Exhibit 4.2.4

THIRD AMENDMENT TO THE CREDIT AGREEMENT
(AMENDING AND RESTATING THE CREDIT AGREEMENT)

This THIRD AMENDMENT dated as of June 29, 1999, is among ENHANCE FINANCIAL SERVICES GROUP INC., a corporation duly organized and validly existing under the laws of the State of New York (together with its successors and assigns, the "COMPANY"); each of the lenders that is a signatory hereto (together with its successors and assigns, individually, a "BANK", and, collectively, the "BANKS"); and FLEET NATIONAL BANK, as Swingline Bank (in such capacity, together with its successors and permitted assigns in such capacity, the "SWINGLINE BANK") and as agent for the Banks (in such capacity, together with its successors in such capacity, the "AGENT").

The Company, Fleet National Bank, The Bank of Tokyo-Mitsubishi, Ltd, New York Branch ("Bank of Tokyo"), The First National Bank of Chicago, Deutsche Bank AG, New York and/or Cayman Island Branches, the Swingline Bank and the Agent are parties to a Credit Agreement dated as of June 30, 1998, which Credit Agreement was amended by Amendment No. 1 and Waiver Agreement dated as of December 31, 1998 and Amendment No. 2 dated as of February 15, 1999 (as so amended and in effect on the date hereof, the "EXISTING CREDIT AGREEMENT"). Pursuant to Section 2.08 of the Existing Credit Agreement, ON OR ABOUT May 14, 1999, the Company requested the Banks to extend the Commitment Termination Date. All of the Banks, except Bank of Tokyo, are in agreement with such request upon certain terms and conditions, and Bank of New York wishes to replace Bank of Tokyo as a lender under the Existing Credit Agreement as amended hereby. The parties hereto wish to amend and restate the Existing Credit Agreement to reflect their understandings and accordingly hereby agree as follows:

Section 1. AMENDMENT AND RESTATEMENT OF THE EXISTING CREDIT AGREEMENT. The Existing Credit Agreement, including, without limitation, the schedules and exhibits thereto, is hereby amended and restated in its entirety to provide as set forth in EXHIBIT A TO THIRD AMENDMENT attached hereto (as so amended and restated hereby, the "Amended and Restated Credit Agreement"). Such amendment and restatement shall be effective as of June 29, 1999 (the "Amendment and Restatement Effective Date"), subject to the satisfaction of the conditions precedent set forth in Section 2 of this Third Amendment. Notwithstanding anything contained in the Existing Credit Agreement or the Amended and Restated Credit Agreement to the contrary, the Consent Date (as defined in the Amended and Restated Credit Agreement) is May 28, 1999.

Section 2. CONDITIONS PRECEDENT. This Third Amendment shall take effect from the first day that the Agent shall have received counterparts hereof signed by the Company, each of the Banks identified on the signature pages of this Third Amendment, the Swingline Bank and the Agent, and each of the conditions set forth in this Section 2 has been waived by each Bank and the Agent or met:

(a) The Agent shall have received from the Company a certificate of a senior officer to the Company, dated the Amendment and Restatement Effective Date, stating that:

(i) the representations and warranties contained in Article 7 of the Credit Agreement are correct on and as of the date of such certificate as though made on and as of such date (or, if such representation or warranty is expressly stated to have been made as of a specific date, as of such specific date); and

(ii) no Event of Default or Default existed on (A) the date the Company requested an extension of the Existing Commitment Termination Date or (B) on the Consent Date and, in each case, is continuing, and no Event of Default or Default has occurred and is continuing or would result from the signing of the Third Amendment or the transactions contemplated thereby.

(b) The Agent shall have received a certificate of the Secretary or an Assistant Secretary of the Company, dated the Amendment and Restatement Effective Date and certifying that, except for amendments, copies of which are attached to such Certificate, the charters or similar organizational documents of the Company and the Material Subsidiaries have not been amended since June 30, 1998.

(c) The Agent shall have received for the account of Bank of New York a duly completed Revolving Credit Note and a Competitive Note, each duly executed and delivered by the Company and made payable to Bank of New York in the amount of its Commitment.

(d) The Agent shall have received an opinion, dated the Amendment and Restatement Effective Date, of Samuel Bergman, Executive Vice President and General Counsel of the Company, covering such matters as the Administrative Agent or any Bank may reasonably request (and the Company hereby instructs such counsel to deliver such opinion to the Banks and the Agent).

(e) The Agent shall have received all information, documents, certificates and opinions of counsel relating to the Company and its Subsidiaries, as any Bank or the Agent may reasonably request, all in form and substance satisfactory to the Banks, the Agent and its special counsel.

(f) Day, Berry & Howard LLP, special counsel to the Agent, shall have received payment of its legal fees and disbursements in connection with the preparation, negotiation, execution and delivery of this Third Amendment.

Section 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents and warrants as follows:

(a) The execution, delivery and performance by the Company of this Third Amendment have been duly authorized by all necessary corporate action and do not and will not (i) require any consent or approval of its shareholders;
(ii) violate any provisions of its articles of incorporation or by-laws; (iii) violate any provision of any law, rule, regulation (including without limitation, Regulation U and X), order, writ, judgment, injunction, decree, determination or award presently in effect having applicability to and binding upon the Company or any Subsidiary, it being understood that the Company may be required to file a copy of this Third Amendment with the Securities and Exchange Commission in connection with the Company's periodic filing requirements; (iv) result in a breach of or constitute a default or require any consent under any indenture or loan or credit agreement or any other material agreement, lease or instrument to which the Company or any Subsidiary is a party or by which it or its Properties may be bound; or (v) result in, or require, the creation or imposition of any Lien upon or with respect to any of the Properties now owned or hereafter acquired by the Company.

(b) No authorizations, approvals or consents of, and no filings or registrations with, any governmental or regulatory authority or agency, or any securities exchange, are necessary for the execution or delivery by the Company of this Third Amendment or performance by the Company thereof or for the legality, validity or enforceability of this Third Amendment.

(c) This Third Amendment constitutes the legal, valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except to the extent that such enforcement may be limited by applicable bankruptcy, insolvency and other similar laws affecting creditors' rights generally and by general principles of equity.

(d) The information, reports, financial statements, exhibits and schedules furnished in writing by or on behalf of the Company or any of its Subsidiaries to the Agent or any Bank in connection with the negotiation, preparation or delivery of this Third Amendment or delivered pursuant hereto, when taken as a whole, do not, as of the Amendment and Restatement Date, contain any untrue statement of material fact or omit to state any material fact necessary to make the statements herein or therein, in light of the circumstances under which they were made, not misleading. To the Company's knowledge, there is no fact peculiar to the Company or any of its Subsidiaries (in contrast to information of a general economic or industry nature) that could have a Material Adverse Effect that has not been disclosed herein or in a report, financial statement, exhibit, schedule, disclosure letter or other writing furnished to the Banks for use in connection with the transactions contemplated hereby.

(e) Substantially all programming required to handle all material dates and date processing, in and following the year 2000, of (i) the Company's and each of its Material

Subsidiaries' computer systems and (ii) equipment containing embedded microchips (including systems and equipment supplied by others or with which the Company's or such Material Subsidiaries' systems interface) and the testing of all such systems and equipment, as so reprogrammed, has been substantially completed. The expected cost to the Company and its Material Subsidiaries of such reprogramming and testing and of the reasonably foreseeable consequences of year 2000 to the Company and its Material Subsidiaries (including, without limitation, reprogramming errors and the failure of others' systems or equipment within the control of the Company or its Material Subsidiaries) is not anticipated to result in a Default or have Material Adverse Effect.

Section 4. EFFECT ON THE EXISTING CREDIT AGREEMENT. The execution, delivery and effectiveness of this Third Amendment shall not, except as expressly provided herein, operate as a waiver of any right, power or remedy of any of the Banks under the Existing Credit Agreement, nor constitute a waiver of any provision of the Existing Credit Agreement. On and after the Amendment and Restatement Effective Date, the rights and obligations of the parties hereto shall be governed by the Amended and Restated Credit Agreement, PROVIDED that the rights and obligations of the parties to the Existing Credit Agreement with respect to the period prior to the Amendment and Restatement Effective Date shall continue to be governed by the provisions of the Existing Credit Agreement. On the effective date of this Third Amendment, the Commitment of each Bank shall immediately become the Commitment amount set forth opposite the name of such Bank on the signature pages to EXHIBIT A TO THIRD AMENDMENT hereto under the caption "Commitment" (as the same may be reduced at any time or from time to time pursuant to Section 2.03 of EXHIBIT A TO THIRD AMENDMENT). With effect from and including the Amendment and Restatement Effective Date, Bank of New York shall be a party to the Amended and Restated Credit Agreement and on that date shall undertake the Commitment set forth opposite its name on the signature page to EXHIBIT A TO THIRD AMENDMENT and make a Revolving Credit Loan to the Company in an amount sufficient to enable the Company to pay Bank of Tokyo the outstanding principal balance owing it by the Company as of the Existing Commitment Termination Date.

Section 5. COSTS, EXPENSES AND TAXES. The Company agrees to pay on demand all reasonable costs and expenses of the Agent in connection with the preparation, execution, delivery and administration of this Third Amendment and any other instruments and documents to be delivered hereunder (including, without limitation, the reasonable fees and expenses of counsel to the Agent) in accordance with the terms of Section 11.03 of the Credit Agreement.

Section 6. EXECUTION IN COUNTERPARTS. This Third Amendment may be executed in any number of counterparts, each of which when so executed and delivered shall be deemed to be an original and all of which taken together shall constitute but one and the same instrument.

Section 7. GOVERNING LAW. This Third Amendment shall be governed by, and construed in accordance with, the laws of the State of New York.

Section 8. DEFINED TERMS. Until the Amendment and Restatement Effective Date, capitalized terms used herein which are not expressly defined herein shall have the meanings ascribed to them in the Existing Credit Agreement.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK --
SIGNATURE PAGES FOLLOW]

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

ENHANCE FINANCIAL SERVICES GROUP INC.

By /s/ Arthur Dubroff
   ----------------------------------------
   Title:  Executive Vice President and
             Chief Financial Officer

FLEET NATIONAL BANK

By  /s/ E.B. Shelley
    ---------------------------------------
    Title: Vice President

BANK OF NEW YORK

By  /s/ Evan Glass
    ---------------------------------------
    Title: Assistant Vice President

THE FIRST NATIONAL BANK OF CHICAGO

By  /s/ Timothy J. Stambaugh
    ---------------------------------------
    Title: TIMOTHY J. STAMBAUGH
           SENIOR VICE PRESIDENT

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

By  /s/ John S. McGill
    ---------------------------------------
    Title: John S. McGill
             Director

and

By  /s/ Gayma Z. Shivnarain
    ---------------------------------------
    Title: Gayma Z. Shivnarain
             Director

FLEET NATIONAL BANK,
as Swingline Bank

By /s/ E.B. Shelley
   ---------------------------------------
   Title: Vice President

AGENT

FLEET NATIONAL BANK,
as Agent

By /s/ E.B. Shelley
   ---------------------------------------
   Title: Vice President

EXHIBIT A TO THIRD AMENDMENT

ENHANCE FINANCIAL SERVICES GROUP INC.

CREDIT AGREEMENT

DATED AS OF JUNE 30, 1998

AMENDED AND RESTATED AS OF JUNE 29, 1999

FLEET NATIONAL BANK,
AS ADMINISTRATIVE AGENT
AND
ARRANGER

TABLE OF CONTENTS

This Table of Contents is not part of the Agreement to which it is attached but is inserted for convenience of reference only.

                                                                                                                Page
Section 1.  Definitions and Accounting Matters.                                                                   1
         1.01     Certain Defined Terms                                                                           1
         1.02     Accounting Terms and Determinations.                                                           17
         1.03     Classes; Series; Type                                                                          18

Section 2.  Commitments, Loans, Notes and Prepayments                                                            18
         2.01     Loans                                                                                          18
         2.02     Borrowings                                                                                     19
         2.03     Changes in Aggregate Amount of Commitments                                                     24
         2.04     Fees                                                                                           24
         2.05     Several Obligations; Remedies Independent                                                      25
         2.06     Notes                                                                                          25
         2.07     Optional Prepayments and Conversions or Continuations of Loans                                 26
         2.08     Extension of Commitment Termination Date                                                       27

Section 3.  Payments of Principal and Interest                                                                   29
         3.01     Repayment of Loans                                                                             29
         3.02     Interest                                                                                       29

Section 4.  Payments; Pro Rata Treatment; Computations; Etc.                                                     31
         4.01     Payments                                                                                       31
         4.02     Pro Rata Treatment                                                                             32
         4.03     Computations                                                                                   32
         4.04     Minimum Amounts                                                                                33
         4.05     Certain Notices                                                                                33
         4.06     Non-Receipt of Funds by the Administrative Agent                                               34
         4.07     Sharing of Payments, Etc.                                                                      35

Section 5.  Yield Protection, Etc.                                                                               37
         5.01     Additional Costs                                                                               37
         5.02     Limitation on Types of Loans                                                                   39
         5.03     Illegality                                                                                     40
         5.04     Treatment of Affected Loans                                                                    40
         5.05     Compensation                                                                                   41
         5.06     U.S. Taxes                                                                                     41
         5.07     Fair Allocation; Substitution of Banks                                                         42

                                      -ii-



Section 6.  Conditions Precedent                                                                                 43
         6.01     Effective Date                                                                                 43
         6.02     Term Loans                                                                                     45
         6.03     Initial and Subsequent Loans                                                                   46

Section 7.  Representations and Warranties                                                                       46
         7.01     Corporate Existence                                                                            46
         7.02     Financial Condition                                                                            46
         7.03     Litigation                                                                                     47
         7.04     No Breach                                                                                      47
         7.05     Action                                                                                         48
         7.06     Approvals                                                                                      48
         7.07     Margin Stock                                                                                   48
         7.08     ERISA                                                                                          48
         7.09     Taxes                                                                                          48
         7.10     Investment Company Act                                                                         49
         7.11     Public Utility Holding Company Act                                                             49
         7.12     Material Agreements and Liens                                                                  49
         7.13     Environmental Matters                                                                          49
         7.14     Capitalization                                                                                 50
         7.15     Subsidiaries, Etc.                                                                             50
         7.16     True and Complete Disclosure                                                                   50
         7.17     Year 2000                                                                                      51

Section 8.  Covenants of the Company                                                                             51
         8.01     Financial Statements; Information; Etc.                                                        51
         8.02     Litigation                                                                                     55
         8.03     Existence, Etc.                                                                                55
         8.04     Insurance                                                                                      56
         8.05     Prohibition of Fundamental Changes                                                             56
         8.06     Limitation on Liens                                                                            57
         8.07     Indebtedness                                                                                   58
         8.08     Investments                                                                                    59
         8.09     Restricted Payments                                                                            60
         8.10     Financial Covenant - Tangible Net Worth                                                        61
         8.11     Lines of Business                                                                              61
         8.12     Transactions with Affiliates                                                                   61
         8.13     Use of Proceeds                                                                                62
         8.14     Certain Obligations Respecting Subsidiaries                                                    62

                                     -iii-



         8.15     Modifications of Certain Documents                                                             62
         8.16     Claims-Paying Rating                                                                           63
         8.17     Dividends to or Investments in the Company by Subsidiaries                                     63

Section 9.  Events of Default                                                                                    63

Section 10.  The Administrative Agent                                                                            66
         10.01    Appointment, Powers and Immunities                                                             66
         10.02    Reliance by Administrative Agent                                                               66
         10.03    Defaults                                                                                       67
         10.04    Rights as a Bank                                                                               67
         10.05    Indemnification                                                                                68
         10.06    Non-Reliance on Administrative Agent and Other Banks                                           68
         10.07    Failure to Act                                                                                 68
         10.08    Resignation or Removal of Administrative Agent                                                 69
         10.09    Consents under Basic Documents                                                                 69

Section 11.  Miscellaneous                                                                                       69
         11.01    Waiver                                                                                         69
         11.02    Notices                                                                                        69
         11.03    Expenses, Etc                                                                                  70
         11.04    Amendments, Etc.                                                                               70
         11.05    Successors and Assigns                                                                         71
         11.06    Assignments and Participations                                                                 71
         11.07    Survival                                                                                       73
         11.08    Captions                                                                                       74
         11.09    Counterparts                                                                                   74
         11.10    Governing Law; Submission to Jurisdiction                                                      74
         11.11    Waiver of Jury Trial                                                                           74
         11.12    Treatment of Certain Information; Confidentiality                                              74

CREDIT AGREEMENT dated as of June 30, 1998 and amended and restated as of June 29, 1999 among: ENHANCE FINANCIAL SERVICES GROUP INC., a corporation duly organized and validly existing under the laws of the State of New York (together with its successors and assigns, the "COMPANY"); each of the lenders named under the caption "BANKS" on the signature pages hereof (together with its successors and assigns, individually, a "BANK", together, the "BANKS"); and FLEET NATIONAL BANK, as Swingline Bank hereunder (in such capacity, together with its successors and permitted assigns in such capacity, the "SWINGLINE BANK") and as agent for the Banks (in such capacity, together with its successors in such capacity, the "ADMINISTRATIVE AGENT").

The Company, the Banks, the Swingline Bank and the Administrative Agent agree as follows:

Section 1. DEFINITIONS AND ACCOUNTING MATTERS.

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

"AFFILIATE" shall mean, as to any specified Person, any other Person that directly or indirectly controls, or is under common control with, or is controlled by, such specified Person. As used in this definition, "CONTROL" (including, with its correlative meanings, "CONTROLLED BY" and "UNDER COMMON CONTROL WITH") shall mean possession, directly or indirectly, of power to direct or cause the direction of management or policies (whether through ownership of securities or partnership or other ownership interests, by contract or otherwise), PROVIDED that, in any event, any Person that owns directly or indirectly securities having 10% or more of the voting power for the election of directors or other governing body of a corporation or 10% or more of the partnership or other ownership interests of any other Person will be deemed to control such corporation or other Person. Notwithstanding the foregoing, (a) no individual shall be an Affiliate of any Person or any of its Subsidiaries solely by reason of such individual being a director, officer or employee of such Person or any of its Subsidiaries, (b) a Person and its Subsidiaries shall not be Affiliates of each other and (c) neither the Administrative Agent nor any Bank shall be an Affiliate of the Company or any of its Subsidiaries.

"APPLICABLE INSURANCE REGULATORY AUTHORITY" shall mean, with respect to any Insurance Subsidiary, the insurance department or similar insurance regulatory or administrative authority or agency of the state or other jurisdiction in which such Insurance Subsidiary is domiciled.

"APPLICABLE LENDING OFFICE" shall mean, for each Bank and each Type of Loan, the "Lending Office" of such Bank (or of an affiliate of such Bank) designated for such Type of Loan on the signature pages hereof or such other office of such Bank (or of an affiliate of such Bank) as such Bank may from time to time specify to the Administrative Agent and the Company as the office by which its Loans of a Type are to be made and maintained. The Swingline Loans shall be made and maintained at the "Lending Office" of the Swingline Bank.

"APPLICABLE MARGIN" shall mean: (a) with respect to Revolving Credit Loans and Term Loans that are Base Rate Loans, 0% per annum; and (b) with respect to (i) Revolving Credit Loans and Term Loans that are Eurodollar Loans or (ii) with respect to facility fees payable hereunder, the applicable percentage per annum set forth below under the caption "Eurodollar Spread" or "Facility Fee Rate", as the case may be, based upon the ratings by S&P and Moody's applicable on such date to the Index Debt:

-------------------------------- -------------------------------------------- -------------------------------
                                              Eurodollar Spread
          Index Debt                                                                   Facility Fee
            Rating:                                                                        Rate
                                 ---------------------- ---------------------
                                   Revolving Credit          Term Loan
                                         Loan1
-------------------------------- ---------------------- --------------------- -------------------------------
            Level 1                     0.210%                 0.310%                     0.070%
-------------------------------- ---------------------- --------------------- -------------------------------
            Level 2                     0.250%                 0.350%                     0.080%
-------------------------------- ---------------------- --------------------- -------------------------------
            Level 3                     0.290%                 0.390%                     0.090%
-------------------------------- ---------------------- --------------------- -------------------------------
            Level 4                     0.325%                 0.425%                     0.105%
-------------------------------- ---------------------- --------------------- -------------------------------
            Level 5                     0.355%                 0.455%                     0.125%
-------------------------------------------------------------------------------------------------------------

For purposes of determining the applicable Index Debt Rating (except for split ratings of more than one equivalent level as provided for below): (a) Level 1 shall be deemed to be applicable if (i) no Event of Default shall have occurred and be continuing and (ii) the Index Debt is rated AA or higher by S&P OR Aa2 or higher by Moody's; (b) Level 2 shall be deemed to be applicable if (i) no Event of Default shall have occurred and be continuing, (ii) Level 1 is not applicable and (iii) the Index Debt is rated A or higher by S&P OR A2 or higher by Moody's;
(c) Level 3 shall be deemed to be applicable if (i) no Event of Default shall have occurred and be continuing, (ii)

neither Level 1 nor Level 2 is applicable and (iii) the Index Debt is rated A- or higher by S&P OR A3 or higher by Moody's; (d) Level 4 shall be deemed to be applicable if (i) no Event of Default shall have occurred and be continuing,
(ii) neither Level 1, Level 2 nor Level 3 is applicable and (iii) the Index Debt is rated BBB+ or higher by S&P OR Baa1 or higher by Moody's; and (e) Level 5 shall be deemed to be applicable if no other Level is applicable. If S&P or Moody's shall not have in effect a rating for the Index Debt (other than by reason of the circumstances referred to in the last sentence of this definition), then S&P shall be deemed to have established a rating in Level 5. If the rating for the Index Debt of S&P and Moody's is split by more than one equivalent rating level, the Index Debt Rating shall be deemed to be at that Level corresponding to the rating that is one level higher than the lower of the two ratings. If the rating established or deemed to have been established by S&P or Moody's for the Index Debt shall be changed (other than as a result of a change in the rating system of S&P or Moody's), such change shall be effective as of the date on which it is first announced by S&P or Moody's, as the case may be. Each change in the Applicable Margin shall apply during the period commencing on the effective date of such change and ending on the date immediately preceding the effective date of the next such change. If the rating system of S&P or Moody's shall change, or if S&P or Moody's shall cease to be in the business of rating corporate debt obligations, the Company and the Banks shall negotiate in good faith to amend this definition to reflect such changed rating system or the unavailability of ratings from such rating agency and, pending the effectiveness of any such amendment, the Applicable Margin shall be determined by reference to the rating most recently in effect prior to such change or cessation.

"ARRANGER" shall mean Fleet National Bank.

"ASSET GUARANTY" shall mean Asset Guaranty Insurance Company, a New York financial guaranty insurance company and a Wholly Owned Subsidiary of the Company.

"BANKRUPTCY CODE" shall mean the Federal Bankruptcy Code of 1978, as amended from time to time.

"BASE RATE" shall mean, for any day, a rate per annum equal to the higher of (a) the Federal Funds Rate for such day PLUS 1/2 of 1% and (b) the Prime Rate for such day. Each change in any interest rate provided for herein based upon the Base Rate resulting from a change in the Base Rate shall take effect at the time of such change in the Base Rate.

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

"BASIC DOCUMENTS" shall mean, collectively, this Agreement and the Notes.

"BORROWING" means (a) Revolving Credit Loans of the same Type, made, Converted or Continued on the same date and, in the case of Eurodollar Loans, as to which a single Interest Period is in effect, or (b) a Competitive Loan or group of Competitive Loans of the same Type made on the same date and as to which a single Interest Period is in effect.

"BUSINESS DAY" shall mean any day (a) on which commercial banks are not authorized or required to close in Hartford, Connecticut or New York City and (b) if such day relates to a Borrowing of, a payment or prepayment of principal of or interest on, a Conversion of or into, or an Interest Period for, a Eurodollar Loan or a notice by the Company with respect to any such Borrowing, payment, prepayment, Conversion or Interest Period, also on which dealings in Dollar deposits are carried out in the London interbank market.

"CAPITAL LEASE OBLIGATIONS" shall mean, for any Person, all obligations of such Person to pay rent or other amounts under a lease of (or other agreement conveying the right to use) Property to the extent such obligations are required to be classified and accounted for as a capital lease on a balance sheet of such Person under GAAP (including Statement of Financial Accounting Standards No. 13 of the Financial Accounting Standards Board), and, for purposes of this Agreement, the amount of such obligations shall be the capitalized amount thereof, determined in accordance with GAAP (including such Statement No. 13).

"CHANGE IN CONTROL" shall mean, with respect to the Company, the occurrence of a state of facts where (a) any one Person, together with its Subsidiaries and Affiliates, or any group of Persons acting together as a group (whether pursuant to a shareholders agreement, partnership or joint venture agreement or otherwise), shall own (beneficially or otherwise) 50% or more of the Voting Stock of the Company or (b) the Company is or would be required to register itself as a "controlled insurer" under Section 1503 of the New York Insurance Law, or (c) the Company is or would be required under Section 1506 (e) of the New York Insurance Law to notify the New York State Superintendent of Insurance of a Person which controls or has acquired control of the Company, or
(d) a Person has filed under Section 1506 (a) of the New York Insurance Law to obtain the prior approval of the New York State Superintendent of Insurance to acquire control of the Company and such approval has been obtained.

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

"CLOSING DATE" shall mean the date upon which the initial Loans hereunder are made.

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

"COMBINED STATUTORY SURPLUS" means, at any date, the combined "statutory surplus as regards policyholders" of each Insurance Subsidiary of Enhance Investment that appears on the Statutory Statement of such Insurance Subsidiary and is computed pursuant to the instructions of the National Association of Insurance Commissioners or any successor thereto. In the Statutory Statement prescribed for each Insurance Subsidiary for the year ended December 31, 1997, such amount for the year ended December 31, 1997 appears on line 32, column 1 on page 4.

"COMMITMENT" shall mean, as to each Bank, the obligation of such Bank to make Loans in an aggregate amount not exceeding the amount set opposite such Bank's name on the signature pages hereof under the caption "Commitment" (as the same may be reduced at any time or from time to time pursuant to Section 2.03 hereof).

"COMMITMENT TERMINATION DATE" shall mean June 27, 2000 (provided that, if such date is not a Business Day, the next preceding Business Day), as the same may be extended pursuant to Section 2.08 hereof.

"COMPETITIVE BID" means an offer by a Bank to make a Competitive Loan in accordance with Section 2.02.

"COMPETITIVE BID RATE" means, with respect to any Competitive Bid, the Competitive Margin or the Fixed Rate, as applicable, offered by the Bank making such Competitive Bid.

"COMPETITIVE BID REQUEST" means a request by the Borrower for Competitive Bids in accordance with Section 2.02.

"COMPETITIVE LOAN" means a Loan made pursuant to Section 2.01(e).

"COMPETITIVE MARGIN" shall mean with respect to any Competitive Loan bearing interest at a rate based on the Eurodollar Base Rate, the marginal rate of interest, if any, to be added to or subtracted from the Eurodollar Base Rate to determine the rate of interest applicable to such Loan, as specified by the Bank making such Loan in its related Competitive Bid.

"COMPETITIVE NOTES" shall mean the promissory notes provided for by Section 2.06(e) and all promissory notes delivered in substitution or exchange therefor, in each case as the same shall be modified and supplemented and in effect from time to time.

"COMPUTATION DATE" shall have the meaning in Section 8.09 hereof.

"COMPUTATION PERIOD" shall have the meaning assigned to such term in Section 8.09 hereof.

"CONSENT DATE" shall have the meaning assigned to such term in
Section 2.08 hereof.

"CONTINUE", "CONTINUATION" and "CONTINUED" shall refer to the continuation pursuant to Section 2.07 hereof of a Eurodollar Loan from one Interest Period to the next Interest Period.

"CONVERT", "CONVERSION" and "CONVERTED" shall refer to a conversion pursuant to Section 2.07 hereof of one Type of Loans into another Type of Loans, which may be accompanied by the transfer by a Bank (at its sole discretion) of a Loan from one Applicable Lending Office to another.

"DATE HEREOF" and "DATE OF THIS AGREEMENT" shall mean June 30, 1998.

"DEBENTURES" shall mean the debentures issued by the Company under the Indenture before the Effective Date in an aggregate principal amount not in excess of $75,000,000.

"DEFAULT" shall mean an Event of Default or an event that with notice or lapse of time or both would become an Event of Default.

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

"EFFECTIVE DATE" shall mean June 30, 1998.

"ENHANCE INVESTMENT" shall mean Enhance Investment Corporation, a Delaware corporation and a Wholly Owned Subsidiary of the Company.

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

"ERC" shall mean Enhance Reinsurance Company, a New York financial guaranty insurance corporation and a Wholly Owned Subsidiary of the Company.

"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time.

"ERISA AFFILIATE" shall mean any corporation or trade or business that is a member of any group of organizations (a) described in Section 414(b) or (c) of the Code of which the Company is a member and (b) solely for purposes of potential liability under Section 302(c) (11) of ERISA and Section 412(c) (11) of the Code and the lien created under Section 302(f) of ERISA and Section 412(n) of the Code, described in Section 414(m) or (o) of the Code of which the Company is a member.

"EURODOLLAR" when used in reference to any Loan or Borrowing, shall refer to whether such Loan, or the Loans comprising such Borrowing, are bearing interest at a rate determined by reference to the Eurodollar Rate (or, in the case of a Competitive Loan, the Eurodollar Base Rate).

"EURODOLLAR BASE RATE" shall mean, with respect to any Eurodollar Borrowing for any Interest Period, the rate per annum appearing on the Screen at approximately 11:00 a.m., London time (or as soon thereafter as practicable), two Business Days prior to the commencement of such Interest Period, as LIBOR with a maturity comparable to such Interest Period. In the event that the Screen shall cease to report such LIBOR or, in the reasonable judgment of the Majority Banks, shall cease to accurately reflect such LIBOR (as reported by any publicly available source of similar market data selected by such Majority Banks), then the "EURODOLLAR BASE RATE" with respect to such Eurodollar Borrowing for such Interest Period shall be the rate per annum at which dollar deposits of $5,000,000 and for a maturity comparable to such Interest Period are offered by the principal London office of the Reference Bank[s] in immediately available funds in the London interbank market at approximately 11:00 a.m., London time, two Business Days prior to the commencement of such Interest Period.

"EURODOLLAR LOANS" shall mean Loans that bear interest at rates based on rates referred to in the definition of "Eurodollar Base Rate" in this Section 1.01.

"EURODOLLAR RATE" shall mean, for any Eurodollar Loan for any Interest Period therefor, a rate per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) determined by the Administrative Agent to be equal to the quotient of (a) the Eurodollar Base Rate for such Loan for such Interest Period DIVIDED BY (b) the sum of (i) 1 MINUS (ii) the Reserve Requirement for such Loan for such Interest Period.

"EVENT OF DEFAULT" shall have the meaning assigned to such term in
Section 9 hereof.

"EXISTING COMMITMENT TERMINATION DATE" shall have the meaning assigned to such term in Section 2.08 hereof.

"EXISTING CREDIT AGREEMENT" shall mean the Amended and Restated Credit Agreement dated as of November 24, 1992, amended and restated as of October 1, 1996, among the Company, each of the banks party thereto, The Chase Manhattan Bank, as both Swingline Bank and Administrative Agent thereunder, as said agreement has been further amended by a letter agreement dated August 4, 1997, Amendment No. 1 dated as of December 31, 1997 and Amendment No.2 dated as of March 27, 1998.

"EXISTING LOANS" shall mean the loans outstanding under the Existing Credit Agreement on the Effective Date.

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

"FIXED RATE" shall mean, with respect to any Competitive Loan (other than a Competitive Loan based on the rates referred to in the definition of Eurodollar Base Rate), the fixed rate of interest per annum specified by the Bank making such Competitive Loan in its related Competitive Bid.

"FIXED RATE LOAN" shall mean a Competitive Loan bearing interest at a Fixed Rate.

"FLEET" shall mean Fleet National Bank.

"FUNDED DEBT" shall mean Indebtedness of the Company and its Subsidiaries which by its terms becomes payable more than one year from the date of origination thereof or which is renewable at the option of the Company or any of its Subsidiaries beyond one year from the date of such origination.

"GAAP" shall mean the generally accepted accounting principles which, in accordance with Section 1.02(a) hereof, are to be used in preparing financial statements on the basis of which are to be made the calculations for purposes of determining compliance with the financial covenants in this Agreement.

"GUARANTEE" shall mean a guarantee, an endorsement, a contingent agreement to purchase or to furnish funds for the payment or maintenance of, or otherwise to be or become contingently liable under or with respect to, the Indebtedness, other obligations, net worth, working capital or earnings of any Person, or a guarantee of the payment of dividends or other distributions upon the stock or equity interests of any Person, or an agreement to purchase, sell or lease (as lessee or lessor) Property, products, materials, supplies or services primarily for the purpose of enabling a debtor to make payment of such debtor's obligations or an agreement to assure a creditor against loss, and including, without limitation, causing a bank or other financial institution to issue a letter of credit or other similar instrument for the benefit of another Person, but excluding endorsements for collection or deposit in the ordinary course of business; provided that the term Guarantee shall not include any financial guaranty insurance, credit insurance or residual value insurance (or any reinsurance of the same), surety bond, or similar or related products, issued by any Insurance Subsidiary in the ordinary course of its business. The terms "GUARANTEE" and "GUARANTEED" used as a verb shall have a correlative meaning.

"INDEBTEDNESS" shall mean, for any Person: (a) obligations created, issued or incurred by such Person for borrowed money (whether by loan, the issuance and sale of debt securities or the sale of Property to another Person subject to an understanding or agreement, contingent or otherwise, to repurchase such Property from such Person); (b) all Redeemable Preferred Stock issued by such Person; (c) obligations of such Person to pay the deferred purchase or acquisition price of Property or services, other than trade accounts payable (other than for borrowed money) arising, and accrued expenses incurred, in the ordinary course of business so long as such trade accounts payable are payable within 90 days of the date the respective goods are delivered or the respective services are rendered; (d) Indebtedness of others secured by a Lien on the Property of such Person, whether or not the respective Indebtedness so secured has been assumed by such Person; (e) obligations (contingent or otherwise) of such Person in respect of letters of credit, bankers' acceptances or similar instruments issued or accepted by banks and other financial institutions for the account of such Person; (f) Capital Lease Obligations of such Person; and (g) Indebtedness of others Guaranteed by such Person; PROVIDED that accrued profit commissions shall not be treated as Indebtedness.

"INDENTURE" shall mean the Indenture dated as of March 5, 1993 between the Company and The Chase Manhattan Bank, as Trustee, as the same shall be modified and supplemented and in effect from time to time.

"INDEX DEBT" shall mean senior, unsecured, long-term indebtedness for borrowed money of the Company that is not guaranteed by any other Person or subject to any other credit enhancement.

"INSURANCE SUBSIDIARIES" shall mean ERC, Asset Guaranty and any other Subsidiary of the Company that is licensed to do an insurance business by an Applicable Insurance Regulatory Authority.

"INTEREST PERIOD" shall mean (a) with respect to any Revolving Credit Loan that is a Eurodollar Loan, each period commencing on the date such Eurodollar Loan is made or Converted from a Base Rate Loan or (in the event of a Continuation) the last day of the next preceding Interest Period and ending on the numerically corresponding day in the first, second or third calendar month thereafter, as the Company may select as provided in Section 4.05 hereof, (b) with respect to any Competitive Loan that is a Eurodollar Loan, the period commencing on the date of such Borrowing and ending on the numerically corresponding day in the calendar month that is one, two or three months thereafter, as specified in the applicable Competitive Bid Request, (c) with respect to any Fixed Rate Borrowing, the period (which shall not be fewer than 3 days or more than 180 days) commencing on the date of such Borrowing and ending on the date specified in the applicable Competitive Bid Request, (d) with respect to any Term Loan that is a Eurodollar Loan, each period commencing on the date such Term Loan is made or Converted from a Base Rate Loan or (in the event of a Continuation) the last day of the next preceding Interest Period and ending on the numerically corresponding day in the first, second, third or sixth calendar month thereafter, as the Company may select as provided in Section 4.05 hereof, except that each Interest Period that commences on the last Business Day of a calendar month (or on any day for which there is no numerically corresponding day in the appropriate subsequent calendar month) shall end on the last Business Day of the appropriate subsequent calendar month and (e) with respect to any Swingline Loan, the period commencing on the date such Swingline Loan is made and ending on the date three Business Days thereafter. Notwithstanding the foregoing: (i) the Company may not select any Interest Period for any Revolving Credit Loan or Competitive Loan that ends after the Commitment Termination Date or for any Swingline Loan that ends after the date which is three Business Days prior to the Commitment Termination Date; (ii) no Interest Period for any Term Loans may commence before and end after any Principal Payment Date for such Term Loans unless, after giving effect thereto, the aggregate principal amount of such Term Loans having Interest Periods that end after such Principal Payment Date shall be equal to or less than the aggregate principal amount of such Term Loans scheduled to be outstanding after giving effect to the payments of principal required to be made on such Principal Payment Date; and (iii) each Interest Period that would otherwise end on a day which is not a Business Day shall end on the next succeeding Business Day (or, with respect to Eurodollar Loans, if such next succeeding Business Day falls in the next succeeding calendar month, on the next preceding Business Day).

"INTEREST RATE PROTECTION AGREEMENT" shall mean, for any Person, an interest rate swap, cap or collar agreement or similar arrangement between such Person and one or more financial institutions providing for the transfer or mitigation of interest risks either generally or under specific contingencies.

"INVESTMENT" shall mean, for any Person: (a) the acquisition (whether for cash, Property, services or securities or otherwise) of capital stock, bonds, notes, debentures, partnership or other ownership interests or other securities of any other Person or any agreement to make any such acquisition (including, without limitation, any "short sale" or any sale of any securities at a time when such securities are not owned by the Person entering into such short sale); (b) the making of any deposit with, or advance, loan or other extension of credit to, any other Person (including the purchase of Property from another Person subject to an understanding or agreement, contingent or otherwise, to resell such Property to such Person, but excluding any such advance, loan or extension of credit having a term not exceeding 90 days representing the purchase price of inventory or supplies sold by such Person in the ordinary course of business) and (without duplication) the entering into of any commitment to deposit funds with, advance or lend funds to or otherwise extend credit to such Person; (c) the entering into of any Guarantee of Indebtedness of any other Person; or (d) the entering into of any Interest Rate Protection Agreement; provided that the term "Investment" shall not include (i) the ownership interest of the Company and its Subsidiaries on the date hereof in the capital stock of any Subsidiary of the Company, (ii) any capital contribution or loan by the Company or by any Wholly Owned Subsidiary of the Company to the Company or to any Wholly Owned Subsidiary of the Company or
(iii) or any acquisition by the Company or by any Wholly Owned Subsidiary of the Company of the capital stock of any Wholly Owned Subsidiary of the Company.

"LIBOR" means the rate at which deposits in dollars are offered to leading banks in the London interbank market.

"LIEN" shall mean, with respect to any Property, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind in respect of such Property. For purposes of this Agreement and the other Basic Documents, a Person shall be deemed to own subject to a Lien any Property that it has acquired or holds subject to the interest of a vendor or lessor under any conditional sale agreement, capital lease or other title retention agreement (other than an operating lease) relating to such Property.

"LOANS" shall mean the Revolving Credit Loans, Term Loans, Competitive Loans and Swingline Loans.

"MAJORITY BANKS" shall mean Banks having at least 51% of the aggregate amount of the Commitments or, if the Commitments shall have terminated, Banks holding at least 51% of the aggregate unpaid principal amount of the Loans.

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

"MATERIAL ADVERSE EFFECT" shall mean a material adverse effect on (a) the Property, business, operations, financial condition, prospects, liabilities or capitalization of the Company and its Subsidiaries taken as a whole, (b) the ability of the Company to perform its obligations under any of the Basic Documents, (c) the validity or enforceability of any of the Basic Documents, (d) the rights and remedies of the Banks and the Administrative Agent under any of the Basic Documents or (e) the timely payment of the principal of or interest on the Loans or other amounts payable in connection therewith.

"MATERIAL SUBSIDIARY" shall mean any Subsidiary of the Company that as of such time meets the definition of "significant subsidiary" contained as of the date hereof in Regulation S-X of the Securities and Exchange Commission or any governmental authority succeeding to its principal functions.

"MOODY'S" shall mean Moody's Investors Service, Inc., and any successor thereto.

"MULTIEMPLOYER PLAN" shall mean a multiemployer plan defined as such in
Section 3(37) of ERISA to which contributions have been made by the Company or any ERISA Affiliate and which is covered by Title IV of ERISA.

"NET WORTH" shall mean, as at any date, the sum, for the Company and its Subsidiaries (determined on a consolidated basis without duplication in accordance with GAAP), of the following:

(a) the amount of capital stock (other than any Redeemable Preferred Stock and cumulative preferred stock), PLUS

(b) the amount of additional paid-in capital and retained earnings (or, in the case of a retained earnings deficit, MINUS the amount of such deficit).

"NOTES" shall mean the Revolving Credit Notes, the Competitive Notes, the Term Loan Notes and the Swingline Note.

"PBGC" shall mean the Pension Benefit Guaranty Corporation or any entity succeeding to any or all of its functions under ERISA.

"PERSON" shall mean any individual, corporation, company, voluntary association, partnership, joint venture, trust, unincorporated organization or government (or any agency, instrumentality or political subdivision thereof).

"PLAN" shall mean an employee benefit or other plan established or maintained by the Company or any ERISA Affiliate and that is covered by Title IV of ERISA, other than a Multiemployer Plan.

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

"PRIME RATE" shall mean the rate of interest from time to time announced by Fleet at its principal office as its prime commercial lending rate. The Prime Rate is a reference rate and does not necessarily represent the lowest or best rate being charged by Fleet.

"PRINCIPAL PAYMENT DATE" shall have the meaning assigned to such term in Section 3.01(b) hereof.

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

"QUARTERLY DATES" shall mean the last Business Day of each March, June, September and December in each year, the first of which shall be the first such day after the Effective Date.

"REDEEMABLE PREFERRED STOCK" shall mean, for any Person, all obligations of such Person, contingent or otherwise, to purchase, redeem, retire or otherwise acquire for value any capital stock (other than common stock) of such Person.

"REFERENCE BANKS" shall mean Fleet and such other Bank(s) as shall be mutually acceptable to Fleet and the Borrower (or their respective Applicable Lending Offices, as the case may be).

"REGULATION A", "REGULATION D", "REGULATION U" and "REGULATION X" shall mean, respectively, Regulation A, Regulation D, Regulation U and Regulation X of the Board of Governors of the Federal Reserve System (or any successor), as the same may be modified and supplemented and in effect from time to time.

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

"RESERVE REQUIREMENT" shall mean, for any Interest Period for any Eurodollar Loan, the average maximum rate at which reserves (including, without limitation, any marginal, supplemental or emergency reserves) are required to be maintained during such Interest Period under Regulation D by member banks of the Federal Reserve System with deposits exceeding one billion Dollars against "Eurocurrency liabilities" (as such term is used in Regulation
D). Without limiting the effect of the foregoing, the Reserve Requirement shall include any other reserves required to be maintained by such member banks by reason of any Regulatory Change with respect to (i) any liabilities that include deposits by reference to which the Eurodollar Base Rate is to be determined as provided in the definition of "Eurodollar Base Rate" in this Section 1.01 or
(ii) any extensions of credit or other assets that include the Eurodollar Loans.

"RESTRICTED PAYMENT" shall mean dividends (in cash, Property or obligations) on, or other payments or distributions on account of, or the setting apart of money for a sinking or other analogous fund for, or the purchase, redemption, retirement or other acquisition of, any shares of any class of stock of the Company or of any warrants, options or other rights to acquire the same (or to make any payments to any Person, such as "phantom stock" payments, where the amount thereof is calculated with reference to the fair market or equity value of the Company or any of its Subsidiaries), but excluding dividends payable solely in shares of common stock of the Company.

"REVOLVING CREDIT LOANS" shall mean the loans provided for by
Section 2.01(a) hereof, which may be Base Rate Loans and/or Eurodollar Loans.

"REVOLVING CREDIT NOTES" shall mean the promissory notes provided for by Section 2.06(a) hereof and all promissory notes delivered in substitution or exchange therefor, in each case as the same shall be modified and supplemented and in effect from time to time.

"S&P" shall mean Standard & Poor's Ratings Group, a division of The McGraw- Hill Companies, Inc., and any successor thereto.

"SCREEN" shall mean the display page 3750 for LIBOR on the Dow Jones Markets (Telerate) Service (or on any successor or substitute page of such Service, as determined by the Administrative Agent); PROVIDED that if the Administrative Agent determines that there is no such relevant display page for LIBOR, "Screen" shall mean the relevant display page for LIBOR (as determined by the Administrative Agent) on the Reuter Monitor Money Rates Service.

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

"SHAREHOLDERS' AGREEMENT" shall mean the Shareholders' Agreement dated May 10, 1988 among US West Financial Services, Inc., Manufacturers Life Insurance Company, the Shareholders party thereto and the Company, as amended by Amendment No. 1 to Shareholders' Agreement dated as of April 7, 1989, Amendment No. 2 to Shareholders' Agreement dated as of April 5, 1993 and Amendment to Shareholders' Agreement dated as of February 23, 1996.

"STATUTORY STATEMENT" shall mean, as to any Insurance Subsidiary, a statement of the condition and affairs of such Insurance Subsidiary, prepared in accordance with statutory accounting practices required or permitted by the Applicable Insurance Regulatory Authority, and filed with the Applicable Insurance Regulatory Authority.

"SUBSIDIARY" shall mean, with respect to any Person, any corporation, partnership or other entity of which at least a majority of the securities or other ownership interests having by the terms thereof ordinary voting power to elect a majority of the board of directors or other persons performing similar functions of such corporation, partnership or other entity (irrespective of whether or not at the time securities or other ownership interests of any other class or classes of such corporation, partnership or other entity shall have or might have voting power by reason of the happening of any contingency) is at the particular time in question directly or indirectly owned or controlled by such Person or one or more Subsidiaries of such Person or by such Person and one or more Subsidiaries of such Person.

"SWINGLINE COMMITMENT" shall mean the obligation of the Swingline Bank to make Swingline Loans in an aggregate amount not to exceed the lesser of (i) $10,000,000 and (ii) the aggregate amount of the Commitments.

"SWINGLINE LOANS" shall mean the loans provided for by
Section 2.01(d) hereof.

"SWINGLINE MATURITY DATE" shall mean, for any Swingline Loan, the last day of the Interest Period for such Swingline Loan.

"SWINGLINE NOTE" shall mean the promissory note provided for by Section 2.06(d) hereof and any promissory note delivered in substitution or exchange therefor, in each case as the same shall be modified and supplemented and in effect from time to time.

"SWINGLINE RATE" shall mean, for any day, a rate per annum equal to the Federal Funds Rate for such day PLUS 1/2 of 1%. Each change in any interest rate provided for herein based upon the Swingline Rate resulting from a change to the Swingline Rate shall take effect at the time of such change in the Swingline Rate.

"TANGIBLE NET WORTH" shall mean, as at any date, the sum for the Company and its Subsidiaries (determined on a consolidated basis without duplication in accordance with GAAP), of the following:

(a) Net Worth, MINUS

(b) the sum of the following (without duplication of deductions in respect of items already deducted in arriving at Net Worth): cost of treasury shares and the book value of all assets which should be classified as intangibles but in any event including goodwill, minority interests, trademarks, trade names, copyrights, patents and franchises, unamortized debt discount and expense, all reserves and any write-up in the book value of assets resulting from a revaluation thereof subsequent to December 31, 1997.

"TERM LOAN NOTES" shall mean the promissory notes provided for by Section 2.06(b) hereof and all promissory notes delivered in substitution or exchange therefor, in each case as the same shall be modified and supplemented and in effect from time to time.

"TERM LOANS" shall mean the loans provided for by Section 2.01(b) hereof, which may be Base Rate Loans and/or Eurodollar Loans.

"TOTAL CAPITALIZATION" shall mean the sum of (a) Funded Debt and (b) Net Worth.

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

"VOTING STOCK" shall mean, at any date, the capital stock of any class or classes of a corporation having general voting power under ordinary circumstances to elect a majority of the board of directors of such corporation, or persons performing similar functions (irrespective of whether or not at the time stock or other securities of any other class or classes shall have or might have special voting power or rights by reason of the happening of any contingency).

"WHOLLY OWNED SUBSIDIARY" shall mean, with respect to any Person, any Subsidiary of such Person all of the equity securities or other ownership interests (other than, in the case of a corporation, directors' qualifying shares) of which are owned or controlled by such Person or one or more Wholly Owned Subsidiaries of such Person.

1.02 ACCOUNTING TERMS AND DETERMINATIONS.

(a) Except as otherwise expressly provided herein, (i) all accounting terms used herein shall be interpreted, (ii) all financial statements and all certificates and reports as to financial matters required to be delivered to the Banks hereunder shall (unless otherwise disclosed to the Banks in writing at the time of delivery thereof in the manner described in subsection
(b) below) be prepared and (iii) all calculations made for the purposes of determining compliance with this Agreement shall (except as otherwise expressly provided herein) be made in accordance with or by application of United States generally accepted accounting principles or statutory accounting practices, as the case may be, applied on a basis consistent with those used in the preparation of the most recent financial statements furnished to the Banks hereunder (or, prior to the delivery of the first financial statements under
Section 8.01 hereof, the financial statements as at December 31, 1997 referred to in Section 7.02 hereof) unless (x) the Company shall notify the Banks of its objection thereto at the time of delivery of any financial statements pursuant to Section 8.01 hereof or (y) the Majority Banks shall notify the Company (through the Administrative Agent) of their objection within 30 days after the delivery of any such financial statements, in either of which events such interpretations, statements, certificates, reports and calculations shall be made in accordance with, or by application of, generally accepted accounting principles or statutory accounting practices, as the case may be, on a basis consistent with those used in the preparation of the most recent financial statements as to which no such objection shall have been made (or, prior to the delivery of the first financial statements under Section 8.01 hereof, the financial statements as at December 31, 1997 referred to in Section 7.02 hereof).

(b) The Company shall deliver to the Banks at the same time as the delivery of any annual or quarterly financial statement under Section 8.01 hereof (i) a description in reasonable detail of any material variation between the application of accounting principles employed in the preparation of such statement and the application

of accounting principles employed in the preparation of the next preceding annual or quarterly financial statements as to which no objection has been made in accordance with the last sentence of paragraph (a) above and (ii) reasonable estimates of the difference between such statements arising as a consequence thereof.

(c) The Company will not, and will not permit any of its Subsidiaries to, change the last day of its fiscal year from December 31 of each year, or the last days of the first three fiscal quarters in each of its fiscal years from March 31, June 30 and September 30 of each year, respectively.

1.03 CLASSES; SERIES; TYPE. Loans hereunder are distinguished by "Class". The "Class" of a Loan refers to whether such Loan is a Revolving Credit Loan, a Competitive Loan, a Swingline Loan or a Term Loan, each of which constitutes, respectively, a "Class" of Loan. Loans are also distinguished by "Series". The Loans of any one Class made on the occasion of any Borrowing constitute a "Series" of Loans. Loans hereunder are also distinguished by "Type". The "Type" of a Loan refers to whether such Loan is a Base Rate Loan, Eurodollar Loan or a Fixed Rate Loan, each of which constitutes a Type. The Loans may be identified by both Class and Type.

Section 2. COMMITMENTS, LOANS, NOTES AND PREPAYMENTS.

2.01 LOANS.

(a) REVOLVING CREDIT LOANS. Each Bank severally agrees, on the terms and conditions of this Agreement, at the request of the Company, to make revolving credit loans to the Company in Dollars during the period from and including the Effective Date to but not including the Commitment Termination Date in an aggregate principal amount at any one time outstanding up to but not exceeding the amount of the Commitment of such Bank as in effect from time to time (each such revolving credit loan being herein called a "REVOLVING CREDIT LOAN" and collectively the "REVOLVING CREDIT LOANS"); provided that, on or before the Commitment Termination Date, in no event shall the aggregate unpaid principal amount of all Loans (including all Competitive Loans and Swingline Loans) exceed the aggregate amount of the Commitments as in effect from time to time. Subject to the terms and conditions of this Agreement, during such period the Company may borrow, repay and reborrow the amount of the Commitments by means of Base Rate Loans and Eurodollar Loans, and the Company may Convert Loans of one Type into Loans of another Type (as provided in Section 2.07 hereof) or Continue Loans of one Type as Loans of the same Type (as provided in Section 2.07 hereof).

(b) TERM LOANS. Each Bank severally agrees, on the terms and conditions of this Agreement, at the request of the Company, to make, on the Commitment Termination Date, a term loan (such term loan being herein called a "TERM LOAN" and collectively the "TERM LOANS") to the Company in Dollars in a principal amount up to but not exceeding the unpaid

principal balance of the Revolving Credit Loans outstanding on such date, the proceeds of which Term Loans shall be applied (and the Company hereby authorizes and instructs such Bank to apply such proceeds) to refinance, in whole or in part, the unpaid principal balance of such Revolving Credit Loans; provided that the Banks shall not be obligated to make Term Loans unless the aggregate amount of such Term Loans is equal to $3,000,000 or an integral multiple of $200,000 in excess thereof. Subject to the terms and conditions of this Agreement, the Company may borrow such Term Loans by means of Base Rate Loans and Eurodollar Loans and, prior to payment in full of the principal of such Term Loans, the Company may Convert Loans of one Type into Loans of another Type (as provided in
Section 2.07 hereof) or Continue Loans of one Type as Loans of the same Type (as provided in Section 2.07 hereof).

(c) LIMIT ON REVOLVING CREDIT LOANS. No more than five separate Revolving Credit Loans from each Bank may be outstanding at any one time.

(d) SWINGLINE LOANS. In addition to the Loans provided for in Subsections (a) and (b) above of this Section 2.01, the Swingline Bank hereby agrees, on the terms an conditions of this Agreement, to make loans ("SWINGLINE LOANS") to the Company during the period from the date hereof to but excluding the date five Business Days prior to the Commitment Termination Date in an aggregate amount at any one time outstanding up to but not exceeding its Swingline Commitment; PROVIDED that the aggregate principal amount of all Loans (including Swingline Loans) shall not at any time outstanding exceed the aggregate amount of the Commitments. Subject to the terms of this Agreement, the Company may borrow, repay and reborrow the amount of the Swingline Commitment by means of Loans that bear interest at the Swingline Rate; PROVIDED that only one Swingline Loan may be outstanding at any one time and no Swingline Loan may be borrowed to repay an outstanding Swingline Loan.

(e) COMPETITIVE LOANS. In addition to the Loans provided for in Subsections (a), (b) and (d) above of this Section 2.01, the Company may request Competitive Bids to borrow Competitive Loans during the period from the date hereof to but excluding the date five Business Days prior to the Commitment Termination Date; PROVIDED that the aggregate principal amount of all Loans (including Competitive Loans) shall not at any time outstanding exceed the aggregate amount of the Commitments. The procedures for requesting and making Competitive Loans are set forth in Section 2.02(d).

2.02 BORROWINGS.

(a) REVOLVING CREDIT LOANS. The Company shall give the Administrative Agent (which shall promptly notify the Banks) notice of each borrowing hereunder as provided in Section 4.05 hereof. Not later than 1:00 p.m. Hartford, Connecticut time on the date specified for each borrowing of Revolving Credit Loans hereunder, which shall be a Business Day, each

Bank shall make available the amount of the Revolving Credit Loan to be made by it on such date to the Administrative Agent, at an account in Hartford designated by the Administrative Agent, in Dollars and immediately available funds, for account of the Company. The amount so received by the Administrative Agent shall, subject to the terms and conditions of this Agreement, be made available by the Administrative Agent to the Company by depositing the same, in immediately available funds, in an account of the Company designated by the Company or by repaying any then outstanding Swingline Loan.

(b) SWINGLINE LOANS. The Company shall give the Administrative Agent (which shall promptly notify the Swingline Bank) notice of each borrowing of Swingline Loans hereunder as provided in Section 4.05 hereof. Not later than 1:00 p.m. Hartford time on the date specified for each borrowing of Swingline Loans hereunder, which shall be a Business Day, the Swingline Bank shall make available the amount of the Swingline Loan to be made by it on such date to the Administrative Agent, at an account in Hartford designated by the Administrative Agent, in Dollars and immediately available funds, for account of the Company. The amount so received by the Administrative Agent shall, subject to the terms and conditions of this Agreement, be made available by the Administrative Agent to the Company by depositing the same, in immediately available funds, in an account of the Company designated by the Company.

(c) BORROWINGS TO REPAY SWINGLINE LOANS. Unless the Company has already given a notice of borrowing of Revolving Credit Loans to repay a Swingline Loan, at any time from and including the Swingline Maturity Date for any Swingline Loan until the unpaid principal amount of such Swingline Loan shall have been paid in full, the Swingline Bank may, and the Company hereby irrevocably authorizes and empowers (which power is coupled with an interest) the Swingline Bank to, deliver, on behalf of the Company, to the Administrative Agent under Section 2.02(a) hereof a notice of borrowing of Revolving Credit Loans that are Base Rate Loans in an amount equal to the then unpaid principal amount of such Swingline Loan. In the event that the power of the Swingline Bank to give such notice of borrowing on behalf of the Company is terminated for any reason whatsoever (including, without limitation, a termination resulting from the occurrence of an event specified in clause (f) or (g) of Section 9 hereof with respect to the Company), or the Swingline Bank is otherwise precluded for any reason whatsoever from giving a notice of borrowing on behalf of the Company as provided in the preceding sentence, each Bank shall, upon notice from the Swingline Bank on or after the Swingline Maturity Date for such Swingline Loan, promptly purchase from the Swingline Bank a participation in (or, if and to the extent specified by the Swingline Bank, an assignment of) such Swingline Loan in the amount of the Base Rate Loan it would have been obligated to make pursuant to such notice of borrowing. Each Bank shall, not later than 4:00 p.m. Hartford time on the Business Day on which such notice is given (if such notice is given by 3:00 p.m. Hartford time) or 9:00 a.m. Hartford time on the next succeeding Business Day (if such notice is given

after 3:00 p.m., but before 5:00 p.m., Hartford time), make available the amount of the Base Rate Loan to be made by it (or the amount of the participation or assignment to be purchased by it, as the case may be) to the Administrative Agent at the account specified in Section 2.02(a) hereof and the amount so received by the Administrative Agent shall promptly be made available to the Swingline Bank by remitting the same, in immediately available funds, to the Swingline Bank. Promptly following its receipt of any payment in respect of such Swingline Loan, the Swingline Bank shall pay to each Bank that has acquired a participation in such Swingline Loan such Bank's proportionate share of such payment. Anything in this Agreement to the contrary notwithstanding (including, without limitation, in Section 6.03 hereof), the obligation of each Bank to make its Base Rate Loan (or purchase its participation in or assignment of such Swingline Loan, as the case may be) pursuant to this Section 2.02(c) is unconditional under any and all circumstances whatsoever and shall not be subject to set-off, counterclaim or defense to payment that such Bank may have or have had against the Company, the Administrative Agent, the Swingline Bank or any other Bank and, without limiting any of the foregoing, shall be unconditional irrespective of (i) the occurrence of any Default, (ii) the financial condition of the Company, any Subsidiary, the Administrative Agent, the Swingline Bank or any other Bank or (iii) the termination or cancellation of the Commitments; PROVIDED that no Bank shall be obligated to make any such Base Rate Loan (or to purchase any such participation or direct interest in the Swingline Loan) if (i) before the making of such Swingline Loan, such Bank had notified the Swingline Bank that a Default had occurred and was continuing and that such Bank would not refinance such Swingline Loan or (ii) to the extent (and only to the extent) that such Swingline Loan, together with all Revolving Credit Loans and Competitive Loans then outstanding at the time of the making of such Swingline Loan, exceeded the then aggregate amount of the Commitments at the time of the making of such Swingline Loan. The Company agrees that any Bank so purchasing a participation (or assignment) in such Swingline Loan may exercise all rights of set-off, bankers' lien, counterclaim or similar rights with respect to such participation as fully as if such Bank were a direct holder of a Swingline Loan in the amount of such participation.

(d) COMPETITIVE LOANS.

(i) Subject to the terms and conditions set forth herein, from time to time during the period from and including the Effective Date to but excluding the date which is five Business Days prior to the Commitment Termination Date, the Company may request Competitive Bids and may (but shall not have any obligation to) accept Competitive Bids and borrow Competitive Loans; provided that the sum of the total Revolving Credit Loans and Swingline Loans plus the aggregate principal amount of outstanding Competitive Loans at any time shall not exceed the total Commitments. To request Competitive Bids, the Company shall notify the Administrative Agent of such request by telephone, in the case of a Eurodollar Borrowing, not later than 11:00 a.m., Hartford time, four Business Days before the date of the

proposed Borrowing and, in the case of a Fixed Rate Borrowing, not later than 10:00 a.m., Hartford time, one Business Day before the date of the proposed Borrowing; provided that the Company may submit up to (but not more than) three Competitive Bid Requests on the same day, but a Competitive Bid Request shall not be made within five Business Days after the date of any previous Competitive Bid Request, unless any and all such previous Competitive Bid Requests shall have been withdrawn or all Competitive Bids received in response thereto rejected. Each such telephonic Competitive Bid Request shall be confirmed promptly by hand delivery or telecopy to the Administrative Agent of a written Competitive Bid Request in a form approved by the Administrative Agent and signed by the Company. Each such telephonic and written Competitive Bid Request shall specify the following information:

(A) aggregate amount of the requested Borrowing;

(B) the date of such Borrowing, which shall be a Business Day;

(C) whether such Borrowing is to be a Eurodollar Borrowing or a Fixed Rate Borrowing;

(D) the Interest Period to be applicable to such Borrowing, which shall be a period contemplated by the definition of the term "Interest Period"; and

(E) the location and number of the account to which funds are to be disbursed.

Promptly following receipt of a Competitive Bid Request in accordance with this Section, the Administrative Agent shall notify the Banks of the details thereof by telecopy, inviting the Banks to submit Competitive Bids. Upon each Competitive Bid Request, the Company shall pay the Administrative Agent an administrative fee of $1,000.

(ii) Each Bank may (but shall not have any obligation to) make one or more Competitive Bids to the Company in response to a Competitive Bid Request. Each Competitive Bid by a Bank must be in a form approved by the Administrative Agent and must be received by the Administrative Agent by telecopy, in the case of a Eurodollar Competitive Borrowing, not later than 10:00 a.m., Hartford time, three Business Days before the proposed date of such Competitive Borrowing, and in the case of a Fixed Rate Borrowing, not later than 10:00 a.m., Hartford time, on the proposed date of such Competitive Borrowing. Competitive Bids that do not conform substantially to the form approved by the Administrative Agent may be rejected by the Administrative Agent, and the Administrative Agent shall notify the applicable Bank as promptly as practicable. Each Competitive Bid shall specify (i) the principal amount (which shall be a minimum of $5,000,000 and an integral multiple of $1,000,000 and which may equal the entire principal amount of the Competitive Loan requested by the Company) of the

Competitive Loan or Loans that the Bank is willing to make, (ii) the Competitive Bid Rate or Rates at which the Bank is prepared to make such Loan or Loans (expressed as a percentage rate per annum in the form of a decimal to no more than four decimal places), and (iii) the Interest Period applicable to each such Loan and the last day thereof.

(iii) The Administrative Agent shall promptly notify the Company by telecopy of the Competitive Bid Rate and the principal amount specified in each Competitive Bid and the identity of the Bank that shall have made such Competitive Bid.

(iv) Subject only to the provisions of this paragraph, the Company may accept or reject any Competitive Bid. The Company shall notify the Administrative Agent by telephone, confirmed by telecopy in a form approved by the Administrative Agent, whether and to what extent it has decided to accept or reject each Competitive Bid, in the case of a Eurodollar Competitive Borrowing, not later than 11:00 am., Hartford time, three Business Days before the date of the proposed Competitive Borrowing, and in the case of a Fixed Rate Borrowing, not later than 11:00 a.m., Hartford time, on the proposed date of the Competitive Borrowing; provided that (A) the failure of the Company to give such notice shall be deemed to be a rejection of each Competitive Bid, (B) the Company shall not accept a Competitive Bid made at a particular Competitive Bid Rate if the Company rejects a Competitive Bid made at a lower Competitive Bid Rate, (C) the aggregate amount of the Competitive Bids accepted by the Company shall not exceed the aggregate amount of the requested Competitive Borrowing specified in the related Competitive Bid Request, (D) to the extent necessary to comply with clause (C) above, the Company may accept Competitive Bids at the same Competitive Bid Rate in part, which acceptance, in the case of multiple Competitive Bids at such Competitive Bid Rate, shall be made by the Company in consultation with the Administrative Agent pro rata in accordance with the amount of each such Competitive Bid, and (E) except pursuant to clause (D) above, no Competitive Bid shall be accepted for a Competitive Loan unless such Competitive Loan is in a minimum principal amount of $5,000,000 and an integral multiple of $1,000,000; and provided further that if a Competitive Loan must be in an amount less than $5,000,000 because of the provisions of clause (D) above, such Competitive Loan may be for a minimum of $1,000,000 or any integral multiple thereof, and in calculating the pro rata allocation of acceptances of portions of multiple Competitive Bids at a particular Competitive Bid Rate pursuant to clause (D) the amounts shall be rounded to integral multiples of $200,000 in a manner determined by the Company in consultation with the Administrative Agent. A notice given by the Company pursuant to this paragraph shall be irrevocable.

(v) The Administrative Agent shall promptly notify

each bidding Bank by telecopy whether or not its Competitive Bid has been accepted (and, if so, the amount and Competitive Bid Rate so accepted), and each successful bidder will thereupon become

bound, subject to the terms and conditions hereof, to make the Competitive Loan in respect of which its Competitive Bid has been accepted.

(vi) If the Administrative Agent shall elect to submit a Competitive Bid in its capacity as a Bank, it shall submit such Competitive Bid directly to the Company at least one quarter of an hour earlier than the time by which the other Banks are required to submit their Competitive Bids to the Administrative Agent pursuant to Subsection (d) (ii) of this Section 2.02.

2.03 CHANGES IN AGGREGATE AMOUNT OF COMMITMENTS.

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

(b) The Company shall have the right at any time or from time to time to terminate in whole, or to reduce in part, the aggregate unused amount of the Commitments; PROVIDED that (x) the Company shall give notice of each such termination or reduction as provided in Section 4.05 hereof, (y) each partial reduction shall be in an integral multiple of $1,000,000 and (z) on or before the Commitment Termination Date, the aggregate amount of the Commitments shall at no time be less than the aggregate outstanding principal amount of all Loans (including the Competitive Loans and the Swingline Loans).

(c) The Company shall have the right to terminate or reduce the unused amount of the Swingline Commitment at any time or from time to time on not less than three Business Days' prior notice to the Administrative Agent (which shall promptly notify the Swingline Bank and each Bank) of each such termination or reduction, which notice shall specify the effective date thereof and the amount of any such reduction (which shall be in integral multiples of $1,000,000) and shall be irrevocable and effective only upon receipt by the Administrative Agent.

(d) The Commitments and Swingline Commitment, once terminated or reduced, may not be reinstated.

2.04 FEES.

(a) The Company shall pay to the Administrative Agent on or before the Closing Date for the account of each Bank an upfront fee equal to .02% of the Commitment of such Bank in effect on the Effective Date. Such fee shall not be refundable.

(b) The Company shall pay to the Administrative Agent for account of each Bank a facility fee on the amount of such Bank's Commitment, for the period from and including the Effective Date to but not including the earlier of the Commitment Termination Date and the date such Commitment is otherwise terminated, at a rate per annum as set forth in the definition of "Applicable Margin" in Section 1.01. Accrued facility fee shall be payable in arrears on each Quarterly Date and on the earlier of the Commitment Termination Date and the date the Commitment is otherwise terminated, as the case may be.

2.05 SEVERAL OBLIGATIONS; REMEDIES INDEPENDENT. The failure of any Bank to make any Loan to be made by it on the date specified therefor shall not relieve any other Bank of its obligation to make its Loan on such date, but neither any Bank nor the Administrative Agent shall be responsible for the failure of any other Bank to make a Loan to be made by such other Bank, and no Bank shall have any obligation to the Administrative Agent or any other Bank for the failure by such Bank to make any Loan required to be made by such Bank. The amounts payable by the Company at any time hereunder and under the Notes to each Bank shall be a separate and independent debt and each Bank shall, subject to the express provisions of Section 9 with respect to the termination of the Commitments and the declaration of the Loans to be due and payable, be entitled to protect and enforce its rights arising out of this Agreement and the Notes, and it shall not be necessary for any other Bank or the Administrative Agent to consent to, or be joined as an additional party in, any proceedings for such purposes.

2.06 NOTES.

(a) The Revolving Credit Loans made by each Bank shall be evidenced by a single promissory note of the Company substantially in the form of Exhibit A-l hereto, dated the Effective Date, payable to such Bank in a principal amount equal to the amount of its Commitment as originally in effect and otherwise duly completed.

(b) The Term Loan made by each Bank shall be evidenced by a separate promissory note of the Company substantially in the form of Exhibit A-2 hereto, dated the date of such Term Loan, payable to such Bank in a principal amount equal to the amount of such Term Loan and otherwise duly completed.

(c) The date, amount, Type, interest rate and duration of Interest Period (if applicable) of each Revolving Credit Loan made by each Bank to the Company, and each payment made on account of the principal thereof, shall be recorded by such Bank on its books and, prior to any transfer of the Revolving Credit Note evidencing the Revolving Credit Loans held by it, endorsed by such Bank on the schedule attached to such Revolving Credit Note or any continuation thereof; PROVIDED that the failure of such Bank to make any such recordation or endorsement shall not affect the obligations of the Company to make a payment when due of any

amount owing hereunder or under such Revolving Credit Note in respect of the Revolving Credit Loans evidenced by such Revolving Credit Note.

(d) The Swingline Loans made by the Swingline Bank shall be evidenced by a single promissory note of the Company substantially in the form of Exhibit A-3 hereto, dated the Effective Date, payable to the Swingline Bank in a principal amount equal to $10,000,000 and otherwise duly completed. The date and amount of each Swingline Loan and each payment made on account of the principal thereof, shall be recorded by the Swingline Bank on its books and, prior to any transfer of its Swingline Note, endorsed by the Swingline Bank on the schedule attached to the Swingline Note or any continuation thereof; PROVIDED that the failure by the Swingline Bank to make any such recordation or endorsement shall not affect the obligations of the Company to make a payment when due of any amount owing hereunder or under such Swingline Note in respect of the Swingline Loans evidenced by such Swingline Note.

(e) The Competitive Loans made by each Bank shall be evidenced by a single promissory note of the Company substantially in the form of Exhibit A-4 hereto, dated the Effective Date, payable to such Bank in a principal amount equal to the amount of its Commitment as originally in effect and otherwise duly completed.

(f) No Bank shall be entitled to have its Notes subdivided, by exchange for promissory notes of lesser denominations or otherwise, except in connection with a permitted assignment of all or any portion of such Bank's relevant Commitment, Loans and Notes pursuant to Section 11.06(b) hereof. The Swingline Bank shall not be entitled to have its Note subdivided, by exchange for promissory notes of lesser denominations or otherwise, except in connection with a permitted assignment of all or any portion of the Swingline Bank's Swingline Commitment, the Swingline Loans and the Swingline Note pursuant to
Section 11.06(g) hereof.

2.07 OPTIONAL PREPAYMENTS AND CONVERSIONS OR CONTINUATIONS OF LOANS. Subject to Section 4.04 hereof, the Company shall have the right to prepay Swingline Loans or any Series of Revolving Credit Loans or the Term Loans, in whole at any time or in part from time to time or to Convert Loans of one Type into Loans of another Type or Continue Loans of one Type as Loans of the same Type, PROVIDED that:

(a) the Company shall give the Administrative Agent notice of each such prepayment, Conversion or Continuation as provided in Section 4.05 hereof (and, upon the prepayment date specified in any such notice of prepayment, the amount to be prepaid shall become due and payable hereunder);

(b) the Company shall simultaneously pay interest on any principal so prepaid accrued to the date of such prepayment;

(c) if any Revolving Credit Loan that is a Eurodollar Loan is prepaid or Converted on any day other than the last day of the Interest Period therefor, the Company shall simultaneously pay any amounts required by Section 5.05 hereof in respect of such prepayment;

(d) prepayments or Conversions of Term Loans that are Eurodollar Loans may only be made on the last day of any Interest Period therefor and shall be applied ratably to the outstanding installments of such Term Loans;

(e) if any Swingline Loan is outstanding, the Revolving Credit Loans may not be prepaid or Converted;

(f) Swingline Loans may not be Continued.

The Company shall not have the right to prepay any Competitive Loan without the consent of the Bank making such Competitive Loan.

Notwithstanding the foregoing, and without limiting the rights and remedies of the Banks under Section 9 hereof, in the event that any Event of Default shall have occurred and be continuing, the Administrative Agent may (and at the request of the Majority Banks shall) suspend (for so long as such Event of Default shall be continuing) the right of the Company to Convert any Loan into a Eurodollar Loan, or to Continue any Loan as a Eurodollar Loan, in which event all Loans shall be Converted (on the last day(s) of the respective Interest Periods therefor) or Continued, as the case may be, as Base Rate Loans.

2.08 EXTENSION OF COMMITMENT TERMINATION DATE.

(a) The Company may, by notice to the Administrative Agent (which shall promptly deliver a copy thereof to each of the Banks) not more than 45 days prior to the Commitment Termination Date then in effect hereunder (the "EXISTING COMMITMENT TERMINATION DATE"), request that the Banks extend the Commitment Termination Date for an additional 364 day period. Each Bank, acting in its sole discretion, shall, by notice to the Company and Administrative Agent given on the date no earlier than 30 days nor later than 20 days prior to the Existing Commitment Termination Date (provided, if such date is not a Business Day, then such notice date shall by the next succeeding Business Day) (the "CONSENT DATE"), advise the Company and the Administrative Agent whether or not such Bank agrees to such request, provided that each Bank that determines not to extend the Existing Commitment Termination Date (a "NON-EXTENDING BANK") shall notify the Administrative Agent (which shall notify the Banks) of such fact promptly after such determination (but in any event no later than the Consent Date) and any Bank that does not advise the Company on the Consent Date shall be

deemed to be a Non-extending Bank. The election of any Bank to agree to such extension shall not obligate any other Bank to so agree.

(b) Subject to paragraph (c) of this Section, the Company shall have the right on or before the Existing Commitment Termination Date to replace each Non-extending Bank with, and otherwise add to this Agreement, one or more other lenders (which may include any Bank, each prior to the Existing Commitment Termination Date an "ADDITIONAL COMMITMENT BANK") with the approval of the Administrative Agent (which approval shall not be unreasonably withheld), each of which Additional Commitment Banks shall have entered into an agreement in form and substance satisfactory to the Company and the Administrative Agent pursuant to which such Additional Commitment Bank shall, effective as of the Existing Commitment Termination Date, undertake a Commitment (and, if any such Additional Commitment Bank is already a Bank, its Commitment shall be in addition to such Bank's Commitment hereunder on such date).

(c) If (and only if) the total amount of the Commitments of the Banks and (without duplication) the Additional Commitment Banks that have agreed so to extend the Existing Commitment Termination Date shall be more than 50% of the aggregate amount of the Commitments in effect immediately prior to the Existing Commitment Termination Date, then, effective as of the Existing Commitment Termination Date, the Existing Commitment Termination Date shall be extended to the date falling 364 days after the Existing Commitment Termination Date (except that, if such date is not a Business Day, such Existing Commitment Termination Date as so extended shall be the next preceding Business Day) and each Additional Commitment Bank shall thereupon become a "Bank" for all purposes of this Agreement.

Notwithstanding the foregoing, the extension of the Existing Commitment Termination Date shall not be effective with respect to any Bank unless:

(i) no Default shall have occurred and be continuing on each of the date of the notice requesting such extension, on the Consent Date and on the Existing Commitment Termination Date;

(ii) each of the representations and warranties made by the Company in Section 7 hereof shall be true and complete on and as of each of the date of the notice requesting such extension, the Consent Date and the Existing Commitment Termination Date with the same force and effect as if made on and as of such date (or, if any such representation or warranty is expressly stated to have been made as of a specific date, as of such specific date); and

(iii) each Non-extending Bank shall have been paid in full by the Company all amounts owing to such Bank hereunder on or before the Existing Commitment Termination Date.

Even if the Existing Commitment Termination Date is extended as aforesaid, the Commitment of each Non-extending Bank shall terminate on the Existing Commitment Termination Date.

Section 3. PAYMENTS OF PRINCIPAL AND INTEREST.

3.01 REPAYMENT OF LOANS.

(a) The Company hereby promises to pay to the Administrative Agent for account of each Bank (i) the outstanding principal amount of each of such Bank's Revolving Credit Loans, and each Revolving Credit Loan shall mature, on the Commitment Termination Date and (ii) the outstanding principal amount of each Competitive Loan, and each Competitive Loan shall mature, on the last day of the Interest Period applicable to such Loan.

(b) The Company hereby promises to pay to the Administrative Agent for account of the Banks the aggregate principal amount of Term Loans in sixteen equal consecutive quarterly installments commencing on the date three months after the date of the making of such Term Loans and thereafter on the quarterly anniversary dates of the date of the making of such Term Loans (each a "PRINCIPAL PAYMENT DATE"); provided that, if the date of the making of such Term Loans is the last Business Day of a calendar month (or on any day for which there is no numerically corresponding date in the appropriate subsequent calendar month) the payment date shall be the last Business Day of the appropriate subsequent calendar month; and provided that, if any Principal Payment Date would fall on a day other than a Business Day, such Principal Payment Date shall be the next succeeding Business Day (or, if such next succeeding Business Day falls in the next succeeding calendar month, on the next preceding Business Day).

(c) The Company hereby promises to pay to the Administrative Agent for account of the Swingline Bank the principal of each Swingline Loan at or prior to, and such Swingline Loan shall mature at, 1:00 p.m. Hartford time on the Swingline Maturity Date for such Swingline Loan.

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

(a) if such Loan is a Revolving Credit Loan, (i) during such periods as such Loan is a Base Rate Loan, the Base Rate (as in effect from time to time) PLUS the Applicable Margin and (ii) during such periods as such Loan is a Eurodollar Loan, for each Interest Period relating thereto, the Eurodollar Rate for such Loan for such Interest Period PLUS the Applicable Margin;

(b) if such Loan is a Term Loan, (i) during such periods as such Loan is a Base Rate Loan, the Base Rate (as in effect from time to time) PLUS the Applicable Margin and (ii) during such periods as such Loan is a Eurodollar Loan, for each Interest Period relating thereto, the Eurodollar Rate for such Loan for such Interest Period PLUS the Applicable Margin;

(c) if such Loan is a Swingline Loan, the Swingline Rate for each day during the period from and including the first day of the Interest Period related thereto to but excluding the Swingline Maturity Date for such Swingline Loan; and

(d) if such Loan is a Competitive Loan, (i) during such periods as such Loan is a Eurodollar Loan, the Eurodollar Base Rate PLUS or MINUS as the case may be, the Competitive Margin and (ii) during such periods as such Loan is a Fixed Rate Loan, the Fixed Rate.

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

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

4.01 PAYMENTS.

(a) Except to the extent otherwise provided herein, all payments of principal, interest and other amounts to be made by the Company under this Agreement and the Notes, and, except to the extent otherwise provided therein, all payments to be made by the Company under any other Basic Document, shall be made in Dollars, in immediately available funds, without deduction, set-off or counterclaim, to the Administrative Agent at an account at its offices in Hartford, Connecticut designated by the Administrative Agent, not later than 1:00 p.m. Hartford time on the date on which such payment shall become due (each such payment made after such time on such due date to be deemed to have been made on the next succeeding Business Day).

(b) Any Bank or Swingline Bank for whose account any such payment is to be made may (but shall not be obligated to) debit the amount of any such payment that is not made by such time to any ordinary deposit account of the Company with such Bank (with notice to the Company and the Administrative Agent).

(c) The Company shall, at the time of making each payment under this Agreement or any Note for account of any Bank, specify to the Administrative Agent (which shall notify the intended recipient(s) thereof) the Loans or other amounts payable by the Company hereunder to which such payment is to be applied, in which case such payment shall be, subject to Section 4.02 hereof, so applied (and in the event that the Company fails to so specify, or if an Event of Default has occurred and is continuing, such payment shall be, subject to said Section 4.02, applied FIRST to the Swingline Bank (to the extent any amounts are then due and payable to the Swingline Bank on account of any Swingline Loan) and then in payment of amounts due under this Agreement or any Note in such manner as is determined to be appropriate by the Majority Banks or, if the Majority Banks fail to advise the Administrative Agent of their determination promptly following a request from the Administrative Agent for such a determination, by the Administrative Agent).

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

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

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

(a) the making of Loans of a particular Class (other than Competitive Loans and Swingline Loans) shall be made pro rata among the Banks according to the amounts of their respective Commitments (without taking into account any Competitive Loans or Swingline Loans) and the then current Interest Period of Loans of a particular Class and Series shall be coterminous;

(b) except as otherwise provided in Section 5.04 hereof, Eurodollar Loans having the same Interest Period shall be allocated pro rata among the Banks according to the amounts of their respective Commitments (in the case of the making of Loans) or their respective Loans (in the case of Conversions and Continuations of Loans);

(c) each payment or prepayment of principal of Loans of a particular Class and Series shall be made for account of the Banks pro rata in accordance with the respective unpaid principal amounts of the Loans of such Class and Series held by the Banks;

(d) each payment of interest on Loans of a particular Class and Series shall be made for account of the Banks pro rata in accordance with the amounts of interest on Loans of such Class and Series then due and payable to the respective Banks;

(e) each termination or reduction of the amount of the Commitments shall be applied to the Commitments of the Banks, pro rata according to the respective amounts of the Commitments of the Banks; and

(f) notwithstanding the foregoing, Borrowings, payments and prepayments of Competitive Loans and Swingline Loans shall be made without regard to the foregoing provisions of this Section 4.02.

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

4.04 MINIMUM AMOUNTS. Except for Conversions, or prepayments made pursuant to Section 5.05 hereof, each Borrowing, Conversion and partial prepayment of principal of Revolving Credit Loans shall be in an aggregate amount equal to (i) if it is a Eurodollar Loan, $10,000,000 or any integral multiple of $1,000,000 in excess thereof or (ii) if it is a Base Rate Loan, $5,000,000 or integral multiple of $500,000 in excess thereof (Borrowings, Conversions or prepayments of or into Loans of different Types or, in the case of Eurodollar Loans, having different Interest Periods at the same time hereunder to be deemed separate Borrowings, Conversions and prepayments for purposes of the foregoing, one for each Type or Interest Period). Each Conversion of Term Loans shall be in an aggregate amount equal to $3,000,000 or any integral multiple of $200,000 in excess thereof, and each partial prepayment or Conversion of the principal of Term Loans shall be in an aggregate amount at least equal to $500,000 (Conversions or prepayments of or into Loans of different Types or, in the case of Eurodollar Loans, having different Interest Periods at the same time hereunder to be deemed separate Conversions and prepayments for purposes of the foregoing, one for each Type or Interest Period). Each Borrowing or partial prepayment of Swingline Loans shall be in an aggregate amount at least equal to $1,000,000 or in multiples of $200,000 in excess thereof. Each Borrowing or partial prepayment of Competitive Loans shall be in an aggregate amount at least equal to $5,000,000 or in multiples of $1,000,000 in excess thereof.

4.05 CERTAIN NOTICES. Notices by the Company to the Administrative Agent of terminations or reductions of Commitments, of Borrowings, Conversions, Continuations and optional prepayments of Loans, of Types of Loans and of the duration of Interest Periods shall be irrevocable and shall be effective only if received by the Administrative Agent not later than 10:00 a.m. Hartford time. The number of Business Days prior to the date of the relevant termination, reduction, Borrowing, Conversion, Continuation or prepayment or the first day of such Interest Period specified below:

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

Termination or reduction
of Commitments                                     3

Borrowing or prepayment of,
or Conversions into,
Base Rate Loans                                    0

Borrowing or prepayment of
Swingline Loans                                    0

Borrowing or prepayment of, Conversions
into, Continuations as, or duration of
Interest Period for, Eurodollar Loans
(other than Competitive Loans)                     3

Borrowing of Competitive Loans that
are Eurodollar Loans                               4

Borrowing of Competitive Loans
that are Fixed Rate Loans                          1

Each such notice of termination or reduction shall specify the amount of the Commitments to be terminated or reduced. Each such notice of Borrowing, Conversion, Continuation or optional prepayment shall specify the Class and Series of Loans to be borrowed, Converted, Continued or prepaid, the amount (subject to Section 4.04 hereof) of each Loan to be borrowed, Converted, Continued or prepaid, the date of Borrowing, Conversion, Continuation or optional prepayment (which shall be a Business Day), and the duration of the Interest Period for such Loan. The Administrative Agent shall promptly notify the Banks of the contents of each such notice. In the event that the Company fails to select the Type of Loan, or the duration of any Interest Period for any Loan, within the time period and otherwise as provided in this Section 4.05, such Loan (if outstanding as a Eurodollar Loan) will be automatically Converted into a Base Rate Loan on the last day of the then current Interest Period for such Loan or (if outstanding as a Base Rate Loan) will remain as, or (if not then outstanding) will be made as, a Base Rate Loan.

4.06 NON-RECEIPT OF FUNDS BY THE ADMINISTRATIVE AGENT. Unless the Administrative Agent shall have been notified by a Bank or the Company (the "PAYOR") prior to the date on which the Payor is to make payment to the Administrative Agent of (in the case of a Bank) the proceeds of a Loan to be made by such Bank hereunder or (in the case of the Company) a payment to the Administrative Agent for account of one or more of the Banks hereunder (such payment being herein called the "REQUIRED PAYMENT"), which notice shall be effective upon receipt, that the Payor does not intend to make the Required Payment to the Administrative Agent, the Administrative Agent may assume that the Required Payment has been made and may, in reliance upon such assumption (but shall not be required to), make the amount thereof available to the intended recipient(s) on such date; and, if the Payor has not in

fact made the Required Payment to the Administrative Agent, the recipient(s) of such payment shall, on demand, repay to the Administrative Agent the amount so made available together with interest thereon in respect of each day during the period commencing on the date (the "ADVANCE DATE") such amount was so made available by the Administrative Agent until the date the Administrative Agent recovers such amount at a rate per annum equal to the Federal Funds Rate for such day and, if such recipient(s) shall fail promptly to make such payment, the Administrative Agent shall be entitled to recover such amount, on demand, from the Payor, together with interest as aforesaid, PROVIDED that if the recipient(s) shall fail to return, and the Payor shall fail to make, the Required Payment to the Administrative Agent within three Business Days of the Advance Date, then the Payor and the recipient(s) shall each be obligated to pay interest on the Required Payment (but without duplication) as follows:

(a) if the Required Payment shall represent a payment to be made by the Company to the Banks, the Company and the recipient(s) shall each be obligated retroactively to the Advance Date to pay interest in respect of the Required Payment at the Post-Default Rate (and, in case the recipient(s) shall return the Required Payment to the Administrative Agent, without limiting the obligation of the Company under Section 3.02 hereof to pay interest to such recipient(s) at the Post-Default Rate in respect of the Required Payment); and

(b) if the Required Payment shall represent proceeds of a Loan to be made by the Banks to the Company, the Payor and the Company shall each be obligated retroactively to the Advance Date to pay interest in respect of the Required Payment at the rate of interest provided for such Required Payment pursuant to whichever of the rates specified in
Section 3.02 hereof is applicable to the Type of such Loan (and, in case the Company shall return the Required Payment to the Administrative Agent, without limiting any claim the Company may have against the Payor in respect of the Required Payment).

4.07 SHARING OF PAYMENTS, ETC.

(a) The Company agrees that, in addition to (and without limitation of) any right of set-off, banker's lien or counterclaim a Bank or the Swingline Bank (as the case may be) may otherwise have, each Bank and the Swingline Bank shall be entitled, at its option, to offset balances held by it for account of the Company at any of its offices, in Dollars or in any other currency, against any principal of or interest on any of such Bank's or the Swingline Bank's Loans or any other amount payable to such Bank or Swingline Bank (as the case may be) hereunder, that is not paid when due (regardless of whether such balances are then due to the Company), in which case it shall promptly thereafter notify the Company and the Administrative

Agent thereof, PROVIDED that such Bank's or the Swingline Bank's failure to give such notice shall not affect the validity thereof.

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

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

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

Section 5. YIELD PROTECTION, ETC.

5.01 ADDITIONAL COSTS.

(a) The Company shall pay directly to each Bank from time to time such amounts as such Bank may determine to be necessary to compensate such Bank for any costs that such Bank determines are attributable to its making or maintaining of any Eurodollar Loans or Fixed Rate Loans or its obligation to make any Eurodollar Loans or Fixed Rate Loans hereunder, or any reduction in any amount receivable by such Bank hereunder in respect of any Loans or such obligation (such increases in costs and reductions in amounts receivable being herein called "ADDITIONAL COSTS"), resulting from any Regulatory Change that:

(i) changes the basis of taxation of any amounts payable to such Bank under this Agreement or its Notes (other than taxes imposed on or measured by the overall net income of such Bank or of its Applicable Lending Office by the jurisdiction in which such Bank has its principal office or such Applicable Lending Office); or

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

(iii) imposes any other condition affecting this Agreement or its Notes or its Commitment.

If any Bank requests compensation from the Company under this Section 5.01(a), the Company may, by notice to such Bank (with a copy to the Agent), suspend the obligation of such Bank thereafter to make or Continue Eurodollar Loans, or to Convert Base Rate Loans into Eurodollar Loans, until the Regulatory Change giving rise to such request ceases to be in effect (in which case the provisions of Section 5.04 hereof shall be applicable), provided that such suspension shall not affect the right of such Bank to receive the compensation so requested.

(b) Without limiting the effect of the provisions of paragraph
(a) of this Section 5.01, in the event that, by reason of any Regulatory Change, any Bank either (i) incurs Additional Costs based on or measured by the excess above a specified level of the amount of a category of deposits or other liabilities of such Bank that includes deposits by reference to which the interest rate on Eurodollar Loans or Fixed Rate Loans is determined as provided in this Agreement or a category of extensions of credit or other assets of such Bank that includes Eurodollar Loans or Fixed Rate Loans or (ii) becomes

subject to restrictions on the amount of such a category of liabilities or assets that it may hold, then, if such Bank so elects by notice to the Company (with a copy to the Administrative Agent), the obligation of such Bank to make Eurodollar Loans or Fixed Rate Loans as the case may be, hereunder shall be suspended until such Regulatory Change ceases to be in effect (in which case the Loans theretofore made by such Bank shall bear interest at the Base Rate from the last day of the then current Interest Period for such Loans in accordance with the provisions of Section 5.04).

(c) Without limiting the effect of the foregoing provisions of this Section 5.01 (but without duplication), the Company shall pay directly to each Bank from time to time on request such amounts as such Bank may determine to be necessary to compensate such Bank (or, without duplication, the bank holding company of which such Bank is a subsidiary) for any costs that it determines are attributable to the maintenance by such Bank (or any Applicable Lending Office or such bank holding company), pursuant to any law or regulation or any interpretation, directive or request (whether or not having the force of law and whether or not failure to comply therewith would be unlawful) of any court or governmental or monetary authority (i) following any Regulatory Change or (ii) implementing any risk-based capital guideline or other requirement (whether or not having the force of law and whether or not the failure to comply therewith would be unlawful) hereafter issued by any government or governmental or supervisory authority implementing at the national level the Basel Accord (including, without limitation, the Final Risk-Based Capital Guidelines of the Board of Governors of the Federal Reserve System (12 C.F.R. Part 208, Appendix A; 12 C.F.R. Part 225, Appendix A) and the Final Risk-Based Capital Guidelines of the Office of the Comptroller of the Currency (12 C.F.R. Part 3, Appendix
A)), of capital in respect of its Commitment(s) or Loans (such compensation to include, without limitation, an amount equal to any reduction of the rate of return on assets or equity of such Bank (or any Applicable Lending Office or such bank holding company) to a level below that which such Bank (or any Applicable Lending Office or such bank holding company) could have achieved but for such law, regulation, interpretation, directive or request). For purposes of this Section 5.01(c), "BASEL ACCORD" shall mean the proposals for risk-based capital framework described by the Basel Committee on Banking Regulations and Supervisory Practices in its paper entitled "International Convergence of Capital Measurement and Capital Standards" dated July 1988, as amended, modified and supplemented and in effect from time to time or any replacement thereof.

(d) Each Bank shall notify the Company of any event occurring after the date of this Agreement entitling such Bank to compensation under paragraph (a) or (c) of this Section 5.01 as promptly as practicable; provided that the Company shall not be required to pay any amounts under this Section 5.01 to the extent the amount requested to be paid is allocable to a period or date prior to the date which is 90 days before the date of such notice by such Bank to the Company. Each Bank will designate a different Applicable Lending Office for the Loans of such Bank affected by such event if such designation will avoid the need for, or reduce the amount of, such compensation and will not, in the sole good faith opinion of such Bank, be disadvantageous to such Bank, except

that such Bank shall have no obligation to designate an Applicable Lending Office located in the United States of America. Each Bank will furnish to the Company a certificate setting forth in reasonable detail the basis and amount of each request by such Bank for compensation under paragraph (a) or (c) of this
Section 5.01. Determinations and allocations by any Bank for purposes of this
Section 5.01 of the effect of any Regulatory Change pursuant to paragraph (a) or
(b) of this Section 5.01, or of the effect of capital maintained pursuant to paragraph (c) of this Section 5.01, on its costs or rate of return of maintaining Loans or its obligation to make Loans, or on amounts receivable by it in respect of Loans, and of the amounts required to compensate such Bank under this Section 5.01, shall be conclusive, PROVIDED that such determinations and allocations are made on a reasonable basis and are not manifestly in error.

5.02 LIMITATION ON TYPES OF LOANS. Anything herein to the contrary notwithstanding, if, on or prior to the determination of any Eurodollar Base Rate for any Interest Period:

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

(b) if the Majority Banks in good faith determine, which determination shall otherwise be conclusive, and notify the Administrative Agent that the relevant rates of interest referred to in the definition of "Eurodollar Base Rate" in Section 1.01 hereof upon the basis of which the rate of interest for Eurodollar Loans for such Interest Period is to be determined are not likely adequately to cover the cost to such Banks of making or maintaining Eurodollar Loans for such Interest Period;

then the Administrative Agent shall give the Company and each Bank prompt notice thereof and, so long as such condition remains in effect, the Banks shall be under no obligation to make additional Eurodollar Loans, to Continue Eurodollar Loans or to Convert Base Rate Loans into Eurodollar Loans, and the Company shall, on the last day(s) of the then current Interest Period(s) for the outstanding Eurodollar Loans, either prepay such Loans or Convert such Loans into Base Rate Loans in accordance with Section 2.07 hereof.

5.03 ILLEGALITY. Notwithstanding any other provision of this Agreement, in the event that it becomes unlawful for any Bank or its Applicable Lending Office to honor its obligation to make or maintain Eurodollar Loans hereunder, then such Bank shall promptly notify the Company thereof (with a copy to the Administrative Agent) and, in the case that it has become unlawful for such Bank to make Loans, such Bank's obligation to make or Continue, or to Convert Loans of any other Type into, Eurodollar Loans shall be suspended until such time as such Bank may again make and maintain Eurodollar Loans and, in the case that it has become unlawful for such Bank to maintain Loans, its outstanding Loans shall bear interest at the Base Rate from the date such Bank may specify to the Company with a copy to the Administrative Agent until it shall no longer be unlawful for such Bank to maintain Eurodollar Loans (in which case the provisions of Section 5.04 hereof shall be applicable).

5.04 TREATMENT OF AFFECTED LOANS. If the obligation of any Bank to make Eurodollar Loans or to Continue, or to Convert Base Rate Loans into, Eurodollar Loans shall be suspended pursuant to Section 5.01 or 5.03 hereof, such Bank's Eurodollar Loans shall be automatically Converted into Base Rate Loans on the last day(s) of the then current Interest Period(s) for such Eurodollar Loans (or, in the case of a Conversion resulting from a circumstance described in Section 5.03 hereof, on such earlier date as such Bank may specify to the Company with a copy to the Agent) and, unless and until such Bank gives notice as provided below that the circumstances specified in Section 5.01 or 5.03 hereof that gave rise to such Conversion no longer exist:

(a) to the extent that such Bank's Eurodollar Loans have been so Converted, all payments and prepayments of principal that would otherwise be applied to such Bank's Eurodollar Loans shall be applied instead to its Base Rate Loans; and

(b) all Loans that would otherwise be made or Continued by such Bank as Eurodollar Loans shall be made or Continued instead as Base Rate Loans, and all Base Rate Loans of such Bank that would otherwise be Converted into Eurodollar Loans shall remain as Base Rate Loans.

If such Bank gives notice to the Company with a copy to the Agent that the circumstances specified in Section 5.01 or 5.03 hereof that gave rise to the Conversion of such Bank's Eurodollar Loans pursuant to this Section 5.04 no longer exist (which such Bank agrees to do promptly upon such circumstances ceasing to exist) at a time when Eurodollar Loans made by other Banks are outstanding, such Bank's Base Rate Loans shall be automatically Converted, on the first day(s) of the next succeeding Interest Period(s) for such outstanding Eurodollar Loans, to the extent necessary so that, after giving effect thereto, all Base Rate and Eurodollar Loans are allocated among the Banks ratably (as to principal amounts, Types and Interest Periods) in accordance with their respective Commitments.

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

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

(b) any failure by the Company (whether by reason of the Company's election not to proceed or the failure of any of the conditions precedent specified in Section 6 hereof to be satisfied) to borrow a Eurodollar Loan or Fixed Rate Loan from such Bank on the date for such borrowing specified in the relevant notice of Borrowing given under Section 2.02 hereof.

Without limiting the effect of the preceding sentence, such compensation shall include an amount equal to the excess (if any) of (i) the amount of interest that otherwise would have accrued on the principal amount of any such Eurodollar Loan so paid, prepaid, Converted or not borrowed, for the period from the date of such payment, prepayment, Conversion or failure to borrow, to the last day of the then current Interest Period for such Eurodollar Loan (or, in the case of a failure to borrow, the Interest Period for such Eurodollar Loan that would have commenced on the date specified for such Borrowing) at the applicable rate of interest for such Eurodollar Loan provided for herein, less the Applicable Margin for such Eurodollar Loan, OVER (ii) the amount of interest that otherwise would have accrued on such principal amount at a rate per annum equal to the interest component of the amount such Bank would have bid on the date of such payment, prepayment or failure to borrow in the London interbank market for Dollar deposits of leading banks in amounts comparable to such principal amount and with maturities comparable to such period (as reasonably determined by such Bank).

5.06 U.S. TAXES.

(a) The Company agrees to pay to each of the Banks and the Swingline Bank that is not a U.S. Person such additional amounts as are necessary in order that the net payment of any amount due to such non-U.S. Person hereunder after deduction for or withholding in respect of any U.S. Taxes imposed with respect to such payment (or in lieu thereof, payment of such U.S. Taxes by such non-U.S. Person), net of any tax credit available to such non-U.S. Person from its home country as determined by such Bank in its sole discretion, will not be less than the amount stated herein to be then due and payable, PROVIDED that the foregoing obligation to pay such additional amounts shall not apply:

(i) to any payment to a Bank hereunder unless such Bank is, on the Effective Date (or on the date it becomes a Bank or the Swingline Bank as provided in Section 11.06(b) hereof) and on the date of any change in the Applicable Lending Office of such Bank or the Swingline Bank, either entitled to submit a Form 1001 (relating to such Bank and entitling it to a complete exemption from withholding on all interest to be received by it hereunder in respect of the Loans) or Form 4224 (relating to all interest to be received by such Bank hereunder in respect of the Loans), or

(ii) to any U.S. Taxes imposed solely by reason of the failure by such non- U.S. Person to comply with applicable certification, information, documentation or other reporting requirements if such compliance is required by statute or regulation of the United States of America as a precondition to relief or exemption from such U.S. Taxes.

For the purposes of this Section 5.06(a), (w) "FORM 1001" shall mean Form 1001 (Ownership, Exemption, or Reduced Rate Certificate) of the Department of the Treasury of the United States of America, (x) "FORM 4224" shall mean Form 4224 (Exemption from Withholding of Tax on Income Effectively Connected with the Conduct of a Trade or Business in the United States) of the Department of the Treasury of the United States of America (or in relation to either such Form such successor and related forms as may from time to time be adopted by the relevant taxing authorities of the United States of America to document a claim to which such Form relates), (y) "U.S. PERSON" shall mean a citizen, national or resident of the United States of America, a corporation, partnership or other entity created or organized in or under any laws of the United States of America, or any estate or trust that is subject to Federal income taxation regardless of the source of its income and (z) "U.S. TAXES" shall mean any present or future tax, assessment or other charge or levy imposed by or on behalf of the United States of America or any taxing authority thereof or therein.

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

5.07 FAIR ALLOCATION; SUBSTITUTION OF BANKS.

(a) Anything herein to the contrary notwithstanding, any determination by any Bank of any amounts payable by the Company under Section 5.01 shall be based upon a fair and equitable allocation by such Bank of the particular overall cost or loss among all its similarly situated borrowers relative to such Bank, and the

Company shall not be obligated to compensate any Bank for any costs that would not have been incurred by such Bank but for its gross negligence or willful misconduct.

(b) Provided that no Default shall have occurred and be continuing, the Company may, at any time, replace any Bank or the Swingline Bank that has requested compensation from the Company pursuant to Section 5.01 hereof or whose obligation to make additional Loans has been suspended pursuant to
Section 5.03 hereof or that is entitled to payment of additional amounts under
Section 5.06 hereof (any such Bank or the Swingline Bank being herein called an "AFFECTED BANK"), by giving not less than ten Business Days' prior notice to the Administrative Agent (which shall promptly notify such Affected Bank and each other Bank), that it intends to replace such Affected Bank with one or more banks (including, but not limited to, any other Bank under this Agreement) selected by the Company and acceptable to the Administrative Agent (which shall not unreasonably withhold its consent). The method (whether by assignment or otherwise) of and documentation for such replacement shall be acceptable to the Affected Bank, the other Banks and the Administrative Agent (which shall not unreasonably withhold their consent and shall cooperate with the Company in effecting such replacement). Upon the effective date of any replacement under this Section 5.07 (and as a condition thereto), the Company shall, or shall cause the replacement bank(s) to, pay to the Affected Bank being replaced any amounts owing to such Affected Bank hereunder (including, without limitation, interest, facility fees, compensation and additional amounts under this Section 5, in each case accrued to the effective date of such replacement), whereupon each replacement bank shall become a "Bank" or the "Swingline Bank", as the case may be, for all purposes of this Agreement having a Commitment in the amount of such Affected Bank's Commitment assumed by it, and such Commitment of the Affected Bank being replaced (including, if such Affected Bank is the Swingline Bank, its Swingline Commitment) shall be terminated upon such effective date and all of such Affected Bank's rights and obligations under this Agreement shall terminate (provided that the obligations of the Company under Sections 5.01, 5.05, 5.06 and 11.03 hereof to such Affected Bank shall survive such replacement as provided in Section 11.07 hereof).

Section 6. CONDITIONS PRECEDENT.

6.01 EFFECTIVE DATE. The effectiveness of this Agreement is subject to the receipt by the Administrative Agent of the following documents, each of which shall be satisfactory to the Administrative Agent (and to the extent specified below, to each Bank) in form and substance:

(a) CORPORATE DOCUMENTS. The following documents, each certified as indicated below:

(i) a copy of the charters or similar organizational documents, as amended and in effect, of the Company and of each Material Subsidiary certified as of a recent date by the Secretary of State of the jurisdiction of its incorporation or formation and by the Applicable Insurance Regulatory Authority, if any, as the case may be, and a certificate from such respective authorities dated as of a recent date as to the good standing of and charter documents or other organizational documents filed by the Company and by such Material Subsidiary;

(ii) a certificate of the Secretary or an Assistant Secretary of the Company, dated the Effective Date and certifying (A) that attached thereto is a true and complete copy of the by-laws or operating agreement of the Company and of each Material Subsidiary as amended and in effect at all times from the date on which the resolutions referred to in clause (B) were adopted to and including the date of such certificate, (B) that attached thereto is a true and complete copy of resolutions duly adopted by the board of directors of the Company authorizing the execution, delivery and performance of the Basic Documents and the extensions of credit hereunder, and that such resolutions have not been modified, rescinded or amended and are in full force and effect, (C) that the charters or similar organizational documents of the Company and the Material Subsidiaries have not been amended since the date of the certification thereto furnished pursuant to subparagraph (i) above, and (D) as to the incumbency and specimen signature of each officer of the Company executing the Basic Documents and each other document to be delivered by the Company from time to time in connection therewith (and the Administrative Agent and each Bank may conclusively rely on such certificate until it receives notice in writing from the Company); and

(iii) a certificate of another officer of the Company as to the incumbency and specimen signature of the Secretary or Assistant Secretary, as the case may be, of the Company.

(b) OFFICER'S CERTIFICATE. A certificate of a senior officer of the Company, dated the Effective Date, to the effect set forth in the first sentence of Section 6.03 hereof.

(c) OPINION OF COUNSEL TO THE COMPANY. An opinion, dated the Effective Date, of Samuel Bergman, Executive Vice President and General Counsel of the Company, substantially in the form of Exhibit C hereto and covering such other matters as the Administrative Agent or any Bank may reasonably request (and the Company hereby instructs such counsel to deliver such opinion to the Banks and the Administrative Agent).

(d) NOTES. The Revolving Credit Notes, Competitive Notes and Swingline Note, duly completed and executed.

(e) TAX SHARING AGREEMENTS. True, correct and complete copies of all tax sharing agreements (if any) to which the Company or any of its Subsidiaries is a party, which agreements must be in form and substance satisfactory to the Banks.

(f) TERMINATION OF EXISTING CREDIT AGREEMENT Evidence that the Existing Credit Agreement and Pledge Agreement (as defined therein) have been terminated and all principal of and interest on the Existing Loans and all other amounts owing under the Existing Credit Agreement accrued to the Effective Date, have been indefeasibly paid in full and all Liens granted in connection therewith shall have been terminated and released and the Administrative Agent shall have received all instruments of release, including without limitation all Form UCC-3 termination statements, to evidence such termination and release.

(g) RELEASE OF SECURITY FOR DEBENTURES. Evidence that all security interests granted to secure the Debentures shall have been terminated and released.

(h) OTHER DOCUMENTS. Such other documents as the Administrative Agent or any Bank or special counsel to Fleet may reasonably request.

The effectiveness of this Agreement is also subject to the payment by the Company of such fees as the Company shall have agreed to pay or deliver to any Bank or the Administrative Agent in connection herewith, including, without limitation, the reasonable fees and expenses of special counsel to Fleet in connection with the negotiation, preparation, execution and delivery of this Agreement and the Notes and the making of the Loans hereunder (to the extent that statements for such fees and expenses have been delivered to the Company not less than five days prior to the Effective Date).

6.02 TERM LOANS.

The obligation of the Banks to make any Term Loans to the Company hereunder on the occasion of the borrowing of Term Loans is subject to the further condition precedent that the Company shall have delivered to the Administrative Agent the Term Notes evidencing such Term Loans.

6.03 INITIAL AND SUBSEQUENT LOANS.

The obligation of any Bank or the Swingline Bank to make any Loan to the Company upon the occasion of any Borrowing hereunder (including the initial Borrowing) is subject to the further conditions precedent that, both immediately prior to the making of such Loan and also after giving effect thereto and to the intended use thereof:

(a) no Default shall have occurred and be continuing; and

(b) the representations and warranties made by the Company in
Section 7 hereof, and in each of the other Basic Documents, shall be true and complete on and as of the date of the making of such Loan with the same force and effect as if made on and as of such date (or, if any such representation or warranty is expressly stated to have been made as of a specific date, as of such specific date).

Each notice of Borrowing by the Company hereunder shall constitute a certification by the Company to the effect set forth in the preceding sentence (both as of the date of such notice and, unless the Company otherwise notifies the Administrative Agent prior to the date of such Borrowing, as of the date of such Borrowing).

Section 7. REPRESENTATIONS AND WARRANTIES. The Company represents and warrants to the Administrative Agent, the Banks and the Swingline Bank that:

7.01 CORPORATE EXISTENCE. Each of the Company and its Material Subsidiaries: (a) is a corporation, partnership or other entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization; (b) has all requisite corporate or other power, and has all material governmental licenses, authorizations, consents and approvals, necessary to own its assets and carry on its business as now being or as proposed to be conducted; and (c) is qualified to do business and is in good standing in all jurisdictions in which the nature of the business conducted by it makes such qualification necessary and where failure so to qualify could, either individually or in the aggregate, have a Material Adverse Effect.

7.02 FINANCIAL CONDITION.

(a) The Company has heretofore furnished to each of the Banks consolidated and consolidating balance sheets of the Company and its Subsidiaries as at December 31, 1997 and the related consolidated and consolidating statements of income, shareholders' equity and cash flows of the Company and its Subsidiaries for the fiscal year ended on said date, with the opinion thereon (in the case of said consolidated balance sheet and statements) of Deloitte & Touche LLP, and the unaudited consolidated and consolidating balance sheets of the Company and its Subsidiaries as at March 31, 1998 and the related consolidated and consolidating statements of income, shareholders' equity

and cash flows of the Company and its Subsidiaries for the three-month period ended on such date. All such financial statements present fairly, in all material respects, the consolidated financial condition of the Company and its Subsidiaries, and (in the case of said consolidating financial statements) the respective unconsolidated financial condition of the Company and of each of its Subsidiaries, as at said dates and the consolidated results of their operations, and (in the case of said consolidating statements) the respective unconsolidated results of operations of the Company and of each of its Subsidiaries, for the fiscal year and three-month period ended on said dates (subject, in the case of such financial statements as at March 31, 1998, to normal year-end audit adjustments), all in accordance with generally accepted accounting principles and practices applied on a consistent basis. None of the Company nor any of its Subsidiaries has on the Effective Date any material contingent liabilities, liabilities for taxes, unusual forward or long-term commitments or unrealized or anticipated losses from any unfavorable commitments, except as referred to or reflected or provided for in said financial statements (or in the notes thereto) as at said dates. Since December 31, 1997, there has been no material adverse change in the consolidated financial condition, operations, business or prospects of the Company and its Subsidiaries taken as a whole from that set forth in said financial statements as at said date.

(b) The Company has heretofore furnished to each of the Banks the annual and quarterly Statutory Statements of the Company (consolidated) and of each of its Insurance Subsidiaries for the fiscal year ended December 31, 1997 and for the quarterly fiscal period ended March 31, 1998 as filed with the Applicable Insurance Regulatory Authority. All such Statutory Statements present fairly, in all material respects, the financial condition of the Company (consolidated) and of each Insurance Subsidiary, respectively, as at the respective dates thereof and its results of operations through fiscal year ended on December 31, 1997 and the quarterly fiscal period ended March 31, 1998, in accordance with statutory accounting practices prescribed or permitted by the Applicable Insurance Regulatory Authority.

7.03 LITIGATION. Except as disclosed in Schedule III hereto, there are no legal or arbitration proceedings, or any proceedings by or before any governmental or regulatory authority or agency, now pending or (to the knowledge of the Company) threatened against the Company or any of its Subsidiaries that, if adversely determined, could, either individually or in the aggregate, have a Material Adverse Effect.

7.04 NO BREACH. None of the execution and delivery of this Agreement and the Notes, the consummation of the transactions herein and therein contemplated or compliance with the terms and provisions hereof and thereof will conflict with or result in a breach of, or require any consent under, the charter or by-laws of the Company, or any applicable law or regulation, or any order, writ, injunction or decree of any court or governmental authority or agency, or any agreement or instrument to which the Company or any of its Subsidiaries is a party or by which any of them or any of their Property is bound or to which any of them is subject, or constitute a default under any such agreement or instrument, or result in the creation or imposition of any Lien upon any

Property of the Company or any of its Subsidiaries pursuant to the terms of any such agreement or instrument.

7.05 ACTION. The Company has all necessary corporate power, authority and legal right to execute and deliver this Agreement and the Notes and perform its obligations under each of the Basic Documents; the execution and delivery of this Agreement and the Notes and performance by the Company thereof have been duly authorized by all necessary corporate action on its part (including, without limitation, any required shareholder approvals); and this Agreement has been duly and validly executed and delivered by the Company and constitutes, and each of the Notes when executed and delivered for value will constitute, the legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms.

7.06 APPROVALS. No authorizations, approvals or consents of, and no filings or registrations with, any governmental or regulatory authority or agency, or any securities exchange, are necessary for the execution or delivery by the Company of this Agreement and the Notes or performance by the Company thereof or for the legality, validity or enforceability hereof or thereof.

7.07 MARGIN STOCK. Not more than 25% of the value (as determined by any reasonable method) of the Properties of the Company and its Subsidiaries (including, without limitation, common stock of the Company held in treasury) subject to the provisions of Section 8.05 or 8.06 hereof is represented by Margin Stock.

7.08 ERISA. Each Plan, and, to the knowledge of the Company, each Multiemployer Plan, is in compliance in all material respects with, and has been administered in all material respects in compliance with, the applicable provisions of ERISA, the Code and any other Federal or State law, and no event or condition has occurred and is continuing as to which the Company would be under an obligation to furnish a report to the Banks under Section 8.01(g) hereof.

7.09 TAXES. The Company and its United States Subsidiaries are members of an affiliated group of corporations filing consolidated returns for Federal income tax purposes, of which the Company is the "common parent" (within the meaning of Section 1504 of the Code) of such group. The Company and its Subsidiaries have filed all Federal income tax returns and all other material tax returns that are required to be filed by them and have paid all taxes due pursuant to such returns or pursuant to any assessment received by the Company or any of its Subsidiaries. The charges, accruals and reserves on the books of the Company and its Subsidiaries in respect of taxes and other governmental charges are, in the opinion of the Company, adequate. The Company has not given or been requested to give a waiver of the statute of limitations relating to the payment of Federal, state, local and foreign taxes or other impositions.

7.10 INVESTMENT COMPANY ACT. Neither the Company 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.

7.11 PUBLIC UTILITY HOLDING COMPANY ACT. Neither the Company nor any of its Subsidiaries is a "holding company", or an "affiliate" of a "holding company" or a "subsidiary company" of a "holding company", within the meaning of the Public Utility Holding Company Act of 1935, as amended.

7.12 MATERIAL AGREEMENTS AND LIENS.

(a) Part A of Schedule I hereto is a complete and correct list, as of the Effective Date, of each credit agreement, loan agreement, indenture, securities purchase agreement, guarantee (other than any insurance policy which is not a Guarantee), letter of credit or other arrangement providing for or otherwise relating to any Indebtedness of the Company or any of its Subsidiaries the aggregate principal or face amount of which equals or exceeds (or may equal or exceed) $3,000,000, and the aggregate principal or face amount outstanding or that may become outstanding under each such arrangement is correctly described in Part A of said Schedule I.

(b) Part B of Schedule I hereto is a complete and correct list, as of the Effective Date, of each Lien securing Indebtedness of any Person the aggregate principal or face amount of which equals or exceeds (or may equal or exceed) $3,000,000 and covering any Property of the Company or any of its Subsidiaries, and the aggregate Indebtedness secured (or which may be secured) by each such Lien and the Property covered by each such Lien is correctly described in Part B of said Schedule I.

7.13 ENVIRONMENTAL MATTERS. There have been no environmental investigations, studies, audits, tests, reviews or other analyses conducted by or that are in the possession of the Company or any of its Subsidiaries in relation to any site or facility now or previously owned, operated or leased by the Company or any of its Subsidiaries which have not been made available to the Banks.

7.14 CAPITALIZATION. The authorized capital stock of the Company consists, on the Effective Date, of an aggregate of 100,000,000 shares of common stock, par value $0.10 per share, of which 39,441,058 shares are duly and validly issued and outstanding (and of which 1,981,148 shares are held in treasury), each of which shares is fully paid and nonassessable. As of the Effective Date, except for the Company's 1987 and 1997 Long-Term Incentive Plans for Key Employees, its Non-Employee-Director Stock Option Plan and its Directors Stock Ownership Plan as in effect on the Effective Date and any stock bonus awards, restricted stock awards, performance units, stock options or stock appreciation rights heretofore issued thereunder and other than pursuant to the Shareholders' Agreement, (x) there are no outstanding Equity Rights with respect to the Company and (y) there are no outstanding obligations of the Company or any of its Subsidiaries to repurchase, redeem, or otherwise acquire any shares of capital stock of the Company nor are there any outstanding obligations of the Company or any of its Subsidiaries to make payments to any Person, such as "phantom stock" payments, where the amount thereof is calculated with reference to the fair market value or equity value of the Company or any of its Subsidiaries.

7.15 SUBSIDIARIES, ETC.

(a) Set forth in Schedule II hereto is a complete and correct list, as of the Effective Date, of all of the Subsidiaries of the Company, together with, for each such Subsidiary, (i) the jurisdiction of organization of such Subsidiary, (ii) each Person holding ownership interests in such Subsidiary and (iii) the nature of the ownership interests held by each such Person and the percentage of ownership of such Subsidiary represented by such ownership interests. Except as disclosed in Schedule II hereto, as of the Effective Date
(x) each of the Company and its Subsidiaries owns, free and clear of Liens, and has the unencumbered right to vote, all outstanding ownership interests in each Person shown to be held by it in Schedule II hereto, (y) all of the issued and outstanding capital stock of each such Person organized as a corporation is validly issued, fully paid and nonassessable and (z) there are no outstanding Equity Rights with respect to such Person.

(b) None of the Subsidiaries of the Company is, on the Effective Date, subject to any indenture, agreement, instrument or other arrangement of the type described in Section 8.17 hereof.

7.16 TRUE AND COMPLETE DISCLOSURE. The information, reports, financial statements, exhibits and schedules furnished in writing by or on behalf of the Company or any of its Subsidiaries to the Administrative Agent or any Bank in connection with the negotiation, preparation or delivery of this Agreement and the other Basic Documents or included herein or therein or delivered pursuant hereto or thereto, when taken as a whole, do not, as of the Effective Date, contain any untrue statement of material fact or

omit to state any material fact necessary to make the statements herein or therein, in light of the circumstances under which they were made, not misleading. All written information furnished after the Effective Date by the Company and its Subsidiaries to the Administrative Agent and the Banks in connection with this Agreement and the other Basic Documents and the transactions contemplated hereby and thereby will be true, complete and accurate in every material respect, or (in the case of projections) based on reasonable estimates, on the date as of which such information is stated or certified. To the Company's knowledge, there is no fact peculiar to the Company or any of its Subsidiaries (in contrast to information of a general economic or industry nature) that could have a Material Adverse Effect that has not been disclosed herein, in the other Basic Documents or in a report, financial statement, exhibit, schedule, disclosure letter or other writing furnished to the Banks for use in connection with the transactions contemplated hereby or thereby.

7.17 YEAR 2000. Substantially all programming required to handle all material dates and date processing, in and following the year 2000, of (i) the Company's and each of its Material Subsidiaries' computer systems and
(ii) equipment containing embedded microchips (including systems and equipment supplied by others or with which the Company's or such Material Subsidiaries' systems interface) and the testing of all such systems and equipment, as so reprogrammed, has been substantially completed as of the Amendment and Restatement Effective Date. The expected cost to the Company and its Material Subsidiaries of such reprogramming and testing and of the reasonably foreseeable consequences of year 2000 to the Company and its Material Subsidiaries (including, without limitation, reprogramming errors and the failure of others' systems or equipment within the control of the Company or its Material Subsidiaries) is not anticipated to result in a Default or have Material Adverse Effect.

Section 8. COVENANTS OF THE COMPANY. The Company covenants and agrees with the Banks, the Swingline Bank and the Administrative Agent that, so long as any Commitment or Loan is outstanding and until payment in full of all amounts payable by the Company hereunder:

8.01 FINANCIAL STATEMENTS; INFORMATION; ETC. The Company shall deliver to each of the Banks and the Swingline Bank:

(a) as soon as available and in any event within 55 days after the end of each quarterly fiscal period of each fiscal year of the Company, consolidated and consolidating statements of income, shareholders' equity and cash flows of the Company and its Subsidiaries for such period and for the period from the beginning of the respective fiscal year to the end of such period, and the related consolidated and consolidating balance sheets of the Company and its Subsidiaries as at the end of such period, setting forth in each case in comparative

form the corresponding consolidated and consolidating figures for the corresponding period in the preceding fiscal year, accompanied by a certificate of a senior financial officer of the Company, which certificate shall state that said consolidated financial statements present fairly, in all material respects, the consolidated financial condition and results of operations of the Company and its Subsidiaries, and said consolidating financial statements present fairly in all material respects, the respective individual unconsolidated financial condition and results of operations of the Company and of each of its Subsidiaries, in each case in accordance with generally accepted accounting principles, consistently applied, as at the end of, and for, such period (subject to normal year-end audit adjustments);

(b) as soon as available and in any event within 100 days after the end of each fiscal year of the Company, consolidated and consolidating statements of income, stockholders' equity and cash flows of the Company and its Subsidiaries for such fiscal year and the related consolidated and consolidating balance sheets of the Company and its Subsidiaries as at the end of such fiscal year, setting forth in each case in comparative form the corresponding consolidated and consolidating figures for the preceding fiscal year, and accompanied
(i) in the case of said consolidated statements and balance sheet of the Company, by an opinion thereon of independent certified public accountants of recognized national standing, which opinion shall state that said consolidated financial statements present fairly, in all material respects, the consolidated financial condition and results of operations of the Company and its Subsidiaries as at the end of, and for, such fiscal year in accordance with generally accepted accounting principles, and a certificate of such accountants addressed to the Banks stating that, in making the examination necessary for their opinion, nothing came to their attention that caused them to believe that the Company had failed to comply with any of its obligations under Sections 8.05 to 8.11 (inclusive) or that any Default specified in paragraph (b) or (e) to (j), inclusive, of Section 9 hereof had occurred, except as specifically stated, and (ii) in the case of said consolidating statements and balance sheets, by a certificate of a senior financial officer of the Company, which certificate shall state that said consolidating financial statements present fairly, in all material respects, the respective individual unconsolidated financial condition and results of operations of the Company and of each of its Subsidiaries, in each case in accordance with generally accepted accounting principles, consistently applied, as at the end of, and for, such fiscal year;

(c) within 5 days after filing with the Applicable Insurance Regulatory Authority and in any event within 55 days after the end of each of the first three quarterly fiscal periods of each fiscal year of the Company the quarterly Statutory Statement of the Company (consolidated) and of each Insurance Subsidiary for such fiscal period, together with a certificate of a senior financial officer of the Company stating that such Statutory Statement fairly presents, in all material respects, the financial condition of the Company (consolidated) and of each

Insurance Subsidiary, respectively, for such quarterly fiscal period in accordance with statutory accounting practices required or permitted by the Applicable Insurance Regulatory Authority;

(d) within 5 days after filing with the Applicable Insurance Regulatory Authority and in any event within 55 days after the end of each fiscal year of the Company the annual Statutory Statement of the Company (consolidated) and of each Insurance Subsidiary for such year, together with a certificate of a senior financial officer of the Company stating that such annual Statutory Statement fairly presents, in all material respects, the financial condition of the Company (consolidated) and of each Insurance Subsidiary, respectively, for such fiscal year in accordance with statutory accounting practices required or permitted by the Applicable Insurance Regulatory Authority;

(e) promptly upon their becoming available, copies of all registration statements and regular periodic reports, if any, which the Company shall have filed with the Securities and Exchange Commission (or any governmental agency substituted therefor) or any national securities exchange;

(f) promptly upon the mailing thereof to the shareholders of the Company generally, copies of all financial statements, reports and proxy statements so mailed;

(g) as soon as possible, and in any event within 10 days after the Company knows or has reason to believe that any of the events or conditions specified below with respect to any Plan or Multiemployer Plan has occurred or exists, a statement signed by a senior financial officer of the Company setting forth details respecting such event or condition and the action, if any, that the Company or its ERISA Affiliate proposes to take with respect thereto (and a copy of any report or notice required to be filed with or given to PBGC by the Company or an ERISA Affiliate with respect to such event or condition):

(i) any reportable event, as defined in Section 4043(b) of ERISA and the regulations issued thereunder, with respect to a Plan, as to which PBGC has not by regulation waived the requirement of Section 4043 (a) of ERISA that it be notified within 30 days of the occurrence of such event (PROVIDED that a failure to meet the minimum funding standard of Section 412 of the Code or Section 302 of ERISA, including, without limitation, the failure to make on or before its due date a required installment under Section 412(m) of the Code or Section 302(e) of ERISA, shall be a reportable event regardless of the issuance of any waivers in

accordance with Section 412(d) of the Code); and any request for a waiver under Section 412(d) of the Code for any Plan;

(ii) the distribution under Section 4041 of ERISA of a notice of intent to terminate any Plan or any action taken by the Company or an ERISA Affiliate to terminate any Plan;

(iii) the institution by PBGC of proceedings under
Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Plan, or the receipt by the Company or any ERISA Affiliate of a notice from a Multiemployer Plan that such action has been taken by PBGC with respect to such Multiemployer Plan;

(iv) the complete or partial withdrawal from a Multiemployer Plan by the Company or any ERISA Affiliate that results in liability under Section 4201 or 4204 of ERISA (including the obligation to satisfy secondary liability as a result of a purchaser default) or the receipt by the Company or any ERISA Affiliate of notice from a Multiemployer Plan that it is in reorganization or insolvency pursuant to Section 4241 or 4245 of ERISA or that it intends to terminate or has terminated under Section 4041A of ERISA;

(v) the institution of a proceeding by a fiduciary of any Multiemployer Plan against the Company or any ERISA Affiliate to enforce Section 515 of ERISA, which proceeding is not dismissed within 30 days; and

(vi) the adoption of an amendment to any Plan that, pursuant to Section 401 (a) (29) of the Code or Section 307 of ERISA, would result in the loss of tax-exempt status of the trust of which such Plan is a part if the Company or an ERISA Affiliate fails to timely provide security to the Plan in accordance with the provisions of said Sections;

(h) promptly after the Company knows or has reason to believe that any Default has occurred, a notice of such Default specifying that such notice is a "Notice of Default" and describing the same in reasonable detail and, together with such notice or as soon thereafter as possible, a description of the action that the Company has taken or proposes to take with respect thereto; and

(i) from time to time such other information regarding the financial condition, operations, business or prospects of the Company or any of its Subsidiaries (including, without limitation, any Plan or Multiemployer Plan and

any reports or other information required to be filed under ERISA) as any Bank or the Administrative Agent may reasonably request.

The Company will furnish to each Bank, at the time it furnishes each set of financial statements pursuant to paragraph (a) or (b) above, a certificate of a senior financial officer of the Company (i) to the effect that no Default has occurred and is continuing (or, if any Default has occurred and is continuing, describing the same in reasonable detail and describing the action that the Company has taken or proposes to take with respect thereto) and (ii) setting forth in reasonable detail the computations necessary to determine whether the Company is in compliance with Sections 8.05(d) (v) (z), 8.06(i), 8.07(d), 8.09 and 8.10 hereof as of the end of the respective quarterly fiscal period or fiscal year.

8.02 LITIGATION. The Company will promptly give to each Bank and the Swingline Bank notice of all legal or arbitration proceedings, and of all proceedings by or before any governmental or regulatory authority or agency, and any material development in respect of such legal or other proceedings, affecting the Company or any of its Subsidiaries, except proceedings which, if adversely determined, could not, either individually or in the aggregate, have a Material Adverse Effect.

8.03 EXISTENCE, ETC. The Company will, and will cause each of its Material Subsidiaries to:

(a) preserve and maintain its legal existence and all of its material rights, privileges, licenses and franchises (PROVIDED that nothing in this Section 8.03 shall prohibit any transaction expressly permitted by Section 8.05 hereof);

(b) comply with the requirements of all applicable laws, rules, regulations and orders of governmental or regulatory authorities if failure to comply with such requirements could, either individually or in the aggregate, have a Material Adverse Effect;

(c) pay and discharge all taxes, assessments and governmental charges or levies imposed on it or on its income or profits or on any of its Property prior to the date on which penalties attach thereto, except for any such tax, assessment, charge or levy the payment of which is being contested in good faith and by proper proceedings and against which adequate reserves are being maintained in accordance with GAAP;

(d) maintain all of its Properties material to its business in reasonably adequate working order and condition, ordinary wear and tear excepted;

(e) keep adequate records and books of account, in which complete entries will be made in accordance with generally accepted accounting principles consistently applied; and

(f) permit representatives of any Bank or the Administrative Agent, during normal business hours, to examine, copy and make extracts from its books and records, to inspect any of its Properties, and to discuss its business and affairs with its officers, all to the extent reasonably requested by such Bank or the Administrative Agent (as the case may be).

8.04 INSURANCE. The Company will, and will cause each of its Material Subsidiaries to, keep insured by financially sound and reputable insurers all Property of a character usually insured by corporations engaged in the same or similar business similarly situated against loss or damage of the kinds and in the amounts customarily insured against by such corporations and carry such other insurance as is usually carried by such corporations.

8.05 PROHIBITION OF FUNDAMENTAL CHANGES.

(a) The Company will not, and will not permit any of its Material Subsidiaries to, enter into any transaction of merger or consolidation or amalgamation, or liquidate, wind up or dissolve itself (or suffer any liquidation or dissolution).

(b) The Company will not, and will not permit any of its Subsidiaries to, acquire any business or Property from, or capital stock of, or be a party to any acquisition of, any Person.

(c) The Company will not, and will not permit any of its Material Subsidiaries to, convey, sell, lease, transfer or otherwise dispose of any part of its business or Property, whether now owned or hereafter acquired (including, without limitation, receivables and leasehold interests).

(d) Notwithstanding the foregoing paragraphs of this Section 8.05:

(i) any Subsidiary of the Company may be merged or consolidated with or into (x) the Company if the Company shall be the continuing or surviving corporation or (y) any other Subsidiary of the Company; PROVIDED that if any such transaction shall be between a Subsidiary of the Company and a Wholly Owned Subsidiary of the Company, such Wholly Owned Subsidiary shall be the continuing or surviving corporation;

(ii) the Company or any of its Subsidiaries may purchase equipment, furniture and supplies to be used in the ordinary course of business;

(iii) the Company or any of its Subsidiaries may make Investments permitted by Section 8.08 hereof;

(iv) any Subsidiary of the Company may convey, sell, lease, transfer or otherwise dispose of any or all of its Property (upon voluntary liquidation or otherwise) to the Company or a Wholly Owned Subsidiary of the Company; and

(v) the Company or any of its Subsidiaries may convey, sell, lease, transfer or otherwise dispose of (x) equipment no longer used or useful in its business, (y) any portfolio Investment sold or disposed of in the ordinary course of business and (z) any other Investment (including any Investment in the capital stock of Subsidiaries of the Company other than ERC or Asset Guaranty) having a value, together with the value (when sold, leased transferred or otherwise disposed of), of all Investments sold, leased, transferred or otherwise disposed of in reliance on this sub-clause (z), not in excess of $3,000,000.

(e) Except as expressly permitted by this Section 8.05, the Company shall not, nor shall it permit any of its Material Subsidiaries to, sell, transfer, convey or otherwise dispose of either directly or indirectly (x) all or any portion of the capital stock of any of its Material Subsidiaries or
(y) all or substantially all of the Properties of any of its Material Subsidiaries in one transaction or a series of related transactions; PROVIDED, HOWEVER, the Company may transfer all of the capital stock of any of its Insurance Subsidiaries to Enhance Investment.

8.06 LIMITATION ON LIENS. The Company will not, and will not permit any of its Material Subsidiaries to, create, incur, assume or suffer to exist any Lien upon any of its Property, whether now owned or hereafter acquired, except:

(a) Liens in existence on the Effective Date and listed in Part B of Schedule I hereto;

(b) Liens imposed by any governmental authority for taxes, assessments or charges not yet due or which are being contested in good faith and by appropriate proceedings, unless the amount thereof is material with respect to it or its financial condition, if adequate reserves with respect thereto are maintained on the books of the Company or the affected Subsidiaries, as the case may be, in accordance with GAAP;

(c) carriers', warehousemen's, mechanics', materialmen's, repairmen's or other like Liens arising in the ordinary course of business which are not overdue for a period of more than 30 days or which are being contested in good faith and by appropriate proceedings and Liens securing judgments but only to the extent for an amount and for a period not resulting in an Event of Default under Section 9(h) hereof;

(d) pledges or deposits under worker's compensation, unemployment insurance and other social security legislation;

(e) deposits to secure the performance of bids, trade contracts (other than for borrowed money), leases, statutory obligations, surety and appeal bonds, performance bonds and other obligations of a like nature incurred in the ordinary course of business;

(f) easements, rights-of-way, restrictions and other similar encumbrances incurred in the ordinary course of business and encumbrances consisting of zoning restrictions, easements, licenses, restrictions on the use of Property or minor imperfections in title thereto which, in the aggregate, are not material in amount, and which do not in any case materially detract from the value of the Property subject thereto or interfere with the ordinary conduct of the business of the Company or any of its Subsidiaries;

(g) Liens on Property of any corporation which becomes a Subsidiary of the Company after the Effective Date; PROVIDED that such Liens are in existence at the time such corporation becomes a Subsidiary of the Company and were not created in anticipation thereof;

(h) Liens upon real and/or tangible personal Property acquired after the Effective Date (by purchase, construction or otherwise) by the Company or any of its Subsidiaries, each of which Liens either existed on such Property before the time of its acquisition and was not created in anticipation thereof or was created solely for the purpose of securing Indebtedness incurred to finance, refinance or refund the cost (including the cost of construction) of such Property; PROVIDED that (i) no such Lien shall extend to or cover any Property of the Company or such Subsidiary other than the Property so acquired and improvements thereon and (ii) the principal amount of Indebtedness secured by any such Lien shall not exceed 75% of the fair market value (as determined in good faith by a senior financial officer of the Company) of such Property at the time it was acquired (by purchase, construction or otherwise); and

(i) any extension, renewal or replacement of the foregoing; PROVIDED that the Liens permitted by this paragraph shall not extend to or cover any additional Indebtedness or Property (other than a substitution of like Property).

8.07 INDEBTEDNESS. The Company will not, and will not permit any of its Material Subsidiaries to, create or incur any Indebtedness except:

(a) Indebtedness to the Banks and the Swingline Bank hereunder;

(b) Indebtedness of the Company to any Subsidiary of the Company or Indebtedness of any Wholly Owned Subsidiary to the Company or to any other Wholly Owned Subsidiary of the Company;

(c) Indebtedness of the Company and its Material Subsidiaries secured by Liens permitted by Section 8.06(h) hereof;

(d) additional Indebtedness of the Company and its Material Subsidiaries provided that on the date such Indebtedness is incurred and after giving effect thereto and to the concurrent retirement of any other Indebtedness of the Company and its Material Subsidiaries, total consolidated Indebtedness of the Company and its Subsidiaries (including Indebtedness created or incurred under any other subsection of this Section 8.07) does not exceed 25% of Total Capitalization or 60% of Combined Statutory Surplus; and

(e) Indebtedness of ERC not exceeding $100,000,000 in aggregate principal amount incurred under a credit facility established by ERC solely for the purpose of acquiring or supporting one or more of its claims-paying ability ratings.

8.08 INVESTMENTS. The Company will not, and will not permit any of its Material Subsidiaries to, make or permit to remain outstanding any Investments except:

(a) Investments constituting (i) operating deposit accounts with banks and (ii) accounts receivable arising in the ordinary course of business on ordinary business terms that are not overdue;

(b) portfolio Investments constituting short-term debt instruments that are rated at least A-1 by Standard & Poor's Corporation or P-l by Moody's Investors Service Inc.;

(c) portfolio Investments constituting fixed income debt securities if, after giving effect to such Investment:

(i) the weighted average credit quality of the fixed income debt securities portfolio of the Company or any Material Subsidiary, as determined by the rating system of Standard & Poor's Corporation, is AA or higher; or

(ii) the aggregate amount invested by the Company and each of its Material Subsidiaries in fixed income debt securities which are rated lower than BBB by Standard & Poor's Corporation or Baa2 by Moody's Investors Service Inc. does not exceed 1% of the aggregate amount of all portfolio Investments of the Company and its Material Subsidiaries;

(d) equity Investments if, after giving effect to such Investments, the aggregate amount of equity Investments of the Company and of its Material Subsidiaries (including, without limitation, Investments in Subsidiaries of the Company that are not Wholly Owned Subsidiaries of the Company) (i) in any one Person, including Affiliates thereof, does not exceed at any time 75% of the aggregate amount of equity Investments of the Company and its Material Subsidiaries and (ii) does not exceed at any time during the periods set forth below, the following percentages of the aggregate amount of the consolidated Investments (both debt and equity) of the Company and its Material Subsidiaries:

-------------------------------- ---------------------------------------
                                  Maximum Aggregate Equity Investments
 DURING THE FISCAL YEAR ENDING:      as Percentage of CONSOLIDATED
                                              INVESTMENTS
-------------------------------- ---------------------------------------
      December 31, 1998 and
        December 31, 1999                        10.0%
-------------------------------- ---------------------------------------
        December 31, 2000                        12.0%
-------------------------------- ---------------------------------------
December 31, 2001 and thereafter                 14.5%
-------------------------------- ---------------------------------------

For purposes of this subsection (d), the amount of equity Investments shall not include any increases in the value of such equity Investments resulting from undistributed earnings on such equity Investment.

(e) travel and similar advances by the Company and its Material Subsidiaries in the ordinary course of business and loans to officers and directors of the Company and its Material Subsidiaries, provided that such travel and similar advances and loans to officers and directors at any one time do not, in the aggregate, exceed $500,000 for the Company and its Material Subsidiaries.

8.09 RESTRICTED PAYMENTS. The Company will not declare or make any Restricted Payment unless, on the date of declaration in the case of any proposed dividend and on the date of payment or distribution in the case of the making of any other Restricted Payment (the "COMPUTATION DATE"), and after giving effect thereto:

(i) the aggregate amount of all Restricted Payments made during the period commencing on January 1, 1998 and ending on and including the Computation Date (the "COMPUTATION PERIOD") shall not exceed an amount equal to the sum of:

(a) 25% (or, in the case of a deficit, minus 100%) of consolidated net income of the Company and its Subsidiaries for the Computation Period, PLUS

(b) the net cash proceeds received by the Company from the issue or sale (other than to a Subsidiary) of shares of common or preferred stock (other than Redeemable Preferred Stock) of the Company (including shares of common stock issued upon conversion of Indebtedness to common stock, it being understood and agreed that in any such conversion, the Company shall be deemed to have received cash proceeds in an amount equal to the principal amount of Indebtedness converted to common stock), and

(ii) no Default shall have occurred and be continuing;

PROVIDED, that the Company shall not in any fiscal quarter of the Company declare any dividend to the extent that the amount of such dividend, together with the sum of (i) the aggregate amount of all dividends theretofore declared in such fiscal quarter PLUS (ii) the aggregate amount of dividends actually paid during the period (the "MEASURING PERIOD") of four consecutive fiscal quarters of the Company ended on (or most recently ended prior to) such declaration, would exceed 25% of the consolidated net income of the Company and its Subsidiaries for the Measuring Period (and the Company shall not pay any dividends it has not previously declared as permitted hereby); and PROVIDED FURTHER, that no Restricted Payments shall be permitted if and for so long as the claims-paying ability rating, as rated by S&P (if rated by S&P), of ERC falls below AA+ (or is withdrawn) or of any other Insurance Subsidiary of the Company falls below AA- (or is withdrawn).

8.10 FINANCIAL COVENANT - TANGIBLE NET WORTH. The Company will not on any date permit Tangible Net Worth to be less than $400,000,000.

8.11 LINES OF BUSINESS. The Company will not permit any of its Insurance Subsidiaries to engage to any substantial extent in any line or lines of business activity other than the business of issuing financial guaranty insurance, credit insurance and residual value insurance (and reinsurance of the same), surety bonds, and similar or related products.

8.12 TRANSACTIONS WITH AFFILIATES. The Company will not, and will not permit any of its Subsidiaries to, directly or indirectly:

(a) make any Investment in any Affiliate of the Company;

(b) transfer, sell, lease, assign or otherwise dispose of any Property to any such Affiliate;

(c) purchase or acquire Property from any such Affiliate; or

(d) enter into any other transaction directly or indirectly with or for the benefit of any such Affiliate (including, without limitation, Guarantees and assumptions of obligations of any such Affiliate);

PROVIDED that the Company and its Subsidiaries may enter into transactions (other than Investments by the Company or any of its Subsidiaries in any Affiliate of the Company) providing for the leasing of Property, the rendering or receipt of services or the purchase or sale of Property in the ordinary course of business if the monetary or business consideration arising therefrom would be substantially as advantageous to the Company and its Subsidiaries as the monetary or business consideration which would obtain in a comparable transaction with a Person not an Affiliate of the Company.

8.13 USE OF PROCEEDS. The Company will use the proceeds of the Loans hereunder solely for general corporate purposes, including repayment of all of its outstanding obligations under the Existing Credit Agreement and acquisitions, in compliance with all applicable legal and regulatory requirements; PROVIDED that (a) the proceeds of any Swingline Loan may not be used to repay or prepay any other Swingline Loan and (b) none of the Administrative Agent, any Bank or the Swingline Bank shall have any responsibility as to the use of any of such proceeds.

8.14 CERTAIN OBLIGATIONS RESPECTING SUBSIDIARIES.

(a) Subject to Section 8.05 hereof, the Company will, and will cause each of ERC and Asset Guaranty to, take such action from time to time as shall be necessary to ensure that each of ERC and Asset Guaranty is a Wholly Owned Subsidiary.

(b) The Company will not permit any of ERC or Asset Guaranty to issue any shares of stock of any class whatsoever to any Person (other than to the Company).

8.15 MODIFICATIONS OF CERTAIN DOCUMENTS. The Company will not consent to any modification, supplement or waiver of any of the provisions of the Indenture that would materially increase the obligations, or materially reduce the rights, of the Company or any of its Subsidiaries thereunder.

8.16 CLAIMS-PAYING RATING. The Company will not allow the claims-paying rating, as rated by S&P, of ERC to be less than AA+ (or to be withdrawn) or of any other Insurance Subsidiary to be less than AA-(or to be withdrawn) at any time.

8.17 DIVIDENDS TO OR INVESTMENTS IN THE COMPANY BY SUBSIDIARIES. The Company will not, nor will it permit any of its Subsidiaries to, issue any securities or enter into any agreements (other than with or as required by applicable regulatory authorities) that will either (i) limit the ability of any of the Subsidiaries of the Company to declare or pay or set apart any funds for the payment of any dividend or make any distribution to or Investment in the Company or (ii) prevent such Subsidiary from paying to the Company the entire amount available to be paid as dividends or distributions by such Subsidiary; PROVIDED, that nothing herein shall be deemed to require any Subsidiary of the Company to pay any dividend to, or make any Investment in, the Company in excess of the amount necessary to enable the Company to make all payments required hereunder and under the Notes.

Section 9. EVENTS OF DEFAULT. If one or more of the following events (herein called "EVENTS OF DEFAULT") shall occur and be continuing:

(a) The Company shall: (i) default in the payment of any principal of any Loan when due (whether at stated maturity or upon mandatory or optional prepayment); or (ii) default in the payment of any interest on any Loan or any fee hereunder when due and such default shall have continued unremedied for five or more days; or

(b) The Company or any of its Subsidiaries shall default in the payment when due of any principal of or interest on any of its Indebtedness aggregating $3,000,000 (or its equivalent in any other currency) or more (other than the Indebtedness referred to in paragraph
(a) above); or any event specified in any note, agreement, indenture or other document evidencing or relating to any

such Indebtedness shall occur if the effect of such event is to cause, or (with the giving of any notice or the lapse of time or both) to permit the holder or holders of such Indebtedness (or a trustee or agent on behalf of such holder or holders) to cause, such Indebtedness to become due, or to be prepaid in full (whether by redemption, purchase, offer to purchase or otherwise), prior to its stated maturity or to have the interest rate thereon reset to a level so that securities evidencing such Indebtedness trade at a level specified in relation to the par value thereof; or

(c) Any representation, warranty or certification made or deemed made herein or in any other Basic Document (or in any modification or supplement hereto or thereto) by the Company, or any certificate furnished to any Bank, the Swingline Bank or the Administrative Agent pursuant to the provisions hereof or thereof, shall prove to have been false or misleading as of the time made, deemed made or furnished in any material respect; or

(d) The Company shall default in the performance of any of its obligations under any of Sections 8.01(h), 8.05, 8.06, 8.07, 8.09, 8.10, 8.11 and 8.13 to 8.18 (inclusive) hereof; or the Company shall default in the performance of any of its other obligations in this Agreement or any other Basic Document and such default shall continue unremedied for a period of 15 days after notice thereof to the Company by the Administrative Agent, any Bank or the Swingline Bank (in either case, through the Administrative Agent); or

(e) The Company or any of its Material Subsidiaries shall admit in writing its inability to, or be generally unable to, pay its debts as such debts become due; or

(f) The Company or any of its Material Subsidiaries shall (i) apply for or consent to the appointment of, or the taking of possession by, a receiver, custodian, trustee, examiner, rehabilitator, conservator or liquidator of itself or of all or a substantial part of its Property, (ii) make a general assignment for the benefit of its creditors, (iii) commence a voluntary case under the Bankruptcy Code,
(iv) file a petition seeking to take advantage of any other law relating to bankruptcy, insolvency, reorganization, liquidation, dissolution, arrangement or winding-up, or composition or readjustment of debts, (v) fail to controvert in a timely and appropriate manner, or acquiesce in writing to, any petition filed against it in an involuntary case under the Bankruptcy Code or (vi) take any corporate action for the purpose of effecting any of the foregoing; or

(g) A proceeding or case shall be commenced, without the application or consent of the Company or any of its Material Subsidiaries, in any court of

competent jurisdiction, seeking (i) its reorganization, rehabilitation, conservation, liquidation, dissolution, arrangement or winding-up, or the composition or readjustment of its debts, (ii) the appointment of a receiver, custodian, trustee, examiner, rehabilitator, conservator, liquidator or the like of the Company or such Material Subsidiary or of all or any substantial part of its Property, or (iii) similar relief in respect of the Company or such Subsidiary under any law relating to bankruptcy, insolvency, reorganization, rehabilitation, conservation, liquidation, winding-up, or composition or adjustment of debts, and such proceeding or case shall continue undismissed, or an order, judgment or decree approving or ordering any of the foregoing (other than an order for relief in an involuntary case under the Bankruptcy Code) shall be entered and continue unstayed and in effect, for a period of 60 or more days; or an order for relief against the Company or such Material Subsidiary shall be entered in an involuntary case under the Bankruptcy Code; or

(h) A final judgment or judgments for the payment of money in excess of $3,000,000 (or its equivalent in any other currency) in the aggregate (exclusive of judgment amounts fully covered by insurance where the insurer has admitted liability in respect of such judgment) or in excess of $5,000,000 (or its equivalent in any other currency) in the aggregate (regardless of insurance coverage) shall be rendered by one or more courts, administrative tribunals or other bodies having jurisdiction against the Company or any of its Subsidiaries and the same shall not be discharged (or provision shall not be made for such discharge), or a stay of execution thereof shall not be procured, within 30 days from the date of entry thereof and the Company or the relevant Subsidiary shall not, within said period of 30 days, or such longer period during which execution of the same shall have been stayed, appeal therefrom and cause the execution thereof to be stayed during such appeal; or

(i) An event or condition specified in Section 8.01(g) hereof shall occur or exist with respect to any Plan or Multiemployer Plan and, as a result of such event or condition, together with all other such events or conditions, the Company or any ERISA Affiliate shall incur or in the opinion of the Majority Banks shall be reasonably likely to incur a liability to a Plan, a Multiemployer Plan or PBGC (or any combination of the foregoing) which, in the determination of the Majority Banks, could have a Material Adverse Effect; or

(j) A Change in Control shall occur;

THEREUPON: (1) in the case of an Event of Default other than one referred to in paragraph (f) or (g) of this Section 9 with respect to the Company, the Administrative Agent may and, upon request of the Majority Banks (or with respect to Swingline Loans, upon the request of the Swingline Bank), shall, by notice to the Company, terminate the Commitments (and/or the Swingline Commitment) and/or declare the principal amount then outstanding of, and the accrued interest on, the Loans and all other amounts payable

by the Company hereunder and under the Notes (including, without limitation, any amounts payable under Section 5.05 hereof) to be forthwith due and payable, whereupon such amounts shall be immediately due and payable without presentment, demand, protest or other formalities of any kind, all of which are hereby expressly waived by the Company; and (2) in the case of the occurrence of an Event of Default referred to in paragraph (f) or (g) of this Section 9 with respect to the Company, the Commitments shall automatically be terminated and the principal amount then outstanding of, and the accrued interest on, the Loans and all other amounts payable by the Company hereunder and under the Notes
(including, without limitation, any amounts payable under Section 5.05 hereof)
shall automatically become immediately due and payable without presentment, demand, protest or other formalities of any kind, all of which are hereby expressly waived by the Company.

Section 10. THE ADMINISTRATIVE AGENT.

10.01 APPOINTMENT, POWERS AND IMMUNITIES. Each Bank and the Swingline Bank hereby irrevocably (subject to Section 10.08 hereof) appoints and authorizes the Administrative Agent to act as its agent hereunder and under the other Basic Documents with such powers as are specifically delegated to the Administrative Agent by the terms of this Agreement and of the other Basic Documents, together with such other powers as are reasonably incidental thereto. The Administrative Agent (which term as used in this sentence and in Section 10.05 and the first sentence of Section 10.06 hereof shall include reference to its affiliates and its own and its affiliates' officers, directors, employees and agents): (a) shall have no duties or responsibilities except those expressly set forth in this Agreement and in the other Basic Documents, and shall not by reason of this Agreement or any other Basic Document be a trustee for any Bank or the Swingline Bank; (b) shall not be responsible to the Banks or the Swingline Bank for any recitals, statements, representations or warranties made by any other Person contained in this Agreement or in any other Basic Document, or in any certificate or other document referred to or provided for in, or received by any of them under, this Agreement or any other Basic Document, or for the value, validity, effectiveness (other than the Agent's own due execution), genuineness, enforceability or sufficiency of this Agreement or any Note or any other document referred to or provided for herein or herein or for any failure by the Company or any other Person to perform any of its obligations hereunder or thereunder; (c) shall not be required to initiate or conduct any litigation or collection proceedings hereunder or under any other Basic Document; (d) shall not be responsible for any action taken or omitted to be taken by it hereunder or under any other Basic Document or under any other document or instrument referred to or provided for herein or therein or in connection herewith or therewith, except for its own gross negligence or willful misconduct; and (e) shall not be responsible to the Company, the Banks or the

Swingline Bank for (i) determining whether or not any of the transactions contemplated hereby qualifies as a highly leveraged transaction ("HLT") as defined by any bank regulatory authority, (ii) notifying the Banks or the Swingline Bank regarding the HLT status of any transaction contemplated hereby or of any change in that status or (iii) the correctness of any determination as to HLT status. The Administrative Agent may employ agents and attorneys-in-fact and shall not be responsible for the negligence or misconduct of any such agents or attorneys-in-fact selected by it in good faith. The Administrative Agent may deem and treat the payee of any Note as the holder thereof for all purposes hereof unless and until a notice of the assignment or transfer thereof shall have been filed with the Administrative Agent, together with the consent of the Company to such assignment or transfer (to the extent provided in Section 11.06(b) hereof).

10.02 RELIANCE BY ADMINISTRATIVE AGENT. The Administrative Agent shall be entitled to rely upon any certification, notice or other communication (including, without limitation, any thereof by telephone, telecopy, telex, telegram or cable) believed by it to be genuine and correct and to have been signed or sent by or on behalf of the proper Person or Persons, and upon advice and statements of legal counsel, independent accountants and other experts selected by the Administrative Agent. As to any matters not expressly provided for by this Agreement or any other Basic Document, the Administrative Agent shall in all cases be fully protected in acting, or in refraining from acting, hereunder or thereunder in accordance with instructions given by the Majority Banks or, if provided herein, in accordance with the instructions given by the Majority Banks or all of the Banks as is required in such circumstance, and such instructions of such Banks and any action taken or failure to act pursuant thereto shall be binding on all of the Banks.

10.03 DEFAULTS. The Administrative Agent shall not be deemed to have knowledge or notice of the occurrence of a Default (other than the non-payment of principal of or interest on Loans) unless the Administrative Agent has received notice from a Bank or the Company specifying such Default and stating that such notice is a "Notice of Default". In the event that the Administrative Agent receives such a notice of the occurrence of a Default, the Administrative Agent shall give prompt notice thereof to the Banks and the Swingline Bank (and shall give each Bank, and with respect to Swingline Loans, the Swingline Bank, prompt notice of each such non-payment). The Administrative Agent shall (subject to Sections 10.01, 10.07 and 11.04 hereof) take such action with respect to such Default as shall be directed by the Majority Banks or in the case of Swingline Loans, the Swingline Bank, PROVIDED that, unless and until the Administrative Agent shall have received such directions, the Administrative Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Default as it shall deem advisable in the best interest of the Banks except to the extent that this Agreement expressly requires that such action be taken, or not be taken, only with the consent or upon the authorization of the Majority Banks or all of the Banks.

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

10.05 INDEMNIFICATION. The Banks agree to indemnify the Administrative Agent (to the extent not reimbursed under Section 11.03 hereof, but without limiting the obligations of the Company under said Section 11.03) ratably in accordance with the aggregate principal amount of the Loans held by the Banks (or, if no Loans are at the time outstanding, ratably in accordance with their respective Commitments), for any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind and nature whatsoever that may be imposed on, incurred by or asserted against the Administrative Agent (including by any Bank) arising out of or by reason of any investigation in or in any way relating to or arising out of this Agreement or any other Basic Document or any other documents contemplated by or referred to herein or therein or the transactions contemplated hereby or thereby (including, without limitation, the costs and expenses that the Company is obligated to pay under Section 11.03 hereof, but excluding, unless a Default has occurred and is continuing, normal administrative costs and expenses incident to the performance of its agency duties hereunder) or the enforcement of any of the terms hereof or thereof or of any such other documents, PROVIDED that no Bank shall be liable for any of the foregoing to the extent they arise from the gross negligence or willful misconduct of the party to be indemnified.

10.06 NON-RELIANCE ON ADMINISTRATIVE AGENT AND OTHER BANKS. Each Bank agrees that it has, independently and without reliance on the Administrative Agent or any other Bank, and based on such documents and information as it has deemed appropriate, made its own credit analysis of the Company and its Subsidiaries and decision to enter into this Agreement and that it will, independently and without reliance upon the Administrative Agent or any other Bank, and based on such documents and information as it shall deem appropriate at the time, continue to make its own analysis and decisions in taking or not taking action under this Agreement. The Administrative Agent shall not be required to keep itself informed as to the performance or observance by the Company of this Agreement or any of the other Basic Documents or any other document referred to or provided for herein or therein or to inspect the Properties or

books of the Company or any of its Subsidiaries. Except for notices, reports and other documents and information expressly required to be furnished to the Banks by the Administrative Agent hereunder, the Administrative Agent shall not have any duty or responsibility to provide any Bank with any credit or other information concerning the affairs, financial condition or business of the Company or any of its Subsidiaries (or any of their affiliates) that may come into the possession of the Administrative Agent or any of its affiliates.

10.07 FAILURE TO ACT. Except for action expressly required of the Administrative Agent hereunder and under the other Basic Documents, the Administrative Agent shall in all cases be fully justified in failing or refusing to act hereunder and thereunder unless it shall receive further assurances to its satisfaction from the Banks of their indemnification obligations under Section 10.05 hereof against any and all liability and expense that may be incurred by it by reason of taking or continuing to take any such action.

10.08 RESIGNATION OR REMOVAL OF ADMINISTRATIVE AGENT. Subject to the appointment and acceptance of a successor Administrative Agent as provided below, the Administrative Agent may resign at any time by giving notice thereof to the Banks and the Company, and the Administrative Agent may be removed at any time with or without cause by the Majority Banks. Upon any such resignation or removal, the Majority Banks shall have the right to appoint a successor Administrative Agent. If no successor Administrative Agent shall have been so appointed by the Majority Banks and shall have accepted such appointment within 30 days after the retiring Administrative Agent's giving of notice of resignation or the Majority Banks' removal of the retiring Administrative Agent, then the retiring Administrative Agent may, on behalf of the Banks, after consultation with the Company, appoint a successor Administrative Agent that shall be a bank which has an office in New York, New York and which has a combined capital and surplus of at least $500,000,000. Upon the acceptance of any appointment as Administrative Agent hereunder by a successor Administrative Agent, such successor Administrative Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring Administrative Agent, and the retiring Administrative Agent shall be discharged from its duties and obligations hereunder. After any retiring Administrative Agent's resignation or removal hereunder as Administrative Agent, the provisions of this Section 10 shall continue in effect for its benefit in respect of any actions taken or omitted to be taken by it while it was acting as the Administrative Agent.

10.09 CONSENTS UNDER BASIC DOCUMENTS. Except as otherwise provided in Section 11.04 hereof with respect to this Agreement, the Administrative Agent may, with the prior consent of the Majority Banks (but not otherwise), consent to any modification, supplement or waiver under any of the Basic Documents.

Section 11. MISCELLANEOUS.

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

11.02 NOTICES. All notices, requests and other communications provided for herein (including, without limitation, any modifications of, or waivers, requests or consents under, this Agreement) shall be given or made in writing (including, without limitation, by telecopy) delivered to the intended recipient at the "Address for Notices" specified below its name on the signature pages hereof); or, as to any party, at such other address as shall be designated by such party in a notice to each other party. Except as otherwise provided in this Agreement, all such communications shall be deemed to have been duly given when transmitted by telecopier or personally delivered or, in the case of a mailed notice, upon receipt, in each case given or addressed as aforesaid.

11.03 EXPENSES, ETC. The Company agrees to pay or reimburse each of the Banks and the Swingline Bank, the Administrative Agent and the Arranger for paying: (a) all reasonable out-of-pocket costs and expenses of the Administrative Agent (including, without limitation, the reasonable fees and expenses of Day, Berry & Howard, LLP, special counsel to Fleet), in connection with (i) the negotiation, preparation, execution and delivery of this Agreement and the other Basic Documents and the making of the Loans hereunder and (ii) any modification, supplement or waiver of any of the terms of this Agreement or any of the other Basic Documents; (b) all costs and expenses of the Banks, the Swingline Bank and the Administrative Agent (including, without limitation, reasonable counsels' fees) in connection with (i) any Default and any enforcement or collection proceedings resulting therefrom or in connection with the negotiation of any restructuring or "work-out" (whether or not consummated) of the obligations of the Company hereunder or under any of the other Basic Documents and (ii) the enforcement of this Section 11.03; and (c) all transfer, stamp, documentary or other similar taxes, assessments or charges levied by any governmental or revenue authority in respect of this Agreement or any of the other Basic Documents or any other document referred to herein or therein.

The Company hereby agrees to indemnify the Administrative Agent, the Arranger, each Bank and the Swingline Bank and their respective directors, officers, employees, attorneys and agents from, and hold each of them harmless against, any and all losses, liabilities, claims, damages or expenses incurred by any of them (other than liability of the Administrative Agent to any Bank) arising out of or by reason of any investigation or litigation or other proceedings (including any threatened investigation or litigation or other proceedings and whether or not the Administrative Agent or such Bank

or the Swingline Bank or other Person is a party thereto) relating to the extensions of credit hereunder or any actual or proposed use by the Company or any of its Subsidiaries of the proceeds of any of the extensions of credit hereunder, including, without limitation, the reasonable fees and disbursements of counsel incurred in connection with any such investigation or litigation or other proceedings (but excluding any such losses, liabilities, claims, damages or expenses incurred by reason of the gross negligence or willful misconduct of the Person to be indemnified).

11.04 AMENDMENTS, ETC. Except as otherwise expressly provided in this Agreement, any provision of this Agreement may be modified or supplemented only by an instrument in writing signed by the Company, the Administrative Agent and the Majority Banks, or by the Company and the Administrative Agent acting with the consent of the Majority Banks, and, if the rights or obligations hereunder of the Swingline Bank are affected thereby, the Swingline Bank, and any provision of this Agreement may be waived by the Majority Banks or by the Administrative Agent acting with the consent of the Majority Banks and, if the rights or obligations hereunder of the Swingline Bank are affected thereby, the Swingline Bank; PROVIDED that: (a) no modification, supplement or waiver shall, unless by an instrument signed by all of the Banks or by the Administrative Agent acting with the consent of all of the Banks (i) increase or extend the term of any of the Commitments, or extend the time or waive any requirement for the reduction or termination of any of the Commitments, (ii) extend any date fixed for the payment of principal of or interest on any Loan or any fee hereunder (other than any fee payable solely for account of the Administrative Agent), (iii) reduce the amount of any such payment of principal, (iv) reduce the rate at which interest is payable thereon or any fee is payable hereunder (other than any fee payable solely for account of the Administrative Agent), (v) alter the several nature of the obligations of each Bank and the Swingline Bank hereunder, (vi) alter the terms of any of Sections 2.07, 4.02 or 4.07 hereof or this Section 11.04, (vii) modify the definition of the term "Majority Banks" or modify in any other manner the number or percentage of the Banks required to make any determinations or waive any rights hereunder or to modify any provision hereof, or (viii) waive any of the conditions precedent set forth in Section 6 hereof; and (b) if at the time any Swingline Loans shall be outstanding, no modification, supplement or waiver with respect to any provision of Sections 8 or 9 hereof shall be effective without the concurrence of the Swingline Bank; and (c) any modification of any of the rights or obligations of the Administrative Agent hereunder shall require the consent of the Administrative Agent.

11.05 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns.

11.06 ASSIGNMENTS AND PARTICIPATIONS.

(a) The Company may not assign any of its rights or obligations hereunder or under the Notes without the prior consent of all of the Banks and the Administrative Agent and the Swingline Bank.

(b) Each Bank may, at any time or from time to time, assign to one or more other Persons all or any portion of its Loans, its Notes, and its Commitment (but only with the consent of the Company, the Administrative Agent and the Swingline Bank, which consents shall not be unreasonably withheld); PROVIDED that (i) no such consent by the Company, the Administrative Agent or the Swingline Bank shall be required in the case of any assignment to another Bank; (ii) any such partial assignment shall be in an amount at least equal to $5,000,000 or any integral multiple of $1,000,000 in excess thereof; (iii) each such assignment by a Bank of its Revolving Credit Loans, Revolving Credit Note, Term Loan, Term Loan Note or Commitment shall be made in such manner so that the same portion of its Revolving Credit Loans, Revolving Credit Note, Term Loan, Term Loan Note and Commitment is assigned to the respective assignee; (iv) each such assignment shall be effected by an Assignment and Acceptance in substantially the form of Exhibit D hereto. Upon execution and delivery by the assignee to the Company and the Administrative Agent of an Assignment and Acceptance pursuant to which such assignee agrees to become a "Bank" hereunder (if not already a Bank) having the Commitment and Loans specified in such Assignment and Acceptance, and upon consent thereto by the Company and the Administrative Agent, to the extent required above, the assignee shall have, to the extent of such assignment (unless otherwise provided in such assignment with the consent of the Company and the Administrative Agent), the obligations, rights and benefits of a Bank hereunder holding the Commitment and Loans (or portions thereof) assigned to it (in addition to the Commitment and Loans, if any, theretofore held by such assignee) and the assigning Bank shall, to the extent of such assignment, be released from the Commitment (or portion thereof) so assigned. Notwithstanding the foregoing, no assignee or other transferee of any of the rights, obligations or benefits of a Bank in respect of the Loans shall be entitled to receive any greater payment under Sections 5.01, 5.05 and 5.06 than such Bank would have been entitled to receive with respect to the Loans unless such transfer is made with the Company's prior written consent specifically detailing the nature of the greater payments to be due, or at a time when the circumstances giving rise to such greater payment did not exist or had not been announced. Upon each such assignment the assigning Bank shall pay the Administrative Agent an assignment fee of $3,500.

(c) A Bank may, at any time or from time to time, sell or agree to sell to one or more other Persons a participation in all or any part of any Loans held by it, or in its Commitment, but no purchaser of a participation (a "PARTICIPANT") shall, except as otherwise provided in Section 4.07(c) hereof, have any rights or benefits under this Agreement or any Note or any other Basic Document (the Participant's rights against such Bank in respect of such participation to be those set forth in the agreements executed by such Bank in favor of the Participant). All amounts payable by the Company to any Bank

under Section 5 hereof in respect of the Loans held by it, and its Commitment, shall be determined as if such Bank had not sold or agreed to sell any participations in such Loans and Commitment, and as if such Bank were funding each of such Loan and Commitment in the same way that it is funding the portion of such Loan and Commitment in which no participations have been sold. In no event shall a Bank that sells a participation agree with the Participant to take or refrain from taking any action hereunder or under any other Basic Document except that such Bank may agree with the Participant that it will not, without the consent of the Participant, agree to (i) increase or extend the term, or extend the time or waive any requirement for the reduction or termination, of such Bank's related Commitment, (ii) extend any date fixed for the payment of principal of or interest on the related Loan or Loans or any portion of any fee hereunder payable to the Participant, (iii) reduce the amount of any such payment of principal, (iv) reduce the rate at which interest is payable thereon, or any fee hereunder payable to the Participant, to a level below the rate at which the Participant is entitled to receive such interest or fee, (v) increase the rights or reduce the obligations of the Company to prepay the related Loans or (vi) consent to any modification, supplement or waiver hereof or of any of the other Basic Documents to the extent that the same, under Section 10.09 or 11.04 hereof, requires the consent of each Bank.

(d) In addition to the assignments and participations permitted by the foregoing provisions of this Section 11.06, any Bank may assign and pledge all or any portion of its Loans and its Notes to any Federal Reserve Bank as collateral security pursuant to Regulation A and any Operating Circular issued by such Federal Reserve Bank. No such assignment shall release the assigning Bank from its obligations hereunder.

(e) A Bank or the Swingline Bank may furnish any information concerning the Company or any of its Subsidiaries in the possession of such Bank from time to time to assignees and participants (including prospective assignees and participants), subject, however, to the provisions of Section 11.12(b) hereof.

(f) Anything in this Section 11.06 to the contrary notwithstanding, neither the Company nor any of its Subsidiaries or Affiliates may acquire (whether by assignment, participation or otherwise), and neither any Bank nor the Swingline Bank shall assign or participate to the Company or any of its Subsidiaries or Affiliates, any interest in any Commitment or Loan without the prior consent of each Bank.

(g) The Swingline Bank may not (except as provided in Section 2.02(c) hereof) assign or sell participations in all or any part of its Swingline Loans, its Swingline Note or its Swingline Commitment; PROVIDED that the Swingline Bank may

assign to another Bank all of its obligations, rights and benefits in respect of its Swingline Loans, its Swingline Note and its Swingline Commitment (but only with the consent of the Company which consent will not be unreasonably withheld). Upon the effectiveness of any such assignment, the assignee shall have the obligations, rights and benefits of the Swingline Bank hereunder holding the Swingline Commitment and Swingline Loans assigned to it, and the assigning Swingline Bank shall be released from its Swingline Commitment so assigned.

11.07 SURVIVAL. The obligations of the Company under Sections 5.01, 5.05, 5.06 and 11.03 hereof and the obligations of the Banks under Section 10.05 hereof shall survive the repayment of the Loans and the termination of the Commitments. In addition, each representation and warranty made, or deemed to be made by a notice of any Loan, herein or pursuant hereto shall survive the making of such representation and warranty, and no Bank shall be deemed to have waived, by reason of making any Loan, any Default which may arise by reason of such representation or warranty proving to have been false or misleading, notwithstanding that such Bank or the Swingline Bank or the Administrative Agent may have had notice or knowledge or reason to believe that such representation or warranty was false or misleading at the time such Loan was made.

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

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

11.10 GOVERNING LAW; SUBMISSION TO JURISDICTION. This Agreement and the Notes shall be governed by, and construed in accordance with, the law of the State of New York. The Company hereby submits to the nonexclusive jurisdiction of the United States District Court for the District of Connecticut and of any Connecticut State court sitting in Connecticut for the purposes of all legal proceedings arising out of or relating to this Agreement or the transactions contemplated hereby. The Company irrevocably waives, to the fullest extent permitted by applicable law, any objection which it may now or hereafter have to the laying of the venue of any such proceeding brought in such a court and any claim that any such proceeding brought in such a court has been brought in an inconvenient forum.

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

11.12 TREATMENT OF CERTAIN INFORMATION; CONFIDENTIALITY.

(a) The Company acknowledges that from time to time financial advisory, investment banking and other services may be offered or provided to the Company or one or more of its Subsidiaries (in connection with this Agreement or otherwise) by any Bank or by one or more subsidiaries or affiliates of such Bank and the Company hereby authorizes each Bank and the Swingline Bank to share any information delivered to such Bank by the Company and its Subsidiaries pursuant to this Agreement, or in connection with the decision of such Bank or the Swingline Bank to enter into this Agreement, to any such subsidiary or affiliate, it being understood that any such subsidiary or affiliate receiving such information shall be bound by the provisions of paragraph (b) below as if it were a Bank hereunder.

(b) Each Bank and the Swingline Bank and the Administrative Agent agrees (on behalf of itself and each of its affiliates, directors, officers, employees and representatives) to use reasonable precautions to keep confidential, in accordance with their customary procedures for handling confidential information of this nature and in accordance with safe and sound banking practices, any non-public information supplied to it by the Company pursuant to this Agreement which is identified by the Company as being confidential at the time the same is delivered to the Banks or the Swingline Bank or the Administrative Agent, PROVIDED that nothing herein shall limit the disclosure of any such information (i) to the extent required by statute, rule, regulation or judicial process (with concurrent notice thereof to be given to the Company), (ii) to counsel, auditors or accountants for any of the Banks or the Swingline Bank or the Administrative Agent (so long as they are advised of the non-public nature of the information), (iii) to bank examiners, (iv) to the Administrative Agent or any other Bank or the Swingline Bank, (v) in connection with any litigation to which any one or more of the Banks or the Swingline Bank or the Administrative Agent is a party, (vi) to a subsidiary or affiliate of such Bank as provided in paragraph (a) above or (vii) to any assignee or participant (or prospective assignee or participant) so long as such assignee or participant (or prospective assignee or participant) first executes and delivers to the respective Bank and the Company a Confidentiality Agreement substantially in the form of Exhibit C hereto; PROVIDED, FURTHER, that in no event shall any Bank or the Administrative Agent be obligated or required to return any materials furnished by the Company. The obligations of each Bank under this
Section 11.12 shall supersede and replace the obligations of such Bank under the confidentiality letter in respect of this financing signed and delivered by such Bank to the Company prior to the Effective Date.

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

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

Address for Notices:

Enhance Financial Services Group Inc.
335 Madison Avenue
25th Floor
New York, NY 10017-4605

Attention:        Arthur Dubroff
                  Executive Vice President
                  and Chief Financial Officer

Telecopier No.: (212) 983-3129

Telephone No.: (212) 983-3100

BANKS

COMMITMENT FLEET NATIONAL BANK

$30,000,000

Lending Office for all Loans:

Fleet National Bank
777 Main Street, CT MO 0250
Hartford, Connecticut 06115

Address for Notices:

Fleet National Bank
777 Main Street, CT MO 0250
Hartford, Connecticut 06115

Attention: Financial Institutions Group

Telecopier No.: (860) 986-1264

Telephone No.: (860) 986-4535

COMMITMENT BANK OF NEW YORK

$25,000,000

Lending Office for all Loans:

The Bank of New York
Insurance Division
One Wall Street, 17th Floor
New York, New York 10286

Address for Notices:

The Bank of New York
Insurance Division
One Wall Street, 17th Floor
New York, New York 10286

Attention: Louis DiFranco

Telecopier No.: (212) 809-9520

Telephone No.: (212) 635-6067

COMMITMENT THE FIRST NATIONAL BANK OF CHICAGO

$25,000,000

Lending Office for all Loans:

The First National Bank of Chicago
1 First National Plaza
Chicago, IL 60670

Address for Notice:

The First National Bank of Chicago
153 West 51st Street
New York, NY 10019

Attention: Timothy J. Stambaugh

Telecopier No.: 212-373-1439

Telephone No.: 212-373-1124

COMMITMENT DEUTSCHE BANK AG, NEW YORK AND/OR

CAYMAN ISLAND BRANCHES

$20,000,000

and

Lending Office for all Loans (other than Eurodollar Loans):

Deutsche Bank AG New York Branch 31 West 52nd Street New York, NY 10019

Lending Office for Eurodollar Loans:

Deutsche Bank AG
Cayman Islands Branch
31 West 52nd Street
New York, NY 10019

Address for Notices:

Deutsche Bank AG
31 West 52nd Street
New York, NY 10019

Attention: John McGill

Telecopier No.: (212) 469-8366
Telephone No.: (212) 469-8666
Telex/Answerback: 429166/DEUT BK NY

FLEET NATIONAL BANK,
as Swingline Bank

FLEET NATIONAL BANK,
as Administrative Agent

Address for Notices to the Administrative Agent:

Fleet National Bank One Federal Street Boston, MA 02110

Attention: Agency Services Group

Telecopier No.: (617) 346-5833

Telephone No.: (617) 346-0339

SCHEDULE I

MATERIAL AGREEMENTS AND LIENS

Part A - MATERIAL AGREEMENTS

1. Indenture dated as of March 5, 1993 between Enhance Financial Services Group Inc. and The Chase Manhattan Bank, as Trustee, and $75 million principal amount of 6 3/4% Debentures due 2003 issued pursuant thereto.

2. Guaranty of Enhance Financial Services Group Inc. to Bank America National Trust and Savings Association ("BofA"), dated as of January 30, 1998, guaranteeing up to $25 million of the obligations of Credit-Based Asset Servicing and Securitization LLC, an affiliate of Enhance Financial Services Group Inc. ("C-BASS"), to BofA pursuant to a Credit Agreement, dated as of January 30, 1998 (the "C-BASS Credit Agreement") between BofA and C-BASS. It is anticipated that the C-BASS Credit Agreement (and the obligations of Enhance Financial Services Group Inc. under the above referenced guaranty) will terminate on or about June 30, 1999.

3. Guaranty of Enhance Financial Services Group Inc. to BofA, dated as of May 27, 1999, guaranteeing up to $25 million of the obligations of Sherman Financial Group LLC, an affiliate of Enhance Financial Services Group Inc. ("Sherman Financial"), to BofA pursuant to a Credit Agreement, dated as of May 27, 1999 between BofA and Sherman Financial.

Part B - LIENS

None

SCHEDULE II

SUBSIDIARIES
[See Section 7.15]

(A) ENHANCE INVESTMENT CORPORATION

(i) Delaware
(ii) Enhance Financial Services Group Inc.
(iii) 100% of the outstanding common stock

(B) ENHANCE REINSURANCE COMPANY

(i) New York
(ii) Enhance Investment Corporation
(iii) 100% of the outstanding common stock

(C) ASSET GUARANTY INSURANCE COMPANY

(i) New York
(ii) Enhance Investment Corporation
(iii) 100% of the outstanding common stock

(D) ENHANCE REINSURANCE BERMUDA, LTD.

(i) Bermuda
(ii) Enhance Investment Corporation
(iii) 100% of the outstanding common stock

(E) SINGER ASSET FINANCE COMPANY, L.L.C.

(i) Delaware
(ii) Enhance Financial Services Group Inc.
(iii) 100% of the outstanding membership interests

(F) VAN-AMERICAN COMPANIES, INC.

(i) Delaware
(ii) Asset Guaranty Insurance Company and certain current and former employees of Van-American Companies, Inc.
(iii) 95.8% of the common stock, 100% of the non-cumulative senior preferred stock; 100% of the non-cumulative convertible preferred stock Note: The remaining 4.2% of the common stock is owned by employees of Van-American Companies, Inc. In addition, certain employees of Van-American Companies, Inc. own options to purchase common stock of Van-American Companies, Inc. which if fully exercised would not materially dilute the Company's interest in Van-American Companies, Inc.

(G) VAN-AMERICAN INSURANCE COMPANY, INC.

(i) Kentucky
(ii) Van-American Companies, Inc.
(iii) 100% of the common stock

(H) VAN-AMERICAN INSURANCE AGENCY, INC.

(i) Kentucky
(ii) Van-American Companies, Inc.
(iii) 100% of the common stock

(I) VANTAGE COAL SALES, INC.

(i) Kentucky
(ii) Van-American Insurance Company, Inc.
(iii) 100% of the common stock

(J) VAN-AMERICAN BUSINESS SERVICES, INC.

(i) Kentucky
(ii) Van-American Insurance Company, Inc.
(iii) 100% of the common stock

(K) ENHANCE CONSUMER SERVICES LLC

(i) Delaware
(ii) Enhance Financial Services Group Inc.
(iii) 100% of the outstanding membership interests

II-2

(L) ENHANCE LIFE BENEFITS LLC

(i) Delaware
(ii) Enhance Consumer Services LLC
(iii) 100% of the outstanding membership interests

(M) ENHANCE CONSUMER SERVICES (CANADA) COMPANY

(i) Nova Scotia, Canada
(ii) Enhance Consumer Services LLC
(iii) 100% of the outstanding membership interests

(N) ABC ACCELERATED BENEFITS CORPORATION

(i) Quebec, Canada
(ii) Enhance Consumer Services (Canada) Company
(iii) 100% of the outstanding common stock

(O) ALEGIS GROUP INC.

(i) Texas
(ii) Enhance Financial Services Group Inc.
(iii) 100% of the outstanding common stock

(P) ALEGIS CORPORATION

(i) Texas
(ii) Alegis Group Inc.
(iii) 100% of the outstanding common stock

(Q) ALEGIS CAPITAL CORP.

(i) Texas
(ii) Alegis Group Inc.
(iii) 100% of the outstanding common stock

(R) TEXAS MUNICIPAL SERVICES, INC.

(i) Texas
(ii) Alegis Group Inc.
(iii) 100% of the outstanding common stock

II-3

(S) AGS FINANCIAL LLC

(i) Delaware
(ii) Enhance Financial Services Group Inc.
(iii) 80% of the outstanding membership interests Note: two members of management of AGS Financial LLC each own 10% of the outstanding membership interests of AGS Financial LLC

(T) AGS BRASIL, S.A.

(i) Brazil
(ii) AGS Financial LLC
(iii) 99% of the outstanding common stock

(U) AGS SECURITIES INC.

(i) New York
(ii) AGS Financial LLC
(iii) 100% of the outstanding common stock

(V) FINPAC SECURITIZADORA S.A.

(i) Brazil
(ii) AGS Brazil, S.A.
(iii) 95% of the outstanding common stock

(W) GUARANTY RISK SERVICES, INC.

(i) New York
(ii) Enhance Financial Services Group Inc.
(iii) 100% of the outstanding common stock

(X) CREDIT-BASED ASSET SERVICING AND SECURITIZATION, INC.

(i) New York
(ii) Enhance Financial Services Group Inc.
(iii) 100% of the outstanding stock

II-4

(Y) A.G. INTERMEDIARIES, INC.

(i) New York
(ii) Enhance Financial Services Group Inc.
(iii) 100% of the outstanding common stock

(Z) ORLEANS ACQUISITION CORP.

(i) Illinois
(ii) Enhance Financial Services Group Inc.
(iii) 100% of the outstanding common stock

(AA) LITTON LOAN SERVICING INC.

(i) Texas
(ii) Enhance Financial Services Group Inc.
(iii) 100% of the outstanding common stock

II-5

SCHEDULE III

LITIGATION

None

EXHIBIT A-1

[Form of Revolving Credit Note]

PROMISSORY NOTE

$________________ ____________, 1998 New York, New York

FOR VALUE RECEIVED, ENHANCE FINANCIAL SERVICES GROUP INC., a New York corporation (the "Company"), hereby promises to pay to the order of ________________ (the "PAYEE"), for the account of its respective Applicable Lending Offices provided for by the Credit Agreement referred to below, at the principal office of Fleet National Bank at 777 Main Street, Hartford, Connecticut 06115, the principal sum of ________________ Dollars (or such lesser amount as shall equal the aggregate unpaid principal amount of the Revolving Credit Loans made by the Payee to the Company under the Credit Agreement), in lawful money of the United States of America and in immediately available funds, on the dates and in the principal amounts provided in the Credit Agreement, and to pay interest on the unpaid principal amount of each such Revolving Credit Loan, at such office, in like money and funds, for the period commencing on the date of such Revolving Credit Loan until such Revolving Credit Loan shall be paid in full, at the rates per annum and on the dates provided in the Credit Agreement.

The date, amount, interest rate and duration of Interest Period of each Revolving Credit Loan made by the Payee to the Company, and each payment made on account of the principal thereof, shall be recorded by the Payee on its books and, prior to any transfer of this Note, endorsed by the Payee on the schedule attached hereto or any continuation thereof, PROVIDED that the failure of the Payee to make any such recordation or endorsement shall not affect the obligations of the Company to make a payment when due of any amount owing under the Credit Agreement or hereunder in respect of the Revolving Credit Loans made by the Payee.

This Note is one of the Revolving Credit Notes referred to in the Credit Agreement dated as of June 30, 1998 (as modified and supplemented and in effect from time to time, the "CREDIT AGREEMENT") among the Company, the banks party thereto and Fleet National Bank, as Swingline Bank and Administrative Agent, and evidences Revolving Credit Loans made by the Payee thereunder. Terms used but not defined in this Note have the respective meanings assigned to them in the Credit Agreement.

The Credit Agreement provides for the acceleration of the maturity of this Note upon the occurrence of certain events and for prepayments of Loans upon the terms and conditions specified therein.

Except as permitted by Sections 11.06(b) and 11.06(d) of the Credit Agreement, this Note may not be assigned by the Payee to any other Person.

This Note shall be governed by, and construed in accordance with, the law of the State of New York.

ENHANCE FINANCIAL SERVICES GROUP INC.

                                                                          Amount
  Date                                                                    Paid,
  Made,                      Principal                     Duration      Prepaid,
Continued         Type         Amount                         of        Continued       Unpaid
   or              of            of         Interest       Interest         or        Principal      Notation
Converted         Loan          Loan          Rate          Period      Converted       Amount        Made by
---------         ----          ----          ----          ------      ---------       ------        -------

EXHIBIT A-2

[Form of Term Loan Note]

PROMISSORY NOTE

$_________________ ______________ , 199_ New York, New York

FOR VALUE RECEIVED, ENHANCE FINANCIAL SERVICES GROUP INC., a New York corporation (the "Company"), hereby promises to pay to the order of ________________ (the "PAYEE"), for the account of its Applicable Lending Office provided for by the Credit Agreement referred to below, at the principal office of Fleet National Bank at 777 Main Street, Hartford, Connecticut 06115, the principal sum of ______________ Dollars, in lawful money of the United States of America and in immediately available funds, on the dates and in the principal amounts provided in the Credit Agreement, and to pay interest on the unpaid principal amount hereof, at such office, in like money and funds, for the period commencing on the date hereof until this Note shall be paid in full, at the rates per annum and on the dates provided in the Credit Agreement.

This Note is one of the Term Loan Notes referred to in the Credit Agreement dated as of June 30, 1998 (as modified and supplemented and in effect from time to time, the "CREDIT AGREEMENT") among the Company, the banks party thereto and Fleet National Bank, as Swingline Bank and Administrative Agent, and evidences a Term Loan made by the Payee thereunder. Terms used but not defined in this Note have the respective meanings assigned to them in the Credit Agreement.

The Credit Agreement provides for the acceleration of the maturity of this Note upon the occurrence of certain events and for prepayments of Term Loans upon the terms and conditions specified therein.

Except as permitted by Sections 11.06(b) and 11.06(d) and of the Credit Agreement, this Note may not be assigned by the Payee to any other Person.

This Note shall be governed by, and construed in accordance with, the law of the State of New York.

ENHANCE FINANCIAL SERVICES GROUP INC.

EXHIBIT A-3

[Form of Swingline Note]

PROMISSORY NOTE

$10,000,000.00 ______________, 1998 New York, New York

FOR VALUE RECEIVED, ENHANCE FINANCIAL SERVICES GROUP INC., a New York corporation (the "Company"), hereby promises to pay to the order of FLEET NATIONAL BANK (the "Bank") at its principal office at 777 Main Street, Hartford, Connecticut 06115, the principal sum of TEN MILLION Dollars (or such lesser amount as shall equal the aggregate unpaid principal amount of the Swingline Loans made by the Bank to the Company under the Credit Agreement), in lawful money of the United States of America and in immediately available funds, on the dates and in the principal amounts provided in the Credit Agreement, and to pay interest on the unpaid principal amount of each such Swingline Loan, at such office, in like money and funds, for the period commencing on the date of such Swingline Loan until such Swingline Loan shall be paid in full, at the rates per annum and on the dates provided in the Credit Agreement.

The date and amount of each Swingline Loan made by the Bank to the Company, and each payment made on account of the principal thereof, shall be recorded by the Bank on its books and, prior to any transfer of this Note, endorsed by the Bank on the schedule attached hereto or any continuation thereof, PROVIDED that the failure of the Bank to make any such recordation or endorsement shall not affect the obligations of the Company to make a payment when due of any amount owing under the Credit Agreement or hereunder in respect of the Swingline Loans made by the Bank.

This Note is the Swingline Note referred to in the Credit Agreement dated as of June 30, 1998 (as modified and supplemented and in effect from time to time, the "CREDIT AGREEMENT") between the Company, the banks party thereto (including the Bank) and Fleet National Bank, as Swingline Bank and Administrative Agent, and evidences Swingline Loans made by the Bank thereunder. Terms used but not defined in this Note have the respective meanings assigned to them in the Credit Agreement.

The Credit Agreement provides for the acceleration of the maturity of this Note upon the occurrence of certain events and for prepayments of Loans upon the terms and conditions specified therein.

Except as permitted by Section 11.06(g) of the Credit Agreement, this Note may not be assigned by the Bank to any other Person.

This Note shall be governed by, and construed in accordance with, the law of the State of New York.

ENHANCE FINANCIAL SERVICES GROUP INC.

                      Principal
Date                   Amount                 Amount                 Unpaid
 of                      of                   Paid or               Principal              Notation
Loan                    Loan                  Prepaid                Amount                 Made by
----                    ----                  -------                ------                 -------

EXHIBIT A-4

[Form of Competitive Note]

PROMISSORY NOTE

$_______________ ______________, 1998 New York, New York

FOR VALUE RECEIVED, ENHANCE FINANCIAL SERVICES GROUP INC., a New York corporation (the "Company"), hereby promises to pay to the order of ____________________ (the "Payee") at the principal office of Fleet National Bank at 777 Main Street, Hartford, Connecticut 06115, the principal sum of ________________ Dollars (or such lesser amount as shall equal the aggregate unpaid principal amount of the Competitive Loans made by the Payee to the Company under the Credit Agreement), in lawful money of the United States of America and in immediately available funds, on the dates and in the principal amounts provided in the Credit Agreement, and to pay interest on the unpaid principal amount of each such Competitive Loan, at such office, in like money and funds, for the period commencing on the date of such Competitive Loan until such Competitive Loan shall be paid in full, at the rates per annum and on the dates provided in the Credit Agreement.

The date and amount of each Competitive Loan made by the Payee to the Company, and each payment made on account of the principal thereof, shall be recorded by the Payee on its books and, prior to any transfer of this Note, endorsed by the Payee on the schedule attached hereto or any continuation thereof, PROVIDED that the failure of the Payee to make any such recordation or endorsement shall not affect the obligations of the Company to make a payment when due of any amount owing under the Credit Agreement or hereunder in respect of the Competitive Loans made by the Payee.

This Note is the Note referred to in the Credit Agreement dated as of June 30, 1998 (as modified and supplemented and in effect from time to time, the "CREDIT AGREEMENT") between the Company, the banks party thereto and Fleet National Bank, as Swingline Bank and Administrative Agent, and evidences Competitive Loans made by the Payee thereunder. Terms used but not defined in this Note have the respective meanings assigned to them in the Credit Agreement.

The Credit Agreement provides for the acceleration of the maturity of this Note upon the occurrence of certain events and for prepayments of Loans upon the terms and conditions specified therein.

Except as permitted by Section 11.06(g) of the Credit Agreement, this Note may not be assigned by the Bank to any other Person.

This Note shall be governed by, and construed in accordance with, the law of the State of New York.

ENHANCE FINANCIAL SERVICES GROUP INC.

EXHIBIT B

[Form of Opinion of General Counsel to the Company]

_______________, 1998

Each of the Banks party
to the Credit Agreement
referred to below

Fleet National Bank,
as Administrative Agent for said Banks
777 Main Street
Hartford, Connecticut 06115

Ladies and Gentlemen:

I am Executive Vice President and General Counsel to Enhance Financial Services Group Inc., a corporation organized under the law of the State of New York (the "COMPANY"), and am rendering this opinion in connection with the Credit Agreement dated as of ____________, 1998 (the "CREDIT AGREEMENT") among the Company, the banks party thereto (the "BANKS") and Fleet National Bank, in its capacity as agent for said Banks (the "ADMINISTRATIVE AGENT"). All capitalized terms used but not defined herein have the respective meanings given to such terms in the Credit Agreement.

In rendering the opinions expressed below, I have examined:

(i) the Credit Agreement;

(ii) the Revolving Credit Notes, the Competitive Notes, the Swingline Notes and the form of the Term Notes (together with the Credit Agreement, the "CREDIT DOCUMENTS"); and

(iii) such corporate records of the Company and such other documents as I have deemed necessary as a basis for the opinions expressed below.

In my examination, I have assumed the genuineness of all signatures, the authenticity of all documents submitted to me as originals and the conformity with authentic original documents of all documents submitted to me as copies.

In rendering the opinions expressed below, I have assumed, with respect to all of the documents referred to in this opinion, that (except, to the extent set forth in the opinions expressed below, as to the Company):

(i) such documents have been duly authorized by, have been (or, in the case of the Term Notes, will be) duly executed and delivered by, and constitute (or, in the case of the Term Notes, will constitute) legal, valid, binding and enforceable obligations of, all of the parties to such documents;

(ii) all signatories to such documents have been duly authorized; and

(iii) all of the parties to such documents are duly organized and validly existing and have the power and authority (corporate or other) to execute, deliver and perform such documents.

Based upon and subject to the foregoing and subject also to the comments and qualifications set forth below, and having considered such questions of law as I have deemed necessary as a basis for the opinions expressed below, I am of the opinion that:

1. The Company is a corporation duly organized, validly existing and in good standing under the law of the State of New York. The Company has all material government licenses, authorizations, consents and approvals necessary to own assets and carry on its business as now being conducted.

2. The Company has all requisite corporate power to execute and deliver, and to perform its obligations under, each Credit Document. The Company has all requisite corporate power to borrow under the Credit Agreement.

3. The execution, delivery and performance by the Company of each Credit Document has been duly authorized by all necessary corporate action on the part of the Company.

4. Each Credit Document (other than the Term Notes) has been duly executed and delivered by the Company.

5. Each Credit Document (other than the Term Notes) constitutes, and each Term Note upon its execution and delivery by the Company for value will constitute, the legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except as may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to or affecting the rights of creditors generally and except as the enforceability of the Credit Documents is subject to the application of general principles of equity (regardless of whether considered in a proceeding in equity or at law), including, without limitation, (a) the possible

unavailability of specific performance, injunctive relief or any other equitable remedy and (b) concepts of materiality, reasonableness, good faith and fair dealing.

6. No authorization, approval or consent of, and no filing or registration with, any governmental or regulatory authority or agency of the United States of America or the State of New York is required on the part of the Company for the execution, delivery or performance by the Company of the Credit Documents or for any Borrowings by the Company under the Credit Agreement.

7. The execution, delivery and performance by the Company of, and the consummation by the Company of the transactions contemplated by, the Credit Documents do not and will not (a) violate any provision of the charter or by-laws of the Company, (b) violate any applicable law, rule or regulation of the United States of America or the State of New York, (c) violate any order, writ, injunction or decree of any court or governmental authority or agency or any arbitral award applicable to the Company or any of its Subsidiaries or (d) result in a breach of, constitute a default under, require any consent under, or result in the acceleration or required prepayment of any indebtedness pursuant to the terms of, any agreement or instrument to which the Company or any of its Subsidiaries is a party or by which any of them is bound or to which any of them is subject, or result in the creation or imposition of any Lien upon any Property of the Company or any of its Subsidiaries pursuant to the terms of any such agreement or instrument.

8. Except as disclosed in Schedule III to the Credit Agreement, there are no legal or arbitral proceedings, or any proceedings by or before any governmental or regulatory authority or agency, now pending or to my knowledge threatened against the Company or any of its Subsidiaries or any of their respective Properties that, if adversely determined, could have a Material Adverse Effect.

9. Neither the Company 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.

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

The foregoing opinions are subject to the following comments and qualifications:

A. The enforceability of Section 11.03 of the Credit Agreement may be limited by laws rendering unenforceable indemnification contrary to Federal or state securities laws and the public policy underlying such laws.

B. The enforceability of provisions in the Credit Documents to the effect that terms may not be waived or modified except in writing may be limited under certain circumstances.

C. I express no opinion as to (i) the effect of the laws of any jurisdiction in which any Bank is located (other than the State of New York) that limit the interest, fees or other charges such Bank may impose, (ii) the last sentence of Section 2.02(c) and Section 4.07(c) of the Credit Agreement and (iii) the second sentence of Section 11.10 of the Credit Agreement, insofar as such sentence relates to the subject matter jurisdiction of the United States District Court for the District of Connecticut to adjudicate any controversy related to the Credit Documents.

The foregoing opinions are limited to matters involving the Federal laws of the United States of America and the law of the State of New York, and I do not express any opinion as to the laws of any other jurisdiction.

At the request of the Company, this opinion is, pursuant to
Section 6.01(c) of the Credit Agreement, provided to you by me in my capacity as General Counsel to the Company and may not be relied upon by any Person other than the addressees hereof without, in each instance, my prior written consent.

Very truly yours,

Samuel Bergman Executive Vice President and General Counsel

EXHIBIT C

[Form of Confidentiality Agreement]

CONFIDENTIALITY AGREEMENT

[Date]

[Insert Name and
Address of Prospective
Participant or Assignee]

Re: Credit Agreement dated as of ____________, 1998 (the "CREDIT AGREEMENT"), among Enhance Financial Services Group Inc. (the "Company"), the banks named therein and Fleet National Bank, as Administrative Agent.

Ladies and Gentlemen:

As a Bank party to the Credit Agreement, we have agreed with the Company pursuant to Section 11.12 of the Credit Agreement to use reasonable precautions to keep confidential, except as otherwise provided therein, all non-public information identified by the Company as being confidential at the time the same is delivered to us pursuant to the Credit Agreement.

As provided in said Section 11.12, we are permitted to provide you, as a prospective [holder of a participation in the Loans (as defined in the Credit Agreement)] [assignee Bank], with certain of such non-public information subject to the execution and delivery by you, prior to receiving such non-public information, of a Confidentiality Agreement in this form. Such information will not be made available to you until your execution and return to us of this Confidentiality Agreement.

Accordingly, in consideration of the foregoing, you agree (on behalf of yourself and each of your affiliates, directors, officers, employees and representatives) that (A) such information will not be used by you except in connection with the proposed [participation] [assignment] mentioned above and (B) you shall use reasonable precautions, in accordance with your customary procedures for handling confidential information and in accordance with safe and sound banking practices, to keep such information confidential, PROVIDED that nothing herein shall limit the disclosure of any such information (i) to the extent required by statute, rule, regulation or judicial process, (ii) to your counsel or to counsel for any of the Banks or the Administrative Agent, (iii) to bank examiners, auditors or accountants, (iv) to the Administrative Agent or any other Bank, (v) in connection with any litigation to which you or any one or more of the Banks or the Administrative Agent are a party, (vi) to a subsidiary or affiliate of yours as provided in Section 11.12(a) of the Credit Agreement or
(vii) to any assignee or participant (or prospective assignee or participant) so long as such assignee or participant (or

prospective assignee or participant) first executes and delivers to you a Confidentiality Agreement substantially in the form hereof; PROVIDED, FURTHER, that in no event shall you be obligated to return any materials furnished to you pursuant to this Confidentiality Agreement.

Please indicate your agreement to the foregoing by signing as provided below the enclosed copy of this Confidentiality Agreement and returning the same to us.

Very truly yours,

[INSERT NAME OF BANK]

AGREED AS AFORESAID:

[INSERT NAME OF PROSPECTIVE
PARTICIPANT OR ASSIGNEE]

EXHIBIT D

[Form of Assignment and Acceptance]

ASSIGNMENT AND ACCEPTANCE

Reference is made to the Credit Agreement, dated as of ____________, 1998 (as modified and supplemented and in effect from time to time, the "CREDIT AGREEMENT"), among Enhance Financial Services Group Inc. (the "COMPANY"), the banks named therein, and Fleet National Bank, as agent for such banks (the "ADMINISTRATIVE AGENT"). Terms defined in the Credit Agreement are used herein as defined therein.

___________________ (the "ASSIGNOR") and ___________________ (the "ASSIGNEE") agree as follows:

1. The Assignor hereby irrevocably sells and assigns to the Assignee without recourse to the Assignor, and the Assignee hereby irrevocably purchases and assumes from the Assignor without recourse to the Assignor, as of the Effective Date as set forth in Schedule 1 hereto (the "EFFECTIVE DATE"), an interest (the "ASSIGNED INTEREST") in and to the Assignor's rights and obligations under the Credit Agreement with respect to those credit facilities contained in the Credit Agreement as are set forth on Schedule 1 (individually, an "ASSIGNED FACILITY"; collectively, the "ASSIGNED FACILITIES"), in a principal amount and percentage for each Assigned Facility as set forth on Schedule 1.

2. The Assignor (i) makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with the Credit Agreement, any other Basic Document or any other instrument or document furnished pursuant thereto, or the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Credit Agreement, any other Basic Document or any other instrument or document furnished pursuant thereto, other than that it has not created any adverse claim upon the interest being assigned by it hereunder and that such interest is free and clear of any such adverse claim; (ii) makes no representation or warranty and assumes no responsibility with respect to the financial condition of the Company, any of its Subsidiaries or any other obligation or the performance or observance by the Company, any of its Subsidiaries or any other obligor of any of their respective obligations under the Credit Agreement or any other Basic Document or any other instrument or document furnished pursuant hereto or thereto; and (iii) attaches the Note(s) held by it evidencing the Assigned Facilities and requests that the Administrative Agent exchange such Note(s) for a new Note or Notes payable to the Assignor (if the Assignor has retained any interest in the Assigned Facility) and a new Note or Notes payable to the Assignee in the respective amounts which reflect the assignment being made hereby (and after giving effect to any other assignments which have become effective on the Effective Date).

3. The Assignee (i) represents and warrants that it is legally authorized to enter into this Assignment and Acceptance; (ii) confirms that it has received a copy of the Credit

Agreement, together with copies of the financial statements referred to in
Section 7.02 thereof, the financial statements delivered pursuant to Section 8.01 thereof, if any, and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Assignment and Acceptance; (iii) agrees that it will, independently and without reliance upon the Assignor, 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 decisions in taking or not taking action under the Credit Agreement, the other Basic Documents or any other instrument or document furnished pursuant hereto or thereto; (iv) appoints and authorizes the Administrative Agent to take such action as administrative agent on its behalf and to exercise such powers and discretion under the Credit Agreement, the other Basic Documents or any other instrument or document furnished pursuant hereto or thereto as are delegated to the Administrative Agent by the terms thereof, together with such powers as are incidental thereto; and (v) agrees that it will be bound by the provisions of the Credit Agreement and will perform in accordance with its terms all the obligations which by the terms of the Credit Agreement are required to be performed by it as a Bank including, if it is organized under the laws of a jurisdiction outside the United States of America, its obligation pursuant to Section 5.06 of the Credit Agreement to deliver the forms prescribed by the Internal Revenue Service of the United States certifying as to the Assignee's exemption from United States withholding taxes with respect to all payments to be made to the Assignee under the Credit Agreement, or such other documents as are necessary to indicate that all such payments are subject to such tax at a rate reduced by an applicable tax treaty.

4. Following the execution of this Assignment and Acceptance, it will be delivered to the Administrative Agent for acceptance by the Administrative Agent pursuant to Section 11.06(b) of the Credit Agreement, effective as of the Effective Date (which date shall not, unless otherwise agreed to by the Administrative Agent, be earlier than five Business Days after the date of such acceptance.

5. Upon such acceptance, from and after the Effective Date, the Administrative Agent shall make all payments in respect of the Assigned Interest (including payments of principal, interest, fees and other amounts) to the Assignee which accrue subsequent to the Effective Date.

6. From and after the Effective Date, (i) the Assignee shall be a party to the Credit Agreement and, to the extent provided in this Assignment and Acceptance, have the rights and obligations of a Bank thereunder and under the other Basic Documents and shall be bound by the provisions thereof and (ii) the Assignor shall, to the extent provided in this Assignment and Acceptance, relinquish its rights and be released from its obligations under the Credit Agreement except as provided in Section 11.07 of the Credit Agreement.

7. This Assignment and Acceptance shall be governed by and construed in accordance with the law of the State of New York.

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

IN WITNESS WHEREOF, the parties hereto have caused this Assignment and Acceptance to be executed as of the date first above written by their respective duly authorized officers on Schedule 1 hereto.

[ASSIGNEE]                                   [ASSIGNOR]


By:________________________                  By:_______________________
     Title:                                                Title:

                                             [Consented to and] Accepted:

                                             FLEET NATIONAL BANK, as
                                                      Administrative Agent

                                             By:_______________________
                                                  Title:

                                             [Consented to:

                                             ENHANCE FINANCIAL SERVICES
                                                      GROUP INC.

                                             By:_______________________
                                                  Title:

                                             FLEET NATIONAL BANK,
                                                      as Swingline Bank


                                             By:_______________________
                                                  Title:

Schedule 1 to Assignment and Acceptance relating to the Credit Agreement, dated as of _____________, 1998, among Enhance Financial Services Group Inc. the banks named therein and Fleet National Bank, as agent for the Banks

(in such capacity, the "ADMINISTRATIVE AGENT")

Name of Assignor:

Name of Assignee:

Effective Date of Assignment:

                Credit                     Principal               Percentage
          Facility Assigned             Amount Assigned             Assigned
          -----------------             ---------------             --------