrative Agent.

     "Fees"  shall mean all  amounts  payable  pursuant  to, or  referred to in,
Section 3.01.

     "Financial  Reinsurance  Agreement"  shall  mean  a  reinsurance  agreement
covering any transaction in which any Regulated Insurance Company cedes business
that does not meet the conditions for reinsurance  accounting as provided by the
Financial  Accounting  Standards  Board in  Statement  of  Financial  Accounting
Standards No. 113, as the same may be revised,  replaced,  or supplemented  from
time to time.

     "Foreign  Pension  Plan"  shall  mean any plan,  fund  (including,  without
limitation, any superannuation fund) or other similar program, other than social
security  or social  insurance,  established  or  maintained  outside the United
States  of  America  by the  Borrower  or any one or  more  of its  Subsidiaries
primarily  for the benefit of  employees  of the  Borrower or such  Subsidiaries
residing outside the United States of America, which plan, fund or other similar
program  provides,  or results in,  retirement  income,  a deferral of income in
contemplation of retirement or severance or termination payments to be made upon
termination of employment, and which plan is not subject to ERISA or the Code.

     "Foreign  Subsidiary"  shall mean each  Subsidiary  of the Borrower that is
incorporated  under the laws of any jurisdiction other than the United States of
America, any State thereof or any territory thereof.

                                       58
<PAGE>

     "Funds at Lloyds"  shall have the meaning  provided  in  paragraph 4 of the
Membership Byelaw (No. 17 of 1993).

     "GAAP" shall mean generally  accepted  accounting  principles in the United
States of  America;  it being  understood  and  agreed  that  determinations  in
accordance with GAAP for purposes of Section 8, including  defined terms as used
therein, are subject (to the extent provided therein) to Section 12.07(a).

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

     "Indebtedness"  of any Person  shall  mean  (without  duplication)  (i) all
indebtedness of such Person for borrowed money, (ii) the deferred purchase price
of assets  or  services  which in  accordance  with  GAAP  would be shown on the
liability side of the balance sheet of such Person, (iii) the face amount of all
letters  of  credit  issued  for  the  account  of  such  Person  and,   without
duplication,  all drafts drawn  thereunder,  (iv) all  Indebtedness  of a second
Person secured by any Lien on any property  owned by such first Person,  whether
or not such  Indebtedness  has been assumed,  (v) the  principal  portion of all
Capitalized  Lease  Obligations  of such Person,  (vi) all  obligations  of such
Person to pay a specified  purchase  price for goods or services  whether or not
delivered or accepted, i.e., take-or-pay and similar obligations,  (vii) the net
termination  obligations of such Person under Interest Rate Agreements and Other
Hedging  Agreements,  calculated  as of  any  date  as if  such  agreement  were
terminated  as of  such  date,  (viii)  all  obligations  of such  Person  under
Financial  Reinsurance  Agreements and (ix) all  Contingent  Obligations of such
Person;  provided that Indebtedness shall not include trade payables  (including
obligations  under  insurance  contracts and  reinsurance  payables) and accrued
expenses, in each case arising in the ordinary course of business.

     "Initial  Credit Event Date" shall mean the date of the  occurrence  of the
initial Credit Event.

     "Insurance  Business"  shall mean one or more  aspects of the  business  of
selling, issuing or underwriting insurance or reinsurance.

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

     "Interest Coverage Ratio" shall mean, for any Test Period, the ratio of (a)
Borrower Cash Flow for such Test Period to (b) Consolidated Interest Expense for
such Test Period; provided that (i) for the Test Period ending on or about March
31, 2000,  Consolidated  Interest  Expense and the portion of Borrower Cash Flow
determined  by  reference  to net  income  shall  be  the  actual  such  amounts
calculated  for such Test Period  multiplied  by 4.00 (other than the portion of
Consolidated  Interest  Expense for such Test Period incurred in connection with
the Trust  Preferred  Securities  and  Chartwell  Senior  Notes  which  shall be
multiplied by 2.00),  (ii) for the Test Period ending on or about June 30, 2000,
Consolidated  Interest  Expense and the portion of Borrower Cash Flow determined
by reference to net income shall be the actual such amounts  calculated for such
Test Period  multiplied by 2.00 and (iii) for the Test Period ending on or about
September 30, 2000,  Consolidated  Interest  Expense and the portion of Borrower
Cash Flow determined by reference to net income shall be the actual such amounts
calculated  for such Test Period  multiplied  by 1.33 (other than the portion of
Consolidated  Interest  Expense for such Test Period incurred in connection with
the Trust  Preferred  Securities  and Chartwell  Senior Notes which shall be the
actual such amounts for such Test Period).

                                       59
<PAGE>

     "Interest  Period" shall mean,  with respect to any  Eurodollar  Loan,  the
interest period applicable thereto, as determined pursuant to Section 1.09.

     "Interest  Rate  Agreement"  shall mean any interest  rate swap  agreement,
interest  rate cap  agreement,  interest  rate collar  agreement,  interest rate
hedging agreement or other similar agreement or arrangement.

     "Issuing Agent" shall mean Chase Manhattan International Limited.

     "Issuing Country" shall have the meaning provided in Section 12.18.

     "Judgment Currency" shall have the meaning provided in Section 12.17(a).

     "Judgment  Currency  Conversion  Date" shall have the  meaning  provided in
Section 12.17(a).

     "L/C Bank" shall mean each Bank with an L/C Commitment.

     "L/C  Commitment"  shall mean,  with  respect to each Bank,  the amount set
forth  opposite such Bank's name on Annex I directly  below the column  entitled
"L/C  Commitment,"  as the same may be reduced  from time to time or  terminated
pursuant to Sections 3.02, 3.03 and/or 9.

     "L/C Commitment Fee" shall have the meaning provided in Section 3.01(b).

     "L/C  Exposure"  of any L/C Bank at any time shall mean such L/C Bank's L/C
Percentage of the aggregate  Stated Amount of all outstanding  Letters of Credit
at such time.

     "L/C Issuance Expiration Date" shall mean the earlier of (i) the Applicable
Lloyds  Coming  in Line  Date  and  (ii) the  first  date on  which a Notice  of
Non-Extension is delivered to Lloyds in accordance with Section 2.05(a).

     "L/C Maturity  Date" shall mean, at any time, the later of (i) December 31,
2004 and (ii) the  latest  expiration  date of any  Letter of  Credit  issued in
accordance with the terms of this Agreement.

     "L/C  Percentage" of any Bank at any time shall mean a fraction  (expressed
as a percentage)  the  numerator of which is the L/C  Commitment of such Bank at
such time and the denominator of which is the Total L/C Commitment at such time,
provided that if the L/C  Percentage  of any Bank is to be determined  after the
Total L/C Commitment has been terminated,  then the L/C Percentages of the Banks
shall be  determined  immediately  prior  (and  without  giving  effect) to such
termination.

     "L/C Supportable Obligations" shall mean the obligations of the Borrower or
its Subsidiaries to Lloyds.

                                       60
<PAGE>

     "Legal  Requirements" shall mean all applicable laws, rules and regulations
made  by any  governmental  body or  regulatory  authority  (including,  without
limitation,  any Applicable Insurance Regulatory  Authority) having jurisdiction
over the Borrower or a Subsidiary of the Borrower.

     "Letter of Credit" shall have the meaning provided in Section 2.01(a).

     "Letter of Credit Fee" shall have the meaning provided in Section 3.01(c).

     "Letter  of Credit  Outstandings"  shall  mean,  at any  time,  the sum of,
without duplication,  (i) the aggregate Stated Amount of all outstanding Letters
of Credit and (ii) the aggregate amount of all Unpaid Drawings in respect of all
Letters of Credit.

     "Letter of Credit  Request"  shall  have the  meaning  provided  in Section
2.02(a).

     "LIBOR" shall mean (i) with respect to any  Borrowing of Loans  denominated
in Dollars or a Primary  Alternate  Currency,  the relevant interest rate, i.e.,
U.S.  LIBOR,  Pounds  Sterling  LIBOR or Euro LIBOR and (ii) with respect to any
Borrowing of Loans  denominated in an Other  Alternate  Currency,  such rate per
annum as shall be  agreed  upon at the time such  Other  Alternate  Currency  is
approved.

     "Lien" shall mean any mortgage,  pledge,  security  interest,  encumbrance,
lien  or  charge  of any  kind  (including  any  agreement  to  give  any of the
foregoing,  any conditional sale or other title retention agreement or any lease
in the nature thereof).

     "Lloyds"  shall mean the  Society  incorporated  by Lloyd's Act 1871 by the
name of Lloyd's.

     "Lloyds Coming in Line Date" shall mean, for any year, the Lloyds coming in
line date for such year (which date shall occur between November 20 and November
30 of each year, and for purposes of this Agreement  shall be deemed to occur on
November 30 of any year if it has not otherwise occurred by such date).

     "Loan" shall mean (i) prior to the Conversion  Date,  Revolving  Loans, and
(ii) on or after the Conversion Date, Term Loans.

     "Managed  Syndicate"  shall mean each  underwriting  syndicate at Lloyds in
which either (i) any  Subsidiary of the Borrower is acting as the managing agent
for  such  syndicate  or (ii) the  Borrower  and its  Subsidiaries  collectively
provide 50% or more of the underwriting capital for such syndicate.

     "Margin Stock" shall have the meaning provided in Regulation U.

     "Material  Adverse  Effect"  shall  mean a material  adverse  effect on the
business,  operations,  property or condition  (financial  or  otherwise) of the
Borrower  and its  Subsidiaries  taken as a whole  after  giving  effect  to the
Transaction.

                                       61
<PAGE>

     "Material Subsidiary" shall mean any Subsidiary of the Borrower whose total
assets  or total  revenues  exceed 1% of the  total  assets  or gross  revenues,
respectively, of the Borrower and its Subsidiaries on a consolidated basis as of
the most recent fiscal quarter end and for the most recent four quarter  period,
respectively, determined in accordance with GAAP.

     "Member" shall mean an underwriting member of Lloyd's.

     "Minimum  Borrowing  Amount"  shall  mean (i) for any Loans that are Dollar
denominated,  $5,000,000,  and if in  excess  thereof,  shall be in an  integral
Dollar denominated multiple of $1,000,000, and (ii) for any Revolving Loans that
are Alternate  Currency  Loans,  an amount in the respective  Approved  Currency
having a Dollar  Equivalent  (determined  at the time a Notice of  Borrowing  is
received or a prepayment made) of $5,000,000, and if in excess thereof, shall be
in a  Dollar  Equivalent  multiple  of  $1,000,000  in the  respective  Approved
Currency.

     "Moody's" shall mean Moody's Investors Service, Inc. and its successors.

     "Moody's  Credit  Rating" shall mean the rating level (it being  understood
that a rating level shall include numerical modifiers and (+) and (-) modifiers)
assigned by Moody's to the senior unsecured  long-term debt of the Borrower.  If
the foregoing rating shall be changed by Moody's, such change shall be effective
for purposes of this  definition  on the Business Day following the day on which
Moody's announces such change.

     "Multiemployer  Plan"  shall  mean any  multiemployer  plan as  defined  in
Section  4001(a)(3) of ERISA, which is a pension plan as defined in Section 3(2)
of ERISA  and which the  Borrower,  a  Subsidiary  of the  Borrower  or an ERISA
Affiliate  maintains,  contributes  to or has an obligation  to  contribute  (or
maintained,  contributed  to or had an  obligation  to contribute to in the last
five years).

     "NAIC" shall mean the National  Association of Insurance  Commissioners  or
any successor organization thereto.

     "NAIC  Tests"  shall  mean the  ratios  and  other  financial  measurements
developed by the NAIC under its Insurance  Regulatory  Information System, as in
effect from time to time.

     "Net  Available  Proceeds"  shall  mean (i) with  respect to any Asset Sale
consummated by a Regulated Insurance Company,  the Surplus Increase with respect
to such Regulated  Insurance  Company as a result of such Asset Sale,  (ii) with
respect to any Asset  Sale  consummated  by the  Borrower  or any  Non-Regulated
Company which is not a Subsidiary of a Regulated Insurance Company, the Net Cash
Proceeds  resulting   therefrom  and  (iii)  with  respect  to  any  Asset  Sale
consummated  by a  Non-Regulated  Company  which is a Subsidiary  of a Regulated
Insurance Company, an amount equal to the dividend that such Regulated Insurance
Company  would be permitted  to pay in  accordance  with the Legal  Requirements
applicable to it as a result of the receipt by such Regulated  Insurance Company
of a dividend from such  Non-Regulated  Insurance  Company in an amount equal to
the Net Cash Proceeds resulting from such Asset Sale; in each case as determined
in good faith by the  Borrower  and  certified in writing by the Borrower to the
Administrative   Agent   (showing  the   calculation   thereof  and   supporting
assumptions)  on or prior to the date on which the Borrower or any Subsidiary is
to receive the initial proceeds from such Asset Sale.

                                       62
<PAGE>

     "Net Cash  Proceeds"  shall mean,  with respect to any Asset Sale, the Cash
Proceeds resulting therefrom net of (a) cash expenses of sale (including payment
of principal, premium and interest on Indebtedness other than the Loans required
to be repaid as a result of such  Asset  Sale),  (b)  incremental  taxes paid or
payable as a result thereof and (c) amounts provided as a reserve, in accordance
with  GAAP,  against  any  liabilities  under any  indemnification  obligations,
purchase price  adjustments or similar items associated with such Asset Sale, in
each case as  determined  in good faith by the Borrower and certified in writing
by the Borrower to the Administrative Agent (showing the calculation thereof and
supporting  assumptions)  on or prior to the date on which the  Borrower  or any
Subsidiary is to receive the initial proceeds from such Asset Sale.

     "Net Worth"  shall mean,  as to any  Person,  the sum of its capital  stock
(including,  without limitation,  its preferred stock), capital in excess of par
or stated value of shares of its capital stock (including,  without  limitation,
its  preferred  stock),  retained  earnings  and any  other  account  which,  in
accordance with GAAP,  constitutes  stockholders  equity,  but excluding (i) any
treasury stock and (ii) the effects of Financial Accounting Statement No. 115.

     "Non-Defaulting Bank" shall mean any Bank other than a Defaulting Bank.

     "Non-Regulated Company" shall mean each Subsidiary of the Borrower which is
not a Regulated Insurance Company.

     "Note" shall mean and include each  promissory  note, in the form agreed by
the Borrower and the  Administrative  Agent prior to the Effective  Date, to the
extent issued pursuant to Section 1.05(b) hereof.

     "Notice of Borrowing" shall have the meaning provided in Section 1.03.

     "Notice of Conversion" shall have the meaning provided in Section 1.06.

     "Notice of Non-Extension" shall have the meaning provided in Section 2.05.

     "Notice  Office" shall mean the office of the  Administrative  Agent at One
Chase  Manhattan  Plaza,  New  York,  New York  10081,  Attention:  Linda  Hill,
Telephone (212) 552-7935, Facsimile: (212) 552-7490, or such other office as the
Administrative  Agent may  designate  to the Borrower and the Banks from time to
time.

     "Obligation Currency" shall have the meaning provided in Section 12.17(a).

     "Obligations"  shall mean all amounts,  direct or indirect,  contingent  or
absolute, of every type or description,  and at any time existing,  owing to the
Administrative  Agent or any Bank pursuant to the terms of this Agreement or any
other Credit Document.

     "Other  Alternate  Currency"  shall mean any freely  transferable  currency
other than any  Primary  Alternate  Currency,  to the extent  such  currency  is
approved by the Administrative Agent and each Bank.

     "Other  Hedging  Agreements"  shall mean any  foreign  exchange  contracts,
currency swap agreements or other similar agreements or arrangements designed to
protect against fluctuations in currency values.

                                       63
<PAGE>

     "Payment Office" shall mean the office of the Administrative  Agent c/o The
Loan and Agency Services Group,  One Chase Manhattan Plaza, 8th Floor, New York,
New York 10081, Attention: Linda Hill, Telephone No.: (212) 552-7935,  Facsimile
No.:  (212)  552-7490  or such  other  office  as the  Administrative  Agent may
designate to the Borrower and the Banks from time to time.

     "PBGC"  shall mean the Pension  Benefit  Guaranty  Corporation  established
pursuant to Section 4002 of ERISA, or any successor thereto.

     "Permitted Acquisition" shall have the meaning provided in Section 8.02(c).

     "Person"  shall mean any  individual,  partnership,  joint  venture,  firm,
corporation,  limited liability company, association,  trust or other enterprise
or any  government  or  political  sub-division  or any  agency,  department  or
instrumentality thereof.

     "Plan"  shall mean any  pension  plan as  defined in Section  3(2) of ERISA
other than a Foreign Pension Plan or a Multiemployer  Plan,  which is maintained
or  contributed  to by (or to which there is an obligation to contribute of) the
Borrower or a Subsidiary  of the Borrower or an ERISA  Affiliate,  and each such
plan for the five year period immediately following the latest date on which the
Borrower,  or a  Subsidiary  of the Borrower or an ERISA  Affiliate  maintained,
contributed to or had an obligation to contribute to such plan.

     "Pounds Sterling" shall mean freely transferable lawful money of the United
Kingdom.

     "Pounds Sterling  Equivalent" shall mean, at any time for the determination
thereof,  the amount of Pounds Sterling which could be purchased with the amount
of Dollars  involved in such  computation  at the spot exchange rate therefor as
quoted by Chase as of 11:00 A.M.  (London time) on the date three  Business Days
prior to the date of any determination thereof for purchase on such date.

     "Pounds  Sterling  LIBOR" shall mean,  with respect to each Interest Period
for any Loan denominated in Pounds Sterling, (I) the rate per annum that appears
on page 3750 (or other appropriate page if such currency does not appear on such
page) of the Dow Jones Telerate Screen (or any successive  page) with maturities
comparable  to such Interest  Period as of 11:00 A.M.  (London time) on the date
which is the  commencement  date of such Interest Period or, if such a rate does
not  appear  on page  3750 (or such  other  appropriate  page) of the Dow  Jones
Telerate  Screen (or any successor  page) the offered  quotations to first-class
banks in the London  interbank  EuroDollar  market by Chase for Pounds  Sterling
deposits of amounts in same day funds  comparable to the  outstanding  principal
amount  of  such  Loans  with  maturities  comparable  to such  Interest  Period
determined as of 11:00 A.M.  (London time) on the date which is the commencement
of such Interest  Period plus (II) the  Associated  Cost Rate for such Loans for
such Interest Period.

     "Primary Alternate Currency" shall mean each of Pounds Sterling and Euros.

     "Prime  Lending Rate" shall mean the rate of interest per annum which Chase
announces  from time to time as its prime  commercial  lending rate in effect at
its principal office in New York City, the Prime Lending Rate to change when and
as such prime  commercial  lending  rate  changes.  The Prime  Lending Rate is a
reference  rate and does not  necessarily  represent  the  lowest  or best  rate
actually charged to any customer. Chase may make commercial loans or other loans
at rates of interest at, above or below the Prime Lending Rate.

     "Principal  Amount" shall mean (i) the stated principal amount of each Loan
denominated in Dollars and/or (ii) the Dollar Equivalent of the stated principal
amount of each Alternate Currency Loan, as the context may require.

     "Projections"  shall  mean  the  financial  projections  contained  in  the
Confidential Bank Memorandum.

                                       64
<PAGE>

     "Quarterly Statement" shall mean the quarterly financial statement required
to be filed by any Regulated  Insurance  Company with the Applicable  Regulatory
Insurance Authority.

     "Rated Ongoing Regulated  Subsidiary"  shall mean each Regulated  Insurance
Company  which  has an  A.M.  Best  claims  paying  rating  (including,  without
limitation,  Trenwick America Reinsurance  Corporation,  Trenwick  International
Limited,  The Insurance  Corporation  of New York,  Dakota  Specialty  Insurance
Company and Chartwell Reinsurance Company, but excluding any Regulated Insurance
Company (including any of the  aforementioned  companies) if such Company is not
being employed in the writing of new insurance or reinsurance business following
the consummation of the Acquisition).

     "Rating Agency" shall mean S&P or Moody's as the case may be.

     "Realistic  Disaster  Scenario" shall mean any realistic  disaster scenario
presented in a business plan prepared in relation to the Managed Syndicate under
paragraph  57A(a) of the  Underwriting  Agents Bylaw (No. 4 of 1984) which shows
the potential impact upon the Managed Syndicate of a catastrophic event.

     "Refinancing"  shall mean the  refinancing of not less than  $50,000,000 of
existing Indebtedness for borrowed money of Chartwell and its Subsidiaries.

     "Refinancing   Documents"   shall  mean  the   documents   related  to  the
Refinancing.

     "Register" shall have the meaning provided in Section 1.05.

     "Regulated  Insurance  Company"  shall mean any  Subsidiary of the Borrower
(including,  without limitation,  Subsidiaries acquired or created in connection
with  the  Acquisition),  whether  now  owned  or  hereafter  acquired,  that is
authorized  or  admitted  to  carry on or  transact  Insurance  Business  in any
jurisdiction  (domestic or foreign) and is regulated by any Applicable Insurance
Regulatory Authority.

     "Regulation  D" shall mean  Regulation  D of the Board of  Governors of the
Federal  Reserve  System as from time to time in effect and any successor to all
or a portion thereof establishing reserve requirements.

     "Regulation  T" shall mean  Regulation  T of the Board of  Governors of the
Federal Reserve System from time to time in effect and any successor to all or a
portion thereof establishing margin requirements.

     "Regulation  U" shall mean  Regulation  U of the Board of  Governors of the
Federal Reserve System from time to time in effect and any successor to all or a
portion thereof establishing margin requirements.

                                       65
<PAGE>

     "Regulation  X" shall mean  Regulation  X of the Board of  Governors of the
Federal Reserve System from time to time in effect and any successor to all or a
portion thereof establishing margin requirements.

     "Reinsurance Agreement" shall mean any agreement, contract, treaty or other
arrangement  whereby one or more  insurers,  as reinsurers,  assume  liabilities
under  insurance   policies  or  agreements   issued  by  another  insurance  or
reinsurance company or companies.

     "Relevant Currency  Equivalent" shall mean the Dollar Equivalent,  the Euro
Equivalent or the Pounds Sterling Equivalent.

     "Replaced Bank" shall have the meaning provided in Section 1.13.

     "Replacement Bank" shall have the meaning provided in Section 1.13.

     "Reportable  Event"  shall mean an event  described  in Section  4043(c) of
ERISA with  respect  to a Plan that is  subject to Title IV of ERISA  other than
those events as to which the 30-day  notice  period is waived  under  subsection
 .22, .23, .25, .27, or .28 of PBGC Regulation Section 4043.

     "Required Banks" shall mean Non-Defaulting Banks the sum of whose Revolving
Loan  Commitment  (or,  after  the  Total  Revolving  Loan  Commitment  has been
terminated,  outstanding  Revolving Loans or Term Loans) and L/C Commitment (or,
after the Total L/C  Commitment  has been  terminated,  the amount of any Unpaid
Drawings owing to such Non-Defaulting Banks) constitute a majority of the sum of
(i) the Total  Revolving  Loan  Commitment  less the  aggregate  Revolving  Loan
Commitments  of Defaulting  Banks,  if any, or, after the Total  Revolving  Loan
Commitment has been terminated,  the total  outstanding  Revolving Loans or Term
Loans of  Non-Defaulting  Banks) and (ii) the Total L/C Commitment or, after the
Total L/C Commitment has been terminated, the aggregate Unpaid Drawings.

     "Retrocession  Agreement"  shall mean 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.

     "Revolving Loan" shall have the meaning provided in Section 1.01(a).

     "Revolving  Loan  Commitment"  shall mean,  with respect to each Bank,  the
amount set forth  opposite such Bank's name in Annex I directly below the column
entitled  "Revolving  Loan  Commitment," as the same may be reduced from time to
time or terminated pursuant to Sections 3.02, 3.03 and/or 9.

                                       66
<PAGE>

     "Risk Based Capital Ratio" shall mean, for any Regulated Insurance Company,
the  ratio  (expressed  as a  percentage),  at any time,  of the Total  Adjusted
Capital of such Regulated  Insurance Company to the Authorized  Control Level of
such Regulated Insurance Company.

     "RL Commitment Fee" shall have the meaning provided in Section 3.01(a).

     "RL Percentage" of any Bank at any time shall mean a fraction (expressed as
a percentage)  the numerator of which is the Revolving  Loan  Commitment of such
Bank at such  time and the  denominator  of which is the  Total  Revolving  Loan
Commitment at such time, provided that if the RL Percentage of any Bank is to be
determined after the Total Revolving Loan Commitment has been  terminated,  then
the RL  Percentages  of the Banks  shall be  determined  immediately  prior (and
without giving effect) to such termination.

     "S&P" shall mean Standard & Poor's Ratings Group and its successors.

"S&P Credit  Rating"  shall mean the rating  level (it being  understood  that a
rating  level  shall  include  numerical  modifiers  and (+) and (-)  modifiers)
assigned by S&P to the senior unsecured  long-term debt of the Borrower.  If the
foregoing  rating shall be changed by S&P,  such change  shall be effective  for
purposes of this  definition  on the Business Day following the day on which S&P
announces such change.

     "SAP" shall mean,  with respect to any  Regulated  Insurance  Company,  the
accounting  procedures  and practices  prescribed or permitted by the Applicable
Insurance Regulatory  Authority of the state or other jurisdiction  (domestic or
foreign)  in which  such  Regulated  Insurance  Company is  domiciled;  it being
understood and agreed that determinations in accordance with SAP for purposes of
Section 8, including  defined terms as used therein,  are subject (to the extent
provided therein) to Section 12.07(a).

     "Scheduled   Repayments"   shall  have  the  meaning  provided  in  Section
4.02(i)(a).

     "SEC" shall mean the  Securities  and Exchange  Commission or any successor
thereto.

     "SEC  Regulation  D" shall  mean  Regulation  D as  promulgated  under  the
Securities  Act of 1933,  as amended,  as the same may be in effect from time to
time.

     "Section  4.04(b)(ii)  Certificate"  shall  have the  meaning  provided  in
Section 4.04(b)(ii).

     "Stated  Amount"  shall mean,  at any time,  (i) if the Letter of Credit is
denominated  in Dollars,  the  maximum  amount  available  to be drawn under the
Letter of Credit (regardless of whether any conditions for drawing could then be
met) and (ii) if the  Letter  of  Credit is an  Alternative  Currency  Letter of
Credit,  the Dollar Equivalent of the maximum amount available to be drawn under
the Letter of Credit  (regardless  of whether any  conditions  for drawing could
then be met).

     "Statutory  Surplus"  shall mean, at any date for any  Regulated  Insurance
Company,  (a) the total amount as would be shown on line 27, page 3, column 1 of
a Benchmark  Statement for such Regulated  Insurance Company prepared as of such
date.

                                       67
<PAGE>

     "Subsidiary" of any Person shall mean and include (i) any corporation  more
than 50% of whose  stock of any class or  classes  having  by the terms  thereof
ordinary  voting power to elect a majority of the directors of such  corporation
(irrespective  of  whether  or not at the time  stock of any class or classes of
such  corporation  shall  have or  might  have  voting  power by  reason  of the
happening of any  contingency)  is at the time owned by such Person  directly or
indirectly through Subsidiaries and (ii) any partnership,  association,  limited
liability  company,  joint venture or other entity in which such Person directly
or indirectly through Subsidiaries has more than a 50% equity or voting interest
at the time.  Unless  otherwise  expressly  provided,  all references  herein to
"Subsidiary" shall mean a Subsidiary of the Borrower.

     "Subsidiary  Guarantor" shall mean each Domestic Subsidiary of the Borrower
which is a  Non-Regulated  Company  and a  Material  Subsidiary;  provided  that
Chartwell  Re Holdings  and its Domestic  Subsidiaries  which are  Non-Regulated
Companies shall not be required to become Subsidiary  Guarantors until such time
as the Chartwell Senior Notes are paid in full.

     "Subsidiary Guaranty" shall have the meaning provided in Section 5.08.

"Surplus  Increase"  shall mean,  with respect to each Asset Sale  effected by a
Regulated Insurance Company, the increase in Statutory Surplus of such Regulated
Insurance Company as a result of such Asset Sale.

     "Syndication  Agent" shall have the meaning provided in the first paragraph
of this Agreement.

     "Taxes" shall have the meaning provided in Section 4.04(a).

     "Term Loan" shall mean each  Revolving  Loan that is converted  into a term
loan on the Conversion Date pursuant to 1.01(b).

     "Term Loan Maturity Date" shall mean the fifth anniversary of the Effective
Date.

                                       68
<PAGE>

     "Test  Period"  shall mean (i) for any  determination  made on and prior to
September  30,  2000,  the  period  from  January 1, 2000 to the last day of the
fiscal  quarter of the Borrower  then last ended,  provided  that the first Test
Period  shall  end on  March  31,  2000,  and (ii)  for any  determination  made
thereafter,  the four  consecutive  fiscal quarters of the Borrower ended on the
last day of the most recently ended fiscal quarter of the Borrower (taken as one
accounting period).

     "Total Adjusted  Capital" shall mean "Total Adjusted Capital" as defined by
the NAIC as of December 31, 1997 and as applied in the context of the Risk Based
Capital Guidelines promulgated by the NAIC.

     "Total  Commitment"  shall  mean  the  sum  of  the  Total  Revolving  Loan
Commitment and Total L/C Commitment.

     "Total L/C Commitment" shall mean the sum of the L/C Commitments of each of
the L/C Banks.

     "Total Revolving Loan Commitment"  shall mean the sum of the Revolving Loan
Commitments of each of the Banks.

     "Total  Unutilized L/C Commitment"  shall mean, at any time, the sum of the
Unutilized L/C Commitments of the L/C Banks at such time.

     "Total  Unutilized  Revolving Loan Commitment" shall mean, at any time, (i)
the  Total  Revolving  Loan  Commitment  at such  time  less (ii) the sum of the
aggregate Principal Amount of all Revolving Loans outstanding at such time.

                                       69
<PAGE>

     "Trenwick Senior Notes" shall mean the 6.70% Senior Notes due April 1, 2003
issued by the Borrower.

     "Trust  Preferred  Securities"  shall  mean the 8.82%  Junior  Subordinated
Deferrable Interest Debentures issued by the Borrower pursuant to the Indenture,
dated as of January 31, 1997, between the Borrower and The Chase Manhattan Bank,
as Trustee,  and all securities  issued by Trenwick  Capital Trust I pursuant to
the Amended and Restated Declaration of Trust, dated as of January 31, 1997.

     "Type" shall mean any type of Loan  determined with respect to currency and
the interest option applicable thereto.

     "Unfunded Current  Liability" of any Plan shall mean the amount, if any, by
which the value of the accumulated  plan benefits under the Plan determined on a
plan  termination  basis in accordance  with actuarial  assumptions at such time
consistent  with those  prescribed  by the PBGC for  purposes of Section 4044 of
ERISA,  exceeds  the fair  market  value of all plan  assets  allocable  to such
liabilities   under  Title  IV  of  ERISA  (excluding  any  accrued  but  unpaid
contributions).

     "Unpaid Drawing" shall have the meaning provided in Section 2.03(a).

     "Unutilized L/C Commitment" with respect to any Bank at any time shall mean
such Bank's L/C  Commitment  at such time less such Bank's L/C  Exposure at such
time.

                                       70
<PAGE>

     "Unutilized Revolving Loan Commitment" with respect to any Bank at any time
shall mean such Bank's Revolving Loan Commitment at such time less the aggregate
outstanding  Principal  Amount of all Revolving  Loans made by such Bank at such
time.

     "U.S.  LIBOR"  shall mean for each  Interest  Period  applicable  to a Loan
denominated  in Dollars  (other than a Base Rate Loan),  the rate per annum that
appears on page 3750 of the Dow Jones  Telerate  Screen (or any successor  page)
for Dollar  deposits with  maturities  comparable to such Interest  Period as of
11:00 A.M.  (London  time) on the date which is two  Business  Days prior to the
commencement  of such Interest Period or, if such a rate does not appear on page
3750 of the Dow Jones  Telerate  Screen (or any  successor  page),  the  offered
quotations  to  first-class  banks in the London  interbank  market by Chase for
Dollar  deposits  of amounts  in same day funds  comparable  to the  outstanding
principal amount of such Dollar  denominated Loan with maturities  comparable to
such Interest Period determined as of 11:00 A.M. (London time) on the date which
is two Business Days prior to the commencement of such Interest Period.

     "Wholly-Owned  Subsidiary"  of any Person shall mean 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.

     "Written" or "in writing" shall mean any form of written communication or a
communication by means of telex, facsimile device, telegraph or cable.

                                       71
<PAGE>

     SECTION 11.  The Administrative Agent.

     11.01  Appointment.  Each Bank hereby  irrevocably  designates and appoints
Chase as  Administrative  Agent (such term as used in this Section 11 to include
Chase Manhattan  International  Limited,  acting as the Issuing Agent under this
Agreement and the Letters of Credit) to act as specified herein and in the other
Credit Documents, and each such Bank hereby irrevocably authorizes Chase, as the
Administrative  Agent for such Bank, to take such action on its behalf under the
provisions of this Agreement and the other Credit Documents and to exercise such
powers and perform such duties as are expressly  delegated to the Administrative
Agent by the terms of this  Agreement and the other Credit  Documents,  together
with such other powers as are reasonably  incidental thereto. The Administrative
Agent  agrees  to act as such  upon the  express  conditions  contained  in this
Section 11.  Notwithstanding  any  provision to the  contrary  elsewhere in this
Agreement,   the   Administrative   Agent   shall   not  have  any   duties   or
responsibilities, except those expressly set forth herein or in the other Credit
Documents,  nor  any  fiduciary  relationship  with  any  Bank,  and no  implied
covenants, functions, responsibilities, duties, obligations or liabilities shall
be read into this Agreement or otherwise exist against the Administrative Agent.
The   provisions  of  this  Section  11  are  solely  for  the  benefit  of  the
Administrative Agent and the Banks, and no Credit Party shall have any rights as
a third party  beneficiary  of any of the provisions  hereof.  In performing its
functions and duties under this Agreement,  the  Administrative  Agent shall act
solely as agent of the Banks and does not assume and shall not be deemed to have
assumed any obligation or relationship of agency or trust with or for the Credit
Party.

     11.02 Delegation of Duties. The Administrative Agent may execute any of its
duties  under this  Agreement  or any other  Credit  Document  by or through its
affiliates,  agents or  attorneys-  in-fact  and shall be  entitled to advice of
counsel  concerning all matters  pertaining to such duties.  The  Administrative
Agent shall not be responsible for the negligence or misconduct of any agents or
attorneys-in-fact  selected  by it with  reasonable  care  except to the  extent
otherwise required by Section 11.03.

     11.03 Exculpatory  Provisions.  Neither the Administrative Agent nor any of
its officers,  directors,  employees,  agents,  attorneys-in-fact  or affiliates
shall be (i) liable for any action  lawfully  taken or omitted to be taken by it
or such Person under or in  connection  with this  Agreement  (except for its or
such Person's own gross negligence or willful misconduct) or (ii) responsible in
any manner to any of the Banks for any recitals, statements,  representations or
warranties  made by the Borrower or any  Subsidiary  or any of their  respective
officers  contained  in this  Agreement,  any other  Credit  Document  or in any
certificate, report, statement or other document referred to or provided for in,
or  received  by the  Administrative  Agent under or in  connection  with,  this
Agreement or any other Credit Document or for any failure of the Borrower or any
of  its  Subsidiaries  or  any of  their  respective  officers  to  perform  its
obligations  here-under or  thereunder.  The  Administrative  Agent shall not be
under any obligation to any Bank to ascertain or to inquire as to the observance
or  performance  of any of the  agreements  contained in, or conditions of, this
Agreement, or to inspect the properties, books or records of the Borrower or any
of its Subsidiaries.  The  Administrative  Agent shall not be responsible to any
Bank   for   the   effectiveness,    genuineness,    validity,   enforceability,
collectibility  or sufficiency  of this Agreement or any Credit  Document or for
any representations,  warranties,  recitals or statements made herein or therein
or  made  in any  written  or  oral  statement  or in  any  financial  or  other
statements,  instruments,  reports,  certificates  or  any  other  documents  in
connection herewith or therewith  furnished or made by the Administrative  Agent
to the Banks or by or on behalf of the Borrower to the  Administrative  Agent or
any Bank or be  required  to  ascertain  or  inquire  as to the  performance  or
observance of any of the terms, conditions,  provisions, covenants or agreements
contained  herein or therein or as to the use of the proceeds of the Loans or of
the existence or possible existence of any Default or Event of Default.

                                       72
<PAGE>

     11.04 Reliance by Administrative  Agent. The Administrative  Agent shall be
entitled  to rely,  and  shall be fully  protected  in  relying,  upon any note,
writing, resolution, notice, consent, certificate, affidavit, letter, cablegram,
telegram, facsimile transmission, telex or teletype message, statement, order or
other document or  conversation  believed by it to be genuine and correct and to
have been signed,  sent or made by the proper  Person or Persons and upon advice
and statements of legal counsel (including,  without limitation,  counsel to the
Borrower),   independent   accountants   and  other  experts   selected  by  the
Administrative  Agent.  The  Administrative  Agent shall be fully  justified  in
failing or refusing to take any action under this  Agreement or any other Credit
Document  unless  it shall  first  receive  such  advice or  concurrence  of the
Required  Banks as it deems  appropriate or it shall first be indemnified to its
satisfaction by the Banks against any and all liability and expense which may be
incurred by it by reason of taking or  continuing  to take any such action.  The
Administrative  Agent  shall in all cases be fully  protected  in acting,  or in
refraining from acting,  under this Agreement and the other Credit  Documents in
accordance with a request of the Required Banks, and such request and any action
taken or failure to act pursuant thereto shall be binding upon all the Banks.

     11.05 Notice of Default.  The  Administrative  Agent shall not be deemed to
have  knowledge or notice of the  occurrence  of any Default or Event of Default
hereunder unless the Administrative Agent has received notice from a Bank or any
Credit Party  referring to this  Agreement,  describing such Default or Event of
Default and stating that such notice is a "notice of default." In the event that
the Administrative  Agent receives such a notice, the Administrative Agent shall
give prompt notice  thereof to the Banks.  The  Administrative  Agent shall take
such  action  with  respect  to such  Default  or Event of  Default  as shall be
reasonably  directed by the Required  Banks,  provided that unless and until the
Administrative  Agent shall have received such  directions,  the  Administrative
Agent may (but shall not be  obligated  to) take such  action,  or refrain  from
taking such action, with respect to such Default or Event of Default as it shall
deem advisable in the best interests of the Banks.

     11.06  Non-Reliance.  Each Bank  expressly  acknowledges  that  neither the
Administrative  Agent nor any of its  officers,  directors,  employees,  agents,
attorneys-in-fact  or affiliates have made any  representations or warranties to
it and that no act by the Administrative Agent hereinafter taken,  including any
review of the  affairs  of the  Borrower  or any of its  Subsidiaries,  shall be
deemed to constitute any representation or warranty by the Administrative  Agent
to any Bank.  Each Bank  represents  to the  Administrative  Agent  that it has,
independently  and without reliance upon the  Administrative  Agent or any other
Bank, and based on such documents and information as it has deemed  appropriate,
made  its  own  appraisal  of  and  investigation  into  the  business,  assets,
operations,   property,   financial   and  other   conditions,   prospects   and
credit-worthiness of the Borrower and its Subsidiaries and made its own decision
to make  its  Loans  hereunder,  participate  in the  Letter  of  Credit  issued
hereunder and enter into this Agreement. Each Bank also represents that it will,
independently  and without reliance upon the  Administrative  Agent or any other
Bank, and based on such documents and  information as it shall deem  appropriate
at the time, continue to make its own credit analysis,  appraisals and decisions
in  taking  or  not  taking  action  under  this  Agreement,  and to  make  such
investigation as it deems necessary to inform itself as to the business, assets,
operations,   property,   financial   and  other   conditions,   prospects   and
creditworthiness of the Borrower and its Subsidiaries.  The Administrative Agent
shall not have any duty or responsibility to provide any Bank with any credit or
other  information  concerning  the  business,   operations,  assets,  property,
financial and other conditions, prospects or creditworthiness of the Borrower or
any Subsidiary which may come into the possession of the Administrative Agent or
any of  its  officers,  directors,  employees,  agents,  attorneys-  in-fact  or
affiliates.

                                       73
<PAGE>

     11.07  Indemnification.  Each Bank agrees to indemnify  the  Administrative
Agent in its capacity as such ratably  according to such Bank's  percentage used
in determining  Required  Banks from time to time,  from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs,  reasonable expenses or disbursements of any kind whatsoever which may at
any time (including,  without  limitation,  at any time following the payment of
the   Obligations)  be  imposed  on,   incurred  by  or  asserted   against  the
Administrative  Agent in its  capacity as such in any way relating to or arising
out  of  this  Agreement  or  any  other  Credit  Document,   or  any  documents
contemplated by or referred to herein or the transactions contemplated hereby or
any action taken or omitted to be taken by the Administrative  Agent under or in
connection  with any of the  foregoing,  but only to the extent  that any of the
foregoing is not paid by the Borrower or any of its Subsidiaries,  provided that
no Bank  shall be liable to the  Administrative  Agent  for the  payment  of any
portion of such liabilities,  obligations,  losses, damages, penalties, actions,
judgments,   suits,  costs,   expenses  or  disbursements   resulting  from  the
Administrative Agent's gross negligence or willful misconduct.  If any indemnity
furnished to the  Administrative  Agent for any purpose shall, in the opinion of
the Administrative Agent, be insufficient or become impaired, the Administrative
Agent may call for additional  indemnity and cease,  or not commence,  to do the
acts  indemnified  against until such  additional  indemnity is  furnished.  The
agreements in this Section 11.07 shall survive the payment of all Obligations.

     11.08 The Administrative  Agent in its Individual  Capacity.  Chase and its
affiliates may make loans to, accept  deposits from and generally  engage in any
kind of business with the Borrower and its Subsidiaries as though Chase were not
acting as Administrative  Agent hereunder.  With respect to the Loans made by it
and all  Obligations  owing to it,  Chase  shall have the same rights and powers
under this Agreement as any Bank and may exercise the same as though it were not
the  Administrative  Agent,  and the terms "Bank" and "Banks"  shall include the
Administrative Agent in its individual capacity.

                                       74
<PAGE>

     11.09 Successor  Administrative  Agent. The Administrative Agent may resign
as the Administrative  Agent upon 20 days' notice to the Banks and the Borrower.
Upon such  resignation,  the  Required  Banks  shall,  with the  consent  of the
Borrower (such consent not to be unreasonably withheld),  appoint from among the
Banks a successor  Administrative Agent for the Banks,  whereupon such successor
agent  shall  succeed to the  rights,  powers  and duties of the  Administrative
Agent,  and the term  "Administrative  Agent" shall include such successor agent
effective upon its appointment, and the resigning Administrative Agent's rights,
powers and duties as the Administrative  Agent shall be terminated,  without any
other or further act or deed on the part of such former  Administrative Agent or
any of the parties to this Agreement.  After the retiring Administrative Agent's
resignation  hereunder  as the  Administrative  Agent,  the  provisions  of this
Section 11 shall inure to its  benefit as to any actions  taken or omitted to be
taken by it while it was Administrative Agent under this Agreement.

     11.10 Other Agents.  Nothing in this Agreement or any other Credit Document
shall impose on the Documentation  Agent or the Syndication  Agent, in each case
in such capacity, any duties or obligations.

                                       75
<PAGE>

     SECTION 12.  Miscellaneous.

     12.01 Payment of Expenses,  etc. The Borrower  hereby agree to: (i) whether
or not the transactions herein contemplated are consummated,  pay all reasonable
out-of-pocket costs and expenses of the Administrative  Agent in connection with
the negotiation,  preparation, syndication, execution and delivery of the Credit
Documents  and  the  documents  and  instruments  referred  to  therein  and any
amendment,  waiver or consent relating thereto  (including,  without limitation,
the  reasonable  fees  and  disbursements  of  White & Case  LLP);  (ii) pay all
reasonable out-of-pocket costs and expenses of the Administrative Agent and each
of the Banks in connection with the enforcement of the Credit  Documents and the
documents and instruments  referred to therein  (including,  without limitation,
the reasonable fees and  disbursements of counsel for the  Administrative  Agent
and for each of the Banks);  (iii) pay and hold each of the Banks  harmless from
and against any and all present and future  stamp and other  similar  taxes with
respect to the  foregoing  matters and save each of the Banks  harmless from and
against any and all  liabilities  with respect to or resulting from any delay or
omission to pay such taxes; and (iv) indemnify the Administrative Agent and each
Bank, and their respective officers, directors,  employees,  representatives and
agents  (each,  an  "indemnified  person")  from and hold each of them  harmless
against  any  and  all  losses,   liabilities,   claims,   damages  or  expenses
(collectively,  "Claims") incurred by any of them as a result of, or arising out
of, or in any way related to, or by reason of, any investigation,  litigation or
other proceeding (whether or not the Administrative Agent or any Bank is a party
thereto) related to the entering into and/or  performance of any Credit Document
or any other Transaction Document or the use of the proceeds of any Loans or the
Letter of Credit  here-under or the Transaction or the consummation of any other
transactions contemplated in any Credit Document, including, without limitation,
the reasonable fees and disbursements of counsel incurred in connection with any
such  investigation,  litigation  or other  proceeding  (but  excluding any such
losses,  liabilities,  claims,  damages or  expenses  to the extent  incurred by
reason  of the  gross  negligence  or  willful  misconduct  of the  Person to be
indemnified).  No Bank shall be liable for any damages  arising  from the use by
others  of  information  or  other  materials   obtained   through   electronic,
telecommunications or other information transmission systems.

     12.02 Right of Setoff.  In addition to any rights now or hereafter  granted
under  applicable  law or  otherwise,  and not by way of  limitation of any such
rights, upon the occurrence and continuance of an Event of Default, each Bank is
hereby authorized at any time or from time to time, without presentment, demand,
protest or other notice of any kind to any Credit Party or to any other  Person,
any such notice being hereby expressly waived, to set off and to appropriate and
apply any and all deposits  (general or special) and any other  Indebtedness  at
any time held or owing by such Bank (including,  without limitation, by branches
and agencies of such Bank wherever  located) to or for the credit or the account
of such Credit Party against and on account of the  Obligations  and liabilities
of such  Credit  Party to such Bank or any other Bank under  this  Agreement  or
under any of the other Credit  Documents,  including,  without  limitation,  all
interests  in  Obligations  of such Credit  Party  purchased by such Bank or any
other Bank pursuant to Section  12.06(b),  and all other claims of any nature or
description  arising out of or connected with this Agreement or any other Credit
Document,  irrespective  of  whether or not such Bank shall have made any demand
hereunder and although said Obligations,  liabilities or claims, or any of them,
shall be contingent or unmatured.  Each Bank is hereby  designated  the agent of
all other Banks for purposes of effecting set off pursuant to this Section 12.02
and each Credit Party hereby grants to each Bank for such Bank's own benefit and
as agent for all  other  Banks a  continuing  security  interest  in any and all
deposits,  accounts or moneys of such Credit Party  maintained from time to time
with such Bank.

                                       76
<PAGE>

     12.03 Notices.  Except as otherwise  expressly provided herein, all notices
and other  communications  provided for hereunder shall be in writing (including
facsimile  communication) and mailed,  telecopied or delivered, if to any Credit
Party, at the address specified opposite its signature below; if to any Bank, at
its  address  specified  for such Bank on Annex II  hereto;  or,  at such  other
address  as shall be  designated  by any party in a written  notice to the other
parties hereto. All such notices and communications shall be mailed, telecopied,
sent by overnight  courier or delivered by hand and shall be deemed to have been
given on the date of receipt if delivered  by hand or overnight  courier or sent
by telecopy, or the date that is five Business Days after being deposited in the
mail,  postage  prepaid,  in  each  case  delivered,  sent or  mailed  (properly
addressed) to such party as provided in this Section 12.03 or in accordance with
the last unrevoked  notice from such party given in accordance with this Section
12.03;  provided that notices and  communications  to the  Administrative  Agent
shall be effective when received by the Administrative Agent.

     12.04 Benefit of Agreement.  (a) This  Agreement  shall be binding upon and
inure to the benefit of and be  enforceable  by the  respective  successors  and
assigns of the parties hereto; provided, however, the Borrower may not assign or
transfer any of its rights or  obligations  hereunder  without the prior written
consent of the Banks.  Each Bank may at any time grant  participations in any of
its rights  hereunder  or under any of its Notes to any bank or other  financial
institution;  provided  that in the  case of any  such  participation,  (i) such
Bank's  obligations under this Agreement shall remain unchanged,  (ii) such Bank
shall remain solely  responsible to the other parties hereto for the performance
of such  obligations  (iii)  the  participant  shall  agree  to be  bound by the
confidentiality  provisions  contained in Section 12.15 and (iv) the participant
shall not have any  rights  under  this  Agreement  or any of the  other  Credit
Documents,  including rights of consent,  approval or waiver (the  participant's
rights against such Bank in respect of such  participation to be those set forth
in the  agreement  executed  by such Bank in favor of the  participant  relating
thereto) and all amounts  payable by the Borrower  hereunder shall be determined
as if such Bank had not sold such  participation,  except  that the  participant
shall be entitled to receive the additional  amounts under  Sections 1.10,  1.11
and 4.04 of this  Agreement to, and only to, the extent that,  and in no greater
amount than,  such Bank would be entitled to such benefits if the  participation
had not been entered  into or sold;  and  provided  further,  that no Bank shall
transfer,  grant or assign any  participation  under which the participant shall
have rights to approve any amendment to or waiver of this Agreement or any other
Credit  Document  except to the extent such amendment or waiver would (i) extend
any Scheduled  Repayment or the final  scheduled  maturity of any Loan,  Note or
Letter of Credit in which such participant is participating (it being understood
that  any  waiver  of  the  application  of any  prepayment  or  the  method  of
application  of any  prepayment  to the  amortization  of,  the Loans  shall not
constitute an extension of a Scheduled Repayment or the final scheduled maturity
date),  or reduce the rate or extend the time of payment of interest  thereon or
Fees, or reduce the principal  amount  thereof,  or increase such  participant's
participating  interest  in any  Commitment,  Loan or Letter of Credit  over the
amount thereof then in effect (it being  understood that a waiver of any Default
or Event of Default or of a mandatory  reduction in the Total Commitment or of a
mandatory  repayment or prepayment shall not constitute a change in the terms of
any Commitment and that an increase in any Commitment shall be permitted without
the  consent  of any  participant  if such  participant's  participation  is not
increased as a result thereof), or (ii) consent to the assignment or transfer by
the Borrower of any of its rights and  obligations  under this  Agreement or any
other Credit Document except in accordance with the terms hereof and thereof.

                                       77
<PAGE>
     (b) Notwithstanding the foregoing,  any Bank may assign all or a portion of
its rights and obligations  hereunder to a bank or other  financial  institution
with the prior  written  consent of the  Administrative  Agent and the Borrower,
which consents shall not be unreasonably  withheld or delayed (provided that (i)
no such consents shall be required in connection  with an assignment to a Person
which is already a Bank hereunder and (ii) the consent of the Borrower shall not
be  required  at any  time  when a  Default  or  Event of  Default  exists).  No
assignment  of less  than  all of a  Bank's  rights  and  obligations  hereunder
pursuant  to the  immediately  preceding  sentence  shall,  to the  extent  such
transaction  represents an assignment to an  institution  other than one or more
Banks  hereunder,  be in an aggregate amount less than the minimum of $5,000,000
unless  otherwise  agreed to by the  Administrative  Agent and the  Borrower  in
writing. No assignment of all or any portion of a Bank's L/C Commitment shall be
made to an institution which is not an Approved Credit Institution,  and no such
assignment shall be effective until all then  outstanding  Letters of Credit are
returned by Lloyds to the Issuing Agent for  cancellation in exchange for new or
amended Letters of Credit having a Schedule 1 thereto which gives effect to such
assignment.  If any  Bank  so  sells  or  assigns  all or a part  of its  rights
hereunder or under the Notes,  any  reference in this  Agreement or the Notes to
such  assigning Bank shall  thereafter  refer to such Bank and to the respective
assignee to the extent of their respective interests and the respective assignee
shall  have,  to the  extent  of  such  assignment  (unless  otherwise  provided
therein), the same rights,  obligations and benefits as it would if it were such
assigning  Bank.  Each  assignment  pursuant to this Section  12.04(b)  shall be
effected by the assigning Bank and the assignee Bank executing an Assignment and
Assumption  Agreement  substantially  in the form of  Exhibit  H  (appropriately
completed) (the "Assignment and Assumption Agreement").  At the time of any such
assignment,  (i)  Annex  I  shall  be  deemed  to  be  amended  to  reflect  the
Commitments,  if any, and  outstanding  Loans of the respective  assignee (which
shall result in a direct reduction to the  Commitments,  if any, and outstanding
Loans of the assigning Bank) and of the other Banks, (ii) if any such assignment
occurs after the Initial  Credit  Event Date,  at the request of the assignor or
the assignee the Borrower will issue new Notes to the respective assignee and to
the assigning Bank in conformity with the  requirements  of Section 1.05,  (iii)
the  Administrative  Agent  shall  receive  from the  assigning  Bank and/or the
assignee  Bank or  financial  institution  at the  time of each  assignment  the
payment of a  nonrefundable  assignment fee of $3,500,  (iv) the  Administrative
Agent  shall  receive  from  the  assignee  Bank  the   Administrative   Agent's
administrative questionnaire completed by such assignee Bank and (v) if any such
assignment is of all or a portion of the assigning  Bank's L/C  Commitment,  all
then  outstanding  Letters of Credit shall be amended or returned to the Issuing
Agent for cancellation  and reissued to reflect such assignment.  At the time of
each  assignment  pursuant to this  Section  12.04(b)  to a Person  which is not
already a Bank  hereunder  and which is not a United States person (as such term
is defined in Section  7701(a)(30) of the Code) for Federal income tax purposes,
the   respective   assignee   Bank  shall   provide  to  the  Borrower  and  the
Administrative  Agent the  appropriate  Internal  Revenue Service forms (and, if
applicable a Section 4.04(b)(ii) Certificate) described in Section 4.04(b). Each
Bank and the  Borrower  agrees to execute  such  documents  (including,  without
limitation,  amendments  to this  Agreement  and the other Credit  Documents) as
shall be necessary to effect the  foregoing.  Promptly  following any assignment
pursuant to this Section 12.04(b),  the assigning Bank shall promptly notify the
Borrower and the  Administrative  Agent  thereof.  Nothing in this Section 12.04
shall prevent or prohibit any Bank from pledging its Loans or Notes hereunder to
a Federal  Reserve  Bank in  support of  borrowings  made by such Bank from such
Federal Reserve Bank.

     (c) Notwithstanding any other provisions of this Section 12.04, no transfer
or assignment of the interests or obligations of any Bank hereunder or any grant
of  participations  therein shall be permitted if such  transfer,  assignment or
grant would require the Borrower to file a  registration  statement with the SEC
or to qualify the Loans under the "Blue Sky" laws of any state.

                                       78
<PAGE>

     (d) Each Bank initially party to this Agreement hereby represents, and each
Person that  becomes a Bank  pursuant to an  assignment  permitted by clause (b)
above will upon its becoming  party to this  Agreement  represent,  that it is a
commercial lender,  other financial  institution or other "accredited  investor"
(as defined in SEC Regulation D) which makes loans in the ordinary course of its
business or is acquiring the Loans without a view to  distribution  of the Loans
within the  meaning of the  federal  securities  laws,  and that it will make or
acquire  Loans for its own  account  in the  ordinary  course of such  business,
provided that, subject to the preceding clauses (a) through (c), the disposition
of any promissory notes or other evidences of or interests in Indebtedness  held
by such Bank shall at all times be within its exclusive control.

     12.05 No Waiver;  Remedies  Cumulative.  No failure or delay on the part of
the Administrative Agent or any Bank in exercising any right, power or privilege
hereunder  or under any other Credit  Document and no course of dealing  between
any Credit  Party and the  Administrative  Agent or any Bank shall  operate as a
waiver thereof;  nor shall any single or partial exercise of any right, power or
privilege  hereunder  or under any other Credit  Document  preclude any other or
further exercise thereof or the exercise of any other right,  power or privilege
hereunder or thereunder.  The rights and remedies herein expressly  provided are
cumulative and not exclusive of any rights or remedies which the  Administrative
Agent or any Bank would  otherwise  have. No notice to or demand on the Borrower
in any case shall entitle the Borrower to any other or further  notice or demand
in similar or other  circumstances  or  constitute a waiver of the rights of the
Administrative  Agent  or the  Banks  to any  other  or  further  action  in any
circumstances without notice or demand.

     12.06 Payments Pro Rata. (a) The Administrative  Agent agrees that promptly
after its receipt of each  payment  from or on behalf of the Borrower in respect
of any  Obligations  of the Borrower,  it shall  distribute  such payment to the
Banks  (other than any Bank that has  consented in writing to waive its pro rata
share of such payment) pro rata based upon their respective  shares,  if any, of
the Obligations with respect to which such payment was received.

     (b)  Each of the  Banks  agrees  that,  if it  should  receive  any  amount
hereunder  (whether by voluntary payment,  by realization upon security,  by the
exercise  of the right of setoff or  banker's  lien,  by  counterclaim  or cross
action,  by  the  enforcement  of any  right  under  the  Credit  Documents,  or
otherwise)  which is  applicable to the payment of the principal of, or interest
on, the  Loans,  Unpaid  Drawings  or Fees,  of a sum which with  respect to the
related sum or sums received by other Banks is in a greater  proportion than the
total of such  Obligation  then owed and due to such Bank  bears to the total of
such Obligation then owed and due to all of the Banks  immediately prior to such
receipt,  then such Bank  receiving  such excess payment shall purchase for cash
without recourse or warranty from the other Banks an interest in the Obligations
of the Borrower to such Banks in such amount as shall  result in a  proportional
participation  by all of the Banks in such amount,  provided  that if all or any
portion of such  excess  amount is  thereafter  recovered  from such Bank,  such
purchase  shall be rescinded  and the purchase  price  restored to the extent of
such recovery, but without interest.

     (c)  Notwithstanding   anything  to  the  contrary  contained  herein,  the
provisions  of the preceding  Sections  12.06(a) and (b) shall be subject to the
express  provisions  of this  Agreement  which  require,  or  permit,  differing
payments to be made to Non-Defaulting Banks as opposed to Defaulting Banks.

                                       79

<PAGE>

     12.07  Calculations;  Computations.  (a)  The  financial  statements  to be
furnished to the Banks pursuant  hereto shall be made and prepared in accordance
with  GAAP or SAP,  as the  case may be,  consistently  applied  throughout  the
periods  involved  (except  as set forth in the notes  thereto  or as  otherwise
disclosed  in writing by the  Borrower to the  Banks).  In  addition,  except as
otherwise specifically provided herein, all computations  determining compliance
with Section 8, including  definitions  used therein,  shall utilize  accounting
principles  and policies in effect from time to time;  provided  that (i) if any
such  accounting  principle or policy (whether GAAP or SAP or both) shall change
after the Effective Date, the Borrower shall give  reasonable  notice thereof to
the  Administrative  Agent and each of the Banks and if within 30 days following
such notice the Borrower,  the Administrative  Agent or the Required Banks shall
elect by giving  written  notice of such election to the other  parties  hereto,
such  computations  shall not give effect to such  change  unless and until this
Agreement  shall be amended  pursuant  to Section  12.12 to give  effect to such
change,  and (ii) if at any time the  computations  determining  compliance with
Section 8 utilize  accounting  principles  different  from those utilized in the
financial statements then being furnished to the Banks pursuant to Section 7.01,
such financial statements shall be accompanied by reconciliation work-sheets.

     (b) All  computations  of interest on Eurodollar  Loans and Fees  hereunder
shall be made on the actual number of days elapsed over a year of 360 days.

     (c) All computations of interest on Base Rate Loans hereunder shall be made
on the actual number of days elapsed over a year of 365/366 days.

     (d) For purposes of this Agreement, the Dollar Equivalent of each Loan that
is an Alternate  Currency Loan and the Dollar Equivalent of the stated amount of
each Letter of Credit that is an  Alternate  Currency  Letter of Credit shall be
calculated  on the date when any such  Loan is made or such  Letter of Credit is
issued,  on the first  Business  Day of each  month and at such  other  times as
designated by the Administrative Agent at any time when a Default or an Event of
Default exists.  Such Dollar Equivalent shall remain in effect until the same is
recalculated  by the  Administrative  Agent as provided above and notice of such
recalculation  is received by the Borrower,  it being understood that until such
notice is received,  the Dollar  Equivalent  shall be that Dollar  Equivalent as
last reported to the Borrower by the  Administrative  Agent. The  Administrative
Agent  shall   promptly   notify  the  Borrower  and  the  Banks  of  each  such
determination of the Dollar Equivalent.

                                       80
<PAGE>

     12.08 GOVERNING LAW; SUBMISSION TO JURISDICTION;  VENUE. (a) THIS AGREEMENT
AND THE OTHER CREDIT  DOCUMENTS  AND THE RIGHTS AND  OBLIGATIONS  OF THE PARTIES
HEREUNDER AND THEREUNDER  SHALL BE CONSTRUED IN ACCORDANCE  WITH AND BE GOVERNED
BY THE LAW OF THE STATE OF NEW YORK. ANY LEGAL ACTION OR PROCEEDING WITH RESPECT
TO THIS  AGREEMENT OR ANY OTHER CREDIT  DOCUMENT MAY BE BROUGHT IN THE COURTS OF
THE STATE OF NEW YORK OR OF THE UNITED  STATES FOR THE SOUTHERN  DISTRICT OF NEW
YORK, AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH CREDIT PARTY HEREBY
IRREVOCABLY  ACCEPTS FOR ITSELF AND IN RESPECT OF ITS  PROPERTY,  GENERALLY  AND
UNCONDITIONALLY,  THE NON-EXCLUSIVE  JURISDICTION OF THE AFORESAID COURTS.  EACH
CREDIT PARTY HEREBY  FURTHER  IRREVOCABLY  WAIVES ANY CLAIM THAT ANY SUCH COURTS
LACK  JURISDICTION  OVER SUCH CREDIT PARTY, AND AGREES NOT TO PLEAD OR CLAIM, IN
ANY LEGAL  ACTION OR  PROCEEDING  WITH  RESPECT TO THIS  AGREEMENT  OR ANY OTHER
CREDIT  DOCUMENT  BROUGHT IN ANY OF THE  AFORESAID  COURTS,  THAT ANY SUCH COURT
LACKS JURISDICTION OVER SUCH CREDIT PARTY. EACH CREDIT PARTY FURTHER IRREVOCABLY
CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE  AFORE-MENTIONED  COURTS IN
ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES  THEREOF BY REGISTERED OR
CERTIFIED MAIL, POSTAGE PREPAID, TO SUCH CREDIT PARTY AT ITS ADDRESS FOR NOTICES
PURSUANT TO SECTION 12.03,  SUCH SERVICE TO BECOME  EFFECTIVE 30 DAYS AFTER SUCH
MAILING.  EACH CREDIT  PARTY  HEREBY  IRREVOCABLY  WAIVES ANY  OBJECTION TO SUCH
SERVICE OF PROCESS  AND  FURTHER  IRREVOCABLY  WAIVES AND AGREES NOT TO PLEAD OR
CLAIM IN ANY ACTION OR PROCEEDING  HEREUNDER OR UNDER ANY OTHER CREDIT  DOCUMENT
THAT SERVICE OF PROCESS WAS IN ANY WAY INVALID OR  INEFFECTIVE.  NOTHING  HEREIN
SHALL AFFECT THE RIGHT OF THE ADMINISTRATIVE  AGENT OR ANY BANK TO SERVE PROCESS
IN ANY  OTHER  MANNER  PERMITTED  BY LAW OR TO  COMMENCE  LEGAL  PROCEEDINGS  OR
OTHERWISE PROCEED AGAINST ANY CREDIT PARTY IN ANY OTHER JURISDICTION.

     (b) EACH CREDIT PARTY HEREBY  IRREVOCABLY WAIVES ANY OBJECTION WHICH IT MAY
NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY OF THE AFORESAID  ACTIONS OR
PROCEEDINGS  ARISING OUT OF OR IN  CONNECTION  WITH THIS  AGREEMENT OR ANY OTHER
CREDIT DOCUMENT BROUGHT IN THE COURTS REFERRED TO IN CLAUSE (A) ABOVE AND HEREBY
FURTHER  IRREVOCABLY  WAIVES  AND AGREES NOT TO PLEAD OR CLAIM IN ANY SUCH COURT
THAT ANY SUCH ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN
AN INCONVENIENT FORUM.

                                       81
<PAGE>

     12.09  Counterparts.  This  Agreement  may be  executed  in any  number  of
counterparts and by the different parties hereto on separate counterparts,  each
of which when so executed and delivered  shall be an original,  but all of which
shall together  constitute one and the same  instrument.  A set of  counterparts
executed by all the parties  hereto  shall be lodged with the  Borrower  and the
Administrative Agent.

     12.10 Effectiveness. This Agreement shall become effective on the date (the
"Effective  Date") on which the Borrower and each of the Banks shall have signed
a copy hereof  (whether the same or different  copies) and shall have  delivered
the same to the Administrative Agent at the Administrative Agent's Notice Office
or, in the case of the  Banks,  shall  have  given to the  Administrative  Agent
telephonic (confirmed in writing),  written,  telex or telecopy notice (actually
received)  at such  office  that the same has been  signed and mailed to it. The
Administrative  Agent will give the Borrower and each Bank prompt written notice
of the occurrence of the Effective Date.

     12.11  Headings  Descriptive.  The  headings  of the several  sections  and
subsections of this Agreement are inserted for convenience only and shall not in
any way affect the meaning or construction of any provision of this Agreement.

     12.12  Amendment  or Waiver.  Neither this  Agreement  nor any other Credit
Document nor any terms hereof or thereof may be changed,  waived,  discharged or
terminated  unless such change,  waiver,  discharge or termination is in writing
signed by the respective  Credit  Parties party thereto and the Required  Banks,
provided that no such change,  waiver,  discharge or termination shall,  without
the consent of each Bank affected  thereby (other than a Defaulting  Bank),  (i)
extend any  Scheduled  Repayment or the  scheduled  final  maturity of any Loan,
Letter of Credit or Note (it being understood that any waiver of the application
of any  prepayment  or the  method  of  application  of  any  prepayment  to the
amortization  of the Loans shall not  constitute  an extension of any  Scheduled
Repayment or the  scheduled  final  maturity  thereof),  or reduce the rate,  or
extend the time of payment,  of interest thereon or Fees or reduce the principal
amount  thereof,  (ii)  increase  the  Commitments  of any Bank over the  amount
thereof  then in effect  (it being  understood  that a waiver of any  Default or
Event  of  Default  or of a  mandatory  reduction  in the  Total  Commitment  or
mandatory  repayment or prepayment shall not constitute a change in the terms of
any Commitment of any Bank), (iii) amend,  modify or waive any provision of this
Section 12.12, (iv) reduce any percentage specified in, or otherwise modify, the
definition of Required Banks or (v) consent to the assignment or transfer by the
Borrower of any of its rights and obligations under this Agreement. No provision
of Section 11 or any other provision  relating to the rights and/or  obligations
of  the  Administrative  Agent  may  be  amended  without  the  consent  of  the
Administrative Agent.

     12.13  Survival.  All  indemnities  set  forth  herein  including,  without
limitation,  in Section  1.10,  1.11,  4.04,  11.07 or 12.01  shall  survive the
execution  and  delivery  of this  Agreement  and the making of the  Loans,  the
repayment of the Obligations and the termination of the Total Commitment.

     12.14 Domicile of Loans.  Subject to Section 12.04,  each Bank may transfer
and carry its Loans at, to or for the account of any branch  office,  subsidiary
or affiliate of such Bank,  provided that the Borrower  shall not be responsible
for costs arising under Section 1.10 or 4.04 resulting from any such transfer to
the extent not otherwise applicable to such Bank prior to such transfer.

                                       82
<PAGE>

     12.15  Confidentiality.  The Administrative  Agent and each Bank shall hold
all  non-public  information  furnished  by or on  behalf  of  the  Borrower  in
connection with such Bank's  evaluation of whether to become a Bank hereunder or
obtained  by  such  Bank  pursuant  to  the   requirements   of  this  Agreement
("Confidential  Information")  in accordance  with its  customary  procedure for
handling confidential information of this nature and in accordance with safe and
sound banking or lending practices; provided that any Bank and/or its affiliates
may  disclose  any  such  Confidential   Information  (a)  to  their  respective
affiliates,  directors,  officers,  employees,  auditors or counsel for purposes
related to the  Credit  Documents  and the  transactions  contemplated  thereby,
provided that the Bank disclosing such confidential information pursuant to this
clause  (a)  shall  remain  liable  for  any  non-permitted  disclosure  of such
information  by any such  employee,  director,  agent,  attorney,  accountant or
professional  advisor, (b) as has become generally available to the public other
than as a result of  disclosure in violation of this Section  12.15,  (c) as has
become available to such Bank or any such affiliate on a non-confidential  basis
from a source  other than the  Borrower and its  affiliates,  provided  that the
source  is not  known  by such  Bank to be  prohibited  from  transmitting  such
information to such Bank by a contractual, legal or fiduciary obligation, (d) as
may be required or appropriate in any report,  statement or testimony  submitted
to any municipal,  state or Federal  regulatory  body having or claiming to have
jurisdiction  over such Bank  and/or its  affiliates,  (e) as may be required or
appropriate  in respect to any  summons or subpoena  or in  connection  with any
litigation or other judicial  process (it being  understood  that, to the extent
reasonably  practicable  and  legally  permitted  under the  circumstances,  the
Borrower  shall be given prior notice and an opportunity to contest any proposed
disclosure  pursuant to this clause  (e)),  (f) in order to comply with any law,
order,  regulation or ruling applicable to such Bank and/or its affiliates,  and
(g) to any permitted  prospective or actual  syndicate  member or participant in
the  Loans,  provided  that  such  prospective  or  actual  syndicate  member or
participant  agrees  with  the  respective  assigning  Bank to be  bound  by the
provisions  of this Section  12.15.  The  provisions of this Section 12.15 shall
survive any termination of this Agreement.

     12.16 WAIVER OF JURY TRIAL.  EACH OF THE PARTIES TO THIS  AGREEMENT  HEREBY
IRREVOCABLY  WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY  ACTION,  PROCEEDING  OR
COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT,  THE CREDIT DOCUMENTS
OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.

     12.17 Judgment Currency. (a) The Borrowers' Obligations hereunder and under
the other Credit Documents to make payments in the applicable  Approved Currency
(the  "Obligation  Currency") shall not be discharged or satisfied by any tender
or recovery pursuant to any judgment expressed in or converted into any currency
other than the  Obligation  Currency,  except to the extent  that such tender or
recovery  results in the effective  receipt by the  Administrative  Agent or the
respective  Bank of the full amount of the Obligation  Currency  expressed to be
payable to the  Administrative  Agent or such Bank under this  Agreement  or the
other Credit Documents.  If, for the purpose of obtaining or enforcing  judgment
against the Borrower in any court or in any  jurisdiction,  it becomes necessary
to convert into or from any currency  other than the  Obligation  Currency (such
other  currency  being  hereinafter  referred to as the "Judgment  Currency") an
amount  due in the  Obligation  Currency,  the  conversion  shall be made at the
Relevant Currency Equivalent,  and, in the case of other currencies, the rate of
exchange (as quoted by the Administrative  Agent or if the Administrative  Agent
does not quote a rate of exchange on such  currency,  by a known  dealer in such
currency designated by the Administrative Agent) determined, in each case, as of
the Business Day  immediately  preceding  the day on which the judgment is given
(such  Business  Day being  hereinafter  referred to as the  "Judgment  Currency
Conversion Date").

                                       83
<PAGE>

     (b) If there is a change in the rate of  exchange  prevailing  between  the
Judgment  Currency  Conversion Date and the date of actual payment of the amount
due,  the  Borrowers  covenant  and  agree to pay,  or  cause  to be paid,  such
additional  amounts,  if any (but in any  event not a lesser  amount)  as may be
necessary  to  ensure  that  the  amount  paid in the  Judgment  Currency,  when
converted  at the  rate of  exchange  prevailing  on the date of  payment,  will
produce the amount of the  Obligation  Currency  which could have been purchased
with the amount of  Judgment  Currency  stipulated  in the  judgment or judicial
award at the rate of exchange  prevailing  on the Judgment  Currency  Conversion
Date.

     (c) For purposes of  determining  the Relevant  Currency  Equivalent or any
other rate of exchange for this Section,  such amounts shall include any premium
and costs payable in connection with the purchase of the Obligation Currency.

     12.18  Euro.  (a) If at any  time  that an  Alternate  Currency  Loan or an
Alternate  Currency  Letter of Credit is  outstanding,  the  relevant  Alternate
Currency  is fully  replaced as the lawful  currency of the country  that issued
such Alternate Currency (the "Issuing Country") by the Euro so that all payments
are to be made in the Issuing Country in Euros and not in the Alternate Currency
previously the lawful  currency of such country,  then such  Alternate  Currency
Loan or Alternate  Currency  Letter of Credit shall be  automatically  converted
into a Loan or Letter of Credit  denominated  in Euros in a principal  amount or
stated  amount equal to the amount of Euros into which the  principal  amount or
stated  amount of such  Alternate  Currency  Loan or  Letter of Credit  would be
converted  pursuant to the EMU  Legislation and thereafter no further Loans will
be available in such Alternate Currency,  with the basis of accrual of interest,
notices requirements and payment offices with respect to such converted Loans or
Letters of Credit to be that consistent with the convention and practices in the
London interbank market for Euro denominated Loans or Letters of Credit.

     (b) The Borrower  shall from time to time, at the request of any Bank,  pay
to such Bank the amount of any losses, damages,  liabilities,  claims, reduction
in yield,  additional expense,  increased cost, reduction in any amount payable,
reduction in the effective  return of its capital,  the decrease or delay in the
payment of interest or any other return  forgone by such Bank or its  affiliates
as a result of the tax or currency  exchange  resulting  from the  introduction,
changeover to or operation of the Euro in any applicable  nation or Eurocurrency
market.

                                       84

<PAGE>

IN WITNESS WHEREOF,  each of the parties hereto has caused a counterpart of this
Agreement to be duly executed and delivered as of the date first above written.

Address:

Trenwick Group Inc.                         TRENWICK GROUP INC.
One Canterbury Green
Stamford, Connecticut  06901
Tel:  (203) 353-5500
Fax:  (203) 353-5557                        By:  /s/ Alan L. Hunte
                                                --------------------------------

Attention:  Alan L. Hunte
Title:  Executive Vice President
& Chief Financial Officer

                                            THE CHASE MANHATTAN BANK,
                                            Individually and as Administrative
                                            Agent

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

                                           CHASE MANHATTAN INTERNATIONAL
                                           LIMITED, as Issuing Agent

                                           By: /s/ Stephen Hurford
                                              ----------------------------------
                                           Title:   Vice President

                                           By: /s/Stephen Clark
                                              ----------------------------------
                                           Title:   Second Vice President

                                           FIRST UNION NATIONAL BANK,
                                           Individually and as Syndication Agent

                                           By: /s/ Thomas L. Stitchberry
                                              ----------------------------------
                                           Title:   Senior Vice President

                                           FLEET NATIONAL BANK, Individually
                                           and as Documentation Agent

                                           By: /s/ Elizabeth Shelley
                                              ----------------------------------
                                           Title:   Vice President

                                           CREDIT LYONNAIS NEW YORK BRANCH

                                           By: /s/ Peter Rasmussen
                                              ----------------------------------
                                           Title:   Vice President

<PAGE>
                                           DRESDNER BANK AG, New York
                                           and Grand Cayman Branches

                                           By: /s/ Lloyd C. Stevens
                                              ----------------------------------
                                           Title:   Vice President

                                           By: /s/ Anthony C. Valencourt
                                              ----------------------------------
                                           Title:   Senior Vice President

                                           NATIONAL WESTMINSTER BANK PLC

                                           By: /s/ Ian Grimsley
                                              ----------------------------------
                                           Title: Head of Lloyd's Insurance Team

                                           STATE STREET BANK AND TRUST COMPANY

                                           By: /s/ Edward M. Anderson
                                              ----------------------------------
                                           Title:   Vice President

                                           THE BANK OF NOVA SCOTIA

                                           By:  /s/ Todd S. Meller
                                              ----------------------------------
                                           Title:   Senior Relationship Manager

                                           THE FUJI BANK, LIMITED

                                           By: /s/ Raymond Ventura
                                              ----------------------------------
                                           Title:   Vice President & ManagerEXHIBIT 10.2

                            FIRST AMENDMENT

         FIRST AMENDMENT (the "Amendment"), dated as of December 31, 1999, among
TRENWICK  GROUP  INC.,  a Delaware  corporation  (the  "Borrower"),  the lending
institutions  from time to time party to the Credit Agreement  referred to below
(each a "Bank" and,  collectively,  the "Banks"),  FIRST UNION NATIONAL BANK, as
Syndication  Agent,  FLEET NATIONAL BANK, as  Documentation  Agent and THE CHASE
MANHATTAN  BANK, as  Administrative  Agent.  Unless  otherwise  defined  herein,
capitalized  terms used herein and defined in the Credit  Agreement  referred to
below are used herein as so defined.

                               W I T N E S E T H :

         WHEREAS,   the  Borrower,   the  Banks,  the  Syndication   Agent,  the
Documentation  Agent and the  Administrative  Agent have  entered  into a Credit
Agreement,  dated as of November 24, 1999 (as amended,  modified or supplemented
through, but not including, the date hereof, the "Credit Agreement"); and

         WHEREAS,  subject  to the terms and  conditions  set forth  below,  the
parties hereto wish to amend the Credit Agreement as provided herein;

         NOW, THEREFORE, it is agreed;

  A.     Amendment

         1.       Section 8.16 of the Credit Agreement is hereby amended to read
                  in its entirety as follows:

                  "8.16  Minimum Consolidated  Tangible Net Worth.  The Borrower
         will not permit its Consolidated  Tangible  Net Worth  to  be less than
         (i) at any time on or  prior to June 30, 2000, $290,000,000 and (ii) at
         any time thereafter $325,000,000."

  B.     Miscellaneous Provisions

         1. In order to induce  the  Banks to enter  into  this  Amendment,  the
Borrower  hereby  represents  and  warrants  that  (i) the  representations  and
warranties  contained in the Credit  Agreement and in the other Credit Documents
are  true  and  correct  in all  material  respects  on and as of the  Amendment
Effective Date (as defined  below)  (except with respect to any  representations
and warranties  limited by their terms to a specific  date,  which shall be true
and correct in all material  respects as of such date), and (ii) there exists no
Default  or Event  of  Default  under  the  Credit  Agreement  on the  Amendment
Effective Date, in each case after giving effect to this Waiver.

                                       1
<PAGE>

         2. This  Amendment is limited as specified and shall not  constitute an
amendment  modification,  acceptance  or waiver of any  other  provision  of the
Credit Agreement or any other Credit Document.

         3.  THIS  AMENDMENT  AND THE  RIGHTS  AND  OBLIGATIONS  OF THE  PARTIES
HEREUNDER  SHALL BE CONSTRUED IN ACCORDANCE  WITH AND GOVERNED BY THE LAW OF THE
STATE OF NEW YORK.

         4. This Amendment  shall become  effective on the date (the  "Amendment
Effective  Date") when the Borrower  and the Required  Banks shall have signed a
counterpart  hereof (whether the same or different  counterparts) and shall have
delivered (including by way of telecopier) the same to the Administrative Agent.

         5. From and after the Amendment  Effective  Date, all references in the
Credit Agreement and in the other Credit Documents to the Credit Agreement shall
be deemed to be referenced to the Credit Agreement as modified hereby.

                                      * * *

                                       -2-

<PAGE>

         IN WITNESS  WHEREOF,  the undersigned  have caused this Amendment to be
duly executed and delivered as of the date first above written.

                                        TRENWICK GROUP INC.

                                        By:  /s/ Alan L. Hunte
                                             --------------------------------
                                        Title:  Executive Vice President and
                                                Chief Financial Officer

                                        THE CHASE MANHATTAN BANK,
                                        Individually and as Administrative Agent

                                        By: /s/  Don Randa
                                            -----------------------------------
                                        Title:   Vice President

                                        CHASE MANHATTAN INTERNATIONAL LIMITED,
                                        as Issuing Agent

                                        By:  /s/ Stephen Hurford
                                             ----------------------------------
                                        Title:   Vice President

                                        By:  /s/ Steve Clarke
                                             ----------------------------------
                                        Title:   Vice President

                                        FIRST UNION NATIONAL BANK, Individually
                                        and as Syndication Agent

                                        By:  /s/  Thomas L. Stickberry
                                             ----------------------------------
                                        Title:   Senior Vice President

                                      -3-

<PAGE>
                                        FLEET NATIONAL BANK, Individually
                                        and as Documentation Agent

                                        By:  /s/ Jan-Gee McCollam
                                             ----------------------------------
                                        Title:   Senior Vice President

                                        CREDIT LYONNAIS NEW YORK BRANCH

                                        By:  /s/  Sebastian Rocco
                                             ----------------------------------
                                        Title:   Senior Vice President

                                        DRESDNER BANK AG, New York and Grand
                                        Cayman Branches

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

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

                                        NATIONAL WESTMINSTER BANK PLC

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

                                        STATE STREET BANK AND TRUST COMPANY

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

                                      -4-

<PAGE>

                                        THE BANK OF NOVA SCOTIA

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

                                        THE FUJI BANK, LIMITED

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

                                        BARCLAYS BANK PLC

                                        By: /s/ Melvin Bean
                                            -----------------------------------
                                        Title:  Relationship Director

                                      -5-

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00006-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00006-of-00352.parquet"}]]